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Did Your Start Up Just Waste Your Venture Capital Money on Advertising?


Did Your Start Up Just Waste Your Venture Capital Money on Advertising?

A friend of mine works in a WeWork based in London, surrounded by start-ups.  The other day we met for a coffee and while having a general catch up, he lowered his voice and said to me.

“These start-ups just seem to be blowing their money, or blowing the venture capitalists money!”

“Why is this?” I asked.

He said “The first thing they do is blow it all on advertising”.

Something I had also overheard while sitting in the Google Campus in London the other week, somebody was explaining the “return” they go on advertising the night before.

Here in Digital Leadership Associates (DLA) I’m known, as a salesman not as someone who understands what Marketing Agencies and Advertising Agencies talk about. They have this strange language; impact, eyeballs, etc.  When I ask, “so what revenue have you created?”, I always get the reply, usually in a sarcastic tone and talking slowly “look you don’t understand”.

In my previous role, I had to sit through a presentation from one of the biggest advertising agencies in the world, who talked at us very slowly, “look, the internet has changed everything”.  I only had 65,000 twitter followers at the time, if they had bothered to look, they probably would have seen that there was a fair chance I knew that the internet had changed things.

Advertising a History

Advertising was invented in the 1930s, because in a pre-internet world the only way you could get people to know about your product was to interrupt them and broadcast at them.  There was a direct link, the more you advertised, the more you sold.  The problem is that most adverts are forgotten, yes we all remember some, but that is the minority.  So once you spend money on advertising and had an initial shot, you have to keep spending to get the hit.

Fast forward to 2018 and there is 30% year on year growth of adblockers and if you talk to anybody, they don’t like being interrupted, they don’t like being pitched at.

I run a YouTube channel and recently did an interview with a FaceBook Ads expert, Julia Bramble.

#TimTalks – How to use Facebook Ads for Small Business Success @JuliaBramble via @YouTube

Now regardless this was advertising, as far as she was concerned, everything was about content marketing.  For example, if you run a baby massage company.  (Stick with me, its the example Julia used).  Rather than standing and shouting across facebook how brilliant your baby massage services are, she suggests writing a blog about how to get a good nights sleep.  He reasoning is this:-

  1. This is probably a subject parents are searching for
  2. Once found, the fact you seem to understand them, they might look for more of your content
  3. They may stumble of your site and as they liked your article and contact you to give it a go

Related: Social Selling: The No Fluff Guide to Using Content

Everything Now Revolves Around Content Marketing

In 2018, the buyer is smart.  They will have researched you and other products.  Today with so many products and services, they will have done this, (probably) without you knowing.  What we find today is that people, have so much choice they spend time qualifying you out, not qualifying you in.

If you are remembered then it will be for good content.

A friend of mine says he loves advertising.  Why I ask, he says, it’s great to getting ideas about things.  He says he seldom buys from the people he sees the ad from as he researches on the net and tells me he usually finds something better at a lower price.

You Are “in Start-Up” or Venture Capital funded and Don’t Want to Waste Money, What Do you Do?

  1. Get a personal brand, everybody is checking out everybody else on-line. People are looking for  people they can trust.  You won’t have that by having an on-line CV or looking like a spammer. As a VC or a Co-Founder, a personal brand is a must.
  2. Be interesting. Share content around your subject mater expertise, show people how passionate you are.
  3. Create content. Everybody can write, I was told at school never to take a job that requires you to write anything down and here I am writing a blog.  Here at DLA we publish a blog a day, it gets us at least 3 piece of inbound every day.
  4. Create Community. As a start-up you need to get new customers and also turn those customers into advocates so they recruit in more customers.  The only way you can do this is on social media, advertising, won’t get your customers to refer.
  5. We Don’t Have Time for Social. This thing that social takes a long time is a fallacy, spread by social marketers.  While you can and should plan for social in the long term, social can get you customers faster and at less cost than cold calling and advertising.  You just need to know how to do it!  (My Book “Social Selling – Techniques to Influence Buyers and Changemakers” available on Amazon is a good place to start.)

So what about VCs, why do they sign off advertising spend?

I don’t know, similar to some of the acquisitions some of the “big 4” seem to be making, to be digital they want to employ 1930s technology, a retrograde step me things.

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