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5 reasons your digital startup will fail

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Over the past year, the startup world has watched Facebook go public in the largest venture-backed IPO of all-time, Buddy Media get acquired by Salesforce.com for nearly $700 million, and Pandora reach a $2 billion market cap as a publicly traded company. One thing that all of these successful startups have in common is that the majority of their revenue comes from brand marketing dollars. These companies have been able to drive explosive revenue growth because they have attracted the world's largest advertisers, including companies like Procter & Gamble, AT&T, General Mills, Verizon, and PepsiCo. And as a result, each of them has grown from being humble startups just a few years ago to dominant players in the world of digital media today.

5 reasons your digital startup will fail

Having that type of success is obviously the aspiration of every startup. But getting to that level of success requires a solid business model that results in consistent (and growing) revenue. For consumer internet startups, there are essentially three main ways to make money: provide media, provide a paid service, or sell a physical product. Many of the startups we work with at Rockfish and The Brandery are targeting that first business model of providing media. In more cases than not, that means that they have built their entire business models on attracting brand marketing dollars.

I am continuously surprised by how many startup founders build their business models around brand marketing dollars, yet do not invest the effort in truly understanding their customer. Because of this, they set up themselves and their startups for failure.

Since failure isn't the first goal of a founder, here are five reasons your startup might fail to connect with brand managers -- and how you can avoid these pitfalls.

 

Comments

Ashley Feucht
Ashley Feucht July 16, 2012 at 4:12 PM

So true! Another tip: Figure out what works and what doesn't. Your startup's digital media (website, ad campaigns, social media, email newsletters, etc) should all be tagged with a web analytics platform, like Google Analytics. If you can't measure how your audience is interacting with your brand, you won't be able to pinpoint what contributed to a success or failure. MaassMedia, LLC has an expert staff that helps organizations find transformative insights from their data, and we're always looking for new clients.