Our Perspective

VCIR Winter 2010 - part 1

From the desk of Ben Johnson & Elaine Schoch…

Last week, we attended the Venture Capital in the Rockies Winter 2010 conference in Beaver Creek. With more than 20 early-growth companies presenting, the Park Hyatt in Beaver Creek was full of innovation along many industries including standouts in clean technology and companies introducing technologies to improve our social and online experiences, something we all can appreciate.

We’ll be posting a few conversations we had with companies in the clean tech space this week but wanted to first share some interesting trends coming from the social space.

According to a study done by the University of California, San Diego, the average American consumes 34 GB of data daily. That is over 100,000 words of information daily. New platforms connect us with friends, family, new business opportunities, customers, journalists, and the list goes on. With the most prominent social connectors being Facebook and Twitter, the list of ways to connect with people is becoming as long as the list of people to connect with. We’re now finding ourselves less worried about how to receive information and instead how to make the most of the information that is being pushed at us. Companies like Grooger and BlipSnips are working to make that 34 GB of data a little more manageable.

Grogger

Grogger provides a Grog “group blog” publishing platform that grants publishers tools to better engage with their audience and crowdsource their content. Content published to the blog can be selected to appear at the top and bloggers are rewarded with recognition. Crowdsource + curation = best content, most content, and better audience interaction. Founder and CEO NAME sat down with and us and explained the technology and how it came about. You can also check out the post TechCrunch wrote about them, which hit during VCIR.

 

 

BlipSnips

Video is the next big thing, sometimes too big, which makes it hard to share specific moments. BlipSnips solves that problem by enabling users to tag, syndicate and inspire conversations about specific moments of videos. It is currently in beta but there are possibilities to use its measurable data-driven statistics as ways for brands to target customers. Founder and CEO John Bliss sat down with us and explained the technology and how it came about.

 

We have several additional clips we’ll be posting this week from other conversations we had with entrepreneurs at VCIR Winter 2010. Stay tuned.

Taking the Mystery out of Budgeting for PR

From the desk of Patrick Ward...

At this time of year, most companies are formulating their plans for the year to come. Setting your marketing budget and allocating a portion of that budget for public relations should be part of this process. Since we have been examining how to measure your investment in public relations in our last few posts, we felt a discussion about budgets is perfectly timed.

While budgeting for marketing initiatives is crucial, for some reason we often find clients and prospects have trouble revealing their budget, when asked. Maybe the truth is that many companies do not know where to begin.

Here are some basic budgeting parameters that may help.

Established Companies
Established companies often determine marketing budgets as a portion of overall revenue and then allocate a portion of that to PR. Experienced marketing executives know how to do that, and if you have strong sense of both what you want from your program and how you want to measure it, then that should be pretty straightforward. A rule of thumb we have used and have found effective is that marketing budgets should be about five percent of revenue. The PR budget often is between 10-20 percent of that figure. Of course, there are a lot of variances in that number: markets, geography, channels, even the size of your direct sales force dictates the size of your marketing budget.

Emerging Companies
For emerging companies and start-ups, especially those without sustained revenue or distinct marketing efforts, that recipe doesn't really work. For these kinds of companies, it's harder to find a formula because everything in the business is sort of unpredictable -- and then you have to consider the weighting of PR. In other words, many companies rely more heavily on PR because it is a cost-effective means of telling a story. Newly formed companies should probably expect to pay between

$5000-$7000/month and then expect that to increase by 15-20 percent every other year or so, if the company is growing nicely. That should include most PR tasks, even though you probably won't do every one of them in every month. You should also expect the volume and sophistication to increase with the budget -- probably an obvious point. While this may be a very broad stroke that garners a suspicious look from marketing execs or CEOs who think $15,000 is a lot to pay a PR firm, remember, there are no shortcuts to effective PR, and the budget should reflect that.

Retainer versus Hourly Rates
The other issue prospective clients bring up is retainer versus hourly rates. We always look at retainers as a sort of hedging system. A retainer motivates agencies to get the work done as efficiently as possible and makes the client want to load up as much work for that retainer as possible. The hourly model makes clients nervous since there is a ticking clock on every project.

We find the best budgeting method is to determine the necessary projects and then fix budgets to those projects. We also find it works best then to add up those project budgets and divide them into monthly installments for the length of the engagement. That way, the agency can manage cash flow, and the client has a very clear idea of what everything costs and can rest assured the work will be accomplished within the limits of the budget.

Like most things in the client/agency relationship, budgets need to be a transparent process. If you are engaging with an agency, then you should have a clear idea of your budget and you should tell your agency what it is. That is the only way to right-size the effort. And if the budgets aren't set, then you should probably get them set before you engage with an agency. It will make your efforts more productive, and the more transparent you can be, the more you will build a partnership that will have greater long-term benefit.