More Common Small Business Marketing Mistakes

Francine Hardaway

• More Common Small Business Marketing Mistakes
• Innovation in Silicon Valley: Finance as Well as Technology
• Leo LaPorte is a Startup

Powen Shiah at Jimdo took this photo of a small business owner’s car parked across from the Jimdo office in the Mission District of San Francisco.  I asked him to send it to me because I thought  it illustrated several common mistakes small businesses make:

1) Incomplete contact information. The US began using area codes in phone numbers as far back as 1947, and yet this truck still doesn’t have them, although the owner thought enough about marketing to paint the  phone numbers on his station wagon. Clearly he meant them to be a marketing tool, but even in San Francisco proper there are several area codes so that phone number is pretty much useless. A related mistake is the lack of a mailing address or location on the business web site. You never know how someone will choose to contact your business. Your job is it to make it as simple as possible to reach you. Is one of those a phone number and another a fax? Are they two mobile numbers? One a landline? How do I know?

2. No separate business web site. I have written about this before. I’m sensitive to it because I know that with Jimdo it doesn’t have to cost anything to build a web site that a small business owner can maintain himself.  It’s downright stupid to rely on someone else’s platform to market your business. For a while, Facebook pages were sweeping the small business community, and owners were giving up their canonical sites for Facebook. Only after they make the switch do the businesses realize that just because there are 750,000,000 people on Facebook doesn’t mean anyone will find their Facebook page. The side of this truck appears to have had the URL of a website painted out, and when we looked for California Auto Glass’s web site nothing came up. Almost everyone goes to the web to look for businesses, and having a web site tells the searcher that you’re still in business. Having an attractive and functional web site tells that you are professional in the way you do your business. Auto Glass is highly competitive, and to stand out I think you need the best materials you can afford.

3. Relying on a review site for leads.  ”Check us out on Yelp.” Are you kidding? Maybe that’s good for this week, but what about next week? This is perhaps the most dangerous marketing mistake of all. One disgruntled customer on Yelp can ruin your entire reputation, so relying on Yelp to market your business is fraught with potential land mines. Just ask most physicians and restaurants, who regularly take a beating on Yelp, sometimes for the wrong reasons.

4. Unprofessional looking marketing materials. It’s great to use your car as a mobile billboard, but make sure it is clean and professional when you do. The signage in this photo does not make me think the company will do a great job replacing the glass on my late model car. I want someone who cares about a clean look.

5. Over dependence on social media. Not long ago, you couldn’t get most small business owners to consider social media. Now many of them have been convinced by various gurus that it is necessary, and they are wasting hours on Twitter and Facebook to no avail. Go where your customers are. Unless you know they are on Twitter and Facebook, don’t waste precious time there.

Marketing a small business is one of the most difficult, subtle undertakings on the planet. That’s because each one is different, and it’s not the tools that make the difference, but the strategy. Before you choose your tools and tactics, make sure you have a firm strategy. That’s what California Auto Glass is missing. It’s as though they had a branded t-shirt, but it was full of holes and stains. Or a billboard covered in graffiti.

 

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Facebook’s Value? — Is It a Bubble Which Might Mean Trouble?

Ahead of filing its IPO, Facebook is feeling the pressure of its valuation. What are the underlying assets that Facebook has gathered? You can’t touch or see the assets. In this case, its “booty” is at least 650 million email addresses and a zillion other data points of personal information on likes, buying patterns, etc., all of which hold intellectual insight into the consumer’s mind. Since the Facebook public offering will mostly likely take place in the first quarter of 2012, there is still much time for lively conversation. Although this was expected, it was also speculated that Goldman Sachs had set-up a “special purpose vehicle” to keep Facebook under the 500 shareholder mark thereby avoiding the SEC “500 Rule.” Word on the street is that the value could top $100 billion. Can that be “real?” And, what does it mean for other social media sites going public?

Mark Zuckerberg and Facebook’s meteoric rise and impending IPO is a real-life Cinderella story. Mark Zuckerberg was a literal “ugly duckling,” who became a swan. Just like Bill Gates a generation prior, Zuckerberg has proven that being a nerd is ‘cool.’ Beyond Gates, he is movie star material, having his early life memorialized and romanticized in the popular film, The Social Network. Apropos, one my favorite Bill Gates’s quotes: “Be nice to nerds, you might work for one someday.”

But, if this story seems a bit familiar, you may be right. The 1990s on Wall Street was known as the dot-com bubble era. It was the infancy of the Internet in which new “apps or websites” were so groundbreaking that each spurred investment bankers to put together a public offering and attempt to value companies for their future value. Like a bubble, countless start-ups grew exponentially and burst just as quickly, leaving many companies (and their investors) financially damaged. Clearly, there was no agreement on the valuation of Internet firms as they were unlike firms that investment bankers were used to valuing: they had no tangible assets. These Internet firms had no brick and mortar buildings, nor warehouses filled with inventory. How to value a website/social network? Plenty of discussion ensued.

Facebook as a social media platform has proven its value as by becoming successful at defining and carving a new online playground/business model called social networking. New, modern and more esoteric assets are almost impossible to value as intellectual property grows. As often happens with me, all of the talk about Facebook’s value and IPO reminded me of a story from 2006. Instead of Mark Zuckerberg, think of Dany Levy — hardly a nerd, more like your “BFF.” Her brainchild was named DailyCandy — a daily email sent by Dany. Daily Candy was most accurately described by Michael Idov in his New York magazine article in April of 2006, “How Sweet Is It?” He said DailyCandy’s daily emails “[were] Written in a cliquish chick-lit chirp, the dispatches appear(ed) to come from a gossipy, mysteriously connected friend somewhere (in NYC).” While a much smaller scale, DailyCandy paved the way for creating value for these types of “warehouse-less” firms. By her own admission, Dany Levy’s “rickety business plan” was written on two pages of paper in 2000. By 2003, Bob Pittman and the Pilot Group bought a controlling interest in Daily Candy for $3 million, leading to DailyCandy’s eventual sale for to Comcast in 2008 for $125 million. What was the value of DailyCandy predicated on? Its subscriber list which was the key to crowd-sourcing the buying power of young women. The “typical” DailyCandy [reader] was somewhere between 24 and 35, loved her city (at one time 12 city-specific editions), loved going out, shopping and being in the know. Comcast paid $125 million for this email list!

Similarly, in valuing Facebook, one of its most valuable assets is its robust collection of over 650 million email addresses and assorted other pieces of personal information. This is information that can be curated, culled and counted for its valuable market data. Facebook (like DailyCandy) has the bulk of its value of underlying assets in the form of email lists and insight into the consumer mind. The same valuation principles that applied to Daily Candy apply to Facebook. They are collectors of information from over 650 million active users. They have troves of data, research etc. Additionally, they maintain market leadership and dominance (underlying assets) in creating a new social relationship/business model online.

Facebook has its place in social networking history as the first and most widely used platform as currently being the most popular social network in the world. It’s given way to social culture behaviors and terminology like “liking” something, and “Facebooking” as a verb. These elements must be “counted” in measuring the value of Facebook. Its influence and impact on our culture and this generation of teenagers is immense in both positive connective fashion, as well as being used negatively as a cyber-bullying platform (its downside). Almost unquestionably, this is the top-line value to Facebook: an outlier which was novel, timely, social and authentic that allowed like-minded people to congregate around topics of interest. The unintended output of this social network was an asset base of email addresses and personal information unlike any other before it. Next, will be anyone’s guess but Google + is a contender!

FB’ers virally began peer networking groups around such diverse interests as: high school and college groups, interests in consumer brands (example: Coca-Cola) health issues (gluten-free) and millions more. As a result, crowd-sourcing was born. These crowds influenced brands by providing feedback, creating communication between brands and their consumers which was measurable. Liking a brand and asking others to group with you on Facebook was the precursor of another evolved crowd-sourcing concept called Groupon. Groupon jumped into crowdsourcing in its early stages and used the aggregated numbers to gain buying power with brands hyper-locally. Groupon has garnered its own assets in email addresses and associated buying patterns. As recently as June 2 of this year, Groupon was valued at $30 billion in its own quest for an IPO. So what is Facebook’s value? Let’s take a look at the value of its asset: email addresses and other personal information.

For Facebook, they have millions of active users who have used their site even occasionally. Additionally, it’s a slightly older and more loyal demographic than some of the latest social networking platforms. Adding to FB’s value is the ability to segregate users into groups thereby creating smaller parts with focused hyper-locality and thus greater value proposition to marketers. They have global data and can also look at retrospective trending.

“Facebook is still growing towards 700 million users, having reached 687 million monthly actives by the start of June,” said Eric Eldon of Inside Facebook, a research and marketing group, in a report about the world’s most popular social network’s Web traffic.

“Most of the new users continue to come from countries that are relatively late in adopting Facebook, as has been the trend for the past year,” Eldon said. “But overall growth has been lower than normal for the second month straight, which is unusual.”

The social media giant gained 11.8 million new users worldwide in May, down from 13.9 million new accounts in April, Eldon said. Previous to those two months, Facebook had grown by an average of 20 million new users a month for the last 12 months, he said.

So what is Facebook really worth? Obviously, no one has a real answer but the market will demonstrate its value shortly. Ahead of the that, the following points need to be considered: 1. Facebook’s valuable asset of email addresses and personal information, 2. Facebook’s far-reaching and global cultural impact, and 3. Facebook’s room for growth after partnering with Skype for video chats among friends and the impending addition of Netflix accounts to the Facebook platform, among other improvements Facebook is making. They know that they must constantly evolve and add features especially given the apparent early adoption numbers which Google + has achieved.

For me, I became an early adopter to Facebook to keep a watchful eye on my teenage sons. They are my “friends” and they must “Like” me! I confess that I enjoyed reconnecting with people from my past but the truth is its a passing fancy and I don’t have the time to keep up with them every day! And as a business tool, its not huge on my radar screen of competing social media outlets and the time required to create visibility around my wealth marketing practice. However, under pressure, I did create a business Facebook page. Just to create a placeholder, I did it. For others, Facebook remains an important platform to reach millions easily.

What might the future hold? It is certain to happen where social media becomes a more integrated function in our lives and less of cumbersome tool which requires “work” to keep up-to-date.

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