Tuesday, December 16, 2008

Surviving The Storm – Smart Use Of Your Limited Marketing Budget

By: Mark Helfen

It was the best of times, it was the worst of times…

The SDForum marketing SIG December meeting, “Surviving The Storm – Smart Use Of Your Limited Marketing Budget” gathered a panel of seven executives from web startups and VCs to discuss how the difficult economic times has changed their strategy and operations.

But while times may be tough, the panel, an optimistic lot, mostly discussed how their companies would survive and turn the economic situation to their advantage.

Ezra Roizen, Partner at Ackrell Capital, moderated the panel. He began by noting, “In the current environment, surviving is winning.” Business models have changed from “customer acquisition to survival.”

But overall, panelists said that this could be a great time for their businesses. Companies need to carefully focus their strategies, but those that survive the downturn can emerge at the other end as market leaders.

“You need to be really clear about what you are doing,” said Tom Patterson, CEO and President of Wise.com. “It doesn’t cost money to be really clear about your message.”

“This is a great time to be selectively aggressive,” said Benjamin Wan, Vice President of Marketing at Hit Profile. According to Wan, advertising for brand awareness is down, but performance advertising – ads that deliver leads – is “robust.”

Ranjith Kumaran, CTO of YouSendit.com, had a similar message, stressing the need to focus.

“The less moving parts to your business, the better it is,” said Kumaran.

Sharam Fouladgar-Mercer, a Senior Associate at Sierra Ventures and the sole VC representative on the panel, noted that while times are difficult, “the VC firms are still open for business.”

“We just signed a deal last night,” he said.

Companies may need to cut their budgets so they don’t run out of cash, and push for finishing their products features so they are ready to go when the economy picks up. Firms need to plan for a longer time horizon. “Visibility may be a few quarters away.”

But most of the executives said that the current problems would be an advantage for their ultimate success.

Surviving is a competitive advantage, according to Kedric Van de Carr, VP of Marketing and Business Development at Vator.tv. “Companies are pulling back, dying. It’s a huge opportunity to gain market share.”

Patterson of Wize.com can see other advantages.

“During a downturn it’s tough to raise capital, and tough to sell a company. Everything else is easier,” said Patterson.

“It’s a good time to rethink your human resource strategy, and get more value for the buck,” he said. “The quality of the resumes we get are much better, and the people we couldn’t get to talk to us before are coming back.”

“It’s a great opportunity to upgrade your team,” he continued, and to renegotiate contracts. “Companies dying is a good thing. The talent pool has been spread really thin.”

It’s an opportunity to “get high value employees inside and out.”

The state of the economy is an “opportunity to cut without feeling bad,” said Chris Tolles, CEO of Topix. “If you lose your job now, the best thing is to start a company.”

Patterson agrees.

“There has never been a time you could start a company so cheaply,” he said. He mentioned web services using Amazon S3, and the availability of lower cost engineers.

Tolles believes that small companies have an advantage in these times. “Big companies are run more poorly and you can go after them.”

For at least one of the companies, web traffic, if not money, seems independent of the economics. Topix is a news aggregation site, carrying local, national, and international news. According to Tolles, web traffic is most affected by world events.

“Disaster is good,” said Tolles, noting that important or popular news, such as the big fires in San Diego, or Hurricane Katrina, drives traffic to his site.

The circulation problems that newspapers are having also drives traffic to Topix.

”The fewer newspapers the better,” said Tolles.
Mark Helfen is a Marketing Consultant and Freelance Writer. He can be reached at mhelfen@wordpixel.com

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