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 , , , , , , , , ,

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 , , , , , , ,

Venture Capital vs. Angel Investors – These Facts Might Surprise You

February 3, 2009 1 Comment

 

John Huston, a leading light in the Angel investing community, recently shared some very interesting information that’s hard not to get your attention.  According to data from both the National Venture Capital Association and the Angel Capital Association (2004 to 2007), Angels invested just as much money and had a higher 20 year rate of return than Venture Capital firms.  VC’s invested $24.4B over the 3 year period while Angels invested a nearly equivalent $24.3B.  In addition, when looking at 20 year return data (through 2006) VC’s earned an average of 19% and Angels 22%.

vcangelOf course, there are structural and timing differences between Angels and VC’s to factor in.  The investment focus for Angels  is pre-seed (pre-revenues) while VC’s are cash-flow break-even.   As such, the average deal sizes are different (Angels average $473k and VC’s $7.5M) as are the volume of deals  (51k for Angels and only 3k for VCs).  

In a time of tighter and tighter capital and credit markets, the magnitude of dollars flowing into new businesses from Angels and the returns they generate are worth taking note.  Angels now number over 225k high net worth people, 10k of whom are in groups.   The latest angel study from November , 2007 showed that a typical deal is now earning a 2.6x return in 3.5 years, for a 27.7% IRR.

Filed under Finance, Market Research, Startups & Entrepreneuring Tagged with , , , , , , , , , , , ,

Follow

Get every new post delivered to your Inbox.