Marketing for Asian Startups: Luxury or Necessity?
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There is no question that startup budgets are tight. New companies often cannot project their earnings nor their losses into the long-term, and this makes the marketing side of the business feel like something that is nice-to-have rather than a necessity.
Nonetheless, startup marketing decision is only happening more in Asia Pacific — thanks to its growing ecosystem. The number of startups across the region has been growing steadily over the years, with more than 1,500 startups being founded in Malaysia alone for 2018. On the flip side, it is estimated that more than 70 per cent of these startups will fail in the first 10 years.
If we examine the top reasons for failure, two stand out – running out of cash and poor marketing. This brings us to the question at hand: Since startups have a limited budget to operate with, how much should they invest in marketing? And why could it change the number of startups who make it past the 10-year mark?
Where the Money is Going
There is a reason why marketing tends to fall to the wayside for many startups. There are just so many other integral outgoings that each business needs to allocate for, with a huge chunk of operating expenses going towards equipment, payroll, technology and research. This leads many to regard marketing as an afterthought, allocating what’s left of the budget to run small scale campaigns.
The campaigns are small scale because the marketing budgets are small scale. According to a study by Outbound Engine, 55 per cent of small business owners spend less than 5 per cent of their annual revenue on marketing. Yet, the results from the same survey show the importance of marketing. Only 50 per cent of respondents who invested less than 5 per cent of revenue into marketing experienced revenue growth. Meanwhile, more than 80 percent of respondents who invested between 5 and 10 per cent of annual revenue in marketing reported experiencing revenue growth in 2018.
The Marketable Truth
The numbers show that marketing is without a doubt a business necessity, and this is even more so for startups. Unlike multinational corporations, which can command attention with the slightest drop of their brand, startups begin as virtual unknowns in today’s increasingly crowded landscape. Without a concrete marketing plan and sufficient investment in paid advertising, there is simply no way for potential customers to even know of a startup’s presence — let alone what it has to offer.
One common mistake is to invest in an awareness campaign at launch, but not follow up with an overall strategy backed with budgets.
The fact is it takes years to leave a lasting impression on target audiences and build credibility; taking a half-hearted approach to marketing and relying purely on word-of-mouth just doesn’t cut it.
And it does not need to cost that much. Paid advertising on social, search and display networks are key drivers of growth for startups and are affordable for small companies. Not dedicating enough time, effort or money to them could be costly in the long term and cause startups to be trapped in the early phases of growth for extended periods.
A Luxury no More
Digital advertising means that marketing is no longer a luxury for the world’s biggest brands and the world’s biggest budgets. Gone is the era of creative agencies and restrictive mediums; the industry’s shift to digital and mobile has leveled the playing field for startups, with costs per thousand and costs per click much more affordable and readily measurable in its impact to the bottomline.
Small yet dedicated teams and targeted adverts can do wonders for startups in the long run, but they do need business backing to make it possible. Hiring a sizeable in-house team to produce ad creatives can be costly from the start, but there are alternatives like freelancers, crowdsourcing platforms, and creative solution providers to lower costs.
Marketing and advertising have become essential in this day and age. A startup without marketing is simply not good business sense, and this is especially true when the majority of such businesses do not survive longer than a decade. Startup business leaders need to be realistic about the role marketing plays, and they also need to be realistic about the amount of resources they allocate to make such marketing strategies possible.
Business is a long-term game and marketing is a long-term tool. Startups, both in Asia and further, need to remember that marketing is no longer something that is nice-to-have. It could be the difference between celebrating the business’ 10th year anniversary — or not.