That was the headline in the lead article in the December 13th issue of BtoB Magazine. Senior writer Kate Maddox reported quite a non-shocker from a survey of more than 300 marketing executives: business-to-business marketers will continue to increase spending in 2005 with the purpose of customer acquisition and sales, over brand awareness.
I’m a public relations person by training. No one needs to convince me about the value of the brand. It is a truism that people do business with companies that they know and trust.
But, I also believe the rule of business that drives most corporate decision-making is the demand for return on investment. The “return” a company is seeking varies, but can typically be attached to one or more of three benchmarks: 1) sales, 2) profitability, and 3) corporate and/or product valuation.
That’s it! The companies that achieve market leadership are the ones that figure out how to grow those three things more quickly and efficiently than their competition. Everything else across the enterprise is a “cost” that can one day be cut. (Just ask all of those IT staffers and call center reps who have seen their jobs sent offshore.)
Are corporate marketers and their agencies getting hip to this? It appears so. BtoB’s survey found that 71% of respondents cited customer acquisition, sales and lead generation as their primary goals for 2005. Brand awareness tallied 17%. (Surprisingly, that increased slightly from fewer than 16% in the 2004 survey.)
My view is that lead generation and sales focused communications activities also positively contribute to overall brand awareness and reputation. You don’t have to sacrifice brand in a sales-focused campaign.
For instance, an article in a trade journal about a company enhances awareness, confers third ***** credibility and, when merchandised by the sales team, serves as collateral directly supporting the sales cycle. The same thing goes for a positive comment from an industry analyst.
Marketers who don’t use the “big 3” (sales, profitability and valuation) as their evaluation criteria will forever be just a cost.
December 26, 2004, 5:00 am
"Marketers to stress customer acquisition in 2005."
Posted by jeffM
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December 17, 2004, 5:00 am
What a week for acquisitions in the enterprise software market!
First up, Oracle finally pulls off its acquisition of fellow business software maker Peoplesoft for $10B, one of the largest software acquisitions in history.
That deal was trumpeted a few days later by enterprise security provider Symantec’s buy of storage software vendor Veritas for more than $13B. The combined company will boast about $5B in annual revenue, making it the fourth largest software firm in the world behind Microsoft, SAP and Oracle. (Computer Associates – once John Swainson gets settled in as CEO I suspect it will be your turn.)
It’s clear this generation of the enterprise software market born in the 1990s has reached maturity. The double whammy of Y2K and the Internet led global 2000 companies to invest millions automating their business operations.
There are few new deals to come by for enterprise software developers so the only way to boost revenue (and market share) is via acquisition. You have to sell more licenses and services to the customers you have to grow the top line.
Second, integration of technologies across the organization is a pain in the backside for customers. And they’re not going to do it any more. The vendor community will have to take ownership of integration of technologies before a sales person comes a calling about adding new licenses or modules.
The New York Times published an excellent article on macro trends in the enterprise software industry that’s worth the read.
Software Sector Finally Enters a Merger Phase
There is an aspect of all of this that I haven’t seen much comment on in the media or analyst communities. What about innovation?
Let’s face it, the bigger the company the less technology and product innovation. (Kudos to Cisco for figuring this out as the goal of many of their acquisitions is to enhance their own R&D activities.)
Innovation typically occurs at smaller, more entrepreneurial companies where risk is an accepted part of everyday business. I believe we’ll see in 18 months the birth of the next generation of the enterprise software market.
All of those soon-to-laid off engineers, sales executives and marketers from Peoplesoft, Veritas and others will go the route of the start-up. There’s a lot of venture capital on the sidelines looking for good deals.
Available capital…experienced technical talent…and a maturing set of industry leaders lean on innovation. This is the environment that creates great, new companies.
That deal was trumpeted a few days later by enterprise security provider Symantec’s buy of storage software vendor Veritas for more than $13B. The combined company will boast about $5B in annual revenue, making it the fourth largest software firm in the world behind Microsoft, SAP and Oracle. (Computer Associates – once John Swainson gets settled in as CEO I suspect it will be your turn.)
It’s clear this generation of the enterprise software market born in the 1990s has reached maturity. The double whammy of Y2K and the Internet led global 2000 companies to invest millions automating their business operations.
There are few new deals to come by for enterprise software developers so the only way to boost revenue (and market share) is via acquisition. You have to sell more licenses and services to the customers you have to grow the top line.
Second, integration of technologies across the organization is a pain in the backside for customers. And they’re not going to do it any more. The vendor community will have to take ownership of integration of technologies before a sales person comes a calling about adding new licenses or modules.
The New York Times published an excellent article on macro trends in the enterprise software industry that’s worth the read.
Software Sector Finally Enters a Merger Phase
There is an aspect of all of this that I haven’t seen much comment on in the media or analyst communities. What about innovation?
Let’s face it, the bigger the company the less technology and product innovation. (Kudos to Cisco for figuring this out as the goal of many of their acquisitions is to enhance their own R&D activities.)
Innovation typically occurs at smaller, more entrepreneurial companies where risk is an accepted part of everyday business. I believe we’ll see in 18 months the birth of the next generation of the enterprise software market.
All of those soon-to-laid off engineers, sales executives and marketers from Peoplesoft, Veritas and others will go the route of the start-up. There’s a lot of venture capital on the sidelines looking for good deals.
Available capital…experienced technical talent…and a maturing set of industry leaders lean on innovation. This is the environment that creates great, new companies.
Posted by jeffM
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December 4, 2004, 5:00 am
It has been so 1999 this past week.
I am flipping through the November 15th issue of Fortune Magazine when I come across an interesting side bar about whether Google’s current valuation is deserved. David Garrity, a financial analyst with research boutique Caris & Company, says in the article, “Until you fully define the end markets Google is pursuing, you can’t value it.”
Uh oh. I’ve heard this before. The rules of business don’t apply. You have to think about this company (or this market) in a whole new way. The CEOs who spewed this stuff several years back most likely watched the rules of business drive their company into non-existence.
Fortune smelled something not so Kosher in this comment as well. Writers Adam Lashinsky and Fred Vogelstein concluded that with Google trading for 56 times projected 2005 profits “you’re gambling, not investing.”
Strategic Communications Group (Strategic) represented its share of dot com duds. We promoted a start-up hyping piano lessons over the Web as well as a company that was trying to turn the computer screen saver into a delivery medium for content. (The problem with that business model is that when a screen saver pops on the person is not sitting at the screen.)
All of these clients went away in 2001 taking with them about $300,000 in fees we couldn’t collect.
We swore off early stage companies, putting our focus on more mature clients with things like products in market, customers, sales strategies, etc. Companies that adhere and respect the rules of business.
However, during the past few weeks we have entered into contract discussions with two potential clients that are a bit atypical for us. Both have annual revenue of less than $10M. Both were founded during the late 1990s and received venture capital backing. And both probably have no business being in business.
Each company is still in the game and once again thinking about growth because of the discipline of their respective management teams. They made tough decisions that meant layoffs and cost-cutting across the organization. Their focus has been on customers, revenue and service/support -- the basics that make for a foundation of a strong company.
So, it looks like Strategic will be taking a bit of flyer on a couple of earlier stage companies. It is a chance we are willing to take because we believe in each company’s solution, track record and management. Unlike the person willing to plop down $160 for a share of Google, I think we are investing rather than gambling.
Uh oh. I’ve heard this before. The rules of business don’t apply. You have to think about this company (or this market) in a whole new way. The CEOs who spewed this stuff several years back most likely watched the rules of business drive their company into non-existence.
Fortune smelled something not so Kosher in this comment as well. Writers Adam Lashinsky and Fred Vogelstein concluded that with Google trading for 56 times projected 2005 profits “you’re gambling, not investing.”
Strategic Communications Group (Strategic) represented its share of dot com duds. We promoted a start-up hyping piano lessons over the Web as well as a company that was trying to turn the computer screen saver into a delivery medium for content. (The problem with that business model is that when a screen saver pops on the person is not sitting at the screen.)
All of these clients went away in 2001 taking with them about $300,000 in fees we couldn’t collect.
We swore off early stage companies, putting our focus on more mature clients with things like products in market, customers, sales strategies, etc. Companies that adhere and respect the rules of business.
However, during the past few weeks we have entered into contract discussions with two potential clients that are a bit atypical for us. Both have annual revenue of less than $10M. Both were founded during the late 1990s and received venture capital backing. And both probably have no business being in business.
Each company is still in the game and once again thinking about growth because of the discipline of their respective management teams. They made tough decisions that meant layoffs and cost-cutting across the organization. Their focus has been on customers, revenue and service/support -- the basics that make for a foundation of a strong company.
So, it looks like Strategic will be taking a bit of flyer on a couple of earlier stage companies. It is a chance we are willing to take because we believe in each company’s solution, track record and management. Unlike the person willing to plop down $160 for a share of Google, I think we are investing rather than gambling.
