Marketing’s Next Five Years: How to Get From Here to There

BE RELEVANT ON CONSUMERS’ MOST IMPORTANT DEVICE 

By 2017, 85% of the world will be covered by 3G mobile internet and half will have 4G coverage, according to Sony Ericsson. Three billion smartphone users will contribute to data traffic that’s 15 times heavier than today’s. For more and more consumers, the most important screen will be the tiny one in their pocket.

Personalized and data-soaked, context and location aware, the phone is the window into the consumer’s soul that marketers have been looking for. Whether brands are invited in depends on whether marketers understand what consumers want and need in a mobile environment. By any measure, they’re not moving fast enough.

To put it bluntly, there needs to be more ad spending on mobile, which now comprises only about 1% of budgets, according to a recent study from the consultancy Marketing Evolution. Based on ROI analyses of smartphone penetration, that figure will be about 7%. In five years’ time, that number will need to be in excess of 10%.

Rex Briggs, CEO of Marketing Evolution, said marketers shouldn’t be scared off by the current options for mobile advertisers, which many find to be creatively, um, challenged. “The formats are there but there is a lot of room for improvement,” he said. In his study, for instance, there weren’t even enough location-based campaigns to break into a separate category. That’s not good because, as Mr. Briggs said, “what makes mobile unique is that it’s mobile.”

Of course, advertising is just part of the question and possibly not the most important part. Using mobile devices and platforms to offer consumers real utility and convenience — and not just interrupt them — is where the battle will be won. Inspirations here are Nike, with its Nike+ and Fuelband platforms, Tesco’s virtual subway store in South Korea and Starbucks. The coffee chain has dabbled in every big mobile trend and bet heavily on innovations in payment systems, recently handing off its credit- and debit-card transaction processing to Square, a mobile startup in which it has taken an equity stake.

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BLACKSLATE LAUNCHES…….. “ THE CLICK PROJECT”

BLACKSLATE logo (2)Blackslate Holdings Caribbean (BHC) is putting out a national call for fresh ideas from tech startups dubbed “THE CLICK PROJECT”, as the venture capital company seeks to boost its investment options and horizons.

Starting January 1st 2013 BlackSlate will begin structuring a wide network of incubators, venture capitalists and angel investors across the Caribbean as it searches for new technologies to help companies and brands bust through in the emerging mobile online and social media channels.

The ongoing process begins with an open call for “funding-ready” projects and startups. Blackslate plans to launch the selected startups within a six to eight months window. During this period brands and companies within the private and public sector will also be paired with other selected startups to create new mobile and social media ventures from scratch within 90-120 days.

Blackslate will then pitch the business concepts to angel investors and venture capitalists in hopes of securing seed funding for the start-ups. Blackslate for its part will also take an equity stake in each start-up.

The CLICK PROJECT is designed to help find and create new mobile and social media projects that will help clients start a compelling conversation between their brands and customers, engaging that customer on their terms, where they hang out encouraging them to share.

On the international stage consumers are spending an increasing amount of time on mobile devices, which account for 23% of daily media consumption.  Still, marketers have yet to dedicate a major percentage of their ad spending to the channel. Advertisers in the US will be spending this year about 1.5% of their media budgets on mobile with that forecast to jump to 2.4% next year and 5.5% by 2016, according to the Ad Age Mobile Fact Pack.

For instance, marketers are looking for help in so-called “social TV,” meaning mobile applications that would work closely with a marketer’s TV advertising, as viewers hop between the big and small screen. Other areas of focus and interest are mobile applications for in-store marketing, as well as technologies that can help companies lure on-the-go consumers to stores where its brands are sold.

Companies and brands now have to begin by considering all influences that encourage the consumer to buy, as rarely does a consumer make one-stop that results in a sale. They then have to measure whether that conversation made the brand; the Owner and the customer achieve a predefined satisfaction level. If it didn’t, then they must seek to do it better the next time. BM

How Should Your Brand Partner With A Startup? Five Key Things Marketers Should Know

1. Which startups should I work with?

Identify startups that are working on big and particularly difficult problems for your organization that you can’t or won’t solve.

The sheer number of startups by which you are now inundated is overwhelming. And they come at you from every conceivable angle- senior leadership, the press, incubators, conferences, LinkedIn, friends, unsolicited emails. Not to mention the universe of potentially game-changing startups of which you are not yet even aware!

So with all of this noise how do you choose which startups to ignore, which to investigate, and which to invest?

First, focus on startups that can help you solve your #1 or #2 most strategic problem. Ignore everything else. By doing so, you ensure that you have time to investigate the right startups and then the resources to maintain momentum in the project. Most important, you will increase your chances of having organizational support when the time is right to go big.

Second, investigate startups that focus on strategic problems you can’t or won’t solve internally. It sounds counterintuitive because startups have a fraction of the resources at their disposal than you have at yours. However, this is the very purpose for which startups exist. They find innovative solutions to difficult problems for they are unencumbered by your inherent paradigms, processes, and hierarchies.

Endorse solved a problem for which brands had a need, finding a way to connect directly to their consumers, but no desire to solve themselves- building a compelling in-store mobile experience.

2. How do I mitigate the risk of my startup partner failing?

Work with startups that have two critical components that give them credibility: a strong team with experienced investors, and a built-in business model that you understand and can see scaling.

Startups are inherently risky. And, more often than not, the initial product that got you so excited in the first place will evolve over time. However, you can drastically reduce the risk of your startup partner failing in two main ways.

First, it helps to work with founders, teams, and investors that give you confidence that they can execute on the company vision. Try not to be wowed simply by a compelling idea, the passion of the founder, and a polished presentation. Yes, these are important traits but you also need to dig a level deeper. What are the key capabilities for the business to succeed? Is this team uniquely constituted to build the business? Have the investors been apart of success before and will they stand behind their investment when things don’t go perfectly? Do I trust this group?

Second, the startup must have a business model that makes sense at both small and large scale and one that you know you can impact. A few key questions that help in this early analysis are things like: Is there an obvious revenue source? Does this solve something for which I am already spending money? Can I see this as a solution for other brands, not just mine?

3. Why shouldn’t I insist on an exclusive?

A platform approach rather than a brand-specific approach is better for both short and long-term startup success.

I know this is counterintuitive, particularly when you “discover” an attractive startup with which to partner. The best chance of future success is for you to embrace a larger solution rather than building something just for your brand(s) or for your CPG company. There are many reasons for this, but in general, the more parties that use the product or service, the more valuable it becomes for everyone. The earlier a startup achieves success in its life cycle, the higher the likelihood that the startup will get the additional investment to help further scale.

Second, though you may not realize it you already have a de facto exclusive by getting in early. The reality is that a startup can only work successfully with a handful of large partners. It’s a symbiotic relationship- the better the startup executes for you, the more invested you become, the more successful the business becomes.

If it makes you more comfortable, it is acceptable to ask the startup for a short time-based exclusive so that they won’t work with a direct competitor.

4. Now that we’re working together, how do I know if we’re on the right track?

Set up a pilot to surface the right issues, then analyze, learn, and communicate key findings frequently.

With Endorse, my team and I collaborated with our brand partners and addressed “Killer Issues” early on in the company lifecycle. We set up “test and learns” with small budgets and we were diligent in analyzing and reporting on the findings.

We ran a six-month pilot and invested our own capital and resources along with our brand partners. We wanted to show that shoppers would provide proof of product purchases in retail stores and that we could give brands compelling data insights that are hard to come by. By proving this out in a controlled manner, we established trust by doing what we said we would do.

Once we were able to draw tangible insights, we jointly met with internal stakeholders across the various companies and reported the findings. We did “lunch and learns”, participated in innovation offsites, and held briefings with senior leadership. In this way, we were able to bring parts of the organization along with us to get their feedback, surface potential stumbling blocks, and got buy-in early in the process.

5. How do I create the best interpersonal dynamic with an entrepreneur to be successful?

It’s not an agency-client relationship- expect more give-and-take, more collaboration, more personal investment.

Simply put: There is a different mentality required partnering with startups than there is with the traditional agency-client relationship. As one of my CPG colleagues is fond of saying, you need to be able to agree to disagree on certain critical issues- and to be comfortable with that. In some cases, you might be even asked to embrace a solution that appears to be sub-optimal for your immediate needs, but is better for serving the long-term success of the company.

Both the startup and you have the same goal: to create a sustainable business that solves a key business problem for you. If the company fails because it optimized for your specific requirements to the detriment of a broader approach, you both lose.

Think about it: both parties are putting a lot on the line. For you, you are risking your political capital, investing your time, and spending your budget on a risky startup with no guarantee of success. For the startup, you are a critical early customer who has the potential to make or break their business.

Just like any relationship, trust is the foundation for long-term partnership success. This is achieved when both parties make the necessary time investment to establish a strong cultural fit.

There must be open lines of communication in order to meet certain time milestones, to set expectations on budget, to know when something is working or not working. The manner in which work gets done at a startup might be different than the way you normally work. In general, frequent, informal, and transparent communication works best.

ABOUT THE AUTHOR: Steven Carpenter is the founder and CEO of Endorse, the next generation offers platform for consumer brands. He is a former Entrepreneur-in-residence at Accel Partners. Follow him on Twitter twitter.com/stevencarpenter.