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 , , , , , ,

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 , , , , , , , ,

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 , , , , , , , ,

Consumer demand for in-home entertainment helps make premium cable recession resistant

March 4, 2009 Leave a Comment

As reported by Paidcontent.org, cable operators and networks are faring better than ad-driven media companies in the recession, thanks to subscription revenue.  Profits at Time Warner’s HBO and Cinemax grew more than 10 percent during the fourth quarter of 2008, and the networks ended the year with their highest subscriber total ever—40.9 million.   Revenues at Showtime and Starz were also up in Q4 at 6% and 8% respectively.

Why? The mix of factors includes aggressive bundling, more online and mobile promotion, an increased interest in-home entertainment.  If cable operators are to begin to feel the pinch it will be when the lag time between troubles at home and subscription cancellations is exhausted.  For the full story click here.

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

Google Wants Out, Tells Time Warner to Take AOL Public

February 9, 2009 1 Comment

 

And Google isn’t just trying to share some investing advice with an old friend.  Google wants its money back, plain and simple.  Or at least it wants to recover a sizeable chunk of the $1b write-down they took on their 2005 AOL investment.   

googleaol1A lot has changed since Google’s investment gave AOL a $20b valuation.  Economic and advertising pressures have driven AOL’s value down 73% to just $5.5b.  With that, Google recently made it clear that the best way to try and recover its money was to “exercise its right” and see that AOL is publicly traded so that they can sell their shares “when the timing made sense.”

Google was careful to say that AOL remains “an extremely valued partner”, which isn’t surprising because they don’t want to further erode their investment with a vote of no-confidence.  But Time Warner CFO John Martin cut to the chase when he told analysts during their most recent earnings call that Google wants them to either spin off AOL as a separate company or buy back their 5.5% stake.

Now, it could be that Google is a) posturing for a larger role over AOL services (like taking over their search), and/or b) introducing leverage before Time Warner and Yahoo! get too chummy over AOL.  But one thing is certain, a $700m write down is impossible to ignore these days, even among friends.

Filed under Business, Economy Tagged with , , , , , , , ,

Evaluating Online Venture Opportunities – Industries and Markets

January 24, 2009 Leave a Comment

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When launching an important new online product or business there are several questions to ask.  First and foremost is this: Does your new idea change the way people will live their lives and work, or is it an incremental improvement only?  If the latter, then beware in terms of ginning up investor or media interest – you probably have a lifestyle business on your hands that will be hard to garner attention.  If the former, then get your pitch ready because investors and the press may want to hear what you have to say.

 

In terms of evaluating prospective markets, here are 5 additional questions where an affirmative on the former suggests you have a high-growth, investable business on your hands and the latter suggests a lifestyle business.  They are:

 

1.      Does your idea encompass a market-driven recurring revenue niche, or is it an unfocused, one time revenue play?

2.      In terms of customers, are they reachable by you or are they loyal to others?

3.      In terms of user benefits, will they see a payback in a year or less when adopting your product or will it take three years or more for them to receive a positive ROI? 

4.      Is there a high value-add where customers will pay in advance, or is the value-add low with minimal impact on the market?

5.      Finally, is the product a durable one or is it perishable?

 

Shaping your new online business and pitch towards a reachable, market-driven audience with recurring revenues, one year payback, high value-add, and durable products will increase your chances of success with both investors and customers.

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

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