This is a guest post by Melissa Olsen. Melissa is the marketing director for Morbie.com and its sister sites, and is currently based in Fort Worth with her husband and four kids. Connect with her through Google or Twitter. If you would like to write a guest post, please contact us.
A common question asked by startups is how much should the spend on their marketing once they begin to see profits. The idea, of course, is to invest in a marketing effort that will result in a wider audience and bigger profits in the future, not just through acquisition of a one-time-buying consumer market but also through establishing and growing a loyal consumer base that will buy repeatedly.
So the question of how much startups should spend on marketing is one laden with high hopes and positivity, in a way. Unfortunately, where most startups are concerned, the right answer may be disheartening.
More often than not, startups should steer clear of investing too much in their marketing—and in most cases, “too much” can still mean “very little”. It’s true that every successful company needs good marketing; the hallmark of all great businesses is that they develop their markets in tandem with their products. But that is exactly the point. If you read it carefully, that means that startups shouldn’t privilege investments in their product development (or product improvement) over investments in marketing and vice versa.
The reason behind it is simple: no company starts out with a perfect product. Startups hoping to broaden their market share need to be wary of many things, not least being bad press (and there is such a thing as bad press, contrary to the aphorism). Investments in marketing are huge gambles for startups as a result. In the first place, there is no guarantee that the marketing campaigns will work. And in the second place… what if they do work?
A successful marketing venture executed prematurely in a company’s history can destroy an unprepared startup very easily. Consider the situation of a startup that invests in a nationwide marketing campaign that gets more people asking for its service, only to discover that it doesn’t have the means to satisfy heightened demand and thus ends up letting down most new customers. Or what about the startup that has major problems with its service procedures but hasn’t realized it in time to fix them before exposing those inefficiencies to a wider audience? These are crisis situations. Just remember, the bigger your audience/market, the more mouths there are to criticize you and spread word of your failings. And in the age of connectedness and online technology, photos of funny cats aren’t the only things that can turn viral.
Startups are characterized by risk-taking, true, but some risks just aren’t worth the jump. Fledgling companies are always wildly vulnerable to consumer opinion. If something a startup overlooked in its supply or production line turns out unsatisfactory to buyers, exposing it to more consumers may knell the death toll of the brand. Startups don’t have the resources or deep roots of the big companies, after all; thus, they are far less likely to recover from such downturns in public opinion. There is little history they can fall back on, few years of good service to cite as assurance that their next year will be good again.
So what should startups do? Leverage as many free and low-cost marketing resources as they can. Work with social networks and media to engage existing customers and ask them to help identify all the kinks in the product before launching it in front of a much larger audience. Continuously make use of customer feedback to refine company processes and products. Startups don’t necessarily need to stay away from marketing, after all, nor do they need to minimize the actual marketing work they do. They just need to be smarter about what they spend and how they spend it.