“I believe that marketing is what you do when your product or service sucks or when you make so much profit on every marginal customer that it would be crazy to not spend a bit of that profit acquiring more of them (coke, zynga, bud, viagra).” – Fred Wilson AVC
What makes it interesting is he confuses the activity of buying advertising with the word marketing. What follows is a “gaggle” of comments pointing out this fact.
It was a smart marketing play. The “error” has provided him with a lot of free coverage on the net.
I’d like to think I’d get the same amount of air play from a post on why “Venture Capital is for late to market Me2′s that suck” but somehow I just can’t see it happening.
His basic proposition is why are start-ups paying for marketing (i.e. Advertising) when, online at least, they don’t need to if they are savvy with leveraging social media as free marketing platform (e.g. Twitter)?
Fred is of course an advocate of freemium. So the basic the message is while established players can buy market share start-ups should sweat for customers.
“Early in a startup you need to acquire your customers for free. Later on, you can spend on customer acquisition.”
I say sweat because as I proved in the first 90 days of this blog: Once you factor in what all that investment in So.Me sweat is worth then So.Me is easily the most expensive marketing platform ever invented. And that’s before you factor in all the other things you could be doing while you are on Twitter or busy Blogging.
As I said in Message in a Bottle you can build an online brand but you can’t do it for free. More importantly the online brand you are building is in reality just another billboard in the desert buried somewhere out there on the long tail of the internet and it will remain that way unless you take the steps in the real world to make people aware that you exist online.
Fred’s right about the fact nobody needs to be paying for advertising online… Though what that “new So.Me reality” says about the relative value of his portfolio of web investments is probably the subject of another post. However, as I explained recently in If you are paying for advertising on the web today then your creative has seriously failed you, it is the biggest players in the market who have the most to gain from the endless free social media marketing.
The biggest problem for today’s start-up is – if everyone is busy doing So.Me – then you have to be doing something different to break through the noise. Put simply if you are doing what everybody else is doing and hoping to get noticed then you have just failed advertising and marketing 101.
You have to “Think Very Differently” if you are going to cut through the avalanche of noise and freemium web services.
And sometimes thinking differently is doing exactly the opposite of what everyone else is doing.
Apple doesn’t do So.Me. So why should you?
We also need to recognise that traditional media still plays a significant role in the breakthrough moment of any start-up. For example, Fred’s own ‘wonder child’ (Twitter) didn’t become an overnight So.Me success until after it was picked up by the old media (Think: CNN and New York Times). And here then is the key to unlocking your success.
And I don’t mean buying a full page ad in the New York Times or airtime on Cable TV.
At the heart of this discussion however isn’t the debate over advertising and marketing semantics. Nor is it: Should you be paying to cut through the noise or sweating for free? The real point is simply this. What does your investor or VC bring to the table? After all their money is very expensive. Probably by any fair measure far too expensive in a world awash with cash from monetary easing.
If you or investor is to add value to your start-up company they must bring a lot more than just dollars to invest. They must bring to the table the contacts and the media influence to cut through the noise.
So my message to you is the next time you sit down with Fred, or any other VC, to “talk turkey” and the question of marketing comes up then take a leaf out of the JFK play book and ask “Not what you can do for your investor but what your investor can do for you”. Because if they can’t get you the breakthrough exposure you are looking for free then you are talking to the wrong person.
After all you are in business to build great products not waste time with So.Me.
Futher Reading:
- I disagree with Fred, Marketing is for companies with great products. – SOEMOZ
- The reality is that customer acquisition is never truly free. – eConsultancy
Posted on February 26, 2011
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