Last month, Intuit, the personal finance software firm that owns Quicken, paid $170 million in cash for Mint.com, a two-year-old personal finance site with 1.6 million users. That corporate embrace comes after much frustration on Intuit’s part. At one point the company wrote Mint a letter demanding “substantiation and evidence” of the rival site’s rapid-fire growth. Compounding the vexation was the cost of acquisition for those consumers, whose numbers are currently growing by more than 130,000 each month: virtually nothing.
Donna Wells, Mint’s CMO and a former exec at Intuit, is a veteran marketer used to the big media budgets she had in previous jobs at Charles Schwab and American Express. At Mint, however, she may well represent a new breed of CMO who is spending very little on brand building and bypassing advertising in the process. Thanks to new social media and communications technologies, partnered with adept PR strategies, Wells showed that building a so-called Web 2.5 brand doesn’t need to cost much these days—and the experience is liberating.
“We built this brand on the cheap. In two full years at Mint, I spent what I would have spent in two days at Expedia,” laughed Wells, who was previously svp-marketing at the travel site. “Mint was my fourth startup, and the tools that are available to me now, even since my last startup in 2000, offer amazing reach and adoption through places like Twitter, Facebook, YouTube, MySpace and iPhone apps. It’s a phenomenal time for a marketer.”
Mint’s start kicked off with a well-read, popular blog—launched in March before the site’s product launch in September 2007—and key exposure when Mint launched at TechCrunch 40 and won top honors. Wells created a Facebook page where Mint now has more than 36,000 fans and attracted a following of 19,000 on Twitter. Free applications like WordPress power Mint’s blog while another free tool, the user-friendly Google analytics, lets staffers track site traffic. Mint does pay for some other off-the-shelf services for its site, spending all of $700 a year.
Wells estimates the marketing costs at Mint over the past two years to be around $2 million. That amount primarily includes salaries for the marketing staff which now numbers five, including herself, and out-of-pocket expenses like hiring an outside PR agency. She also experimented with search initially, spending about $50,000.
“The idea that you need a huge amount in marketing and advertising dollars is simply not true,” said Laura Ries, president, Roswell, Ga., consultants Ries & Ries. “That was a major fallacy in the dot-com boom where companies went out and spent millions and got no benefit. Companies like eBay and Amazon did it by being first at something, by standing for something and having a credible strong idea that generated the PR and word of mouth necessary to get into the minds of consumers.”
As a free money management tool, Mint obviously has a compelling appeal in the current economic climate. But Ries also noted the site’s quirky name and compelling blog, which in a world of forgettable corporate blogs won the award for best blog at the Online Media Marketing and Advertising awards last month. That communiqué reinforces an identifiable voice with the brand that initially attracted 20 and 30-somethings, Ries said, particularly in contrast to the older-skewing Quicken, with a less-defined image given the number or products associated with the brand.
Wells admits she will modify her marketing strategies as Mint goes more mainstream under Intuit but, even with new financial resources, vows to keep using the cheap tools that launched the brand and keep nontraditional media at marketing core.
Other creators of recent popular Web 2.5 brands share Wells’ reluctance to spend on advertising—and it’s not because they don’t have the money. Pandora.com founder Tim Westergren said his four-year-old Internet radio site expects to bring in $40 million in revenues this year, more than double that in 2008. But while he spent “maybe $100,000” on search in Pandora’s early days, he’s not interested in traditional marketing. Instead, he’s focused on customer service and bonding, no easy feat given the 35 million U.S. registered listeners to Pandora’s automated music recommendations. Westergren, a musician and composer, said a primary focus of the site’s marketing, and a major expense for the site, is a team of eight people who respond to every listener inquiry. In a busy month, Pandora’s “listener advocates”’ might deal with 30,000 e-mails, with topics ranging from new site features and new bands to complaints. Additionally, Westergren travels around the country talking to listeners at “town halls” held in coffee shops, community centers and bookstores. (He’s not just interested in what urban hipsters have to say—upcoming trips take him to places like Sioux City, Iowa, and Billings, Mont.) He said that while that might sound “old school,” it’s critical.
“Each town hall includes just a small number of listeners, obviously, but it’s a powerful cementing tool. They become ambassadors for you,” said Westergren, who cautioned about the need to take in the bad with the good. “In this day and age, it just takes a few enthusiastic people to do some damage to you on the Web; there are so many ways to evangelize.”
For his part, David Karp, the 23-year-old Internet entrepreneur who founded short-form blogging platform Tumblr, said more traditional marketing communications couldn’t achieve what his own team could do in viral product design at the nearly two-year-old site.
“We did an experiment with outside PR, but we found people couldn’t explain it as well as we could,” he says. “The marketing is all on Tumblr’s site. We thought, ‘What features can we build, what design changes? How can we get visitors to further engage and share the experience?’ We always looked at the product as inherently viral and designed it that way. As it becomes more social with the Tumblr dashboard (which quickly lets users add other users to lists of friends), you can follow friends, publish and repost.”
Last week, Jinni.com, a Pandora-like recommendation service for movies and TV, launched in public beta. The site’s co-founder, Yosi Glick, who’s clocked in time as a marketer at tech companies like Orca Interactive, said his lack of interest in advertising the new site strikes some acquaintances as odd. “‘How do you do zero-dollar marketing?’ People from the b-to-b environment find that intriguing,” he said. “Is it possible, they ask? It is indeed possible.”
Glick’s optimism about grassroots marketing may be premature. Still, sites like Jinni, along with Tumblr and Pandora, have all the advantages that accompany marketers who are the first in their categories. It’s a lot harder for others who later jump in and play catch up to the pioneers.
But even those companies with a head start like Amazon and eBay ended up using traditional advertising once they became dominant players and needed to protect their leadership status. So while marketers like Wells have launched successful sites on a dime, their experiences may still be the exception, not the rule. Advertising will remain a critical marketing support at launch—and thereafter, some observers contend.
“In general, you need more than one tool to launch and maintain a brand,” contended Allen Adamson, managing director of the New York office of Landor Associates. “If you’re the third one out there (in a category), you’re going to need more. Successfully doing it on a shoestring is not an average situation—it’s more like winning a lottery ticket.”
— Nielsen Business Media