What I’m listening to while I type: Return of the Grievous Angel:
Number three on my list of five things that make web-tech start-up success more likely is ‘Twitter chatter isn’t enough, good press and advertising last longer’.
I spend more time than is probably good for my career in the pub four doors from our home.
Me and hubby will sit in a particular corner and, because the landlord controls the TV remote, we watch a lot of sport and in particular a lot of La Liga. Aside from developing an awe-struck appreciation for the genius that is Messi and a schoolgirl crush on the sparkliness that is Balague, I’ve also noticed just how much of Sky’s ad space is bought by internet-based businesses.
It made me think about the value of traditional press publicity and non-digital advertising to digital businesses. Or why you need old-school media to make new media businesses really successful.
Online ad spend first overtook TV spend in the UK in 2009, and will overtake TV spend in the US this year or next (depending on your choice of analyst). Yet earlier this year, analysts were pointing to a bit of a bounceback for TV advertising led by web businesses including Google. And multi-media companies like Gannett have seen a 38 percent hike in TV ad revenues, albeit boosted by the Presidential battle and the Olympics.
“The biggest way to attract mass is still television,” Estée Lauder Chief Executive Fabrizio Freda told reporters at a briefing in New York in April.
So, if you’re a web company with a product already used by a billion people, and investors eating their children to have a share of your expected future earnings, what do you spend cash on?
Telling us Facebook is like a chair.
If you’re the world’s biggest-earning web business, where do you place a third of your ad budget? Into TV. And when you’ve got a great new product no-one uses, where do you tell people about it?
Google spent $1.5bn globally on advertising and promotion in 2011, over 4% of company revenueand, along with Apple and Amazon, has one of the highest ad-spend growth rates. There’s a great infographic here.
Here’s a game we can play. I’ll run through a short list of successful UK web businesses and see if you remember their TV ad:
And, while you’re thinking about advertising, had a LoveFilm mailshot or a notonthehighstreet catalogue drop through your letterbox recently? Twenty-five-percent of spend on postal mailshots comes from home shopping businesses– and if that’s not what Lovefilm and notonthehighstreet are about, I’m a monkey’s aunt.
Yes, you can grow your business at speed if you hit the jackpot on a Facebook frenzy or Twitter trend spike, but it won’t be enough for long enough. You need press coverage in the early days and cash to spend on advertising once you’re growing.
I get a spike of roughly an extra 2,000 views each time I tweet about a new post on wreckoftheweek, more if it’s retweeted. But that’s digital peanuts compared to the spike a mention in a magazine delivers.
My point being that this is stuff you can do yourself for free and that makes a big difference at start-up. Press coverage, listings, forums, social media, search-engine-optimised content. It’s about hours and hard work, not marketing magic.
Basically, you need to work out where your potential customers are, go find them and say ‘Hi’.
What works in most business start-up reporting is a positive story focused on firsts (eg your software is doing something new), or numbers(eg investors have chipped in a nice big figure) or milestones (eg hitting a nice big user milestone). And with a feelgood personal story about the founder/s thrown in. Here’s an example of all four in one Guardian story: Songkick raises £6.3m in funding round.
With my start-ups I was generally pretty ok at getting initial press interest and web chatter but not so good at keeping the interest going (ran out of ‘first’ and ‘numbers’).
However good you are at attracting free publicity and web chatter, eventually it comes down to spending money on traditional advertising. Which means making money or attracting investors. Facebook may not need to advertise for more users, but it does need to use advertising to scrape off some of that studenty-stalkery-privacy-dodginess attached to its brand.
I’m going to wrap up with something from research by McKinsey earlier this year. Note the last sentence:
The results revealed that advertising fueled about 15 percent of growth in GDP for the major G20 economies over the past decade by generating new business. While some companies launched unsuccessful media campaigns and did not recoup their costs, such failures were outweighed by the companies with strong campaigns that increased sales, attracted new customers, or improved margins. On a microeconomic level, introducing digital media to the advertising mix helped companies increase their revenues, market share, and profit margins to a greater degree than traditional advertising alone. (Notably, digital media produced its effect by enhancing the impact of print and broadcast ads, rather than by replacing them.)