The importance of creating a brand for your startup business

March 31, 2009 Leave a Comment

 

There are few certainties when it comes to launching a new business, but one of them is starting with zero customers.  This fact alone is what deters many would-be entrepreneurs from taking the plunge.  Without customers there is no income, and without income…well, you know how that story ends.

For those who press ahead anyway, good for you.  Now the sales cycle begins.  And for your prospective customers that cycle includes an information gathering stage, a shopping stage, and a purchase stage.  The key for your startup is to stand out in each of these stages, gaining a measure of relevance along with way.  How do you do that?  One important way is to insert your brand into the mix.  That’s because your brand makes selling easier.  It conveys a promise – before, during and after the sale – that builds trust around what you do and how well you do it.

The benefits of branding to the sales cycle are numerous.  Your brand builds recognition and name awareness in the marketplace in advance of the sale, which leads to increased selection of your product or service over competitors.  It also builds equity for your business in the form of premium pricing and customer loyalty.    It raises your product or service above the level of being a commodity, which helps reduce churn and protects your profit margin.  And finally, it increases the odds that your business will survive and prosper.

So make sure that building your brand is a part of your business plan.  Weave it into your product definition, your positioning, and your messaging.  Realize that shaping your brand’s perception requires persistence – so stick with it.  And know that there are lots of people who can help you with your branding strategy including PR and advertising firms, logo designers, and web-site developers to name a few.  But remember that you control the key ingredient, which is what your product or service stands for and the benefits it transmits.  That is your brand.  Others can help you message it, but you need to be it first.

Filed under advertising, Business, Marketing, PR, Sales, Startups & Entrepreneuring Tagged with , , , , , ,

SEM and SEO spending expected to continue increasing, while online sales continue to bolster retailers

March 25, 2009 Leave a Comment

 

According to eMarketer, in spite of growing recessionary concerns U.S. marketers are likely to boost spending by as much as 16 percent in 2009 across the four basic forms of search engine marketing (paid search advertising, contextual advertising, paid inclusion, and search engine optimization.)  Investment is expected to grow to from $12.2 billion last year to $14.1 billion this year.  In addition, they suggest that by 2013 such spending could exceed $23 billion annually.  Another strong upward trend is in the area of search engine optimization, where eMarketer predicts that the size of the SEO industry could almost double in the next five years.

Anecdotal evidence from retailers selling online would appear to support the validity of making these investments.   In its annual report filing, Kohl’s just announced a 48% jump in Internet sales in 2008, joining Macy’s and Saks among retailers who have seen online success despite the recession.  This followed a strong ‘07 for Kohl’s, where online sales grew over 30%.  In the case of Macy’s and Saks, even as poor performing stores were being closed down their online sales were increasing.  What this means is that their brand was still resonating with Internet shoppers.

Online marketing for retailers is more than just SEM and SEO however.  In the case of Kohl’s, they struck timely deals with AOL, MSN and Yahoo during the holidays with eight home page takeovers, plus they offered regular “deal of the day” internet-only discounts on their web site.

The argument for investing in online brand development and selling via SEM, SEO and web site activities remains compelling, especially in these hard economic times.

Filed under eCommerce, Retailing, Sales, Search Engines Tagged with , , , , , , , , ,

Is online advertising failing or is it just the recession?

March 23, 2009 Leave a Comment

Eric Clemons has just written a very thoughtful article on “Why Advertising Is Failing On The Internet” on TechCrunch. His high level argument is that the Internet shatters all forms of advertising because it allows consumers to bypass them. He provides evidence for why people don’t trust ads, why they don’t want them, and why they don’t need them. He then goes on to illustrate how the Internet provides ways for people to meaningfully get the information they need without them.

He then moves quickly from advertising to the ecommerce space where he talks about new monetization models around selling real things, selling virtual things, selling virtual experiences, and selling misdirection (a subject where he expresses a lack of faith in Google’s revenue model and sustainability.)

Unfortunately, he falls short in the end of providing a list of concrete replacements for advertising. Can you really imagine a world without ads? Surely they will exist, perhaps in different forms, but they will be omnipresent.  In addition, he sites declining online ad revenues to support his thesis at a time when the culprit may be nothing more than the current recession. Whatever the outcome, his sweeping approach to the landscape of online advertising bears reading.

Filed under advertising, eCommerce, Marketing, Retailing Tagged with , , , , , ,

Local ad spending expected to decline through 2013, interactive segment the only bright spot

March 17, 2009 Leave a Comment

According to the BIA and The Kelsey Group, economic conditions over the next few years will reduce overall local advertising spending through 2013.  Local advertising revenues in the United States are expected to decline from $155 billion in 2008 to $144 billion in 2013, representing a negative 1.4 percent compound annual growth rate.

Only one segment is expected to show growth over that time, which is interactive advertising.  The others should see marginal or rapid declines over the next 1.5 to 3 years. 

Tom Buono, president and CEO, BIA Advisory Services, sees an accelerating shift to online and an increasing demand for “accountability metrics”.   According to the survey, interactive share of local ad spending will grow from 9 percent ($14 billion) in 2008 to 22.2 percent ($32 billion) in 2013.   For purposes of the survey, “interactive” includes mobile, Internet Yellow Pages, local search, online verticals and classifieds, voice search, and email marketing.

In contrast, the “traditional segment” is expected to decrease from $141.3 billion in 2008 to $112.4 billion in 2013 (CAGR of -4.5%).  This area includes newspapers, direct mail, television, radio, print Yellow Pages, cable television and magazines.  Neal Polachek, CEO of The Kelsey Group, indicates that the share shift “could actually be more pronounced if the major traditional media are not able to integrate new interactive products into their bundle.”

With yet another major print newspaper (the Seattle Post Intelligencer) closing its doors, the transition already feels very real.  If traditional media companies are to thrive over the next 10 years they will need to continue to embrace interactive strategies far more aggressively.

For more information about the survey and its methodology, click here.

Filed under advertising, Business, Economy, Marketing Tagged with , , , , , , , , , ,

Focus on being a niche web site to earn higher eCPMs

March 16, 2009 Leave a Comment

 

Don’t let what happened to AOL happen to you.  AOL’s broad-based content mix including news, weather, sports, music, tv, movies and dozens of other categories meant it was good at one thing in terms of making money:  selling remnant advertising across its network.  That “success” probably helped hasten Randy Falco’s departure as CEO.

Without strong niche brands and content, AOL was never able to aggregate demographically targeted audiences in a way that advertisers were willing to pay a premium to reach.  So their sales people did what sales people do, they took lots of orders for low cost run-of-network ads.  In the last few months AOL’s now deposed CEO had made a push to move the business in the direction of niche content and premium ad-buys, but with little success.  As a result, he’s gone and there is a new sheriff in town – Tim Armstrong of Google.

The double-negative with launching a broad-based content site includes a) being of no interest to advertisers until you have lots of traffic volume, and b) once you get that volume being so mainstream as to be of little strategic value to buyers.

If you already have lots of content covering a variety of categories, consider launching individual destination sites which will have immediate appeal to both niche audiences and advertisers.  Replicating web sites is inexpensive these days, and the premium ad revenue should be worth the extra effort. 

If you are just starting out, think small to earn big.

Filed under advertising, Business, Editorial/Content, Marketing Tagged with , , , , , , , ,

eBay to focus on secondary markets, revenue growth to lag ecommerce market in ‘09

March 11, 2009 Leave a Comment

 

eBay Chief Executive John Donahoe announced at their Analyst Day meeting that the company would focus on selling low-volume and liquidation products as it tranforms its marketplace business.  He said eBay is “not a retailer “, but instead a business intent on focusing on the global secondary marketplace.

ebayHe indicated that changing the business will take time, and that their revenues will grow more slowly than the ecommerce market in ‘09, track it in ‘10 and surpass it in ‘11.

He referred to PayPal as an important part of the business with huge potential.  But it’s eBay’s waning auction growth that is garnering the attention of investors.  Online shoppers are shifting away from auctions to fixed-price purchases on leading product sites like Amazon.com.   Donahoe countered that online auctions and fixed-price sales are simply “formats” that buyers can choose from, and that last year they launched various efforts to promote fixed-price transactions and acquire top sellers.

So far investors appear not to be biting, as eBay share prices are down two-thirds from their 52-week high.  Look for more changes from eBay over the coming months as they look to try and regain their old swagger.

Filed under eCommerce, Retailing, Sales Tagged with , , , , , , ,

What does it take to start an online B2B community?

March 10, 2009 Leave a Comment

 

A typical B2B community is one that is created by a company intent on reaching and connecting customers to a) the organization or b) each other.  And it starts by asking a question – what do you want to build the community around?  More succinctly – what are your goals?  For some firms it is a stated desire to get feedback from customers or partners and make a closer, ongoing connection with them.   For others it is to reduce costs by having customers help other customers.  Still others desire to market to their customers in new ways using the latest social media tools.  Whatever your goal, be sure to define the “what” of your community before investigating the “how”.

bridgeAfter defining the goal (customer loyalty, lowering support costs, feedback, keeping customers informed, etc.) the next step is put a small team of people together who are highly motivated to seeing the community come to life.  Like many Web 2.0 communities, the best ones are built around the notion of high focus, high tailoring, niche-type destinations where collaborators can easily engage. 

Early on your launch team will want to do two things.  The first is to identify the key influencers who should be invited to join the community and whose presence will inspire others to join and participate.  The second is to pre-seed the community at launch with topics and conversations that relate to the overall goal.  But note that very quickly the team should be prepared to step away from micro-managing the conversation and let the community organically shape the content and topics on its own – because it will.

What about ROI?  In many B2B communities the ratio for those visitors who read versus those who add content is roughly 25 to 1. This means that every successful interaction potentially influences another 25 visitors on average.  Since influence is often correlated with purchase intent, start with the proxy that 2-5% of sales made to community members were influenced by the community itself.  Then you can refine the proxy value by surveying your members.  And for those B2B communities engaged in self-service customer support the cost avoidance equation is just as straight forward to measure.

However, the best thing about online B2B communities is that they are (in essence) the daily expression of what used to be annual or sporadic conversations of a highly important and valuable nature.  So putting a ROI on this part of the model is much more qualitative.  But there is little doubt that if your business can leverage the opportunity to connect important constituencies together in a real-time fashion, you will gain timely insights, customer credibility, and improved profitability (via increased sales, decreased costs) that otherwise were going untapped. 

Filed under Editorial/Content, Manufacturers, Marketing, Retailing, Sales Tagged with , , , , , , , , , , ,

Basil Peters talks about early exits for entrepreneurs and angels – sweet spot $10m to $30m

March 9, 2009 Leave a Comment

 

In an interview with the Angel Capital Education Fund, Basil Peters, fund manager for Fundamental Technologies II, encourages angel investors and entrepreneurs to recognize the opportunity for earlier exits.

His target opportunity is an angel-backed company under 5 years old in the $10 to $30 million exit range sold to a large corporation.  Because companies can be started on a shoestring and grow to be quite valuable in just three or four years, the old days of needing to heavily capitalizing via a Venture Capital round isn’t an automatic requirement anymore.

Peters says that large corporations are better at buying technology than developing it in-house and they know it.   The goal of the big company is to take that $10 to $30 million business and 10x it into a $100 to $300 million business unit.

He cautions that although angel investors are already receptive to such deals, entrepreneurs are slower to catch, especially if VC money was always a part of their plan.   But he counters that the introduction of a VC round extends the entrepreneurs commitment to the business several more years, and the required $100m sale needed for the VC to hit its multiple limits the upside (and eagerness to buy) on the part of the acquiring buisness unit.   

For more information and to read the entire interview, click here.

Filed under Business, Finance, Startups & Entrepreneuring Tagged with , , , , , , , ,

Even in hard times, some VC firms investing in student entrepreneurship

March 9, 2009 Leave a Comment

As reported by the Wall Street Journal, the bad economy hasn’t dissuaded two high-profile VC firms from stimulating efforts to enhance collegiate entrepreneurship. Highland Capital Partners has opened the call for applicants for its third annual Summer Entrepreneurship program, which gives selected student/university-affiliated entrepreneurs a financial stipend, complimentary workspace in Highland’s offices and advice from investment professionals. Deadline for applications is April. 9.

Meanwhile, True Ventures is doing something similar this summer, inviting a group of students to take part in the first True Entrepreneur Corps program that will let them spend eight weeks with a portfolio company and work on a variety of projects. Deadline here is April 19.

Scott Austin says in the article, “Here’s to hoping more venture capital firms offer such an opportunity.” I couldn’t agree more.

Filed under Economy, Startups & Entrepreneuring Tagged with , , , , , ,

Google announces expandable ad units to improve click-through rates

March 6, 2009 Leave a Comment

In an industry where display ads enjoy 0.25% click through rates and low CPMs, Google is stepping up the footprint of its Adsense units with the introduction of expandable rich-media ad units that grow larger after a user clicks.

Google is being careful at the moment to restrict the expansion to only when users click on the ads (some competitors allow it happen on simple rollover), and holding the size of the expansion to 2x the original width and height.  In addition, filters allow publishers to opt-out of having certain advertiser ads show up on their site.   This is the second relaxation of standards for Google ads in recent months.  In December the company allowed ads for alcoholic beverages to run in Britain. 

For more information about the new ad units and Google’s overall policies, click here.

Filed under Marketing, Search Engines Tagged with , , , , , , , ,

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