Could a marketplace for growth hacker marketing contests be a viable business?
Several years ago, Toronto-based gold mining company Goldcorp was not in good shape. As detailed in this Bloomberg piece, the company was getting beat up by high costs, labor strikes, and a gold market that was headed in the wrong direction. Their 50-year old mine in Red Lake, Ontario, showed no evidence of new gold deposits, and the company looked likely to go out of business. The company needed a miracle. That’s when the CEO, Rob McEwen, had an idea.
Frustrated that his in-house geologists couldn’t reliably estimate the value and location of the gold on his property, McEwen did something unheard of in his industry: He published his geological data on the Web for all to see and challenged the world to do the prospecting. The “Goldcorp Challenge” made a total of $575,000 in prize money available to participants who submitted the best methods and estimates.
The property covered 55,000 acres. McEwen published every bit of data he had on the Goldcorp website. News spread, and experts from 50 countries around the world started analyzing the data. McEwen was flooded with submissions, and the article explains what happened next.
The contestants identified 110 targets on the Red Lake property, more than 80% of which yielded substantial quantities of gold. In fact, since the challenge was initiated, an astounding 8 million ounces of gold have been found—worth well over $3 billion. Not a bad return on a half million dollar investment.
Could a similar model work when it comes to marketing?
Challenges for Marketing Contests
When it comes to setting up a growth hacker marketing contest there would certainly be challenges, and some contests wouldn’t work. Contrasting how growth hacker marketing might work with other companies that use contests is instructive.
99designs is a company that creates design contests. If you need a logo, book cover, poster, or website, you can go to their website, sign up, and start getting submissions from designers who compete to win the ultimate prize. This model works well for clients–they get to choose from amongst a large field of submissions and they only have to pay for one. The model has its detractors in the design community, however. Who wants to do a bunch of work and then if they get 2nd place, they get nothing? Another aspect of the model that works well is that it’s easy to identify a winner. The winner submits files. But what about a marketing contest? What if the goal were to get a certain number of articles in the press? How could such a thing be tracked to a certain growth hacker if there are multiple growth hackers working on the task?
A Potential Model For Growth Hacker Marketing Contests
Here are my rough ideas for how a growth hacker contest marketplace might work. The contests would be coordinated through a website/marketplace that brings clients and hackers together. For the time being we’ll ignore some of the details such as account creation that are a given and stick to the core steps in creating and executing a growth hacker marketing contest.
1. Client creates a contest idea. Why not just create a contest? Because clients are highly likely to have unrealistic ideas and bad compensation plans. “I want 50 placements in top tier publications and I’m willing to pay $1,000 to the 1st place winner!” Who is going to enter that contest? Nobody who has a chance of pulling it off. That’s not good for anyone. Instead of allowing clients to create a contest, why not having them first create a contest idea, have hackers provide feedback/input along the lines of “You would need to offer 5x as much for 1st place in order to get any interest,” or “What you want isn’t feasible within the time frame you want.”
Then again, perhaps better than having the hackers provide this feedback, we could have the marketplace owner provide instructions to clients and then have an approval step wherein this type of feedback is provided to the client prior to any hacker seeing the contest.
The type of contest would probably gravitate toward contests that can be performed “off site,” or without access to the client’s data, website, etc. It would need to be the type of thing a marketer could do on his or her own, independent of the client. There might be some soft areas here, where the hacker says “I’ll need you to create a landing page on your website that I can drive traffic to…” but the model would lend itself best to hacks where the hacker can do her work without needing to coordinate with the client in any way.
2. Contest goes live. As with Kickstarter, the contest goes live and is public on the marketplace website. The contest is live for a certain amount of time to receive proposals from hackers. Maybe it’s live for a few days, or a week, or two, or a month. Whatever the client wants. Data would provide insights over time as to what is most effective. The contest would include a timeframe for completion, and prize money. The client could give out a single prize for a winner, but it would probably be to their benefit to have multiple prize levels. And I suspect the marketplace would want to limit the number of proposals that can be accepted to the number of prizes. Here’s why.
Let’s say your contest is offering $5K for the 1st prize to get 10 placements in top tier media publications within two months (Btw, this is just one example. The goal could be to drive a certain number of app downloads within a given time frame, increase sales by %, or it could be much more high level and just express a challenge or problem, such as “We need more customers.” Then let the hackers give proposals as to how they’d fix that issue or satisfy the need). If you only offer one prize, but you have 10 participants, you’ve just guaranteed that 9 of the 10 participants are going to be ticked when the contest is over, just as some of the designers for 99designs are left unfulfilled at the end of their contests. With 99designs they don’t have much of an option–people don’t need two logos, two book covers, two website designs for the same website, etc. But with marketing, the more the better.
If three prize tiers are offered, then here’s what happens:
a. Three proposals from hackers are accepted.
b. Every hacker knows he/she is going to win something.
c. The client gets the results of three hackers, rather than one. This is key–all three hackers are trying to get 10 placements. If one hacker gets 10, another 6, and another 4, then the client walks away with 20 placements, rather than just 10. Sure, the hackers who got 2nd and 3rd places aren’t going to be thrilled, but at least they got something and hopefully covered any costs they incurred. It’s an improvement over the 99designs model, at least.
3. Hackers submit proposals. Hackers would submit their proposals to the client. I suspect these would need to remain private since otherwise some unscrupulous types would just go around copying existing proposals.
4. Client chooses proposals. The client looks through the proposals and chooses those that look the best.
5. Hackers go to work. Updates would be posted to the site. Publicly? I’m not sure. Would the results of one hacker be visible to another on the system? That would seem to foster competition, but would there be an incentive for hackers to keep their information private from each other? Maybe. Something to think about.
6. Contest ends. Contest ends, client has their results, hackers get their money. There are some challenges/questions here as well.
a. In the aforementioned example, what if one of the hackers gets zero placements? Why would he get any prize money at all? He shouldn’t. But what if he gets 1, or 2? Perhaps the client would specify a minimum threshold for getting anything. As in “You must get at least two placements otherwise you don’t get any prize money at all.”
b. How would “top tier publication” be judged? The client would need to specify as part of the contest.
c. What if there is a tie? This would need to be specified as part of the process of setting up the contest. Joining the two prizes (1st and 2nd, or 2nd and 3rd, etc.) and splitting them equally seems like the straightforward solution.
- How would payment/reward work? There would need to be an escrow account set up with prize money deposited when the contest goes live.
- How would the marketplace make money? By taking a percentage or charging a flat fee per contest.
- Could a client cancel a contest? Under certain circumstances, perhaps. Something else to think about.
- Could these contests be the future of marketing? No way. Such contests could satisfy a certain niche need for quick results for an easily definable goal, but wouldn’t replace the kind of long term marketing almost all companies need to produce sustained results.
This is just a rough idea at this point. What other challenges do you see with such a business model? What questions do you have? Would you use such a service?
Update: Anyone interested in this post may be interested in this service launched by some TechStars folks: GrowthGeeks.Liked it? Share it!