Startups

How a startup is viewed (by an investor) when its majority spending is on marketing/advertising?

Marian Melnychuk Senior .Net Developer – Upwork

October 7th, 2016

I personally believe that marketing expenses should be less than the spending on innovative ways to grow business.

Andrea Raimondi Computer Software Consultant and Contractor

October 7th, 2016

What, exactly, do you mean by "marketing"? :)

Shel com I help organizations thrive by building social transformation into your products, your services, and your marketing

October 7th, 2016

Having written several books on how to market effectively with little or no money, I definitely agree. While we don't all have to be as extreme as Google, which built one of the most profitable companies in the world without spending anything on advertising, I think all of us should be focused heavily on more creative, more interactive marketing--including content, interactive involvement tools on your website, social media actual participation (not just advertising), live appearances, etc.--only using advertising and other paid strategies sparingly if at all. This is something I can help with, BTW. For a very affordable cost, and can create a entire marketing plan for you, rooted in these kinds of strategies as they make sense for your particular business/skill set/interests.

If someone is spending more on marketing than on operations, I'd worry about their long-term viability.

Rod Abbamonte Co Founder at STARTREK / @startupHunter / @startupWay / @CoFounderFound / @GOcapital / @startupClub / @lastminute

October 7th, 2016

Is viewed as a startup who invests the majority in marketing/advertising.

Martin Omansky Independent Venture Capital & Private Equity Professional

October 7th, 2016

Depends. Mostly, the investors I represent want to see a fully-developed project and some traction from brand-name early adopters, which can be acquired without a lot of marketing or advertising. There may be an argument for heavy marketing and advertising when a mass consumer product is involved, but we avoid this circumstance because it is an inefficient use of investment dollars in the early stages of an enterprise's life. This does not mean that no marketing is called for. Sent from my iPhone

Mike Moyer

October 7th, 2016

Your details are unclear.

Marketing = Innovative ways to grow a business.

Marketing is everything. No market = no business. In the beginning 100% of your effort should be put towards getting customers. All activity and spending should focus on acquisition. If you can prove people want your product or service you may be onto something. If you can't prove people want it, why bother creating it??

Way too many startups focus on building a product or service first. They worry about features and usability and customer service and HR and financing and other thing that are 100% meaningless without customers.

Everything in a startup is about market validation. NOTHING else matters.

If your marketing gets you customers and you have nothing to sell them you can go build something to sell them. Good problem to have.

If your product is awesome but you can't get customers you're out of business. Bad problem to have.


Andrea Raimondi Computer Software Consultant and Contractor

October 7th, 2016

@Mike, that was sort of what I was trying to say (pity nobody picked up on it :) ).

A

Martin Omansky Independent Venture Capital & Private Equity Professional

October 7th, 2016

Mike: I agree on the importance of the marketing function, but in my investor world, we like to start with something worthwhile to market and sell! One can have a superb marketing program, but few repeat customers because the product/service is lousy, expensive, or undifferentiated. Marketing is not "everything"; marketing is a tool and a process to bring your value proposition to the attention of potential users. Sent from my iPhone

Mike Moyer

October 7th, 2016

Martin: It's too easy to build a product first and market second. Marketing is scary, making a product is fun. You can replace the word "Marketing" with "Market Validation" it is, by far, the most important step in my opinion.


Martin Omansky Independent Venture Capital & Private Equity Professional

October 7th, 2016

Mike: maybe this is not the proper forum for our discussion, but I would like to say here that there are many changes to the product/service during the development process, and that premature marketing might miss, overlook, or misrepresent the object(s) for sale. This is not to say that one does not prepare marketing strategies, programs, and materials, but I feel strongly tthat the claims we make need to be accurate and complete. I do have a kind of bias, which that our group focuses on non-digital technologies (material science, chemistry, energy generation and storage, electro-mechanical devices, medical devices, pharmaceuticals) that require experimentation and refinements - and that will be subject to independent and careful validation. No amount of marketing, no matter how sophisticated, can successfully introduce innovations into an innately conservative environment, if the product/service/technology (as defined above) fails to match or exceed the performance as described in marketing programs. One other bias: most of our investments are b2b. I recognize that marketing to consumers is a different kettle of fish. Sent from my iPhone