Marketing Revolution: How To Win When Everyone Is Using AI – Neil Patel | INBOUND 2023

So there's probably been a lot of talks about AI. Some of you guys may be sick about hearing about AI. And today I'm going to give you something a little bit different. Instead of focusing on AI, I'm going to teach you guys how to win. When everyone is using AI and it's a simple strategy and a concept, it's not that complex. Anyone can do it. You know, we're here in Boston with some of the smartest colleges in the world. Harvard, mit. I wasn't smart enough to get into any of them. So if I can use this strategy, all you guys can. So my name is Neil Patel. I'm the co founder of ad agency called NP Digital. Work with a lot of different clients, won tons of different awards, you know, and I've seen a lot of things, we've proven that. We've taken a look at a lot of the data that these enterprise companies are using and we figured out patterns from it, right? So today, when I break down how to win when everyone's using AI, keep in mind it's coming from a place where I'm seeing a lot of data, what big corporations are using. Because most of our clients at NP Digital are Fortune 100 or Global 5000 companies. The first thing to know is, and you guys know this, AI is everywhere and it's evolving super, super fast. And if you look at the study from McKinsey, pretty much around 50 to 60% of companies have adopted AI over the past few years. And that's a lot. But the big change here, and this is nothing new, is actually the shift to the mainstream. What's happened is Chat GPT has made it where my mom and dad can now tell me how to do my job better. They literally log in and they were like, neil, did you know this? And I'm like, mom, did you know that or did chatgpt know that? And she's like, well, I know it because I read it from Chad GPT and it's come to a place where it's so mainstream that people are using it for research or learning anything new. If you look at how long it took Netflix to gain over a million users, it was literally, you know, if you look at the time frame, it was literally 40 plus months while ChatGPT was five days. Just think about that. Five days. They beat Instagram, they beat Facebook, they beat Twitter. The only one that I think that beat ChatGPT was what is that new social app called from Facebook Threads. And I already kind of forgot the name. So it shows you how many people are still using it? Probably not trying to throw shade on threads, but I think we all went back to X or Twitter. And ChatGPT or OpenAI is one of the most popular websites on the Internet, at least according to similar web. I believe it ranks number 26 from a global rank perspective. Could change day to day. The last time I checked, before I had to turn in my deck on to HubSpot, it was number 26. And with AI, it's evolving at a really rapid pace. It's just like there's weeks that go by and it's like, have we really progressed this fast in such a short period of time? Look at Mid Journey and how they evolved in just 1.4 years. The image to the left versus the right is a massive difference. You're not going to use the image to the left in a marketing campaign. Image to the right looks like, oh, you paid money for it. Nope, use Mid Journey. But here's the thing. I will not just transform marketing, it will cause a lot of problems for marketers as well. Anyone want to guess what the number one problem is? It's what I call the Waldo problem. Have you guys seen Where's Waldo before? Right, the person, red and white hat. Funny story is I once lived in Seattle and for a gift, someone gave me a Where's Waldo photo. It was a good friend of mine and they convinced my concierge to let him in and they hung it up in my bathroom. And instead of Waldo, the face was of me, but in a red and white striped shirt with a hat. So then every time someone went to go pee in my bathroom, pee ended up everywhere and they laughed and I had a cloth clean it up. But the problem with marketing is if we're all using the same technology, how do you really win? Content will look alike, you know, if you tell Chad, GPT or Bard, hey, how can I improve conversions on this page? And we've asked them that many times, they start giving a lot of similar suggestions. So if everyone starts making the same changes, how do you make yourself stand up from the crowd? And with AI, there's a lot of risk. People believe that their content won't be optimized for SEO or that AA could provide inaccurate information. You guys hear about the lawyer who got into trouble by using ChatGPT for his case? Well, you did. Now don't do it. A lawyer got in trouble because there's things in there that was inaccurate. Probably wasn't a good lawyer in the first place. Content will also sound too similar you know, back in the day when I was a marketer, we had something called a content so spinner. You upload a few articles and it outputs something new. AI is a modern version of that in which it scrapes the web, looks at all the old data, and creates something new, but it's basing it off the old data. So how are you going to really stand out and separate yourself? And when. When everyone's using these kind of tools and they're using it, when it comes to at least marketing for creating content, analyzing their data and analytics. And check this out. All right, be honest. And I want you guys to look out, look around the room. How many of you log into your analytics at least once a week? Literally raise your hand, you'll be shocked. Okay, look around the room. It's less than 10%. And check this out. How many of you log into your analytics, raise your hand, and make changes based on the data at least once a month? My guess is 50 people raise their hand. 60, 70, maybe. Most people don't log into their analytics, and if they log in, they don't really make any changes. With AI, that's going to change. People are going to start making changes based on what the AI tells them. They're also learning how to do things and conducting research. So if everyone's using AI, what's left? Well, whether you love her or hate her, you could build a personal brand like the Kardashians. They done exceptionally well. I know a lot of people talk trash on them, but you know what? They've done exceptionally well in business. Can't knock them for it. Whether Kylie Jenner is a billionaire or not, she's done well with her Kylie cosmetics brand. But to build that personal brand like Kylie Jenner or Kim Kardashian or anyone who's popular on social media, there's this X factor, and I don't care what anyone tells you. It's a big hit or miss game. It's not just about right timing. It's about do people resonate with you. You know, I once went to a conference and I was talking to this guy named Perry, and Perry used to run this event called Digital Marketer. And I was like. And they had a, you know, their own event called, like, War Room. And Perry's like, you've done a really good job building your personal brand. But Perry's done a lot of the stuff I did, and so, so has his partner, Ryan Dice. And Perry's like, you know what? I think's worked for you? That didn't work for us. I was like, what? They're like, you're that token nerdy brown dude that people can resonate with. I can't replicate that or other people can't. It was just my genetics. Just like I don't have hair. Right. But there's that X factor in branding. It's just like what makes that dude on the longboard drinking cranberry juice going to work super popular. You guys know who I'm talking about. It was a while ago, but still, there's that X factor. There must be another strategy that works that doesn't have to do much with AI and there is. We use it to build our ad agency NPD to over nine figures a year. And we ended up getting to number 21 on the Inc 500 list of five. First year that we got on there and our team was really happy. I wasn't so much. I'm like, 21's a useless number unless you're playing blackjack. I'm like, it's not even in the top 10. But, you know, we digress. My team was really happy with it. I had a fake celebrate to show enthusiasm, but it worked really well. And it wasn't just me who used this strategy. Actually, Dharmesh at HubSpot used it before I did. I wasn't the first one to come up with it. And HubSpot used it to build a 25 plus billion dollar company. Again, they could be worth more, a little bit less. I don't know what their latest stock price is, but this was a screenshot. Call it maybe a month or so ago, but either way, that's a massive company, right? HubSpot used it much more effectively than I did. They've grown much faster than I have. They've been around longer, but still, their numbers are extraordinary. Even if you look at their earnings, they're growing at 2020 to 30% per year, even in this economy. So what's the secret? And no, it's not AI It's a simple concept and you can do it in both B2B and B2C. You give away something for free that people are used to paying for and you sell them something bigger. All right, And I'm going to give you an example of it. HubSpot. How many people here pay for HubSpot or use their product? Almost everyone should be raising their hand. All right, Website grader is by HubSpot. Have you guys used website grader? Raise your hand if you have. Okay. You guys should all check it out. Most of you Guys did not raise your hand. Check it out. It's a free tool from HubSpot. They don't sell you anything. There is no freemium that, oh, use this feature and you pay for more website grader. They just give it away for free. Do you want to know why HubSpot gives it away for free? It causes a lot of people to become into their ecosystem. Once they get you into their ecosystem, what do they sell you? HubSpot. And it's not just them. Gillette has run promos where they give away free razors, where if you buy a razor, you only need one handle, but what do you need to keep replacing the blades? You're giving away something for free, and you're making money selling something that's much bigger in which razors, Right. There's much more money to be made continually selling the razor blades than there is to sell the handle. Now at NP Digital, the strategy we use, I started the company a little bit more than five years ago, and we were really fast to grow in the nine figures. We did it without venture funding. And I was like, wait, more people spend money on marketing services than marketing software. If you look at marketing services, and I have a chart on this later on, and marketing labor, if you combine both those two, it makes up roughly 49% of marketing spend. The rest is on tools and marketing ads, like ads like on Google or Facebook. So I'm like, wait, if I give away a lot of tools for free, even if they're not as good as a competition, but if I give away stuff that they're used to paying for and just make them 100% free, free, I can upsell them on something that is a bigger pie. The bigger pie for me was marketing services. Now, I could have run this playbook on marketing software, but someone already ran it before me. HubSpot, right? They give away marketing greater for free. Sell them on HubSpot. And it did really well. We started climbing up in visitor count, and we started generating a lot of leads. And we did this with two or two products, and I'll show you that in a bit. And we were generating a lot of leads. Now in the chart, it looks like our leads went down, but we were collecting leads from a global basis, like in places like Croatia and Romania, all great places and countries. But we weren't. We didn't actually have staff to service companies in those regions from a service space. So what we started doing is we stopped putting those leads into our CRM to save money. Less records, you start paying it Starts costing money. You have a lot of sales reps. I was like, there's no point in passing in all these leads if we're not going to call them passing the leads for the regions we actually service. But I can bump it back up to 60 plus K leads a month. So here's how the model works, and I'm going to break this down again. You can do this in both B2B and B2C. First, you find a big TAM. TAM stands for total addressable market. All right, HubSpot is in a big market. They're not just in marketing tools. They're also in CRM. They're taking a slice out of Salesforce as well. That's a big market. If you find something that's really massive, if you give away something for free, you still have this massive thing to sell. And then that leads me to step two. You give away something for free that people are used to paying for. Now, here's an example of this. A lot of you guys work for a company or have a business, use payroll software. Paychex is a massive payroll company. It's $40 billion. But you know what else every single employee wants, at least in America? Health insurance. UnitedHealthcare is worth more than 10 times from a market cap than paychecks. They're not the only health insurance company in town. Literally $451 billion market. Over $40 billion market. Payroll software does not have to be expensive. It could be free. You create a free payroll software and you get businesses onboarded. You start selling them on insurance, health insurance, life insurance for their employees. 401k. You see what I'm saying? You give away something for free that people are used to paying for because everyone's used to paying for payroll software. And you make money charging for something bigger. It's an amazing mousetrap. Right, Gillette? Same thing. Let me give you away free razors, because I know you're going to end up buying a lot of blades for me in the long run. Another example, we did this at NP Digital. If you look here, 23% of marketing spend is to agencies. 23.7. Another 24.9% is labor. See, people pay my ad agency for agency services and labor. So that's making up close, let's call it 48, 49%. Somewhere around there, a little bit less than 50%. That's a big market. So I'm giving away a lot of marketing technology for free, which is around 25% of the market, to try to gobble up Another bigger portion. And my competition is wpp. Omnicom publicist. Right, the big holding company. They're not doing it. It's a very unique strategy that allows me to take away clients from these guys. Step three, Create your free product or buy it. We bought a tool called Ubersuggest back in the day for around $120,000. I put in around 3 million to $5 million in it for shits and giggles to try to make it better. And I didn't end up leveraging this strategy on purpose. It was, it was more of an accident. I was going through a midlife crisis. I'm 38 now. I was much younger back then, but I was like, what is there to do in life? You know? Didn't really care for a big home, didn't really care for Ferraris. I drive a Honda Odyssey. Love that thing. You push buttons, the doors open, your kids hop right in. Such a cool car. They should give me a free one because I could be a spokesperson. But, you know, so I was going through this midlife crisis. What should I do? So I was like, you know what would be fun? Give away a lot of the features that my competition charges for or software priors for free. It was just literally a random experiment. And I was spending millions of dollars because I didn't know what else to do in life. And it just became more and more popular. Started collecting a lot of leads and my salespeople at my ad agency were like, hey Neil, let's call them up. Do you mind if we start calling them? He's like, sure, do whatever you want. And I was like, huh? It really quickly turned into 40% of our new customers. Nine figure agency generating 40 plus percent of it from one tool. Not tool revenue, but literally sales reps calling up people who are using the tool. Be like, hey, you're using the tool. Do you want us just to pay us and we'll just do everything for you? People are like, yeah, sounds good. And we're getting leads from companies like Venetian and Wynn, which are hotels, all the way to Wyndham, which is another hotel, to Honda and Mitsubishi, to Nike, to Target. It was a very effective strategy. So effective that we bought another tool called Answer the public for $8.6 million and started rinse and repeating the Playbook because it had roughly 70% of the traffic that Uber said us had. They just never ran that playbook and they wanted a X Ebitda. So in other words, we, we spent eight times profit by. But we didn't care. We overpaid for it on the buy, but we knew the moment we picked up the phone we would make way more than our money back within roughly 12 months. And the numbers ended up panning out. It didn't take us 12 months. We were a little slow to integrate, just due to headcount and bureaucracy. Once you grow a company to 4 or 500 employees, 1000 plus employees, et cetera, you start having layers. Things just move slower. And if you're going to buy it like I did, make sure you look for tools or anything that's free out there with brand queries. Brand queries is when someone's doing a search on Google. A lot of times they'll type in the domain name in the URL bar or just type in the brand name in the URL in the search bar. If they type in the brand name, that means that site has good brand affinity. Those are good buys. Typically, if you're going to build it, you can kickstart it with things like product product, huh? TechCrunch. Just getting press out there. And if you don't wanna build it and you don't have the money to buy it, you can use sites like CodeCanyon or you can use AI tools to help you start building the tools. ChatGPT coded the gang of Pong in 60 seconds. You can do this with literally anything that's related to your ideal customer. Now step four, once you've built it, you gotta keep adding features. I love this quote from Peter Thiel. First mover isn't what's important, it's the last mover. Like Microsoft was the last operating system and Google was the last search engine. In other words, if you're the last mover, you can see all the mistakes others did and then adapt based on that. So when I bought ubersuggest, the first version that I adjusted it to was, hey, let me just give you a lot of keyword data. I did a deal with Semrush, took their data, popped it in there, showed it to everyone. People weren't too happy with it, got feedback. Then I started adding in more features like a keyword overview, giving you more ideas for keywords, telling you who's ranking on Google for a lot of terms. And then I just kept adding more and more features from my competition. The Playbook was simple. Last movers advance. You take what other people are charging for and you literally give it away for free. As long as you're competing, cost is very small or what you're selling is so massive it makes up for your cost. And then I just kept going because I was crazy. This was during my midlife crisis phase. My wife also always makes a joke with me. She's like, if your midlife crisis was when you're around 32, what's going to happen when you're 50? And I said, honey, you'll find out you married me through thick and thin, so, you know, she'll have to deal with it. So then I started adding more features. 4.0. Hey, let me give you content ideas. I took this and jacked it from Buzzsumo. And people could hate and say, hey, you're copying others, but I'm not the only one who does this. The reality is, what did Facebook do to Twitter? They copied it with threads. What do you think Instagram did with Snapchat? What do you think they did with TikTok? What do you think YouTube did with TikTok and Instagram? They're like, oh, YouTube shorts. Oh, Instagram reels. All I'm getting at, this is the way business works. Whether you like it or not. It's reality. And if you just keep adding more features that people are used to paying for, like I did here and here and here and here, as you can see, I just kept going and going. It went so crazy that I stopped blogging and saying, hey, Ubersuggest 8.0, and I didn't do 9.0. This is too much. But if you look at all the features I added, it was just so many. I started building such a massive audience and I could sell them on almost anything related to anything marketing, because that's what they're using the tools for. And again, you can do this. In B2B. B2C, there was a company called Aura Brush, those selling dental products. Now, the company eventually ended up selling and what Orabrush did was saying, free tongue cleaner. All right, free tongue cleaner. But then they would get you be like, hey, your tongue isn't the only problem with bad breath. It's also the toothpaste and the mouthwash and all these other kind of things. And they would just sell you on all this other stuff. It was a really good Trojan horse. And then once you give away a lot of stuff for free, you need to either collect leads or emails and you keep selling them on other stuff. So, for example, we collect in the last 30 days, 148,000 emails. And with those emails, we promote a lot of our products and services. Now, the key with this strategy, and this is what most people get wrong, is what you Give away for free has to be a value. So for example, if you are creating a photo product where people can print pictures and all this kind of stuff, you're selling a camera and you're just like, I'm going to create a free Photoshop competitor. Well, there's a ton of free photo editing apps out there. Canva Photopea. So if you're trying to sell cameras and creating a free photo app, it's not that effective because people have done it over and over and over again. But on the flip side, if I'm selling health insurance, if you Google right now for a free payroll solution, there's not tons of options. But anyone who uses payroll, assuming their company grows, eventually they'll have to start thinking about health insurance insurance and it's your Trojan horse in there. And look, with AI, AI will make your marketing more efficient, but it won't really help you stand out. And it doesn't mean that you shouldn't use AI. I'm not here to knock it. I do believe it is the future. I do think it's great. Anyone who's not leveraging AI is making a big mistake. But relying on AI as your sole solution for everything marketing related is going to be a big failure. And the reason being is a lot of companies already doing this. I literally speak, no joke, at least four times a month. Some days it's so bad that I'm flying from country to country. Like next week I got a break because I had to go to some school thing for my daughter. But the week after I head to Brazil and then from Brazil, Brazil I head to Mexico and then from there I head to Florida. And then from Florida I head back home to see my kids, home for a few days and then back on the road. And when I'm in all these countries and I travel all around the world meeting with large corporations from the Coca Colas to the Hondas to even the startups that are up and coming or the ones that have raised a billion plus dollars in venture capital. A lot of them believe that hey, with AI we can do less in marketing and just have the tools do everything for us and we don't need to worry about the rest. Oh, Google will just release AI in their ad platform, so we don't need to worry about having people help manage our ads. And a lot of companies are starting to think this way. But this is going to be a big mistake. I love Google. If you ever have worked with any of their ad reps that help you with AdWords, you'll find that it usually doesn't produce as good as results as you just doing it in house internally or hiring another external consultant. So if you're using AI to just be your savior and do everything for you, you're making a mistake. But if you use it as assistant, something to help you become more efficient, something to help you with your research, something to help you get more done out of the time, or analyze your analytics and figure out what's wrong. These are all great things, but you need to figure out a way to differentiate yourself. And the easiest way that I see is give away something for free that people are used to paying for and not something that they're used to paying a dollar for. Ideally something that they're used to paying 10, 20, 50, $100 for. The more expensive it is and the more you give it away for free, the more organic and word of mouth you're going to end up creating and virality you're going to end up getting. And you're like, huh, this is actually easier than doing marketing. And what I found is cheaper than buying ads. If I had to buy the Traffic from Google AdWords, we did a calculation on this that we're getting from all our tools to generate those same amount of leads. It would cost us, no joke, $11 million a month. It would be hard to make the economics work. That's the power of giving away something for free. That's how you stand out when everyone else is using AI and is doing the same Waldo stuff as everyone else. Thank you for your time. I hope you guys use it. Best of luck.