Marketing Week (MW): What is ‘growth hacker’ marketing?
Ryan Holiday (RH): Growth hacking is what marketing would be if it were invented in 2013. Instead of focusing on press releases, television advertising and billboards, growth hackers focus on technologies that are scalable, trackable, efficient, malleable and creative. They take full advantage of all these tools, not just to get attention but to get attention that can birth into growth very quickly.
MW: What has triggered this evolution?
RH: A large part of it is the lean start-up model. So, instead of building a new business with a £10m investment, creating one with a £10,000 investment. As a result, you do not have the money to hire a marketing firm or a dedicated person in-house, so the person doing your programming also ends up taking on the marketing role. As they don’t know how they are ‘supposed’ to do things, they make up a new way, and it turns out this new way is a complete reinvention of marketing, which may or may not be better.
MW: To what extent do marketers today need to have a start-up mentality?
RH: Everyone needs a start-up mentality. If you only learn old skills you will increasingly find yourself in an obsolete market.
Start-up tactics are becoming increasingly mainstream. When you look at Facebook, Twitter, Dropbox and Airbnb, these companies barely existed a few years ago but are now worth billions of pounds and have essentially done that without any traditional marketing. It’s hard to argue with their success, and it’s also hard to justify spending a lot of time and money on anything but those skills.
MW: How do you apply the concept of growth hacking at American Apparel?
RH: American Apparel is a vertically integrated company so it has a lot more flexibility to do this kind of thing. American Apparel will design, manufacture and retail a product in less than a week, and can do it in a very testable and trackable way. We can put 10 lines of a new product into a store and the chief executive can then call that store to see if any have been sold before deciding whether it should be scaled out or not.
MW: As well as being American Apparel’s marketing director, you are a media strategist for authors and musicians. How do you incorporate growth hacking in the work you do for them?
RH: If you can growth hack a book, you can growth hack just about anything. Books are literally thousands of years old but are still being released and sold in more or less the same way. However, when launching Tim Ferriss’s latest book, The 4-Hour Chef [published by Amazon, meaning a lot of book sellers refused to carry it], I thought it would be a good opportunity to test out some growth-hacking techniques.
A lot of old tactics were impossible, owing to the fact there was no retail distribution and effectively a media blackout, so we had to find a new way to let people know about the book.
[In addition to doing extensive market research ahead of publication and working with bloggers] we partnered with file-sharing site BitTorrent, typically associated with online piracy. Through the partnership, which was the most effective part of the launch, we gave away a large chunk of the book, which was downloaded millions of times. By our estimations it was responsible for selling 250,000 copies, and was the reason the book debuted on all the major bestseller lists.
MW: You are known for taking risks at American Apparel. How important is it for marketers to push the boundaries?
RH: Having a risk-taking appetite is crucial for growth hacking. That doesn’t mean being reckless by any means, but you have to experiment and try things that might just not work. You have to be willing to break some rules. American Apparel is willing to do that. I think a lot of companies are willing to but they’ve not seen the benefits of taking those risks yet. The track record of growth hackers is really astounding, which I think should justify some of these experiments.
MW: Are there some sectors or industries where growth hacking works better than others?
RH: A lot of people try to dismiss growth hacking and say it’s only for tech companies. I would say it is easier to apply to tech companies so that’s where it started, but so many things that started in Silicon Valley have rippled through and disrupted our lives.
Growth hacking is not a tool kit, it’s a mindset. It’s not that you have to do X, Y and Z, it’s that you have to think about everything you do from a different angle.
MW: Are there any areas where you think marketers should have a more active role?
RH: All too often marketers take a passive role in product development. Rather than being given a product and trying to get it in the news [regardless of whether they believe in it or not], if marketers were involved at the design stage they might be able to highlight fatal flaws or suggest certain features that would make marketing it much more successful down the line. This ‘product market fit’ mentally is a core component of growth hacking.
MW: What else should marketers today have their eye on?
RH: Marketers should be thinking about customer retention instead of acquisition. I can’t remember the last time I heard someone ask how to keep the customers they already have instead of going out and getting new ones. People often think optimisation, customer retention and loyalty is someone else’s job. Growth hacking has made us ask why we are treating all these different things as distinct processes when in reality they are much more related than people think. Marketers need to look at the evidence and then re-examine some of their priorities.
MW: How do you measure the effects of marketing at American Apparel?
RH: We avoid vanity metrics. When we advertise online we don’t look at how many clicks it generates or how many people saw it. That’s all very well, but what did it do? Did it drive sales? And what is the lifetime value of those customers? We’ve tried to re-evaluate some of the metrics we use and think about things in the long term.
It’s about keeping the customers that you’ve already got instead of spending another £100,000 getting 10,000 new customers. Find the 10,000 customers you brought into the funnel last time and reactivate them. One way is also a lot cheaper than the other.
MW: What else has been a game changer for you in the way you work?
RH: Having an iterative approach is really important. The idea of doing smaller launches more often, improving as you go, has been quite influential for me. Too many marketers concentrate everything into one grandiose launch, but growth hackers have a different approach. First, they look at how to get 1,000 customers, then get 10,000 and then 100,000, rather than looking to get 100,000 customers in the first week. When you invest heavily it increases the likelihood that you will fail and that your failure will be very costly, rather than cheap and efficient.
MW: How do you plan to keep up the growth-hacking momentum?
RH: When I first came across some articles [by technologist Andrew Chen, which inspired the book] it shook me to my core because it said growth hackers were the new vice-presidents of marketing, and that’s what I am. But I quickly got very into this new, developing under-culture of marketing and grew fascinated by it.
I want to try new things and resist the temptation to do what’s safe or traditional. I want to experiment on new ideas that are scalable and trackable and have the potential for real exponential returns and gains.
I also hope to see growth hacking expand and continue to heat up some of the more traditional marketing talent and see what expertise they can inject into the discussion..
Breaking the rules
Marketers looking to embrace growth hacking must have a risk-taking attitude and be willing to break some rules, says Ryan Holiday, which is a strategy he firmly believes as marketing director of American Apparel.
The fashion retailer’s marketing activity has been described as offensive, irresponsible, provocative, voyeuristic and pornographic over the years, resulting in numerous complaints to the Advertising Standards Authority and several ads being banned.
On more than a few occasions, American Apparel has been warned by the ASA that it must not use images that are exploitative of women or that sexualise underage girls, yet complaints continue to be of that nature.
But Holiday points out that although he takes risks he never sets out to be “reckless”.
The brand does use young women in its marketing as that is its target audience, but it has argued that the models it uses are over 18 (in some cases), and that the ads are aimed at adults. Magazines including Vice and Time Out, which have both carried offending American Apparel ads, have supported this claim, pointing out that they have an adult readership.
The retailer has also been accused of sexism as the way it advertises unisex clothing to men and women differs greatly. In one example, for the same checked shirt, in the men’s ad a fully clothed man wears it with jeans, while in the women’s version a girl wears the shirt tied at her waist without underwear.
Set to push the boundaries again, the retailer had an open call for “transexy” transgender and transsexual models at the end of last month, which was met with mixed reactions on the company’s Instagram page. Some praised the retailer for embracing the community, but others called it immoral and disgusting, particularly as it used the word “transgendered” rather than transgender.
American Apparel has used transgender models in the past, most notably Isis King from reality TV series America’s Next Top Model.