The online marketing model is broken, says HubSpot CEO Brian Halligan

5 Mar 2013

Brian Halligan, CEO of HubSpot

HubSpot CEO Brian Halligan has told that his company’s new European HQ in Dublin that will employ 150 people will in effect be a mirror of its HQ in the States with core engineering and R&D happening alongside sales and business operations. He also voiced his belief that online marketing as we know it is a broken model.

HubSpot revealed last year that it was coming to Dublin with the intention of creating 150 jobs and so far 30 of those jobs are in place. The roles will span software engineering, sales and customer support.

The company provides tools that make it easier for marketers to succeed online using a model that Halligan describes as ‘Inbound Marketing’, which involves selling products using online content as the core component. Some 710 HubSpot tools are used by 8,600 companies in 56 countries.

In addition to HubSpot, Halligan is a best-selling author whose titles include Marketing Lessons from the Grateful Dead and Inbound Marketing, which has sold more than 50,000 copies, has been translated into nine languages and hit No 17 overall on the Amazon best-seller list.

The future of marketing is inbound

Before establishing HubSpot with Dharmesh Shah at MIT in 2006, Halligan already had a fine pedigree as a professional who knew how to grow revenues for software companies. For example, he grew revenues in the Pacific Rim for Parametric Technology Corp from zero to US$80m and at collaboration software Groove Networks – the precursor to Microsoft’s SharePoint Workspace – he grew the company from pre-revenue to US$20m before it was acquired by Microsoft.

Halligan had a brief stint as a venture capitalist with Longworth Ventures but it was while at MIT that he noticed a classmate (Shah) had figured out online marketing in a way that few had.

“I noticed that the companies I was investing in were all marketing the same way. They were sending lots of email and did a lot of online advertising, hiring PR firms and more but I kind of feel that the model for marketing is broken. It doesn’t work anymore.

“People are sick of being marketed to and they’ve become quite adept at getting software tools to block ads and email. So it was getting darn harder for marketers to reach people.

“I noticed my friend Shah was just blogging and he wasn’t spending any money or interrupting people, but he was pulling in people from Google and blogs and social media like crazy and I was blown away by how much traction he had.

“We had this idea that markets needed to transform the way they market. Old school we call outbound marketing and new school we call inbound marketing.

“We created a software platform that basically allowed people to just do it in terms of the social media tools they needed, the blogging software, the analytics, content management system and we packaged it together into a modern software system.”

The model has worked and today HubSpot employs 450 people. The company has attracted more than US$100m in venture capital from investors that include Google Ventures, and Sequoia and revenues are estimated to have grown 82pc in 2012 alone. In 2010 and 2011, Halligan was named the Ernst & Young Entrepreneur of the Year.

I asked Halligan what attracted him to Dublin. “Well, the tax incentives are strong, I wouldn’t spin you on that. The talent is great. We’re blown away by the people we’ve hired so far. They are just terrific hires and we’re doing something a little bit different over here than a lot of the American companies that have come over.

“We are not just putting a call centre in. We’re basically building a mini HubSpot where we’re going to build product here. We took one of our top product guys and he’s going to build an engineering team here and we’re going to have sales and services, too.

“I think that is key for Ireland. It’s an unbelievable country and it has built its economy around internet services, but I think the next step for Ireland is to move up the value chain and build products and international businesses like they do in Silicon Valley. I think with HubSpot and a couple of other companies doing the same thing, things are looking good for Ireland’s digital economy.”

Online marketing – it’s getting worse out there

I ask Halligan what the future holds for online marketers in a marketer’s world fractured by not only search but social media and now mobile.

“I think it’s getting worse and worse by the day for marketers. It’s just getting harder and harder to get people’s attention.”

However, he says people are using sophisticated blocking tools and new online services are making it harder to market to the consumer. “Google’s priority inbox is a clever new feature on Gmail which actually makes it harder for marketers. Look at TV, lots of people have DVRs and are just fast-forwarding through ads and in addition people are downloading content from Netflix and iTunes and are paying per show and there’s no room for advertising.

“Big companies that don’t know how to measure this stuff are just trying to muscle their way through and throw more and more money at it. What I like about this inbound stuff is that it really appeals to companies in Ireland, and smaller businesses around Europe who have more brains than dollars.

“Inbound marketing is about the width of your brain, not your wallet. The way to win today is by being smart enough. The marketplace is flattening and the advantage is swinging to the attacker and way from the defender.”

The inbound philosophy

Halligan explained to me how the HubSpot process works. “We teach people to think about this stuff and the main thing we need to teach people is how to create their own content. How do you create the world’s best blog for the industry you are in? A brilliant e-book, webinar or video? If you can create really good content it becomes easier to spread online.

“It will get linked to, it will be ranked by Google, it will spread on Facebook, LinkedIn, Twitter and Pinterest.

“So we teach people how to think about this new way of marketing and we create a workflow that walks them through how to do it.”

Tim Berners-Lee’s vision is coming true

Halligan says Tim Berners-Lee’s vision of creating a network of interconnected documents and being able to collaborate wasn’t actually followed through in the early days of the internet.

Rather, the first sites online were brochures for companies and the earliest success stories were one-to-many publishing vehicles.

“I feel like the last four or five years show Tim’s vision coming true. The web is now truly an information platform that connects people in a one-to-one or few-to-few kind of a way.

“I think we’re at the second inning of that. I believe that in the next three to four years websites will change in two dramatic ways. First, every website will become collaborative and interactive, a living breathing thing. Second, I think websites will become more personalised.

“Every time I go back to a website the more I use it the smarter and more personalised it gets, like Amazon. I do think websites will change a lot for the better in the next few years.”

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years