Blogging from Sun's Startup Camp
links for 2008-05-06

Redefining reach; the new marketing equation

iStock_000003345269XSmall.jpgWhile I was at StartupCamp this past Sunday here in San Francisco a few of the future founders came up to me asking my advice on how they should approach PR/advertising.

Many of their questions (as small pre-startups) echo the same quandary that major marketers are facing. What is the right way to get the message out in a measurable, cost effective manner. In larger companies it really seems that they value the medium (seeing a spot run in primetime, an article in a major newspaper) more than the benefits that come out of them.

One of the ways that I tried to help guide them and explain why social media is so powerful is the following scenario. Look at these two equations and let me know which one has the most benefit to you:

1. Message 1,000,000 to possibly reach 100

2. Personally reach 100 who influence 1,000 who influence 10,000 who influence 1,000,000

They are two very disparate scenarios, but that is social media in a nutshell. You're not wasting millions of untraceable impressions on TV, radio and print buys. You're forming real relationships with people that spread their version of your message along the chain.

It seems pretty clear right? But this is a huge mental leap for most marketing organizations. The new model is about building relationships that grow and spread to new relationships. Here is a graphical representation of this shift. Advertising will have diminishing returns over time as social connections will deliver more and more value.

value paradox.png

There is a huge value paradigm shift that has to happen here. The traditional scenario is very front weighted with value, but it is constantly in a state of decline as time goes on. You pay for the creation of the ad and the media buy and then sit back and pray.

With the social media option, you invest up front, but your spending has to scale as your message spreads to new audiences over time. The value you get takes longer to build and catch up with the advertising model, but it will eventually exceed it. That's a hard thing to budget, but it's important to note.

How do you help people make this jump? It's possible, but it takes time and dedication. What are your thoughts on the equations?

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