It seems that every five seconds, another accelerator or incubator holds a demo day somewhere in the world. Thanks to a flood of seed-stage investment dollars and falling costs to launch, there have never been more digital startups entering the marketplace. Many of them have built business models around serving the world's brand managers -- and yet marketers have never had a harder time buying new ideas. If startups have any chance to get a meeting, much less a purchase order, they must step into their clients' shoes and make it as easy as possible to say "yes."
Thanks to consumer control and media fragmentation, marketers struggle to deliver 50 tactics to market where they once had scale with five. Budgets and headcount are down, while email inboxes and meeting requests are up. I have been in the unique position to gain perspective on these challenges on the client side, the agency side, and now as an investor helping to shepherd dozens of startups onto corporate campuses. Based on these 15 years of experience, I offer these five ways for startups to overcome client brand barriers.
Bring an idea that reduces their work
Since marketers have almost no spare time in their work lives, the vast majority of startups that add chores to a manager's time will fail to get in the door. More work equals more pain. We are already starting to see a backlash against social media tools, for example, that were aimed at helping marketers "do it themselves." Marketers simply do not have time to see which posts popped most on Pinterest yesterday, much less spend an extra few hours a week running A/B tests and trying to master yet another piece of software as a service.
Take a page from how marketers themselves are using time-saving innovation to meet the needs of their consumers. Febreze and Swiffer took off because they allowed people to clean their homes dramatically faster. Starwood's iPhone app lets you book a hotel room in seconds. Ad-tech startups must start with this fundamental insight around the value of time and develop products and services that help brands remove work from their plates.
Adapt to whatever way they buy media
We love to celebrate Apple's success in consumer device innovation, but the company's foray into advertising was a complete dud. In the summer of 2010, Steve Jobs himself announced that Apple's iAd program would remake the advertising industry. The company announced that it would charge every brand $2.00 per user interaction with an ad on its apps -- a standard pricing model aimed at unlocking an advertising revolution like what happened in music. A few brands tested the platform, but less than a year later, Apple was backtracking on its standard pricing. More than 27 months later, we are still waiting for the iAd revolution.
The problem is that while consumers can easily see the value of $.99 songs, the vast majority of marketers still have no idea what the ROI is on a $2.00 app ad click. The simple truth is that no one company -- even Apple, the biggest company in the world -- can force marketers to change their habits around media spending.
Some brands are gradually embracing pay-per-engagement or pay-per-follower models, but it is far from an industry standard. So when you meet with a brand, ask how it buys media and adapt your pricing and process to its current habit. It's great if you have a sexy way to engage consumers at the point of sale. But if your target client is wedded to CPM, you had better have a reasonable impression-based pricing model in your back pocket.
Don't break the budget
Here's another little detail that most startups miss about the marketers they target: Brand budgets are set about a year in advance, and most are cut a few months into the fiscal year. The money you hope to gain from a client must come from somewhere -- and the battle over where to find funds in a shrinking pie can be another enormous headache for your target clients.
The good news is that many brands do keep a small reserve for new test-and-learn ideas that keep them on the cutting edge of consumer connections. But you have to work within the limits of how much your client can dig up. Don't push too hard for the $100,000 deal when $10,000 is significantly easier to start with. However, when you start with a smaller deal, make sure you get agreement from the client about what results would have to look like for the budget to increase. It also helps to know when each client does annual financial planning so that you can wedge into the conversation when it is dramatically easier.
Grease the legal skids
Nothing new gets through legal without a considerable amount of client-side pain. "New" means "we have never done this before." This is exciting for many clients, and that excitement extends to their legal departments -- but in a bad way. Those folks get too excited with their red pens when your deal hits their desks. In a big company, the legal department has little incentive to green light ideas that push the envelope; rather, legal departments see it as their duty to make sure that the young assistant brand manager doesn't get a billion-dollar brand in trouble on a small test-and-learn idea.
Smart startups are devising new ways to make it easier for their clients to face legal questions. One idea came from a big brand client that one of our startups recently worked with: Create a one-page, 12-point-font overview of the idea and describe the most essential elements in a contract. It also helps to provide examples of the biggest legal questions you have had in the past and how you worked through these with other clients. This will make it easy for the legal department to respond, and it also helps that assistant brand manager be confident enough to push back in the discussion.
Be different than anyone else out there
I recently joined a conference call with one of our startups that was pitching a large CPG company, and I heard something that was new to me: The client loved the idea and said that it should be easy to approve for a test "because no one else is doing what you guys are doing." She explained that when there are multiple startups in the same space, there is enormous internal pressure to make sure they are working with the "right" one. In some cases, brand managers have favorites and question why one is used over another. Alternatively, if there are multiple players in the same market, purchasing or procurement departments feel it is their duty to lead a long RFP process.
Unfortunately, most startups are not alone in a market -- but if you are still at the early stages of your idea, now is a good time to truly innovate! If you are too far down the road, try to frame your business as unique among other players and always have a competitive landscape slide in your deck that shows your business as the sole player in a relevant two-by-two matrix.
The reality is that the startups that master this list will still struggle to break into the world's biggest brands. Expect a ton of rejection and unreturned emails. But if you keep digging with a solution truly worthy of marketers' time and attention, odds are that you will eventually have a chance to show them how your great idea can improve their lives and those of their customers.
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