If you work in the digital marketing field, you might have stumbled several times in the articles, videos, and interviews by Neil Patel. Creator of the blog neilpatel.com, he founded several startups operating in the digital marketing space (like CrazyEgg and HelloBar). He has built his success in part by creating start-ups that operate according to the Subscription-based business model. Indeed, those are SaaS (software as a service) tools that for a monthly fee give you access to those services.
However, recently Neil Patel has been experimenting a lot with free tools. There seems to be a reason for that, which he recently explained in a blog post. Whether or not his marketing strategy will prove fruitful, it is an interesting perspective worth exploring.
In the marketing world, we all love scalability. The service and consultancy business is unsexy for most. Indeed, everything you do is limited by the number of hours of work you put in or by the number of people you employ. Yet, that is not what Neil Patel thinks so far. After making money by building tools for marketers.
Neil Patel is now taking a risky yet exciting perspective. He is still experimenting with marketing tools, but to build another kind of business: a multi-billion dollar agency.
As Neil Patel specified in a recent blog post:
If I want to grow my traffic to the level of Hubspot’s blog and get over 6 million visitors a month I would have to write content on things like “how to edit videos.”
There are two problems with content like that. First, I wouldn’t be able to monetize it.
Second, and most importantly, I am not an expert when it comes to video editing so I shouldn’t blog about it.
I’ve also thought about writing about entrepreneurship, but I don’t really enjoy it as much.
And because of that, my lack of passion will show in the content when I publish it.
In general, if you aren’t passionate about what you are writing about, don’t waste your time. Your content will suck, and people will be able to tell.
So, my team and I made a decision last week that I should only write one blog post per week, share my personal experiences, and get away from writing generic marketing content that I’ve been blogging about for years.
Plus, it’s more fun to share stories than it is to write a blog post showing you how to use Twitter.
But there was one big issue.
I couldn’t move away from writing one blog post a week because the blog is what generates all of the leads for Neil Patel Digital(my ad agency).
I had to find something that could continually help generate more visits without me requiring to blog 7 days a week.
And although it took me over a year of experimenting…I found it.
What is he referring to?
Tools as marketing
Neil Patel is popular for his – what might seem crazy – experiments. One of those experiments consisted in buying a tool, Ubersuggest and make it available for free in the tools section of his site.
This is a tool for keyword discovery and suggestions:
It is simple to use, and it has an intuitive UI:
How much do you pay for this tool?
The power of free and open
As Neil Patel specified:
So, I decided that it would be a fun experiment to make Ubersuggest into a much larger tooland just give away everything for freethat you are used to paying for 🙂.
Unlimited usage, no login required, for free.
Why is he doing that?
By making something for free I won’t have to do much marketing at all to generate the visitors.
It’s easier than writing 7 blog posts a week and all I have to do is take what people love and pay for and give it all away for free.
What’s the point?
Grow a multi-billion dollar agency
My model isn’t as scalable and it requires more headcount, but it can generate much more money. Just look at ad agencies like WPP and Dentsu. They generate billions in revenue!
Why would people use a free tool for their professional activity?
Get the single feature that people pay for and make it free and open
The exciting part of the story is that Neil Patel has a clear strategy in mind, which can be summarized as it follows:
Get the single feature from a tool that people are paying for, replicate it and make it available for free and openly
His thesis is that most people pay for a tool because there is a single feature they like the most and they use that tool for. If you’re able to replicate that you’ve won.
In short, in the business world, we’ve learned to believe (especially in the business classrooms) that the first mover will win. While this might have been true in the past decades and in more conservative industries; that doesn’t apply to technology.
In fact, in the tech world – who arrives last – might have a considerable advantage. Take Google; it wasn’t the first mover in the search industry. The search engine from Mountain View was one of the latest entering the search market. Yet it dominated it. Why? Of course, there were several reasons for that. One of the main reasons was its ability to focus on search and build the best engine, which in a way capitalized on the experience of the first movers.
A bold yet expensive strategy
As Neil Patel explained in the same blog post:
I thought I could do this for under $100,000 in development expenses and $15,000 a month in server expenses. Boy was I wrong.
I’m already spending around $122,312 a month on this tool and I don’t see the cost going down anytime soon.
My server bills alone have gotten up to roughly $20,000 a month and it’s expected to grow to $80,000 a month within 4 months.
A cost like that can be justified if you’re able to create a business that scale or at least that has such high margins to give you enough flexibility in keeping the tool open and for free!
Whether or not Neil Patel marketing strategy for SEO domination will succeed, it is interesting to see this kind of bold implementation. Of course, as specified in this article, he might be able to do that thanks to the financial resources he has available. Yet I believe three points make this strategy compelling:
- A tool as marketing is the next step after content marketing. Both are quite expensive, and both are scalable. However, if you exhausted your ability to scale up with content, then experimenting with tools might be fun and worthy
- Free and open can make the difference between a small business and a multi-billion dollar company
- People might be more focused on using a tool they need rather than being loyal to a brand. Also, in that same tool, users might only value it for the main feature, rather than for a set of minor features
It will be fun to see how the story unravels.
Other tools and resources for your business:
- What Is a Business Model? 30 Successful Types of Business Models You Need to Know
- Business Strategy: Definition, Examples, And Case Studies
- What Is a Business Model Canvas? Business Model Canvas Explained
- Blitzscaling Business Model Innovation Canvas In A Nutshell
- What Is a Value Proposition? Value Proposition Canvas Explained
- What Is a Lean Startup Canvas? Lean Startup Canvas Explained
- What Is Market Segmentation? the Ultimate Guide to Market Segmentation
- Marketing Strategy: Definition, Types, And Examples