Quick Summary: How do today’s tech startups launch and scale big and fast? By using a new union of traditional and direct marketing and business development that adds up to one thing: Growth. How can radio and other media brands become “growth hackers”?
Ryan Holiday is the former Director of Marketing for American Apparel. He has promoted the works of authors like Tim Ferriss, Seth Godin, Marc Ecko and Tucker Max. He is a devious genius when it comes to the art and science of media attention, and he’s the author of some of my favorite books from the past three years, including Trust Me, I’m Lying: Confessions of a Media Manipulator, The Obstacle Is the Way: The Timeless Art of Turning Trials into Triumph, and the one we’re talking about today – now out in an expanded version: Growth Hacker Marketing: A Primer on the Future of PR, Marketing, and Advertising.
Watch this short Q&A with Ryan and please share it with your peers:
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What follows is a highly edited transcript of our chat. Make sure to watch or listen to the whole thing!
Ryan, what is “growth hacker marketing,” what’s new about it, and why does it matter?
I read an article about two years ago by Andrew Chen, a prominent advisor to Silicon Valley entrepreneurs. He argued that in Silicon Valley this idea of a “growth hacker” is replacing what we would consider the VP of Marketing. Now that caught my attention because that was my job, right?
So I looked at the companies that attributed their success to growth hacking – names like Twitter, Airbnb, Dropbox. These are major billion-dollar brands that acquired hundreds of millions of users – billions in some cases – and in a very short amount of time doing none of the things that traditional marketers pride themselves on being good at. And so the book is really an exploration of how that came to be, what it means, and what to do about it.
Most of the companies you mentioned are either primarily or exclusively digital entities. So to what degree is growth hacker marketing applicable to a brick and mortar enterprise or a media company that reaches people’s ears and eyes through radio or television?
Predominantly you see growth hacking happen in the tech space. But to me, this is because it’s a testing ground for a larger set of trends that are affecting all of us. And this has been true for all of media’s history. I mean, look, the idea of a press release, which companies have now used for a hundreds of years. It was invented by government agents in World War I who were trying to update the media on events happening overseas.
And look, right now we’re using webcams, a tool that was pioneered by people in the pornography industry. So technology usually is innovated in one space and then it envelops the rest of us. Twitter happened with nerds and then all of a sudden celebrities are using it. So innovation happens in one space and then it tends to trickle through the rest of culture if they share the underlying economics.
So where companies are launching with less money, shorter runways, and fewer employees than they ever have before, that’s where lean marketing tactics come in. That’s where growth hacker marketing matters most.
And it’s not just startups; established companies also have short runways and diminished resources, right?
Totally. And the way in which they get those customers is now much more trackable than it was before. So if you’re a national retailer and you’re just hoping sales materialize because you did some promotion, that’s one thing. But if most of those sales are coming through a website you can actually see what’s working and what’s not working. And many of these tech firms have created innovations enabling them to see and scale what works rather than just rely on gut instinct or creative preference.
The idea of growth hacker marketing is to bake “virality” into the product – to bake in the actual “marketing.” Can you give me some examples of companies that have done that and how they’ve done it?
Two of the most prominent ones that I talk a lot about in the book are Groupon and Living Social, which built their model on customer acquisition through referrals. So if you send a deal to three other people it will be free for you. Or if one of your friends signed up based on a referral link you’ve got a $10 coupon. Dropbox did the same thing, but instead of paying you in cash they paid you in free storage on the site. So when I send you a file on Dropbox and then you sign up for the service, I get an extra 100 megabytes of space.
It’s taking the idea of a network effect – the idea that a network gets more valuable the more users who are on it – and giving some of that value back to the customers. These companies are technically paying their customers to bring them more customers.
How do you differentiate this from what people might call either direct response advertising or direct marketing?
I see growth hacking as a combination of direct marketing, traditional marketing, and business development.
I’ll give you a great example:
Airbnb decided to pay to have a professional photographer take pictures of your house if you listed it on Airbnb. Now this is not direct marketing and it’s not really traditional marketing. It’s not really anything. But the purpose is to make the site look better, to give you something to talk about as a customer, and to make the average listing seem more attractive and, therefore, worth more money.
See, somebody at Airbnb determined that listings with professional photos sell for 20% more. So even if Airbnb subsidizes that process they can still make more money and that’s good for them.
So what is that? A marketing decision? A product decision? The programmers didn’t make that decision, and it’s not really business development. What is it? It’s all about growing the site at the end of the day, and that’s where growth hacking comes in.
That’s one of the points in your book: That this division between product and marketing is a dated notion and now those two things are converging all the time, right?
Yes, Facebook made that decision early on. They don’t have a “marketing department,” they have a “growth department.” It may seem like a semantic difference, but if you think about it, what is a marketing department’s job? It’s to do marketing. Well, nobody wants to do marketing. You’re doing marketing because it’s a means to an end. So Facebook says, “Let’s not dance around that. Let’s have a company whose job it is to grow the business. Let’s have a department whose job it is to acquire more users and grow the user base. We don’t really care what they do, provided it meets that goal.”
In your book you write: “Deep down, I think anyone marketing or launching anything fantasizes that they are premiering a blockbuster movie. And this illusion shapes and warps every marketing decision we make. It feels good, but it’s so very wrong.”
Yes, look: I think everyone in marketing wants to be Don Draper, but Don Draper is a fictional character. Plus, he’s not really in marketing, he’s in advertising. His job is to create advertising campaigns. His job is not for those campaigns to be successful. He’s not judged on any metrics. He’s just an artist masquerading as a marketer, right?
We tend to focus on what seems really cool and creative and makes us feel good about ourselves, but we’re not actually holding ourselves against many benchmarks and evaluating whether what we’re doing and what we think looks cool actually succeeds.
To what degree does growth hacking marketing substitute for advertising via mass media? You’re not suggesting that growth hacker marketing is a substitute for traditional marketing and advertising.
No, definitely not, especially once you get to a certain size. Even Google buys Super Bowl commercials now. Maybe Facebook will at some point. At a certain point these traditional techniques make sense.
And not only that, what it’s really about is looking for the things that nobody else in your particular space is doing; uncovering undervalued assets in the market. So social media happened to be how a lot of these companies grew very quickly, but now that’s a very crowded space and maybe billboards or radio ads are undervalued on the market now. And that’s what you want to look at. So I suppose it really depends on specifically what you’re doing and, more importantly, what your competitors are doing, because you should not do that.
In the radio and audio space so much of advertising is about reach. Not necessarily attention, not necessarily engagement. Where do you see the future of advertising in this era where radio, for example, is pushing reach to the exclusion of other more trackable metrics?
When you look at advertising, it’s interesting how many of the metrics people throw around are just totally worthless or unverifiable. “Oh, you want to buy on this cable channel? We’re in 200 million homes.” Yeah, but 200,000 people watch your channel! So this is just made up. Growth hackers talk about vanity metrics all the time. And reach can be a vanity metric.
You’re just looking for sheer size, you’re actually evaluating whether it’s working or not. So it’s less about reach per se and more about what that reach is converting into.
You can tell me I could reach two million people and I would capture 1% of them, or you can tell me I could reach a much smaller number of people but capture a much higher percentage. Well, what ultimately matters is what that conversion rate amounts to, right?
At the end of the day it’s really about putting asses in seats. And if you’re not doing that, reach is just a vanity metric.
So, ultimately, there have to be some metrics that are at the bottom of the funnel and not simply at the top of the funnel.
Yes, totally. We can get very focused on having the top of the funnel as large as numerically possible, and then we think it’s somebody else’s job to convert that into something, right? “I’m just the buyer, so I don’t care if it converts into sales.” “I don’t make the website, it’s not my job if the traffic I send to it isn’t going anywhere.” That’s all wrong.
But Ryan, isn’t this actually one of the problems? The buyer, in fact, doesn’t care? In fact, results are not the buyer’s job?
Totally. And it’s especially true when you hire outside agencies, right?
I think one of the differences between a marketer and a growth hacker is that a growth hacker usually works at the company they’re doing this at. They are not some external firm.
And so I think it’s really interesting that we all agree that marketing is very important and communicating with our customers is very important. Then the first thing we do is pay someone who doesn’t work for our company to do it for us!
You don’t manufacture your own product, you don’t design your own creative, you don’t buy your own advertising; what is it exactly that you do? And so it seems to me if there’s one thing you’re going to bring in house, it should be these marketing efforts.
If virality is at the heart of growth hacking, can you give me a couple of tips on things a marketer should do to build in that virality?
I think the first part is just empathy. Would you share this yourself? Most of the time I don’t think people actually bother to think about that. They make some video and go, “Oh, this is a viral video.” But would you put this on your own Facebook account? Probably not, right? So it’s not really a viral video.
Second, you need to look at the actual mechanism to make this thing spread. Are you just hoping that it’s so good and so compelling that people are going to get over any obstacle to share it? Or have you facilitated that and made that easier? That’s what those referral programs we were talking about earlier do: They create extra incentives. I’m not going to refer a crappy deal to my friends. But if the deal is good and you were incentivizing me to do it, there’s no way I’m going to say no to that.
You’re famous for some breakthrough ideas in PR, some controversial, some just brilliant. So where do those ideas come from? What’s your process?
For any product, you have to ask what is the most interesting thing about that product and how can we emphasize or exaggerate exactly that part.
So when I’m dealing with controversial clients I ask how we exaggerate and amplify that controversy.
If I’m dealing with something surprising or counterintuitive or funny, it’s about exaggerating and emphasizing those things.
Too many people try to be everything to everyone, and then they wonder why they’re nothing to nobody.