Startup Advisors

Which is more effective, inbound or outbound marketing? One of the attendees at a recent startup event asked this question, and started a lengthy discussion.

Outbound marketing is the communication of information from an organization to it’s customers and other constituents such as investors and partners. Traditionally these consist of the key messages that an organization wishes to communicate, and the many vehicles that are used to communicate those messages. The key messages can include product offers and information, competitive comparisons, white papers, etc. The vehicles traditionally include public relations, trade shows, advertising, seminars, direct mail, website etc.

So what is inbound marketing? If you ask product managers they will tell you that it is the inbound information flow from potential customers that drives product strategy, and which can be used to help craft the outbound communications messages. Call it market research, in all of its different perspectives. Recently another definition for inbound marketing has gained broader awareness, driven in part by internet search engines. The idea behind the new inbound marketing is to create content that is highly ranked in internet search, so people who are looking for that information will find you themselves.

So how can you decide whether outbound marketing or inbound marketing is more effective? First you should ask what are your goals for marketing in the first place?  It is a common frustration to technical entrepreneurs, that they can spend a lot of money on marketing activities, and don’t see that they are getting much in return. Partly this is due to the fact that they failed to establish any marketing goals in the first place. In my experience marketing people tend to be creative and relationship oriented, and not analytical, so they can have a difficult time quantifying their own activities.

The real goals of both the new inbound and outbound marketing can be distilled down into two main categories, building brand awareness (aka buzz) and generating sales leads. For customers the two are actually closely related, however building brand awareness has additional importance to potential investors partners.

So which is more effective, the new inbound marketing or outbound marketing?

The common perception is that inbound marketing is lower cost compared to most outbound marketing activities. Is it really? Here are some questions you should ask:

• How much does it cost to generate a stream of content to attract potential customers?
• How long will it take for the content to actually gain traction? One of the factors used by search engines in determining the ranking of different content is the number of inbound links. You can write the content, but can you get people to link to it?
• How are you going to turn people who find your content into leads?

Outbound marketing may be more expensive but the effects are much more immediate. You can run an ad on the internet and see results within minutes or hours. You can run a direct mail campaign (that’s really old school!) and see results within days.

Ultimately you need to decide for yourself which marketing activities will allow you to achieve your marketing goals of brand awareness and lead generation most effectively. Just remember to keep in mind that marketing requires an investment of time, people and money. The marketing programs that you run will require all three.

Well the first day of the Agora Startup Idol competition is complete, and here are my observations of how the startups did. There were 4 heats today, and there will be 12 additional heats over the rest of this week to determine which 32 startups get to move on to round 2 next week.

The format was that each startup presented a 2 minute lightning presentation, followed by 5 minutes of Q&A, after which the “judges” discussed how they would suggest the startups improve their presentation, and then awarded the startups a score from 1-5.

Not all the startups were actually trying to build a sustainable business. One was looking for crowd funding using KickStarter.com to create a mosaic from pictures submitted globally by people from their phones. That hardly qualifies as a sustainable business, although I can think of a number of ways to apply the same technology in other contexts.

Of the others there were a variety of innovative technology, business models and social metaphors that made it difficult to compare the startups to each other. Clearly though, it is difficult to conceive of many of them creating a long term sustainable business. On the other hand, it is conceivable that they will be able to have a profitable exist, if they execute.

The big issue that kept coming up again and again was financial. How much money are they looking for, what are the financial projections to back that up, and what evidence do they have that those projections might actually hold up.

My feeling is that in many cases they just don’t know, which isn’t a problem in and of itself. What is a problem is that they don’t at least present their assumptions. While an investor might challenge, (or less likely support) those assumptions, at least they get them out there for feedback. One thing investors have seen is a variety of different business models, and they can be quick to provide feedback. Better to hear the bad news at this stage in the process than later.

Overall I was impressed with the ideas. One problem with judging an event like this is that different judges have different perspectives on what they are judging. They may have been judging the actual presentation, or they may have been judging the startup through the presentation and the subsequent Q&A.

In any event I applaud the startups who actually participated. 2 minutes of talking without any supporting props or materials, with the trials and tribulations of attempting to live cast an event like this isn’t easy. Hopefully the audience will make it worth their while, but the worst case scenario is that they have had a chance to articulate their business one more time.

I wish all of them the best of luck in the subsequent rounds of this competition.