Small Business Labs

Kill All The Marketers

Fred Wilson, a well known VC, caused quite a stir with a recent post that started with:

"I believe that marketing is what you do when your product or service sucks ..."

After panning marketing a bit more and explaining why startups shouldn't market, he provides his advice on how startups should market.  This very confusing message led to a lot of feedback.  It's worth looking at the comments in addition to the post. 

I think Wilson's core message - that startups should focus on low cost or free customer acquisition - is correct.  I also like his 8 points on how to do this.

But I'm fascinated he thinks his points aren't marketing, and that successful early stage companies don't market.  He uses Zynga - one of his most successful portfolio companies - as an example of a company that didn't market early on. 

I think just the opposite.  I think Zynga's early success was entirely due to innovative marketing.  They used Facebook for distribution (that's marketing) instead of setting up their own casual game site.  This distribution choice, coupled with some very effective viral marketing, is what made Zynga successful.   

Zynga clearly marketed, but they didn't use traditional "push" marketing methods like advertising.  Or at least they didn't in the beginning.  They do now. 

Seth Godin's response was that Wilson conflated marketing and advertising.  I would state it more broadly.  I think Wilson doesn't think startups should use traditional "push" marketing methods.  But based on his suggestions, he seems to be encouraging the use of "pull" and social marketing methods. 

He just doesn't realize this is also marketing. 

Online Marketing Trends for 2011

We read a lot of trends articles at Smallbizlabs.  I found two articles covering online marketing trends for 2011 to be quite interesting:

1.  Entrepreneur's 10 Trends for Online Marketers in 2011 not only covers trends, but provides advice on whether or not small businesses should be invest early in these trends or wait until they more mature. 

The trends they think small businesses should move on are: location-based marketing, instant search, social media marketing, email marketing and online advertising. 

They suggest you wait a while on: social media monitoring, mobile marketing, social shopping instant messaging and online TV. 

2.  Adweek's 2011: A Pivotal Year for Marketing discusses how "the mass acculturation of digital technology has fundamentally changed our way of life" and is leading to changes in marketing. 

The author singles out social media, advanced analytics and mobile technologies as having the biggest impacts.

Both articles highlight the clear shift to digital marketing. 

The Age of Co-Creativity

One of the sources on consumer behavior we follow is BBMG.  They are a consumer marketing and branding firm focused on sustainability. 

They been tracking a group they call "the conscious consumer" for several years.  This growing group of consumers believes it is important to purchase products with social or environmental benefits. 

BBMG recently released a new report on co-creativity.  The key message in this report is that you no longer market to consumers, you market with them.  The report also explains the importance of switching from the traditional "command and control" marketing to collaborative marketing with consumers. 

The report also points out the growing role sustainability is playing in consumer decision making.   

The report is quite interesting and introduces 5 forces of co-creativity: mutuality, shared purpose, cross-pollination, innovation and shared values. 

See the report to learn more.

Social Media Not Always the Answer

We've noticed a strong uptick in the number of small businesses telling us they are disappointed with their social media efforts. 

The main complaint is a lack of results.  The other issue we hear about is social media is too time consuming.

We're not the only ones hearing this.  Entrepreneur's Is It Time for You to Get Anti-Social does a nice job of describing the complaints.  Key quote:

"Amid the hype about social networks and the many positive things they can do to help businesses build a buzz come tales from the social media counterculture -- cases of trend-bucking entrepreneurs such as Wong making a strategic decision to de-emphasize social media ..."

This reaction is common with technology trends (and social trends also).  Fast growing trends almost always create a countervailing trend of people unhappy with the main trend. 

This is especially true when a technology is as over-hyped as social media.  The hype results in businesses using social media when it's not a good fit. 

This does not mean social media is not useful.  It just means it's not always useful. 

Dandelion Marketing

I moderated a marketing panel at the GrowSmartBiz conference last week.  During the session Jeremy Epstein from Never Stop Marketing presented his Dandelion Marketing concept, which I really liked. 

The name comes from the strategy dandelions employ to survive and thrive - they release lots of low cost seeds that spread to many places.  This approach improves the chances that some of the seeds survive and thrive.

Based on my backyard, this method works. 

When applied to marketing, the dandelion approach focuses on Agile Marketing - the ongoing, rapid development of marketing programs.  These programs are released and measured for results. 

Rapid feedback loops are used to decide which programs are continued and which are ended. 

Social media provides an ideal platform for dandelion marketing.  You can experiment with approaches and test for results, without having to spend a lot money.

There's a lot more to the Dandelion Marketing concept.  For more information, download the ebook by clicking here.

Local Online Advertising to Increase 18% in 2011

Borrell Associatesis forecasting a solid increase of 14% in online advertising in 2011.  This results in the overall market for onlilne advertising reaching $35.7 billion. 

This is much faster than their 2011 overall advertising growth forecast of 5%.  This forecast would result in the overall advertising market growing to $238.6 billion in 2011.

One of the best performing online sectors is expected to be local online advertising, which they are forecasting to increase 18% and reach $16.1 billion. 

It's All About Leads

Yes, this is pretty obvious.  But we often overlook the importance of leads and lead generation.  Also overlooked is how central lead generation is to the business models of many of the Internet's most successful companies - and how lead generation is changing media and marketing. 

Google is, of course, all about leads via adwords.  So is eBay and all the other online markets.  For example, I just made a restaurant reservation using Open Table.  It is a public company worth $600 million that gets a big chunk of its revenue generating leads. 

We recently posted on social game companies.  Rapidly growing rapidly and hugely successful, these firms are lead generation platforms disguised as casual game companies. 

On the marketing side, firms that provide lead generation services are thriving while traditional marketing agencies struggle.  Hubspot, a successful Internet marketing firm that is an agency/services/web analytics hybrid, is a good example. 

The shift towards lead generation is also a major driver of the disruption of the media industry.  Traditional media's marketing strengths are awareness and branding.  Not good when advertisers are focusing on lead generation.  Most new media companies tightly focus on generating leads for their clients. 

The trends driving the need for leads are diverse and strong.  Increased competition is a key driver, as is the growing consumer and B2B customer immunity to traditional advertising.  

Enabling and driving this trend is the the increasing power of analytical software and the growing reach and data intensiveness of the Internet.  These tools and data are making it easier for even small businesses to run sophisticated lead generation programs. 

Like most trends, the shift towards lead generation is not new.  Many of the online methods and approaches considered innovative today were in use decades ago by the direct marketing industry.  But despite its age, the shift towards lead generation is just beginning.   

Marketers to Spend More on Virtual Events and Social Media in 2010

The always useful Marketing Charts reports on a survey by virtual events provider Unisfair.  It show that marketers are planning to increase their use of online marketing, virtual events and social media in 2010. 

Key findings from the survey of marketers:

• 75% plan to increase their use of social media
• 51% plan to increase their use of SEO methods
• 49% plan to increase their use of direct mail
• 48% plan to increase their use of virtual events

I was a bit surprised the use of virtual events didn't score higher.  They are easy and cheap to do and can be very effective.  Lack of virtual event knowledge and experience seems to be the key barriers to increased use. 

The survey also showed the continued focus from marketers on lead generation, with 60% saying it is their most important objective.

Small Businesses Spending More on Online Marketing

Several studies were released in the last couple of weeks forecasting that small business spending on their websites and online marketing will increase substantially in the next few years:

Borrell and Associates reports and forecasts that SMBs (small and mid-sized businesses) spent $6.7 billion on online advertising in 2008, will increase their spend in 2009 and online ad spend will grow modestly to $7.4 billion by 2013. 

They are also predicting that SMB spend on website development (they call it non-ad marketing) will triple over the next 5 years.  Below is a chart from their report.

   

AMI's recent forecast report says that SMBs spent $7.5 billion on online advertising in 2008.  But they are less positive about 2009 and are forecasting SMB online ad spending will be flat. 

They are optimistic about future SMB spending on online advertising and marketing and suggest it will grow substantially over the next few years.

Online Advertising Early Growth Faster Than Other Media

The Chart of the Day on Silicon Alley Insider shows total online advertising over its first 14 years versus broadcast and cable advertising during their first 14 years.

As you can see from the chart below, online advertising has grown much faster than any other advertising media has.  

    

This is not surprising.  Most new and successful technologies have diffused faster than technology from prior generations. 

Also, the ad industry is much bigger today than it was when broadcast TV or even Cable TV started.  This makes it easier for Internet advertising to outpace the growth of legacy ad systems.

But it is still impressive growth. 

And at least in some areas it seems to be continuing.  Over the last few months Smallbizlabs has been contacted by several ad networks. 

After reviewing our options we have chosen to go with the Forbes network.  We were already a content contributor to the Forbes network and it makes sense to extend our relationship with them.  We will be hosting ads starting next week.