Thinking about the business model and micro businesses

Understanding the business model and the objectives set by a company's owners are essential to get marketing on target.

In my view, understanding the business model is very important because if this lacks clarity (in short figuring out how are they making money out of the business), the chances are their customers may not get it either and guess what you will discover they won't actually be making money. For example, back in the so called "dot com boom" or bubble in the late 1990s, investors were pouring funds into  start up Internet businesses. They in turn were spending it - 'cash burn' was a phrase commonly used. Some of it went on paying programmers to write code day and night, some on expensive advertising campaigns and most just squandered. We had via an American contact been introduced to one such start up. The briefing meeting was taking place in the entrepreneur's apartment in London's Knightsbridge - probably rented with investors' cash. He was in a great rushing, hinting of dashing off any minute on a mission to Paris to buy yet another ailing dot com business to add to the portfolio. Meantime, a woman in a dressing gown mysteriously wandered in and out of the room. It seemed buying other fledgling and ailing Internet start ups had become  their main activity since the injection of investor funds. All questions aimed at understanding what their real business was about was directed to the IPO prospectus which boasted some impressive business and political names as directors and also carried the financial equivalent of a health warning. In short the merchant bankers had failed to come up with anything tangible to explain the business model. A subsequent trawl of investor comments quickly revealed stock had nose dived and they felt tricked. As an advertising agency used to dealing with challenges it was apparent there was no business plan, no vision and worryingly no customers either. We declined the invitation to bid for their account. Shortly after the business had burnt the investors cash and went the way of many others.

Out of that era however emerged businesses that used the Internet not as a novelty to appeal to investors who unwisely thought it to be a cash generator, but as a means of reducing operating costs in running businesses founded on a sound business model. This trend appears to have accelerated since the credit crunch of 2008 as the unemployed started what are being termed "micro businesses". According to Management Today "In 1971 there were 820,000 firms with fewer than 9 employees in the UK. Now there are a record 4.8 million." It goes on to say "These small companies account for 32% of private sector employment (7.8 million) and 20% of private sector turnover." Of these 4.8 million, a massive 3.6 million are sole traders.

I am reminded of a business school lecturer who advocated what back in those early 1970's when most of us still worked for big corporations  was then a very radical idea of not to employ any staff. As anyone who manages staff will know, once employee numbers reach about 9 oddly enough, they tend to take up all of your time. Something the entrepreneur is probably not trained to do, is  any good at and anyway is a major distraction from converting his vision into profitable business. The statistics of micro businesses tend to bear this out. Interestingly in another article, Management Today says that some global Internet names are not that much bigger with Wikipedia employing 65, Pinterest under 50 and Reddit just 12. As the work place changes, so a more flexible and mobile work force is emerging allowing companies to utilise external specialists without employing them and the burden of related legislation and overheads that accompanies it.

Technical Marketing Ltd has been in the vanguard of this trend, with our own skill sets augmented by those of other specialists as required, working on the Internet without the overhead of expensive premises and regarded very much as part of the business team by our clients. By outsourcing marketing expertise  these new expanding micro companies can grow turnover and profit without adding overhead of staff, buildings to house them and all the baggage of HR headaches they bring with them. You know it's worth thinking about.

Does the company blog replace the press release?

Although company blogs have become a news channel in their own right, they are not a substitute for a press release.

Press releases are written for the press, providing the basic information about a company news announcement for journalists to develop into a story, written in a style that will be of interest to the readership of the publication. The reality is that few company pronouncements are actually that newsworthy to prompt a journalist, or in the case of many trade journals, the editor, to call up and get more information. Some editors in the industrial sector now seem to edit more than one title and the only other staffers are not journalists, but advertising salesmen selling traditional display and classified space, but also editorial space. Not all publications do this, the better quality titles keep editorial decisions away from advertising influence. What tends to happen is that the press release, if the word count is within the required range, may be re-titled, or edited for length, but otherwise published as received.

Before blogs came the news aggregator web sites that unlike the print based titles who published perhaps as little as 1 in 20 press releases received, published everything. Some industry specific news aggregators may take a swift editorial review to tidy up copy, but some others are happy to publish news just as it comes in. The news aggregating sites were of interest to companies on several counts. Not only was their investment in PR rewarded by publication rather than rejection into the editorial trash can, but the sites did well on search results and links helped company web site ranking and to attract visitors. In short they had SEO value. The company blog was the next step, with the PR content published there too. But all this may actually now be working against high rankings as this recent article explains, "Why your press releases are getting you penalised." As more and more company web sites have turned to standard  development packages and CMS -- the wide landscape rotating image set at the top being a common distinguishing feature - there is often a "news" module in the kit. This is more of a blog module than a press resource, which in turn raises the question of what resources is the press looking for?

Research conducted some 10 years or more ago indicated even then 90% of journalists researching a company turn first of all to the company web site to discover what the business says about itself.  A background document that explains the company's business, introduces the important company officers, gives financials, brief history and key performance data, helps set the scene and save journalists a lot of time. What else might they expect to find there? Well current press releases with downloadable and captioned high resolution images and contact details for the press officer or PR agency. Perhaps too, searchable news archives to quickly find reference to related stories that help build up the full picture and how about an image library with hi-res and web ready images. For the company press officer other features would be great, such as automatic creation of an html press release ready to email out, news feeds such as RSS and news tickers that can be put on the home page, or other web sites and linking to the full story. The Virtual News Office offers all these features as a service to busy marketing and PR  professionals - it does a lot more than a blog!

Is digital publication the only future?

A rallying call for print and falling stock price for Facebook hints that the digital only future has not yet arrived.

Despite advocates regularly predicting the demise of print in an all digital world, with a few centuries of experience print has established some well entrenched business models.  Readers understand the concept of buying a publication and value the content. Publishers control the process including the quality of the final product and marketing issues such as 'cover appeal'. Digital meanwhile dabbles with a number of business models delivered through a medium where there is an expectation that content is free. Just as confusing is the  platform on which content will be read. Is it on a desk top computer, a smart phone or tablet? And even which way round will it be read - vertical or landscape. Some publishers have merely set up the publication for print and brought it to the screen using page turning software. Others have made greater use of the digital medium such as incorporating video, but still produce using software tools designed primarily for print. Few yet have abandoned the set constraints of a magazine size and layout and designed only as a digital publication.

So where does all this leave the marketing manager with regard to advertising and which media, format and platform to use? Talking to an advertisement manager of a technical publication earlier this week there was news of larger companies actually booking larger campaigns in the printed media. At the same time print industry journal PrintWeek reports that Barry Hibbert boss of mega print firm Polestar,  issued a rallying call to customers to invest in "the golden nugget of printing". Interestingly Polestar back this up with sales growth, investment in new print plant and success in securing long term print contracts.

Meanwhile over at Facebook falling stock values, about 40% off the IPO valuation, and a claim teenagers are getting tired of the social network, the hope is now focussing more on mobile. Unlike print which can command both a cover price and an advertising income stream, social media needs the advertising revenue. Although the prospect of reaching very carefully targeted individuals is appealing, real sales leads from Facebook, especially in the b-2-b markets are not something you hear about.

Although the company web site remains the first place to go, our research suggests that when customers type a search term into  Google it is more commonly for the brand that they already know than actually searching for a generic product to discover vendors. Business buyers it seems already have favourite destination sites, using search is just a quick way of getting there.

What does your email signature say about your company?

Does the email signature dominate the message content and create a negative impression of your company?

We have been using email as a communication media since the very early days and still find it probably the most useful messaging tool. In those pioneering times when only pockets of users were connected, in the company I worked then, only Marketing and R & D departments in London and Los Angeles were linked, but it revolutionised our working practice. At that time messages were much more casually written and more friendly, even amusing it seems in retrospect in a time before the legal boys wised up and started adding disclaimers. We didn't really expect the content to be formal as would be the case for official letters which then were still being dictated to an army of secretaries to transcribe. People were now writing their own content complete with spelling errors and absence of punctuation. But know what - we didn't care. Not only did we get the information we needed quickly, but we tuned in to the personality of the individuals and it did a whole lot of good for collaborative working for people in different locations and time zones. And once we had dealt with the message it was trashed along with any record of political incorrectness or corporate transgressions.

But once the wider business community embraced emails the geeky stuff got replaced by formal content and the signature kind of became excessively loaded with dire legal warnings. The emails didn't go in the trash can any more, they were filed for all time and instead of speaking to the guy at the next desk an email with appropriate audit trail is sent. Forwarded emails are worse because each time it is sent another great load of signature stuff gets stuck in between. Of course there are still some folks that haven't figured out it is customisable and leave in the default - 'sent from my iPad' - promoting Apple rather than their own company. Personally I favour sticking to contact details plus maybe a tagline or reference to a current promotion or exhibition the company is at - but short and to the point. I find the 'do you need to print this?' message a bit patronising, but nothing is as bad as the full legal sign off. I will conclude with this example - say no more. Names and addresses are removed to protect the creators.

"Thank you, for contacting our Enquiries Team at XXX College.

We hope to process your enquiry and where appropriate respond to your request within the next 48 hours.

Kind Regards

The Enquiries Team

This message may contain confidential information and is intended only
for the individual(s) named. If you are not the named addressee youshould not disseminate, distribute, print or copy this e-mail. Pleasenotify the sender immediately by e-mail if you have received this e-mailby mistake and delete this e-mail from your system. E-mail transmissioncannot be guaranteed to be secure or error-free as information could beintercepted, corrupted, lost, destroyed, arrive late or incomplete, orcontain viruses. The sender therefore does not accept liability for anyerrors or omissions in the contents of this message, which arise as aresult of e-mail transmission. Please note that any views or opinionspresented in this email are solely those of the author and do notnecessarily represent those of XXX. Finally, the recipient should checkthis email and any attachments for the presence of viruses. Althoughthis email and its attachments are believed to be free of any virus orother defects which might affect any computer or IT system into whichthey are received, no responsibility is accepted by XXX or any of itsassociated companies for any loss or damage arising in any way from thereceipt or use thereof.

XXX is the trading name of XXX College Corporation incorporatedunder the Further and Higher Education Act for the provision ofeducation to students, whose trading divisions are XXX College andYYY College and whose registered office is at ................................

XXX works nationally to meet diverse education and training needs inpartnership with its subsidiary companies:
The AAA Group Limited is a private limited company registered inEngland and Wales with registration number 0000000 whose registeredoffice is at ..................................
BBB is: a company limited by guarantee with registrationnumber 0000000; a charity registered in England and Wales withregistration number 00000; a charity registered in Scotland withregistration number 000000. The registered office of ....................................