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Posts Tagged ‘advertising’

Nouns are more important than adjectives

March 6th, 2013 No comments

Bloomberg quotes Thrivent analyst Nabil Elsheshai “It’s no coincidence that Google’s rise has coincided with Apple’s demise. Making money from services versus devices is growingly perceived as a better business model.”

Please, correct me if I’m wrong, but somebody has to make something for a service to actually be of any value at all.

You service your car; no car, no service.

You get information from the web about where to buy things; nothing to buy, no reason to search for info about it.

Crowd sourcing tells you which restaurant you want to eat in and Pandora streams music to your desktop, but the food had to be prepared and musicians had to create the music; everything, it seems to me, starts and finishes with things.

Right now, Google makes much of its revenue related to advertising. It’s genius really, all the ways they skim money from that business and what it’s done for them. For that Google should be commended. But to suggest that services are more valuable than devices seems crazy to me. On the plus side, Google makes money from the advertising of, well, anything. That’s, no question, a pretty big stream of money, but it’s literally pennies an ad. Margin per transaction is important for a business because each transaction, even with Gooogle’s efficiency, costs something.

Meanwhile, thing-makers, like the companies I usually work with, have to set aside some of their margins for advertising—money they’ll pay maybe to Google in order to get the word out about their new thing.That advertising dollar can never be greater than the money made from the thing in the first place though, can it? Google’s ultimate market, if unopposed and if they get every advertising dollar out there, is certainly large and, likely larger than Apple’s. Apple can make only so many different categories of iDevices after all. Except Apple, and all of us thing-makers (manufacturers) typically make quite a bit more money every time someone buys our object; even if we pay Google a little bit to help convince them. The broader suggestion, that services are more valuable than things is ludicrous.

It’s annoying because one thing may be true about this quote: perception. Small startups selling real live things you can touch and use have a hard time just competing for investor ear-time with thousands of software models based on some variation of ‘get a load of users for a service and then sell the users to advertisers.’ Usually this business model is called a service, but it’s driven by advertising, and there is only so much advertising revenue to go around. And it’s always going to be smaller than the revenue from selling actual objects.

In other words, without the nouns, there’s really no reason to bother describing them.

Different differentiation

May 13th, 2011 No comments

Differentiation crops up more often than you might think. Most anyone can recognize that whatever product or service you’re selling will be easier to get into customers’ hands if they can distinguish how it’s different from other offerings. It’s just that differentiation doesn’t stop there.

I often find it easy to file competitors into two categories: those who do what you do, and those who solve the same, or even similar, problem. The first one is obvious, but the second is just as important. It’s easy to identify the people who make the same thing you’re offering, but dangerous to miss the folks competing for the same money.

A classic example I once heard goes like this: who are the Denver Broncos biggest competition this year? The Steelers? or the Saints? Hardly. It’s the Denver Nuggets or the Colorado Rockies. When the Broncos play another football team, win or lose, they make money. It’s other entertainment choices, such as local teams from other sports, that make up their real competition. Money spent on baseball won’t be spent on football at all, whether you root for the local team or someone else.

Sometimes selecting how you advertise is influenced by how your product is differentiated. Suppose you’re a contractor painting houses. Once choice, ServiceMagic, is a web-based advertising product that generates leads from interested consumers. That sounds better than advertising in the paper alright, but you have to look closely at how they do their business. In order to avoid overwhelming the consumer, ServiceMagic provides only three vendors at a time, chosen at random from their pool of contractors. You compete with these three to get the business. No problem, you’re the quality leader and you are confident you can win over your competitors. Except this isn’t a typical playing field where the consumer compares from a wide range of offerings including national companies and mom and pop shops. If your bid just happens to be included with two low cost leaders you look hopelessly expensive, even though, in reality, you’re right in the middle of the range. Your ability to differentiate yourself only works if the consumer gets to see all of the choices. ServiceMagic is going to work well for the big names (they can afford to miss a few deals and look awesome compared to the mom and pops) and small names (he’s that much cheaper? wow!) alike, but the guys in the middle might look worse than they should.

Tech startups face both of these kinds of differentiation problems. They are often offering a first-of-its-kind product, so they may forget that they still have other competition. How many other ways are there to skin a cat! Furthermore, they have to get the word out somehow that is most favorable to their offering and not try to out-shout their competitors. It doesn’t take a genius to think all this through, but it does take some effort. That’s where Eye On Technology can help. We’d love to work with you to identify your issues and make your business development efforts as effective as possible.

Categories: Business Tags: ,

Advertising is so last millenium

May 11th, 2011 No comments

Typically, small technology firms are founded by incredibly talented engineers-turned-entrepreneurs. They have the vision to develop a product that people will need and they’ve been successful enough finding customers, otherwise, they wouldn’t have gotten as far as they have. While they’re not marketing people, they are smart enough to have an idea how to get the word out about their products. If they’ve tried advertising, or worse, engaged an advertising company or consultant, there is a good chance they’ve been turned off.

“My customers find me by word-of-mouth, I don’t need to advertise.”

Well, for many businesses that is absolutely true. The problem many advertising companies and marketing firms have is when all you have is a hammer, everything looks like a nail. There are excellent companies out there with experience in print advertising, web marketing, or search engine optimization. When faced with your company’s needs, they figure what’s worked for other clients should work for you. Since most companies offering to help small businesses with their advertising needs know, well, advertising, that’s what they recommend and often it ends up  leaving that smart entrepreneur wondering why she engaged a consultant in the first place.

In fact, for some businesses, advertising in leading journals and industry publications works, and for some it doesn’t. If word-of-mouth is working for you, what are you doing to get more word-of-mouth? If you think trade-shows are too expensive, are you considering other ways of using them?

Have you thought of motivating people to spread the word? Do you have a vehicle for them to do so? Maybe they can comment on your company blog, or present a paper at a trade conference? Print advertising and web banners may not be the best thing for your business, but that doesn’t mean you should sit back and wait for people to hear about you. Eye On Technology can work with you to identify the best channel to communicate with your customers and then develop the tools to do it. If you don’t have the time to edit a blog, we can be a resource. Whether it’s downloadable PDFs on your website or a simple content management system customized for each prospect, these modern tools provide value long after your customers have turned the page past your last, expensive, print ad.

There’s no question that, for some companies, print advertising is a critical part of their business. It might even play a part in your business now or in the future. Just don’t complain if the one-size-fits-all solution you get from some advertising firms and market consultants didn’t make you look as good as you thought.