Growth Hacker Marketing: A Primer on the Future of PR, Marketing, and Advertising

by Ryan Holiday

Whether you’re currently a marketing executive or a college grad about to enter the field or the owner of a small, struggling coffee shop—the first growth hackers have pioneered a new way of marketing worth knowing. Some of their strategies are incredibly technical and complex. The strategies also change constantly; in fact, occasionally a strategy might work only one time. This book is short because it sticks with the timeless parts. I also won’t weigh you down with heavy concepts like “cohort analysis” and “viral coefficients.”* Instead, we will focus on the mindset—it’s far and away the most important part.

The end goal of every growth hacker is to build a self-perpetuating marketing machine that reaches millions by itself. —AARON GINN

It was only a matter of time before someone smart came along and said, “It doesn’t have to be this way. The tools of the internet and social media have made it possible to track, test, iterate, and improve marketing to the point where these enormous gambles are not only unnecessary, but insanely counterproductive.” That person was the first growth hacker, whether they knew it or not.

A growth hacker is someone who has thrown out the playbook of traditional marketing and replaced it with only what is testable, trackable, and scalable. Their tools are emails, data targeting, blogs, and platform APIs instead of commercials, publicity, and money. While their marketing brethren chase vague notions like “branding” and “mind share,” growth hackers relentlessly pursue users and growth—and when they do it right, those users become evangelists for products, bringing more users with them. Growth hackers are the inventors, operators, and mechanics of a self-sustaining and self-propagating growth machine that can take a company not just from zero to one, but from one to a hundred or a hundred million.

Noah Kagan, a growth hacker at Facebook, the personal finance service Mint.com (which sold to Intuit for nearly $170 million), and now Sumo, a company that makes best-in-class plug-ins for websites and online publishers, explains it simply: “Marketing has always been about the same thing—who your customers are and where they are.”

how do you get, maintain, and multiply attention in a scalable and efficient way?

Some companies, like Airbnb and Instagram, spend a long time trying new iterations until they achieve what growth hackers call Product Market Fit (PMF); others find it right away; others, like Yelp or Slack, discover it accidentally. The end goal is the same, however, and it’s to have the product and its customers in perfect sync with each other.

To be successful and grow your business and revenues, you must match the way you market your products with the way your prospects learn about and shop for your products. —BRIAN HALLIGAN, CEO AND COFOUNDER OF HUBSPOT

The important question at a launch is not “How can we reach as many people as possible?” It is “Who are our early adopters and where can we find them?”

To kick off and reach your first group of users, you have many options: You can reach out to the sites you know your potential customers read with a pitch email: “This is who we are, this is what we’re doing, and this is why you should write about us.”* You can put up a post on Hacker News, Quora, or reddit yourself. You can start writing blog posts about popular topics that get traffic and indirectly pimp your product. You can use the Kickstarter or Indiegogo platforms for exposure and bribe your first users with cool prizes (and get some online chatter at the same time). You can use a service like Help a Reporter Out (www.helpareporter.com) to find reporters who are looking for people to include in stories they are already writing about your space. You can find your potential customers one by one and invite them to your service for free or with some special incentive (that’s how small we’re talking).

If we go back to 1999, we can find an even better example. In his book The PayPal Wars, Eric Jackson, an early marketer at PayPal, reveals how PayPal became synonymous with eBay. Realizing that its most compelling pitch came when a potential buyer asked an auction seller if they could pay for the item with PayPal, the company’s engineers created a buyer bot that emailed sellers to ask if it could use PayPal and then purchased the item if the seller was willing. The goods would later go to charity—but buying the unwanted items was a cheaper, more lasting way to hook users than advertising was. I don’t think a direct marketer or a traditional marketer—with their proclivities for cheap advertisements or mail—would have thought of either of those ideas. This is a totally different approach. It’s half strategy, half engineering, with a pirate’s respect for the “rules.” It’s the kind of thing that requires collaboration across a company, from multiple departments and perhaps even, in some particularly aggressive or experimental cases, sign-off from senior leadership.

Virality isn’t luck. It’s not magic. And it’s not random. There’s a science behind why people talk and share. A recipe. A formula, even. —JONAH BERGER

The reason most growth hackers cringe when they hear that phrase is that they know how difficult it actually is to make things spread. They know that it’s not as simple as slapping a couple buttons on something and expecting customers or viewers to do your marketing for you. When asked to make something shareable, the growth hacker asks: Well, why should customers do that? Have you actually made it easy for them to spread your product? Is the product even worth talking about?

Did the founders expect it to go viral and launch their company in front of many new customers? Perhaps not at such an enormous scale, but because it was inspiring, moving, directed at a specific audience, and concise, it had a far better chance of doing so than the countless boring and meaningless mission statements written by other companies each and every day. It had Product Market Fit—that’s why it spread.

All of which is to say a simple fact: if you want to go viral, it must be baked into your product and the experience. There must be a reason to share something and the means and motivation to do so.

First off, in a small company, there is no one else. Your job is not just to bring in potential customers but to create lifelong users. And, as it turns out, dedicated and happy users are marketing tools in and of themselves. What’s the point of driving a bunch of new customers through marketing channels if they immediately leak out through a hole in the bottom? What good is putting a barker out in front of your restaurant if, as soon as the customers see the menu, they get up and leave? And what’s the point of trying to get more and more customers if you’re monetizing only a fraction of them, or a fraction of what you could monetize from each customer?

When I first joined the company, the suggested user list had 20 random people who were default selected to follow. Given this data insight, we reset the new user flow to encourage people to follow their first ~10 people and offer them a lot of choices, but no default selection. Then we later built a feature that continually suggested new users to follow on the sidebar of the website. These two changes helped people get started following, and more importantly understand that following was important to get the most out of Twitter. So over time more people did just this and became more and more likely to be retained.32

This innovation has been responsible for millions of happy users, not just on Twitter but on other social networks as well. For example, Pinterest, the popular design and inspiration community, has new users automatically follow a selection of high-quality Pinterest users. Anyone who joins is therefore much more likely to see compelling, attractive content right off the bat. It also gives users a great place to start rather than hoping they figure it out on their own.

On the other hand, Airbnb invested heavily in an expensive program that a lot of growth hackers doubted at first. In 2011, in an effort to improve the site’s aesthetic appeal and attract higher-end customers, Airbnb began offering free professional photography for its listings. If you listed your house on the service, they’d send a pro over to taking amazing photos that made your house look irresistible. Why? Because, as they put it, “taking crisp, well-lit and composed photographs that accurately convey the look and feel of the space is the most difficult part of creating a listing, so we make it easy.”35 Not that Airbnb was flawless here either. It took outside companies like PriceMethod to innovate and come up with the idea of algorithmic (or data-based) pricing for Airbnb listings, which gave better insights on what to charge per night and how to maximize revenue for hosts. Airbnb should have developed this in-house—instead of, say, spending millions of dollars sponsoring the Rio Olympics in 2016—but they eventually caught up and incorporated such technology in their offerings, to the benefit of users and the company’s bottom line.

Though this approach is untraditional, you can see how techniques like Airbnb’s free photography check off so many growth hacking objectives. That tactic increased the conversion rate, increased the price a listing could charge, drew members deeper into the community, weeded out potentially risky or negative listings, taught users how to use the product better, made them rave about the product, and just as a bonus, got a bunch of positive publicity about it. The result was better listings, happier customers, and higher profits.

I’ve made billions of dollars of failures at Amazon.com. Literally. None of these things are fun, but they also don’t matter. What matters is that companies that don’t continue to experiment or embrace failure eventually get in the position where the only thing they can do is make a Hail Mary bet at the end of their corporate existence. I don’t believe in bet-the-company bets.39

The role of the growth hacker is to ruthlessly optimize incoming traffic for success. As Eric Ries explains in The Lean Startup, “The focus needs to be on improving customer retention.” Because retention is easier than acquisition. You’ve already got the people here—now just don’t lose them! Forget the conventional wisdom that says if a company lacks growth, it should invest more in sales and marketing. Instead, it should also invest in refining and improving the service itself until users are so happy that they can’t stop using the service (and their friends come along with them).

The term for it is “onboarding.” How you get someone’s attention or get them to sign up, that’s what marketing is about—but how do you manage their initial experiences and groom them to be a great customer or client or fan? That’s onboarding. I’ll give you an example: A site I run called DailyStoic.com has built a six-figure email list of people who are interested in Stoic philosophy and who get a daily email meditation to inspire them at the start of the day.* But if you sign up on Tuesday, you don’t just get whatever email was randomly scheduled for that day. I mean, what are the chances that is the perfect first email for you to see? Instead, the first seven emails you get are scripted to be the perfect experience—based on the data we have about what people have liked in the past—to explain to you the important lessons of this philosophy you’re interested in. The subject lines and every word of the copy inside them have been tweaked dozens of times (again based on data) to help build the habit we’d like to see you stick with. And then after the seven emails, there are other scripted notes that go out at predetermined intervals that we know convert well.

Yet when I reflect on the billions of ad impressions I’ve generated in my career, the millions of books I’ve helped sell, and the millions of emails I’ve acquired for clients, the truth is that the majority of the time, I didn’t follow up with anyone who converted and I spent only a few seconds thinking about the people who didn’t convert at all. I—along with everyone in my industry—was obsessed with more, more, more, instead of getting the most out of the leads we were already generating. It makes me shudder to think of the wasted effort inherent in that approach. What could have been with all those ghost users? And can I ever get them back?

I’ll give you another example. In 2011 or 2012, I was invited to be an early user of Uber in Los Angeles. I signed up but for some reason never ended up using it other than that first night. To use the technical term, I “bounced” out of the service. So I knew of the service, but I was not a user. Flash forward to a year later, when I was traveling internationally to attend a conference and the event organizers gave all of the speakers a $50 Uber gift card. (In other words, a viral referral feature.) I couldn’t find a cab, so I ended up logging into the app for the first time in many, many months and hailed a black car. As it turned out, the service was seamless and enjoyable. After my ride, Uber kept me engaged by asking me to rate my driver, and then it sent me a coupon via email. Back in the United States a few days later and stranded in Brooklyn, my first thought was “Let’s pull up Uber.” I had officially been transformed from a lost customer to an active user. That is retention and optimization. It is marketing to someone who is a lot more likely to convert than some busy stranger you might otherwise try flashing an online banner ad to.

Yes, it’s more seductive to chase new marketing initiatives. Yes, it would be more fun to get some press. But it’s usually better for business to retain and optimize what we already have.

According to Bain & Company, a 10 percent increase in customer retention can mean a 30 percent increase in profitability for the company. And according to Market Metrics, the probability of selling to an existing customer is 60 to 70 percent, while to a new prospect it’s just 5 to 20 percent.40 Bronson Taylor, host of Growth Hacker TV, puts it in a phrase: “Retention trumps acquisition.”41

Growth hacking is about maximizing ROI—about expending our energies and efforts where they will be most effective. It may be that you’re better off rolling out new features that get more out of your customer base, that turn potential users into active users, than going out and pounding the pavement for more potentials. You’re better off teaching your customers how to use your product—spending time, as services like Facebook and Amazon do, to get users to supply more personal information and make them more engaged—than chasing some new person who doesn’t really care.

Retail or e-commerce, we can all get better at using data to improve the experience for our customers (and better for our bottom lines in the process). But my favorite expression of this comes from Steve Varsano, one of the world’s most successful private jet brokers. He explained to the New York Times that the secret to selling jets was maintaining great relationships with his customers and selling them the newest model when it comes in rather than trying to hustle new leads. As he said, “If you’ve got a fast-food restaurant it’s easier to get the guy who comes in three times a month to come in four times a month than it is to get a new customer. So we try to check in with all the current owners at least every quarter.”42

Remember, this is a loop. One that we run through many consecutive and concurrent times in the life of a business or a project. And as we’re running it, other people are going to be coming up behind us, benefiting from our insights and competing with us on the new ground we’ve broken. So we have to keep breaking new ground and keep discovering new things. That’s the mindset of a growth hacker. We must find growth via acquisition and retention through tried-and-true channels while simultaneously experimenting with things that others have never tried before. We’ll stick with concepts as long as they’re working, but never be misled by vanity metrics (and always watch out for churn). We’re thinking long term and short term at the same time, investing in our current customers while we invest in finding more just like them. We’re never content with the status quo, whether that pertains to our product or our marketing efforts. We know we can always do better and that’s what we’re relentlessly chasing.

With tools like Compete, Quantcast, and Alexa, it was easy to research potential sites we wanted to appear on, cross-check their traffic, and then reach out.

But far too many of us in the marketing world, decades away from a world of traveling salesmen and mail-order catalogs, have lost sight of this fundamental reality. We forget the function behind the form and miss out on new opportunities because we can’t see what’s in front of us. At the core, marketing is lead generation. Ads drive awareness . . . to drive sales. PR and publicity drive attention . . . to drive sales. Social media drives communication . . . to drive sales. Marketing, too many people forget, is not an end unto itself. It is simply getting customers. And by the transitive property, anything that gets customers is marketing.

Run down the list of the start-ups we’ve talked about in this book, from Hotmail to Airbnb to Groupon to Spotify, and see the startling fact: tactics that no one would have previously described as “marketing” turned out to be the marketing steroids behind their business growth. For Hotmail, it was inserting an email signature at the bottom of each message that turned every email sent by one of its users into a pitch for new users. For Airbnb, it was craigslist infiltration, which allowed Airbnb hosts to use the site as a sales platform. For Groupon and LivingSocial, it was referral offers that paid users to share deals with their friends. And for Spotify, it was the free “advertising” it got from Facebook integration.

As I interviewed and read about the dozens of growth hackers whose many insights contributed to this book, I noticed that each one had used an almost entirely different set of tactics from the others. Some had relied on viral features; others leaned more heavily on product and optimization. Some were expert email marketers, while others knew how to use platforms and APIs to reach equally large numbers of people.