Question

Topic: Strategy

Should A Hi-tech Start-up Outsorce Its Marketing?

Posted by Anonymous on 3/19/2005 at 9:33 AM ET 250 Points
Facts: A one year old new start-up in the smart card industry providing high end, hi-tect solutions to a conserative B2B industry segment, which also has high entry barriers due to security requirements and quality assurance demands.

Fact: The start-up is burnning through its cash and after 6 months has no tangiable or clearly defined strategic-marketing plan or barrels of money to develop one.

Fact: A Marketing and Advertising agency (external) has be reviewed to provide the critical elements of a marketing plan and roll-out.

Questions: Should such a company outsource its marketing efforts to an agency especially when they have few results to date and a lack of internal expertise in this area?

What would an agency have to provide or present to such a client to insure successful development and roll-out of an integrated marketing plan?

To continue reading this question and the solution, sign up ... it's free!
SUBSCRIBE
Or, SIGN IN

RESPONSES

  • Posted by Peter (henna gaijin) on 3/19/2005 at 2:42 PM Member
    Nothing against the offers listed above, but I am not sure an agency is the route to go. They will likely want to be paid in cash, which is something you are short on. Added to this, most agencies don't have the market experience for your particular product to formulate good, high level product plans, etc., so the high level guidance needs to come from someone with some skin in the game (someone inside the company or who otherwise has a lot to gain if things work, but also lots to lose if they don't).

    Options you may want to consider:
    - find a company that would be willing to partner based on a commission or mark-up basis (usually a sales type company). This is very common as a means when entering a new market - you partner with someone who knows the market and has access to the customers. Downside is you give up some control of the channels and market in exchange for not having to pay out cash. And this doesn't solve issues of needing someone to guide the product inside your company.
    - find a person (employee) who you could hire who would be willing to accept equity for the majority of their pay. There are people who will do this, though often you have to be a bit more flexible about the background of the person than if you were paying market rates. Often it is a more junior person who is looking for being able to get the higher responsibilities and more varied experiences found in a small company. The challenge is finding someone good - people who have worked a while have a track record that you can look at, which you won't have with junior people.

    Of course, you should take a hard look at the business. Is it realistic to think you can make it work and get to positive cash flow before you run out of cash? If not, how can you reduce your cash burn?

    If you can't reduce the cash burn to a point where you can possibly get to cash flow positive, then exiting the business may be the right solution. No use spending good cash after bad.

    This all said, if you do decide to go with an agency, posting a project on MarketingProfs may be a good ways to check out multiple consultants/agencies at once. There are many impressive consultants/agencies on this site.
  • Posted by telemoxie on 3/19/2005 at 5:03 PM Member
    Fifteen years ago, when I last worked in the security / encryption / authentication area, the security related community was a fairly small and tight-lipped bunch.

    Today, in the post 9-11 world, folks who are well versed, well connected, and have the right background and clearances are in high demand.

    You have said you are B2B. Even so, I would bet dollars to donuts that the majority of folk handling security in your target companies once worked in DC, that a substantial portion are retired military, and that most of them have or had high security clearances.

    Personally, I avoid this kind of work like the plague. I have the greatest respect for many on this forum - but due to the "good old boy" nature of this industry, and due to the fact that much of the information needed to prepare valid marketing plans is classified, if I were in your specific situation, I would not consider any person, company, or agency with less than ten years specific and relevant experience.
  • Posted by steven.alker on 3/19/2005 at 10:56 PM Accepted
    Mark

    You seem to be presented with dilemmas and yet more dilemmas. You can engage an agency to try to overcome the hurdles Bill and Randall rightly outline, but risk burning up your funds through fees before even the best strategies anyone could suggest might pay out in orders. Or you go for collaboration possibly at a cost to the independence of the company.

    The latter could be better, but it would come at a cost on your margin and any partner worth their salt would want some form of exclusivity for a considerable period of time in order to protect their investment – possibly exposing your company to their failure in the market and leaving you with the same problem as now, but further down the line, with fewer funds and the same timescale to get some revenue in from your product.

    Bill’s hit a point in that you do seem to know the answers, so might it be within your grasp to take on at least some of the marketing work needed to get things off the ground? At least it would produce some concrete enquiries or leads which are themselves a form of currency should you then wish to explore some collaboration on further sales and marketing.

    You appear to have the understanding to write a marketing plan, so why not do so and get some feedback here.

    You must have an idea of the features, benefits and some possible applications for the product, so a spot of B2B PR would be easy, if time consuming, to write.

    Alternatively, a technical B2B agency is a lot less expensive than a full marketing agency and they could place a series of lead generating stories in a range of publications over the next few months for a few thousand dollars.

    If that’s too much, write the first few press releases yourself, research the details about the relevant trade magazine’s editors in your local library, look up how to write a covering letter on the web, send 400 well penned words of editorial to them, checked by a couple of literate colleagues and enclose a nice photograph and see what happens. It will only enjoy a fraction of the success a PR professional would gain, but all it will cost is your time.

    By the way, use the best quality paper and envelopes for the press release and covering letter, a good quality photograph, a first class stamp and possibly hand address the envelope, neatly, using a fountain pen. It gets you noticed!

    At the same time, seek out some established companies which could utilise your product as part of their offering and see if they could use your product without having to invent it themselves. Don’t get tied into exclusive deals, even for a market sector, unless the partner is prepared to put their cash up front to secure your technology in return for their access to a given market where they have an established and respected presence.

    I also sympathise with Telemoxie and his views on the security industry, but I don’t know that you mean that type of Pentagon / Whitehall security. We have a client who has a security based smart card which could have been all things to all people who wanted to record personal details about communities of users in all sorts of situations.

    By partnering with Universities (Student Loyalty Deals), Town Councils (Resident’s benefits) and Sports Clubs (Supporter Organisations, Ticketing Software Companies, Booking Agencies, Access Control Hardware and Software and Loyalty Schemes) they found the partners who could utilise their smart card with their systems and software without going near to a restricted area access protocol.

    Funny thing is that until they did the PR, the military were their main target and the reason why they started to develop the card. The second sector they had in mind was the headquarters of finance companies. To date, they don’t have a single company in these areas as a client. We put them in touch with a load of Football Clubs by linking up their card to our CRM systems used for supporter relationship management programmes.

    Steve
  • Posted by steven.alker on 3/21/2005 at 6:12 AM Member
    Mark

    Thanks for your feedback and the personal comments. I agree with you about the other postings - I've been using ideas put forward by telemoxie and Peter long before I started to contribute here (Read, learn then dare to try to offer advice!)

    I'll get in contact with Valerie Frazee, the moderator and see if it's possible to split the points equally to reflect your wishes - I think it’s only right and fair.

    Good luck in getting this moved forward - don't let a wealth of new ideas cause too much thinking time!!

    Steve
BACK TO TOP

Post a Comment

Related Discussions

Community Info

Top 25 Experts
(Strategy)