App-driven product-led marketing is the new growth hack
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Digital marketing is going through a shift, and it’s app-driven product-led marketing more than digital advertising and sales as a 2022 Amplitude report shows. In our interview with Adam Greco, who a product evangelist at Amplitude, we discussed this new groundbreaking trend and the reallocation of marketing dollars towards apps to generate more growth.
App-driven product-led marketing is the new cool
The Amplitude report of August 2022
During the COVID pandemic, there was tremendous growth in the usage of apps. Amplitude published its first report right after that. The August 2022 report is their second one.
“We were curious to see what the growth pattern would look like as the pandemic tapered down. We analysed industry trends across our 2000 customers,” Adam Greco said.
In the past, SaaS businesses invested a lot in sales and marketing. Nowadays, instead of hiring hundreds of salespeople, they favour product-led marketing growth
“The methodology of our study entailed looking at a bunch of industries over a year. The apps that we studied had to have at least 10,000 monthly active users in order to get rid of the outliers. We also interviewed over 200 business leaders from marketing and product to get their insights of what’s happening.” For the different industries, we analysed key countries across APAC, North America and Europe.
The study covered different kinds of web applications, both social and transactional, with a focus on B2B, eCommerce, consumer tech, FinTech, wellness, etc. We saw a lot of situations where new, small businesses are getting started because of the fears of a recession or some of the impacts of a potential recession. So, a lot of things we are curious about is how does the potential economic downturn or coming out of the pandemic impact app usage.
Global product usage grew by a massive 16% year-over-year
Our previous report showed an amazing amount of growth in hundreds of percent. We went into this one expecting that there would be almost like negative product growth, but we were surprised that product growth increased year-over-year, with some ups and downs, from August 21 to August 22.
There was 16% growth showing that even during tumultuous economic times, there’s still massive investment in product-led marketing and apps as its key driver
Growth across different countries and geographies
Singapore witnessed the highest growth out of all, 43%, and their economy seems to be doing really well. Germany was at 38%, and then France at 32% growth.
These are significantly high numbers. I just spent a month in Europe, and it’s interesting to witness that it has started to become a powerhouse of start-ups.
A lot of these start-ups are using some kind of product teams and product methodology to differentiate themselves in the marketMarket definition in B2B and B2C - The very notion of "market" is at the heart of any marketing approach. A market can be defined.... It is said that whenever you have potential economic downturns, it’s actually the best time to start new companies. We’re definitely seeing that.
What’s interesting is the largest product-led marketing growth that we saw was a social media app called BeReal. Their numbers were just through the roof. Interestingly, the CEO told us they use Amplitude to track growth.
He mentioned when he meets his investors, instead of showing them a pitch deck, he’s just showing them the growth data in Amplitude because it’s more impactful and it lets them see what’s happening.
We saw some massive growth in the travel sector in Europe since the restrictions have been lifted. One company based in the Netherlands was up 324%, another in Spain was up by 253%, and a UK-based firm scaled by 164%. It’s great to see how much the travel sector has kicked back after the pandemic.
Different Geographies Showed Growth in Different Industries
In Europe, we saw maximum growth in the travel sector, while in North America a large growth could be observed in SaaS, and health and wellness apps. I think a lot of people want to get back in shape after sitting around for a couple of years in the pandemic. FinTech has been huge as well.
In France, two companies stood out. One is Qonto, a Paris-based financial company that helps with payments, expense management, and accounting solutions. They registered 75% year-over-year growth.
Then there is Luko, which is an insurance tech company focusing on transparency and an open model to let its users understand where their money is going. They had 119% growth. So, it’s all over the board, different companies in different regions with a lot of them being pandemic upstarts.
Growth Across Staffing & Job Search and FinTech Industries
This one was really fascinating because everyone had talked about the great resignation. People worried about losing their jobs because of recession. But during the pandemic, people felt empowered as they could find another job any time they want.
Overall, we saw that this industry had 118% year-over-year growth. What we’re seeing is people flocking to job-related apps and products and trying to use them to figure out multiple job options that exist out there. Also, a lot of that has to do with networking with peers about finding jobs.
When it comes to staffing, especially as you’re thinking about a downturn and recession, you thought maybe that would be an area that would go down, but it actually increased pretty significantly.
Crypto has been in the news lately and the whole crypto market has definitely lost a lot of steam. What’s interesting, though, and this may just be timing of when our product report ended in August, we saw about a 26% year-over-year growth in crypto apps.
So I think there may be a little bit of a news story hype that makes it seem like crypto is going down a lot more than it actually is. We definitely see it in the news and the whole debacle, but we’re seeing still a lot of usage in crypto apps and it’ll be interesting to see in our next year’s report if all the news actually does have an impact on app usage.
SaaS market: valuations versus product usage
Our stats showed that growth in SaaS was up on average about 25%. It seems like nowadays many B2B apps are SaaS apps. Talking about the valuation of SaaS companies, definitely, the stock prices have gone down, but it has not impacted product usage.
So we look at product usage as a fascinating indicator. It may be that the market valuation of companies versus the actual usage of these products is kind of misaligned.
Our assumption is that if SaaS app usage continues to stay strong, once the economy turns around, the valuations will probably go back up. You’d think that if the stock prices were down, the usage of these apps would be way down. But that hasn’t been the case as per our data.
Product-Led Marketing Is the New Cool
I believe firmly in product-led marketing growth. For those who aren’t familiar with product-led growth, the idea is that companies have to decide where they want to spend their money. In the past, a lot of money was spent in sales and marketing. If you’re a SaaS company, you might hire hundreds of salespeople. At the moment, product-led growth has really taken off owing to a couple of reasons.
Companies are deciding to spend more money on their digital products instead of buying advertisements or hiring salespeople. It’s backed by the fact that if you have a really good digital app, the word will spread and people will tell their friends, family, and more people will come onboard.
Hence, the way you could best differentiate yourself in the market is to have the best product and invest in it.
In a lot of companies like ours, we have an offering where people can try the product for free. Once they like it, it becomes a habit for them. Then they hit certain limits and have to pay. You’ll see that across the board. Products like calendar, where people use it to schedule meetings and then later they have to pay for it. This whole concept of product-led growth has really gained steam because in marketing it’s becoming increasingly difficult to show your return on investment these days as privacy policies are becoming strict and cookies are starting to be deleted.
Thus, a lot of the ways in which people would show their ROI or return on ad spend are becoming more difficult. Companies are realising that one of the best ways they could spend their money is to invest in the product where they can make sure that people are having really good product experiences.
Marketing Based on Product, Recommendations and Word of Mouth
There is a shift to a different type of marketing. It could be that ten years from now, people decide to move the other way and do a lot more of advertising. But right now, we just happen to see a massive change of where the dollars are going.
Suddenly, we’re also witnessing that the CTO, which is the chief product officer at many organisations and a role that didn’t even exist many years ago, is starting to become very prevalent. On the other hand, the Chief Marketing Officer role is somewhat ceding a little bit of budget and power over to the Chief Product Officer.
But it doesn’t have to be confrontational. Some of the leading companies are starting to realise that marketing and product should start to work together and almost join forces because the customer doesn’t care whether they’re interacting with the marketing or the product department. They just want to come to a website or an app and have a good experience. They want to have a good product that they can use and get value from.
How they get to the product isn’t as critical as they continue to use it week over week, month over month. The smartest companies are getting the marketing and product departments to acknowledge the need to work together because it’s the customer who is important, not their internal departmental hierarchy.
The Future May Come With Reduced Digital Advertising Spends
That’s what we believe and are starting to see. A lot of organisations are questioning the value they’re getting out of spending in digital advertising. If you spend €50,000 a month on digital advertising, you’re definitely going to get some impact. But you’re going to have to keep spending €50,000 every month to realise similar results. It doesn’t really have a compounding effect.
Companies are telling us that the investments they’re making in the product is actually having a multiplier effect because it does get more people to join, to use the product and become loyal customers.
They feel like they almost get two, three or €4 per euro spent when they invest in the product, but it’s a 1 to 1 when they spend it in marketing.
It is certainly going to be interesting to discover how focusing more on product instead of advertisements will unlock value for B2B marketers.