Recently I had the pleasure to sit down with Erich Joachimsthaler, the CEO and Founder of Vivaldi in his “Business of Platforms, Video Podcast Series”. Amongst other things, we discussed:
· The transformation of marketing into a growth engine
· The need to drive growth across the brand, the user base and user value
· The principles of demand creation and demand capture
· Understanding user states and user value
· … and more
I enjoyed our chat, hope you enjoy it too. Thank you Erich and Agastha for inviting me and making this happen.
Erich: This is Erich Joachimsthaler, the CEO and Founder of Vivaldi, and I am honored to be joined here by Mayur Gupta, the Global Vice President for Growth & Marketing at Spotify, where he is driving the vision and strategy to establish a connected marketing ecosystem and growth machinery for Spotify’s multi-sided marketplace that connects the right artist with the right fan through programmatic discovery and accessibility. Which is right at the heart of our topic, the Business of Platforms.
I’ve been following Mayur throughout the years,and am very pleased to be presenting to you this innovation thought leader, and marketing technologist. What I find particularly compelling about Mayur, is that he has led digital transformation efforts across consumer goods, healthcare and B2B companies.
Today, we will be speaking about the role of marketing in building platforms, how data plays into the mix and I’m looking forward to exploring Mayur’s secret sauce in building a platform business.
Erich: How did Spotify get fans to originally engage with the platform? (Chicken & Egg problem of building platforms)
Mayur: That’s interesting Erich, you are right it’s quite a chicken and egg problem; whether to build demand or supply. Daniel’s recent interview in the Fast Company actually talks about the first 10 years of Spotify focusing on that side of our marketplace, building a platform that will allow all millions of fans get access to world’s music. Be able to discover what was best for them. There have been many strategies on top of a brilliant product that lead to the growth – one of the notable ones were part of this article, in December 2013 we launched Spotify free on mobile, that completely changed the trajectory. The heart of that shift was data that told us during the dip in usage we saw during summer vacation was because users were staying away from the computers.
But fundamentally it’s like Daniel said in the interview, “Success for us will be determined by our ability to move faster than everyone else in this space.”
Erich: What was the role does marketing play in how fans engage with the platform?
Mayur: At Spotify we believe the ultimate user experience happens at the inter-section of product, content and marketing. It’s a cross functional effort that no single part of the organization can deliver in isolation.
At a stage in the company where we have of course proven the product-market fit in many markets, marketing’s role now is about “Demand Creation” and “Demand Capture”. If you think about your entire addressable audience in a series of concentric circles, the inner circles representing the users you’re more likely to have, or you deserve to have; I think about Demand Creation as an ability to identify new audiences in those outer circles who would NOT have come otherwise. Of course it influences and inspires the ones who re are already aware of Spotify and just need a nudge but more importantly it’s creating demand for the ones further away who re truly incremental. This is where we leverage the power of our brand, it’s impact on culture to connect with those audiences, to apply our understanding of their needs and barriers to connect with them at scale.
Demand Capture is the more scientific part of marketing that is intertwined with data, content and technology to capture that demand, in an always-on way, – it’s a constantly running engine that “bring them home”. You apply the science to inspire these users to enter the Spotify ecosystem and use the power of your content to keep bringing them back one more time and one more time. Of course, underneath that engine lies a lot of data, lot of experiments to see what works, with what type of user, who is coming back and staying active vs who is slowing down, how do we engage them in a way that is unique to them and so on.
Erich: You’ve said that a large part of your job is to inspire “more fans to listen to more music more often.” What is the secret sauce? What types of learning effects, viral effects and network effects do you tap into?
Mayur: Not sure if there is a single secret sauce other than this underlying belief that we have to continuously innovate and take risks and move faster than everyone else. Of course, we are sitting on top of a brilliant product that has semblences of these growth principles… For instance, a good percentage of our users are still organic, coming through word of mouth which is phenomenal, …. the product inspires a network effect with more collaborative playlisting and sharing options, so you know having your friends on the platform will elevate your own experience; subscription plans like the “family plans” inspires network effect too.
From a marketing standpoint, I look at the Demand Creation and Demand Capture framework as a loop effect as well, it isn’t linear. We apply science to focus on the quality of the users who re coming through instead of paying our way to acquisition; that allows more of those users to share and amplify the brand itself; effectively creating new demand for us.. So it’s the art and science of converting paid or performance media into a loop effect.
Erich: With the abundance of data at our fingertips today, how do we parse it to find what’s meaningful and apply it with purpose?
Mayur: That’s an interesting challenge to have right, coming from a CPG world I can appreciate it. I strongly believe the challenge today is not as much the availability of data but the application and transformation of data into insights and action. One of marketing’s mission at Spotify is to derive inspiration through science, it’s making the nuance of art and science a reality.
We do that by putting the “human” at the center, putting in a lot of effort to understand the “WHY” behind the “WHAT”. Data can tell you what is happening but we need to dig in more to understand WHY it happened, move from correlation to causality. We leverage the spectrum of data to connect user’s behavior on and off platform, we believe what a user does on platform is a reflection of their off platform life.. these are inseparable worlds. You connect their attitudes, their psychographic profiles with actual behavior on platform to deliver a more immersive experience.
Interestingly enough, you may have all that but it still does not end there because ultimately you need to just EXPERIMENT, and generate more data and learn and then EXPERIMENT more.
Erich: In a connected world, how do we change the metrics with which to measure brand equity, value creation, etc.? How do you measure success? (Growth outcomes versus activities; new KPI for the organization)
Mayur: I love to talk about measurement right, brilliant times for marketing and marketers, so much change, disruption… The definition of success has fundamentally changed in modern marketing; it’s no longer just about the most witty ad, or just about the number of Gold Lions someone may win; it’s truly about impact, about business outcome .. Marketing is now accountable for growth and that’s the measure of success. Now we define growth across 3 simple pillars (these ladder back up to our framework of Demand Creation and Demand Capture):
· Growing the brand – builds trust, connects with culture
· Growing the user base – user growth, acquisition, viral loops, network effects
· Growing the user value – the toughest part, driving retention, maximizing LTV
These are inter-twined, you cannot isolate the growth of your brand from the growth of your use base; a brand brings trust, it connects your audience with culture, it lays the foundation for you to build off of; something that often gets neglected. But at Spotify we strongly believe in the value of the brand and have proven the quantitative impact of the brand on our business KPIs…
More tactically speaking, we focus a lot on the leading indicators of growth and not just the North Star KPIs that the world may hear about… We have dug deep into how we measure the growth of our brand in isolation and subsequently it’s impact on downstream KPIs…
We focus a lot on proving the “Incrementality of Marketing”, this is part of the growth that would not have happened in the absence of any communication with the world; this is critical for a brand that has a strong word of mouth funnel;
We focus a lot on the “quality of users who come through” because if you don’t do that, you bleed twice. The ultimate outcome for marketing is not limited to acquiring users but to maximize their lifetime value, using communication to bring them back to the platform one more time and one more time, we optimize against retention KPIs … we look at our users not just as active or inactive but monitor the behavior, think about them as power users, core users, casual users and tailor the messaging accordingly…
I will say one thing though —- Not everything is measurable, not everything needs to be measurable in marketing. We believe if we can measure 70% of it, and that 70% we optimize to our forecasted goals, we have the flexibility to apply the remaining 30% that we believe in, just can.t quite measure it yet. And that goes to the sometimes irrational, serendipitous world of marketing that emotionally and cultural connections with the world.
Erich: What’s interesting is that this has permeated other aspects of your business. You talk about shifting your relationship with advertisers from being a publisher to being a platform. Can you elaborate?
Mayur: Music is so emotional and we are intrigued by moods and moments and mind. That is really where the magic happens. More and more brands are buying behavior rather than demographics. We use data to understanding People Through Music, people have such a personal relationship to music. The biggest win for us is when users learn a lot about themselves based on how they stream, how they engage and express themselves through music. These experiences help people discover more about themselves and the communities we live in.
Erich: You’ve talked before about the importance of systems thinking for companies who want to become ecosystem organizations – can you expand on that? What does it take for a company to achieve that?
Mayur: A lot of work, and a lot of breaking down of the silos, breaking down of the fragments. It’s systems thinking because it forces you to go top down and bottom up for everything you do. I feel that’s just an organic side effect of growth, you end up making too many compartments as you grow. Which is also an irony because the very thing that drives your growth when you re small (no fragments) is the first thing you throw out of the window as you grow…
Now of course if you’re a marketplace, that’s not an option. The entire premise is based on connecting the dots, connecting the dots across various constituents, connecting the dots across the different functions within the organization and interestingly connecting the dots within these functions. It becomes an ecosystem of ecosystems… In the micro construct, I feel marketing itself is a sub-ecosystem; that needs to ladder up to the macro ecosystem of the Spotify’s marketplace. But if we don’t think like that, I can start to have silos within marketing. instead of becoming consumer centric, we can so easily become channel centric…
At the end, I feel it helps to have everyone align on OUTCOMES; common set of objectives and that’s the underpinning of building an ecosystem mindset ground up.
Erich: How has your approach to digital transformation and growth evolved since you first entered the industry—what’s the same, what’s different, and what are the most critical points today?
Mayur: You know when I entered the industry digital wasn’t really a word; let alone a thing… I remember using C++ to build stuff and then in college everyone starting opening email accounts on Hotmail, on a dial up modem with the cranky sound… It was like something you could just see from a far distance. Then in the mid 2000s, when I moved from pure technology to the world of Advertising and Tech or Marketing & Tech, these things became like an “island”, you could see it more clearly, it had a meaning, had potential… My experience at Kimberly Clark in many ways a reflection where the world realized that you had to be connected to that island, it started the notion of “digital transformation” for companies that were purely analog in their thinking…
Gradually we all realized that these weren’t 2 things anymore, the world is inherently digital, it’s an inherently digital consumer leading an inherently digital life… so the word “digital” from digital marketing has gone now… all marketing is digital… all companies are digital ..
Erich: You have a unique background in marketing and seem particularly well suited to tackle digital transformation. What would you recommend to people with more traditional backgrounds in marketing? What advice would you give to others who are just beginning in the industry, and perhaps looking to you for inspiration?
Mayur: I grew up looking at a lot of doctors in our family who would constantly have to study, even when they were established seniors in their practice… because there is a constant evolution of viruses in the world, the medical field has to come up with new vaccines to handle those viruses… I feel we are all living in a world like that which is constantly changing, technology has inspired and enabled all of us consumers to drive that change, to drive disruption…. So to be a marketer, you have to constantly evolve, keep learning, keep taking risks, don’t be static…
I would like to think that it’s no longer digital transformation, it’s digital survival and digital existence…
Erich: How has your background in tech helped you stay a step ahead in an increasingly tech-reliant economy?
Mayur: That’s who I am, I still cannot figure if that is good or bad… I think about marketing as an engineer, as a system, I break it down and stitch it.. Now that at times can take the emotion out of marketing which is what I am working on… without that, you may be able to communicate with the consumer but you cannot connect with them…
Erich: That’s all the time we have today with Mayur – thank you so much for sharing your insights on platforms with us today. Before we go, what’s the one thing our viewers should remember from today?
You can find Mayur on Twitter at @inspiremartech