Welcome to the 89th edition of Heartcore Consumer Insights. Curated with 🖤 every two weeks by the Heartcore Team.
If you missed the past newsletters, you can catch up here. Now, let’s dive in!
Viral marketing is what happens when people share a product or content. It’s consumer-spread growth. What viral marketing isn’t is just one thing. It’s not all viral social media posts. In fact, content virality, the kind that gets shared on social media, is potentially the least important type.
4 virality types exist:
Pull virality: when users invite others because doing so improves their experience. Slack, PayPal, and Facebook are all better with others. Spotify is an example of well-integrated pull virality. You can use Spotify without other people, but it’s much more engaging when you can share your tastes. The good news is that because you can build pull virality directly into your product, you have a lot of control over its implementation. You should factor in viral cycle time (how long it takes a user to invite others to a product). Because VCT needs to compensate for churn, it’s a vital element of growth - even though it’s not discussed nearly as often as k-factors.
Content virality: if your product isn’t innately shareable, or if it’s not used frequently enough to build a habit, content, and word of mouth are your best bets for going viral. How to create excellent content? (a) Reverse engineer popular content in your industry and use tools like BuzzSumo to identify the most shared or upvoted pieces of content, (b) Leverage your exclusive data (e.g OkCupid uses its own dating data to create blog posts, people share them, and major media outlets quote or link to them) (c) Create content that’s authentic to your brand: look at existing viral content for inspiration - but don’t try to copy it if it doesn’t fit your brand’s mission, voice, and values.
Word-of-mouth: people usually think this type of virality is largely out of their control. That’s partly true, but there are some things that are under your control. Get close to some of your customers. That might mean your top customers, your influential customers, or anyone you want to show a little appreciation for. Do niche community outreach: if you’re targeting real estate developers, you might write an opinion piece in your local paper about a recent development, then email the link to your local real estate association. Make your customer experience as remarkable as possible, and make it personal: Spotify’s end-of-year recaps of individual users’ listening habits got shared over 60 million times in 2020 - among 90M users. Personalization can be a powerful catalyst for virality.
Push virality: this is similar to word of mouth, except that instead of hearing people talk about a product, you see it, like when you see someone wearing AirPods, and that makes you realize you’d really like a pair too. According to the mere-exposure effect, people develop a preference for things because they’re familiar with them. That effect is at the root of marketing strategies like influencer marketing, guerilla marketing, out-of-home ads, and really all standard ad campaigns. It’s why marketers use “impressions” as a metric.
Bear in mind: virality is all about product value. In fact, core product value is essential for all virality types. If users don’t love your product, they won’t pull or push others into it. They won’t talk about it. They might share its content, but those shares won’t result in retained users.
As product builder Josh Elman puts it, “Whenever you’re thinking about engineering virality, you need to be sure that it’s reaching the right people, gets them interested for reasons that align with the intrinsic value of your product, and leads them to the right actions.” Everything goes back to your product. And the value users get from it.
Highlights from the third edition of the Marketplace 100, a ranking of the largest consumer-facing marketplace startups and private companies by a16z.
In some categories, the marketplace dynamic tends to be “winner takes all” or “winner takes most”: groceries is one example that tends to be “winner takes all” since it’s more difficult to multi-tenant on the supply side, and supply is fairly concentrated. Instacart made up a whopping 71.5% of the entire Marketplace 100 list’s GMV last year and represents 64.2% of marketplace activity this year. Some other examples of possible “winner takes most” categories below (categories that have only one company on the list):
Gaming and Shopping benefitted from a “new normal,” even post-vaccines: time spent in games saw a huge increase in 2020 and somewhat surprisingly, continued to rise in 2021! Many consumers have now developed rich in-game personas and relationships that they won’t leave behind. Similarly, collectibles have seen a massive boom during covid, which also appears to be lasting. Quarantine drove record-high sales for tabletop games, like Dungeons & Dragons and Magic: The Gathering. This boosted interest in cards for these games on marketplaces like TCGplayer (#12).
The Rise of NFT Marketplaces: while on-chain crypto transactions aren’t picked up by credit card panel data, NFTs were a huge and important part of the consumer marketplace story in 2021:
The Future of marketplaces: 2.0 marketplaces that have baked in buyer or seller tools that make them a more attractive platform are gaining ground. Example: ResortPass (#60) focuses on letting day guests book amenities at resorts but also provides software to help resorts upsell more services to overnight guests. The additional value these kinds of marketplaces provide outweighs any value the buyer or seller would get from trying to arbitrage across platforms. Especially in the fast-growing categories with expanding TAM driven in part by new consumer trends, this kind of business model innovation could have more impact than we can see in the data today.
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🇪🇺 Notable European early-stage Consumer rounds
🇺🇸 Notable US early-stage Consumer rounds
🔭 Notable later stage Consumer rounds
🍭 Notable Consumer Exits
Heartcore Consumer Insights is a weekly newsletter covering notable consumer rounds and exits and top content in the B2C space.