The Difference Between Marketing and Growth Hacking
It's a term used a lot these days.
In recent years, there seems to have been an explosion of people calling themselves 'growth hackers', 'growth marketers', 'growth engineers' or something similar.
In fact, the common use of the phrase has led to claims that the term has become another overused buzzword lacking in genuine substance.
While I agree that the term has certainly become overused, I believe 'growth hacking' constitutes a valuable approach to building a business in a smart, cost-effective way, often within a limited budget.
To understand why, let's take a second to go right back to basics, so we can identify exactly what growth hacking is as a concept, and how it can be utilised in business.
The term 'growth hacking' was coined by entrepreneur Sean Ellis in 2010, and he used it in an attempt to define a specific job role; someone whose primary purpose was to acquire new users for a company.
Ellis felt the need to create this new job specification after seeing the growth rates at startups he consulted at flatline after he left the companies.
The problem he encountered was that traditional marketers tended to have the wrong mindset to achieve his specified goals, which were; to get as many users for a product or service as quickly as possible, without investing in the same kind of highly expensive ad placements that a large, established company might use.
For example, whereas Starbucks or Microsoft may pay millions of dollars to show an ad to a mass audience during the superbowl, a growth hacker working to acquire users would use their more limited budget to appeal directly to the group of people who will get the most benefit from their product, because they are likely to be the easiest people to turn into users of the product.
These 'early adopters' then tend to drive viral growth, which can lead to explosive gains in the number of users, in a very short space of time.
So far, so marketing, you may think.
But there is a crucial factor at play here which traditional marketing approaches might not be able to take into account.
Where the marketing mindset may consider factors such as expenses, budgets and desired profit margins, a growth hacker focuses almost exclusively on growing their company's customer base.
Questions that a growth hacker may ask themselves include: how many users did method A generate compared to method B? Which method is more scalable over time? Can we optimise either method so that we can acquire more users at a lower cost?
This is because in today's startup climate, the first currency is users.
Startups either acquire users quickly, or they fail.
Companies such as Facebook, Snapchat and Uber relentlessly focused their early efforts on acquiring users rather than monetisation, and now each of them is worth several billion dollars.
Only the most mature of these companies, Facebook, is currently generating a profit. But after years of making heavy losses while it focused its energies on acquiring users, profits are now substantial, with Facebook having made almost $4billion worth of profit in the second quarter of 2017 alone.
Facebook therefore, can now clearly be considered the perfect model on how to go from acquiring as many users as possible, as quickly as possible, to a mature, viable and extremely profitable business which generates excellent returns for its investors.
It can be argued that growth hacking is still a function of marketing, just one that has the number of users acquired, instead of revenue growth or profitability increases, as the Key Performance Indicator, but this ignores another crucial aspect of growth hacking; the need to innovate and experiment.
Where traditional marketing takes place almost entirely through established channels, such as print or broadcast advertising, or online methods such as Google Adwords or SEO, growth hacking uses all of these methods, and more, while also trying out cutting-edge new approaches and experimenting with bold new methods that traditional marketers may not be familiar with, before only then focusing on which avenues drive the most number of new users.
For example, Dropbox increased the number of users their product had by offering people extra storage space in return for inviting their friends to also use Dropbox, Paypal experienced huge growth after integrating their online checkout software with eBay, while British rock band The Police, who were hugely popular in the 1980's, used a very early and extraordinarily successful growth hack when they decided to call themselves 'The Police' due to the fact that this name would give them an enormous amount of free publicity every day, all over the world.
In short, growth hacking requires a greater degree of risk-taking, innovation and experimentation than traditional marketing, along with the ability to recognise quickly what is working and what isn't, so the approach can be adapted accordingly.
Growth Hacking Coal From Santa
Over the course of my career in digital marketing, I've worked on several projects which can be considered to have involved growth hacking, but my favourite of them is the story of my own startup, Coal From Santa.
Around August 2015, I realised that most of my clients at the time were b2b customers whose commercial activities tended to slow down significantly around the Christmas period.
This meant they would have less need for me during this upcoming time of year. So, I decided to create a fun little side-project which I could test out some new marketing ideas on.
Coal From Santa was born.
The idea was simple. I'd create a quick website where people could pay to have coal sent to anyone they don't like, along with a message, and I'd box it, wrap it and ship it to their chosen recipient, ready for them to get a nasty surprise on Christmas morning.
It wasn't a particularly original idea, but that wasn't the point.
I was looking to create a simple, fun business that I could work on over the Christmas period (and no longer), which gave me the chance to test out a few things.
Specifically, how could I profitably market the business and generate sales when the average profit margin per sale was only £5?
I thought I knew.
My intention was to use ultra-targeted Stumbleupon and Facebook ads to get visitors to the website for £0.10 - £0.15 each, and then retarget these website visitors on Facebook, where the cost of retargeting campaigns can be very low.
The strategy can be summarised as using Facebook and Stumbleupon to get cheap and targeted visitors to the website, where I knew a handful of them would make a purchase, but the large majority wouldn't, and then retarget every website visitor on Facebook, with ads tailored to both groups of people; those who had purchased, and those who hadn't.
I knew that the conversion rates and profit margins from retargeting campaigns tend to be much higher than from ad campaigns where the audience is discovering your business for the first time, so I expected the majority of sales and profits to come from the Facebook retargeting campaign.
This proved to be true, and although my marketing strategy was a good one, and it did produce sales, the cost per conversion was just under £7, meaning that I was making a loss on every sale.
I needed to rethink my approach.
I realised I needed to find cheaper ways of generating sales if I was ever going to make the business profitable.
I then tried a few more strategies, all of which were successful.
I made sure to create a steady stream of quality content for my followers to enjoy, and encouraged them to engage with it, so the business would be exposed to as large an audience as possible.
I occasionally held competitions, where people could submit their email addresses using a twitter card I'd tweet out, and I'd pick a winner who would get coal sent to anyone they wanted for free.
Everyone who submitted their email address had their details automatically sent to my mailchimp account, so I could then email market to them, for free, whenever I wanted.
I also made a post on imgur where I pretended to be a disgruntled victim of someone sending me coal.
The post went viral, and reached the front page of the entire website.
This drove a lot of traffic to the Coal From Santa website, and generated over 50 sales.
These methods of building up a Twitter page for the business, and acquiring, engaging, then email marketing to, highly relevant followers, along with creating a viral post on social media, cost me very, very little to do, and generated over £800 in profits, 25% of which I donated to charity.
After a slow start, I'd achieved my goal of making Coal From Santa profitable within a short space of time, on a very small budget.
This was despite the profit margins being very low, and the fact that my original marketing strategies did not generate sales cheaply enough, meaning that I had to quickly pivot my approach until I found strategies which did.
So, despite some criticism towards growth hacking which claims it is little more than an over-used buzzword, and that it is simply marketing by another name, there are, in my opinion, significant enough distinctions between growth hacking and traditional marketing approaches to make 'growth hacking' a valid and useful term.
Specifically, growth hacking's emphasis on acquiring as many new users as quickly and cheaply as possible, and focus on experimentation, innovation and openness to trying out new marketing approaches, means that it requires a specific mindset and set of tools which traditional marketers may be unfamiliar with, and may find difficult to adopt.
I therefore suggest that both 'growth hacking' and its associated titles of expertise, such as 'growth hacker' 'growth marketer' and others, should be considered part of their own specialism, which is closely related to, but separate from, traditional marketing.
At the very least, I believe growth hacking should be considered a distinct subset of marketing, and not something entirely indistinguishable from it.