How do you know when a company stops being a startup and has become an established company? Established companies advertise in “traditional” means: television, print, outdoor, etc. While startups would love to have this massive reach, their size and risk profile usually prevent them from doing so. Startups don’t engage with these forms of advertising because of:
High fixed costs
These mediums require creative production that has a high fixed cost that startups cannot compete here. The cost of a print ad, billboard, or commercial is prohibitively expensive, and the company hasn’t even gotten any eyeballs on it yet. Startups have been relegated to low barrier of entry mediums like Google AdWords, Facebook Promoted Posts, or Twitter Sponsored Tweets, where the cost of creative is simply the time needed to test different copy.
Most advertising space is “rented”; every impression, commission, and click yields a “rent” payment to the landlord. On top of that, traditional advertising charges a premium and a minimum for their space. Startups would prefer investing in social media or search engine optimization where they can reap longer-term benefits at a fraction of the cost.
Putting all eggs in one basket
By definition, startups are still searching for product market fit. While startups need some traffic to validate their ideas, it’s highly risky to drive an over abundance of traffic to the site when the business model might not be validated. The irony in driving too much traffic too early: “We lose money on every unit, but we can make it up in volume.”
A Startup’s Secret Weapon
How can startups compete then? Sponsored content, which some refer to as native advertising, is when a publisher creates content that their audience would like to read with an organic integration of the sponsor. It could be interpreted as text based product placement. Cost wise, sponsored content can be sold like banner advertising, quoted in cost per thousand impressions, although it is more expensive since the custom creative story drives more engagement with the brand. Sponsored content solves the above problems that traditional media has:
With lower fixed costs
While sponsored content from well-known publishers like the New York Times could run close to a million dollars, startups are helping to make sponsored content available to everyone on all sizes of outlets from blogs to niche industry journals, where the price is a fraction of what other publications are charging.
Bloggers with huge followings are equally ranked in search engines than some of the biggest publications, yet with their lower overhead they are able to cater to the bootstrapped startup. Startups can begin to see results with budget sizes comparable to what they are spending on Facebook or Google.
With advertising ownership
Startups love sponsored content: it combines the guarantee of advertising with the storytelling ability of social and the third party authority of media. Having other sites link in other than the ones that are owned by the brand is a powerful indicator and can provide a sense of credibility.
Sponsored content provides a financial guarantee to the brand as well, since the downside is protected by the rules of advertising: getting what you paid for. The upside is unlimited: your shareable story has the potential to earn many more impressions than what you paid. And while virility is never guaranteed, people are 13% more likely to share a sponsored story while a banner ad does not even provide for that option.
With story diversification
With high creative media costs, traditional advertising’s story must resonate with the widest audience possible. However, with lower costs, sponsored content allows brands to experiment with a variety of messages. Do you know which facets of your product excite this particular audience? Does this audience even care about your product? Why does the demographic buy your product?
With advanced sponsored content metrics, brands can now test a variety of stories to see which ones carry the most weight.
With the correct storyteller
Storytelling, the centuries old memory-facilitating tool, has made a comeback in the advertising space. A clear story lets users remember a startup when the time is right. Foursquare’s story of the check-in allowed them to take Facebook head on and win, since users had a hard time associating Facebook with check-ins. Even, the phenomenon of crowdfunding is based on users putting their dollars behind an idea’s story: Most of the products are not yet even reality, yet the compelling stories result in seed capital.
On the other hand, media with no story sometimes leads nowhere. Braintree’s Venmo’s print campaign in the New York City subway caused confusion or apathy since there was no narrative or story to back it up.
In the on demand economy, people will buy a product when they are ready to, not when you tell them to. Recall and knowing what keywords to type into search engines is essential to conversion. Good storytellers understand their audience and can help them remember your product when the time is right.
Storytelling is essential to this because it’s hard to feel a company’s essence, mission, and purpose when the only building blocks available are the three lines of copy in a search ad, status update or tweet.
Sponsored content gives us:
- Lower risk, lower minimums
- Potential virility with protected downside
- Memorable storytelling from trusted third party
- Ability to test various narratives among various audiences
Startups can now compete against the bigger incumbents because they are able to use their tiny budgets to amplify their content across the owned, earned and paid channels and target exactly the customer that they need. Recently sprouted startups can use this secret weapon of sponsored content to outmaneuver and outsmart their resource rich competition.