Start-Up Lessons
Start-Up Marketing Surprises: Lessons Learned From An Economic Storm
Over the past several years, I have written about my experiences consulting with start-up companies in the linear and new media/digital markets. Most recently, I have learned surprising lessons which changed and challenged assumptions about the power of brand and power of a global online community.
Over the past year I have worked with a start up linear channel with a Las Vegas theme and a new broadband site focusing on music, musicians and fans of how music is created.
Working from a belief that the current economic crisis, which effected Las Vegas especially hard, would provide a counterintuitive opportunity for a new linear Vegas channel, my colleagues began meeting with key Vegas business and marketing entities. The value and power of creating such a content and marketing platform was acknowledged. While Las Vegas could still point to annual visitor number s of over 38 million, and 22,000 conventions hosting over 5 million attendees annually, there was recognition that even a global and iconic brand like Vegas could be severely stressed. As the growing mobile/digital/online distribution and advertising platforms captures more viewers, and especially so in the global market from which Las Vegas increasingly draws its visitors, the opportunity to use the marketing power of a new immediately branded linear channel as a means to also populate the multimedia space with content seemed timely in a time of extended economic uncertainty.
Even the downward pressures on ad spending and CPMs were not seen as a deterrent. Discussions with Vegas based businesses supported the projections of ad and marketing dollars for a channel dedicated to showcasing the full breadth of Vegas entertainment, events and lifestyle. In addition, independent analyses from ad sales executives cited the power and appeal of the Vegas brand association for travel, leisure and entertainment related categories attracting a younger and more affluent demographic. Of particular interest is the potential of “product placement” type sponsored programming featuring the major name properties showcasing their venues and attractions. As a multi-platform plus, relationships with premier Vegas marketing entities would add a major online reach and allow advertisers to take advantage of the Vegas brand in traditional linear and new media audiences.
In addition, with existing Vegas investment in Macau and the historical interest in Vegas from Asian, and particularly Chinese, markets there were reasons to project significant international interest and carriage for the channel. Coupling all of this with strong relationships and understandings in place for domestic distribution of the channel there was justified belief that the plan would be sufficiently well received by investors.
To the surprise of the team, the indications of ready investor interest were tempered by caution and uncertainty once the full plan was presented. The many stories about how Las Vegas has been hit by the current economy coupled with ongoing uncertainties about the ad market resulted in more and stronger resistance than expected. The discussion (I hesitate to say argument) centered on a focus on the immediate past, present and future versus a longer view of how a branded Vegas channel could and would weather this economic storm and find advertisers, as well as exploit the brand’s global and online reach. For example, last year’s approximately $6.5 billion in gambling revenues in 2008 “fell” to the 2005 levels of approximately $6.5 billion and continuing reports of foreclosures, unemployment and financial pressures on the major hotel/casino companies result in a risk averse reaction from the investment community. The assumed power of the brand could not, as readily as believed, counter current economic and advertising uncertainty. While the potential of the brand and channel are recognized, the issue becomes timing and a steadier advertising market.
Conversely, is the more immediate likelihood of successful funding for a broadband venture, The Musician Network (TMN). The focus and theme of TMN is on musicians (both amateur and professional), the creation of music and the consumers of music and music equipment around the world.
To date, while the business plan and funding process are being finalized, there has been a TMN-YouTube site with a very basic and stripped down version of what the “live launch” full site will look like. With no marketing budget or active efforts and relying only on online/social media sharing, the site has registered over 500,000 viewers. Though the current users skew heavily male, there is an almost even split among age groups from 13-64. These nascent statistics have indicated what a marketing campaign with sufficient resources and using a mix of online, viral, search and traditional industry media might achieve.
Working with executives with experience both in start-ups and the provision of back-end online e-commerce and video infrastructure and integrated marketing solutions employing and connecting online, SMS and mobile strategies, the response from the investment community has been strong.
Although the marketplace for broadband music sites is crowded, the perception is that by focusing on the creation of music and those who create it, TMN has a viable opportunity to fill a niche that remains open and sufficiently distinctive. Of particular interest is the marketing and advertising reach to a passionate and dedicated consumer base that has a demonstrated history of spending in the music category and remain willing to spend on their passions, and to reach these consumers in and through the media where they find music. This belief is supported by recent statistics compiled by the national Association of Music Merchants (NAMM).
In the music making space, industry estimates are that 52% of US households have at least one person who plays a musical instrument and the musical instrument and equipment market alone generates about $7.5 billion annually. The recording industry (CDs, portable players, etc.) adds approximately $19 billion. This sector also contains numbers of publications with a focus on particular instruments or production interests. While there are many online destinations for music videos, there is an opportunity for a focus on an audience that plays music and cares about how music is made and the life of music makers inclusive of musical styles, instruments and levels of musicianship. Investors look at these numbers and see a new media means to tap into its present reality and future potential.
From these very different investor community reactions, I have learned (again) that any assumption can be proven shaky and that brand name alone is no guarantee of success—at least immediate success. While there seems little question that the Vegas brand is and will remain instantly recognizable and attractive on a national and global scale, the kind of economic stress we have experienced can and will create deeper questions and caution than imagined. The means and opportunity to introduce and market a new media or content brand will be tied to timing, perception of a market opening and the right plan to exploit that opening.
A few months ago, my money would have placed a bigger bet on Vegas. Luckily, the smart colleagues I work with aren’t going after my money.
Glenn Moss provides legal and business consulting to media and communications companies. With over 20 years of experience with cable, broadband and broadcasting companies, Mr. Moss provides a combination of legal, business affairs and management services to Internet, VOD and cable networks. He can be reached at gmoss22@gmail.com or 917-543-4888.
Over the past several years, I have written about my experiences consulting with start-up companies in the linear and new media/digital markets. Most recently, I have learned surprising lessons which changed and challenged assumptions about the power of brand and power of a global online community.
Over the past year I have worked with a start up linear channel with a Las Vegas theme and a new broadband site focusing on music, musicians and fans of how music is created.
Working from a belief that the current economic crisis, which effected Las Vegas especially hard, would provide a counterintuitive opportunity for a new linear Vegas channel, my colleagues began meeting with key Vegas business and marketing entities. The value and power of creating such a content and marketing platform was acknowledged. While Las Vegas could still point to annual visitor number s of over 38 million, and 22,000 conventions hosting over 5 million attendees annually, there was recognition that even a global and iconic brand like Vegas could be severely stressed. As the growing mobile/digital/online distribution and advertising platforms captures more viewers, and especially so in the global market from which Las Vegas increasingly draws its visitors, the opportunity to use the marketing power of a new immediately branded linear channel as a means to also populate the multimedia space with content seemed timely in a time of extended economic uncertainty.
Even the downward pressures on ad spending and CPMs were not seen as a deterrent. Discussions with Vegas based businesses supported the projections of ad and marketing dollars for a channel dedicated to showcasing the full breadth of Vegas entertainment, events and lifestyle. In addition, independent analyses from ad sales executives cited the power and appeal of the Vegas brand association for travel, leisure and entertainment related categories attracting a younger and more affluent demographic. Of particular interest is the potential of “product placement” type sponsored programming featuring the major name properties showcasing their venues and attractions. As a multi-platform plus, relationships with premier Vegas marketing entities would add a major online reach and allow advertisers to take advantage of the Vegas brand in traditional linear and new media audiences.
In addition, with existing Vegas investment in Macau and the historical interest in Vegas from Asian, and particularly Chinese, markets there were reasons to project significant international interest and carriage for the channel. Coupling all of this with strong relationships and understandings in place for domestic distribution of the channel there was justified belief that the plan would be sufficiently well received by investors.
To the surprise of the team, the indications of ready investor interest were tempered by caution and uncertainty once the full plan was presented. The many stories about how Las Vegas has been hit by the current economy coupled with ongoing uncertainties about the ad market resulted in more and stronger resistance than expected. The discussion (I hesitate to say argument) centered on a focus on the immediate past, present and future versus a longer view of how a branded Vegas channel could and would weather this economic storm and find advertisers, as well as exploit the brand’s global and online reach. For example, last year’s approximately $6.5 billion in gambling revenues in 2008 “fell” to the 2005 levels of approximately $6.5 billion and continuing reports of foreclosures, unemployment and financial pressures on the major hotel/casino companies result in a risk averse reaction from the investment community. The assumed power of the brand could not, as readily as believed, counter current economic and advertising uncertainty. While the potential of the brand and channel are recognized, the issue becomes timing and a steadier advertising market.
Conversely, is the more immediate likelihood of successful funding for a broadband venture, The Musician Network (TMN). The focus and theme of TMN is on musicians (both amateur and professional), the creation of music and the consumers of music and music equipment around the world.
To date, while the business plan and funding process are being finalized, there has been a TMN-YouTube site with a very basic and stripped down version of what the “live launch” full site will look like. With no marketing budget or active efforts and relying only on online/social media sharing, the site has registered over 500,000 viewers. Though the current users skew heavily male, there is an almost even split among age groups from 13-64. These nascent statistics have indicated what a marketing campaign with sufficient resources and using a mix of online, viral, search and traditional industry media might achieve.
Working with executives with experience both in start-ups and the provision of back-end online e-commerce and video infrastructure and integrated marketing solutions employing and connecting online, SMS and mobile strategies, the response from the investment community has been strong.
Although the marketplace for broadband music sites is crowded, the perception is that by focusing on the creation of music and those who create it, TMN has a viable opportunity to fill a niche that remains open and sufficiently distinctive. Of particular interest is the marketing and advertising reach to a passionate and dedicated consumer base that has a demonstrated history of spending in the music category and remain willing to spend on their passions, and to reach these consumers in and through the media where they find music. This belief is supported by recent statistics compiled by the national Association of Music Merchants (NAMM).
In the music making space, industry estimates are that 52% of US households have at least one person who plays a musical instrument and the musical instrument and equipment market alone generates about $7.5 billion annually. The recording industry (CDs, portable players, etc.) adds approximately $19 billion. This sector also contains numbers of publications with a focus on particular instruments or production interests. While there are many online destinations for music videos, there is an opportunity for a focus on an audience that plays music and cares about how music is made and the life of music makers inclusive of musical styles, instruments and levels of musicianship. Investors look at these numbers and see a new media means to tap into its present reality and future potential.
From these very different investor community reactions, I have learned (again) that any assumption can be proven shaky and that brand name alone is no guarantee of success—at least immediate success. While there seems little question that the Vegas brand is and will remain instantly recognizable and attractive on a national and global scale, the kind of economic stress we have experienced can and will create deeper questions and caution than imagined. The means and opportunity to introduce and market a new media or content brand will be tied to timing, perception of a market opening and the right plan to exploit that opening.
A few months ago, my money would have placed a bigger bet on Vegas. Luckily, the smart colleagues I work with aren’t going after my money.
Glenn Moss provides legal and business consulting to media and communications companies. With over 20 years of experience with cable, broadband and broadcasting companies, Mr. Moss provides a combination of legal, business affairs and management services to Internet, VOD and cable networks. He can be reached at gmoss22@gmail.com or 917-543-4888.
posted by Glenn Moss at 12:57 PM
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