Marketing and SMB

"Half the money I spend on advertising is wasted; the trouble is I don't know which half." - John Wannamaker

Every owner understands that a good business has to constantly cultivate new opportunities and maintain existing customer relationships. Most owners also know finding the right marketing channels and marketing talent can be difficult, and can be incredibly costly if the wrong ones are chosen.

Take eBay for example. Back in 2013, the company's head economists discovered a sinister truth about its ad budget. It didn't matter whether they spent the money or not on Google ads - sales kept coming. Why? The brand, a lack of competition, and the overwhelming demand for their product. Spending on AdWords to target customers that were already familiar with eBay was a pointless and costly exercise.

Many businesses, and especially small businesses, have never found much marketing that clearly works. They have customers, but how they found them feels haphazard at best. We see it all the time when we meet with owners and CEOs and it’s almost always the same story — “We’ve worked with 5 different marketing firms over the past 10 years, all of which told us they were going to do amazing things for our business and none that moved the needle." Measuring marketing ROI is just plain hard.

There’s also a talent selection issue. Understandably, most owners aren’t marketing experts and have a difficult time differentiating between the real deal, the pretender, and the charlatan. As your marketing budget gets smaller, the quality of the talent/firm you can attract drops off steeply. Said differently, if a firm is great at providing marketing services, they are constantly leveling up their client base to bigger budgets and more sophistication. The best marketing talent leaves the SMB market, leaving smaller businesses with far less viable options.

Then, there’s the paradox of choice. The beauty of the internet is that it has fostered the creation of new forms of media. Quite literally there’s a new way to market available to you weekly. These include the widespread consumption of podcasting, newsletters, and influencer platforms, just to name a few. In addition, old school media (radio, billboards, TV, and print) still provides tremendous value in the right context. But the choices are overwhelming. It’s hard not to throw up your hands in confusion and frustration.

We believe good marketing boils down to finding your customer, speaking their language, and solving their problem. When we start working with a business, we ask the following questions:

1) Who is your customer? The more specific, the better.
2) Where does your customer spend time?
3) Are you educating your customer or reminding them you exist?
4) How much margin is each incremental dollar of sales worth?
5) Where are the friction points in our customer experience and how can we eliminate those?

All good marketing starts with the basics and results often flow from small tweaks. It’s almost aways a game of incremental improvement, not game-changing leaps. As an example, one of our portfolio companies experienced a surge in lead volume merely by making it easier for a potential customer to contact them. Another needed a small brand refresh to reflect the company wasn’t a small “mom and pop” shop like their customers perceived them.

If you find yourself frustrated or baffled by marketing, start Googling and get educated. With low expectations, test something small, focusing on incremental improvements around how you find and communicate with your potential customers.

Leading through anxiety: inspiring others when you’re struggling yourself (Harvard Business Review)
+ "How can you lead with authority and strength when you feel anxious? How can you inspire and motivate others when your mind and heart are racing? And if you hide the fear in an attempt to be leaderlike, where does it go?"

These gas-station entrepreneurs favored food over fuel and got rich (Wall Street Journal)
+ "As teenagers, Mohsin and Zuber Issa worked at a filling station in northern England owned by their parents, who emigrated from India in the 1960s. They used that experience to expand from the purchase of a single derelict site nearby into one of the world’s largest independent gas-station operators, with over 6,000 sites across Europe, and more recently in Australia and the U.S."

The future of workplace (Cushman Wakefield)
+ "Nonetheless, younger employees have increased their adoption of remote work at a quicker pace than other demographic groups. Compared to 2005 levels, workers aged 18 to 29 have more than doubled the rate at which they work remotely, compared to a 74% increase among workers aged 45 and older. Even with these trends, it would take decades for these remote work shares to equalize, indicating that remote work will likely continue to be utilized more heavily by older employees."

The Chapwood Cost of Living Index (Chapwood Index)
+ "The Chapwood Index reflects the true cost-of-living increase in America. Updated and released twice a year, it reports the unadjusted actual cost and price fluctuation of the top 500 items on which Americans spend their after-tax dollars in the 50 largest cities in the nation."

Inflating inflation part deux (Financial Times)
+ This piece takes the other side of the inflation / Chapwood Index debate.

Don’t count on free trials to win you customers (Harvard Business Review)
+ "Our research provides evidence that for “experience” goods — for example a holiday destination, a movie, or new software, where value is only discovered after consumption — free trial campaigns should be deliberately targeting existing customers of medium to high usage. Our study reveals that for this type of goods and services, relative to non-users, customers with some exposure to the product are more responsive to free-trial campaigns."

For 2021 housing data, context is key (Housing Wire)
+ "The last thing to keep in mind for all of 2021, is that the “too-hot” demand we have had going into 2021 will moderate as that was more of function of make-up demand after the drop in housing data due to COVID-19. This should be expected by everyone. Don’t be like the housing bubble crash boys who, for the last eight years, have taken every soft number (even if the metric was positive year over year) as evidence for their narrative that the housing market is on the verge of a 30%-50% price crash in a calendar year."

When big brands stopped spending on digital ads, nothing happened. Why? (Forbes)
+ "When P&G turned off $200 million of their digital ad spending, they saw NO CHANGE in business outcomes [1]. When Chase reduced their programmatic reach from 400,000 sites showing its ads to 5,000 sites (a 99% decrease), they saw NO CHANGE in business outcomes [2]. When Uber turned off $120 million of their digital ad spending meant to drive more app installs, they saw NO CHANGE in the rate of app installs [3]. When big brands stopped spending on digital ads, nothing happened. Even further back in time, in 2015 a large medical device company turned off half of its digital ad spend, and saw conversions stay the same (chart below) [Harvard Business Review], and in 2012, eBay turned off their paid search ad spending, and saw NO CHANGE in sales coming from those sources [4]."

What the numbers tell us about work right now (Wall Street Journal)
+ "We’re getting our work done, but we feel pretty miserable. In a September survey of 330 human resources leaders by the Conference Board, 47% of respondents reported an increase in productivity at their companies, while only 13% reported a drop. But 60% said their employees are working more hours and 63% said their employees are spending more time in meetings. Four out of 10 reported more mental health problems among workers."

Is the office dead? Not exactly. (Marker Media)
+ "Last fall, Dropbox drew its line in the sand when it announced that it would indefinitely become “virtual first,” ushering in the next iteration of the brick-and-mortar office economy. To be clear, Dropbox isn’t abandoning in-person work or switching to a pure work-from-home model. Instead, it’s shifting the default from the office to remote, while setting up Dropbox Studios, where employees can collaborate and hold in-person meetings. Unlike traditional hybrid-remote office models where employees can choose whether or not to go into the office, Dropbox has made it clear that Dropbox Studios is not intended for individual work or hot desking. Its offices will be reserved explicitly for team building and community gatherings. In other words, something more akin to a rented hotel banquet hall — but theirs is 24/7."

How sports trading cards went from hobby to 'asset class' (ESPN Daily)
+ "In August 2020, a rookie year baseball card for Angels superstar Mike Trout sold for nearly $4 million. The modern-day card broke a record previously set by a much older rare Honus Wagner card of the early 1900s. And the eye-popping price could be surpassed again soon. Trading cards have transformed into investments, fueled by a mysterious rating system and eccentric power brokers. Dan Hajducky tells us strange stories from the world of sports cards. Then Mike Greenberg shares his thoughts on why the return of baseball meant so much in 2020."

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