Since I published a rather radical (by Singapore’s standards) $0 marketing approach, eager business owners and fellow marketers have been wanting to find out how I decide which businesses I invest in.
“Nate, what do you look at before investing in digital marketing for a business?”
For readers who haven’t read the last article, I basically help businesses grow through the internet, by investing my own expertise, team and resources, in return for a cut of the profits/equity.
As such, I need to be very careful about the agreements I accept. For every bad investment I make, I can lose quite a bit of man-hour, money and even people.
Here are the 5 factors I consider before agreeing to an investment/partnership:
#1 Product and Brand
The first thing I try to understand is the product (or service).
- Is there an existing demand for it? Or do I need to create one?
- How helpful is the product? Will people love it enough to tell friends?
- How is the product or brand perceived by the internet audience?
I’d invest in marketing those shoes. That pet rock… maybe not.
I try to look for products that add real value to a customer. I tend to avoid products that rely on impulse-buying and hard-selling. In this way, I can devise long-term plans that help businesses to prosper for years. It’s also easier to grow customer base exponentially using the power of word-of-mouth.
Help people and people will help you.
#2 Customers and Target Market
Before a product or brand can grow using the internet, it must first appeal to the internet crowd.
Many businesses in Singapore were built around an older generation of consumers, with completely different needs and expectations. Here’s a fine example.
Many of us Gen Xers and Baby-Boomers have heard of Abeille d’Or chlorella. It’s a great product and fine business built around the older, Chinese-educated masses. A lot of it was based on health-talks and seminars, with reach and influence coming through Straits Times, TV and radio channels targeted at older folks.
But if you market it on the internet (in Singapore), you’re going to get terrible results. The image and brand simply don’t appeal to the internet audience. You’d get better returns from radio ads on FM97.2. Even if it costs more to advertise there, the ROI will probably be higher.
Products and brands such as this will require a change in the image before it can appeal to internet crowd (usually younger, more educated, professionals and yuppies).
Things aren’t as straightforward as “turn on ads and get more customers”.
#3 Communication with Business Owner
This 3rd point isn’t about digital, data or marketing (scholars, students and budding marketers, take note).
What works in the real world requires a lot more than paper-craft and theory. Intangible and non-quantifiable factors play a big role in the success or failure of any plan. Of all these, people and communication is #1.
I’d much rather prefer working with an SME boss I can comfortably chat with on Whatsapp than the CEO of an MNC who holds monthly progress meetings. If I have to constantly be the one initiating contact with the business owner, or wait 24 hours for a reply, I know the partnership isn’t going to work out.
Communication with your partner is vital in making a digital plan work.
#4 Belief & Values of the Business Owner
This is another factor unrelated to digital marketing.
There can be many reasons why businesses go into digital marketing. Some of these are:
- Experiencing a decline in sales and being anxious to fix it
- Seeing a small competitor taking their market share with digital marketing
- Just wanting to give it a try
Partners who go into digital marketing because of the above reasons are likely to be less determined to make it work. Without a strong belief, it’d be hard to push past the many obstacles along the way.
Also, is the partner ready to accept change? Recall the earlier Abeille d’Or example. A partner that refuses to adapt to changing market needs can seriously jeopardize the success of the plan.
It is safer to go with partners that believe in digital marketing and are able to adapt to market and environmental changes. They must also be someone you can trust and who trusts you.
#5 State of the Industry
Finally, even with a solid plan, good product, the right customers and an awesome partner, the business can still falter if the industry itself suffers.
Is the industry experiencing a boom or decline? What are the projections for the industry’s growth? Is there data which can help analyze the state of the industry?
1 clear sign of a changing industry is a sudden surge in the number of businesses venturing into digital marketing or e-commerce. This is already happening in industries like health foods, beauty, traditional ornaments and is usually a result of:
- changing consumer mindsets
- new products threatening to replace it
- low barriers to entry causing the market to become over-saturated
For businesses that are willing to adapt, it is a golden opportunity to capture the entire market.
But for businesses that refuse to change, I’d usually be forced to turn their proposal down.
For fellow marketers, data scientists, web designers or developers confident enough to risk investing in partnership agreements, I hope this helps you pick your battles.
For business owners who are still looking for a partner to grow your business through digital marketing, drop me a message here.