Popular influencer marketing has evolved into just another form of advertising, albeit through different channels. However, the very essence of social networks and connections allows for a completely different mechanism in the same space – word-of-mouth marketing! This can bring a more powerful and long-lasting effect. But to achieve this, several nuances need to be considered, which can be observed in this startup.
Project Essence
I’ve written several times about “hyperlocal” businesses – a network of similar offline locations in various areas: restaurants, beauty salons, stores, laundromats, childcare centers, and anything else. Whether it’s a franchise or not, the key is attracting visitors to all locations.
In other words, hyperlocal businesses should engage in hyperlocal marketing. 😉
Hummingbirds is a platform that assists hyperlocal businesses in finding local content creators in their areas to generate a flow of visitors to their local spots.
Why is Hummingbirds beneficial for such businesses?
92% of people trust the opinions of friends, acquaintances, and family much more than advertising. Platform participants are ordinary people with friends, neighbors, and colleagues in their living areas. The platform’s task is to enable them to influence their local circles appropriately. Firstly, the brand must make platform participants loyal and regular customers. Then, they will spread the desired opinion about the brand in their circles convincingly and for a long time.
The platform is a meeting place for brands and their potential local representatives.
Brands post offers on the platform, like free trial services, free product samples, or other lures. People view offers from brands in their area and select those they like. These applications go to the brand for approval. Then, people receive the “perks,” use them, and write about them on their social networks. Brands see all these posts, sorted by location, to evaluate the marketing campaign’s effectiveness, comparing publication metrics with local spot metrics.
90% of platform participants are women, 75% aged 24-45, and half have children.
Hummingbirds currently markets through its platform participants in 14 US cities, planning to expand to 45 more American “medium-sized” cities by next year, as the co-founder emphasized.
Founded in 2022, the startup received a $100,000 grant that November. In January 2023, it attracted its first $1 million investment and has now raised an additional $3.3 million.
Interesting Aspects
Hummingbirds builds its marketing on an ideological basis. They claim, “partnering with us is partnering with the local community,” supporting local businesses, producers, and workers. Building a local marketplace, in the startup’s view, is like “neighbor helping neighbor, friend helping friend.”
They state that spending with local sellers keeps 68 out of 100 spent dollars in the local economy, versus only 43 dollars when buying from federal players.
Notably, federal players usually don’t rush into small towns due to lower investment returns compared to expansion in metropolises. They typically decide to enter these areas only when metropolis expansion potential starts to wane.
For instance, Uber Eats only began entering Canadian small towns this October, where Hummingbirds originated.
Federal players’ delayed expansion gives local entrepreneurs a chance to build similar local marketplaces much earlier, trying to gather more loyal sellers and buyers who might retain their market share even after a federal player’s arrival. This isn’t a guarantee, but there’s a chance.
This suggests that small towns are generally an interesting business area. However, building a business in a small town isn’t appealing. The intriguing concept is creating “hyperlocal” businesses – a collection of similar businesses launched and developed using the same recipe across numerous small towns.
Interest in small towns might be fueled by the fact that most towns in most countries are small.
For example, in the US, there are only 10 cities with over 1 million people, 27 with 500,000 to 1 million, and 52 with 250,000 to 500,000.
But there are 225 cities with 100,000 to 250,000 people, 466 with 50,000 to 100,000, 741 with 25,000 to 50,000, 1,572 with 10,000 to 25,000, and a whopping 16,410 with less than 10,000.
A similar trend in the distribution of cities by population size is almost universal. The chart shows similar trends in Brazil, China, Europe, the CIS, India, South Africa, and the USA.
Where to Run
Thus, an interesting direction is creating hyperlocal businesses in small towns.
However, establishing your own businesses in each town is a huge hassle and costly, considering each town won’t bring much profit.
Hummingbirds’ approach is intriguing. They developed a single technological platform, beyond the reach of any local entrepreneur in terms of funds and expertise. Independent local entrepreneurs can use it to create their businesses.
These entrepreneurs are already in the right places, enabling them to manage their local businesses with minimal extra costs. They work hard to create a successful local business – small by general standards. But the sum of small revenue streams from their platform subscriptions and sales commissions can flow into the pocket of the hyperlocal player initiating this.
The vital question is: what other types of hyperlocal businesses involving local entrepreneurs can be started using a single technological platform? What ideas are there besides replicating Hummingbirds?