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Marketing tech has attracted significant investment attention in recent years. According to CBInsights, venture investment in the space increased 91% from 2012 to 2015. In October 2016, McKinsey’s Fast Growth practice convened a panel of marketing tech executives and investors to discuss trends in marketing tech, how startups in the space should market themselves, and how enterprise CMOs can most effectively engage with Silicon Valley to capture the opportunities marketing tech companies have to offer.
Participants included Ross Fubini, a venture capitalist; Eric Greenberg, the Founder and CEO of Wrap Media; Nadim Hossain, the Co-Founder and CEO of BrightFunnel; and Naren Nath, the CEO of Wayfare Interactive. McKinsey Fast Growth’s Judy Wade moderated.
Excerpts from the conversation have been edited for length and clarity.
Our panelists agreed that ubiquitous technology creates both a risk that consumers and B2B customers will not respond to traditional approaches to marketing and an opportunity to reconceive the marketing model as a journey in which there are multiple opportunities to engage, rather than a single all-or-nothing touch.
Naren Nath: “We all think about customer journeys. And we think the customer journey starts when we make contact with the consumer and ends when the consumer leaves our store. But from a consumer standpoint, it’s one Internet, and there are 50,000 and more stores in it. So their journey doesn’t start and stop when our journey as website owners starts and stops.”
Nadim Hossain: “Most companies think of marketing in terms of a single touch, instead of a journey that involves multiple touches. . . . The new way of thinking that applies to every B2B company is to think of marketing and sales as working together. So . . . marketing is active throughout the buyer’s journey.”
Eric Greenberg: “You walk out of the store with a receipt, or you buy something. You get a mobile bill. Why isn’t it cross-marketed and upsold? Why aren’t you providing customer care and support right off of that?”
But the ubiquity of marketing touches also creates challenges on the content side.
NN: “The consumer experience for advertising is really broken, and we can all try to do many things around it, and billions of dollars have gone into it, and it’s still broken, as evidenced by the use of ad blockers. Look at all of our personal experiences. We’re trying to dodge ads to get to the thing we really want to get to. And then from an industry standpoint, the publishers’ business model is broken; publishers are having incredible challenges sustaining their price points and their revenues. And then advertisers or merchants who are trying to sell things also . . . have significant challenges such as the conversion rates of people coming to their sites online.”
EG: “Everybody is talking about targeting, targeting, targeting, targeting. AI. Data, data, data, data. . . . And at the end of the day, it’s user experience that is going to make you successful with your constituency. It’s no longer business to consumer, or business to business, it’s business to individual. As a businessperson, I have an individual persona that expects consumer user interface on this phone.”
Ross Fubini: “The consumer experience has changed so that now it’s like if you don’t know, if you didn’t show me the content that is most relevant for me when I hit the website, I’m kind of pissed. If the recommendation doesn’t match your expectation, if you’re . . . calling into the call center [and] the salesperson doesn’t know they’ve already talked to you three times, the expectation has shifted pretty dramatically. If you’re not doing those things, it actually stands out.”
NH: “I think what we’re seeing is that people are willing to give up a bit of information, but they’re expecting more in return, a more personalized experience. . . . I think one implication of the intimacy is that it puts pressure on the marketing team to have better content. So it’s like ‘Hey, Ross, I see you live at 5 Center Street,’ and you’re like ‘Oh, that’s creepy.’ But if I told you something really amazing like ‘Oh, your neighbor had a break-in and here’s a security service,’ then maybe you’d be okay with that.”
In turn, this puts pressure on enterprise CMOs to figure out and measure how their content, delivered through various channels, impacts the bottom line.
RF: “The CMO’s job is perhaps the hardest now across different roles in companies because all this data is available. But how do you actually use it to make your job easier is actually quite, quite hard. I think the best companies that I see now in the Valley are the ones that begin at the business application layer, but then hide a lot of the secret magic and decision-making well under the covers [and] let you make real decisions.”
NH: “You’re never going to acquire a net new person through a steak dinner. You already know them. You’re inviting them to spend time with you. So the metric for that marketing tactic is not, ‘Did I acquire someone new?’ It’s something completely different. It’s about, ‘What was the impact on that journey? Did they increase the probability of closing?’”
It is important for startup companies to understand and appreciate the corporate culture of their customers and the challenges that big companies face.
EG: “Most of the entrepreneurs in Silicon Valley haven’t spent time in enterprise or large corporate settings. And they don’t know how to conduct themselves. But, you know, the whole notion of partnership with integrators and having mature product and salespeople, and a mature organization that understands that you might have HIPAA compliance, FINRA compliance, you have data security issues. Having that maturity is really important.”
NH: “[The client] helped our team figure out, “okay, your biggest worry is that [big incumbent provider] is turning the screws on you every year” so that’s your big strategic priority, not to be painted in a corner.”
NN: “One of the things, for instance, we do is we don’t start the conversation by telling you all the five things we do. We just ask, ‘What are you trying to do? What are you needs?’ So that’s where we start the conversation, by asking questions because we respect the customer. The second tactical point I’ll make is we found that our traction with our initial conversation went up about ten times when we came into a first call, first meeting, with some mockups or examples of how this could work in their world. We start by saying, ‘We have no idea what’s in your mind. We have no idea what you’re going to do. But we can show that here is an instantiation of what we can do in your world.’ And we’ve found that our conversion rate from there to ‘Okay, let’s do a trial’ is high.”
With this understanding in mind, setting an appropriate scope for the first project and proving that your startup can meaningfully help solve a corporate client’s problems can mark the start of a productive relationship.
EG: “Having senior-level sponsorship, and then figuring out a way to demonstrate proof of concept [is key]. Because once we deliver proof of concept, then you have a host of functional businesspeople, not just the sponsor. What you need to focus on are really simple cases that can be easily understood, and everybody gets dollars in and dollars out. In other words, you make ROI. Or it changes a relationship, or improves something. Because that’s much easier to evangelize in a company. . . . So it’s all about sponsorship, and, to me, chipping off meaningful wins that don’t require massive commitments. And then it’s building a relationship from there.”
NH: “There was a director-level person, so he worked for the CMO. But what was amazing about this gentleman and the conversation was that he, as the buyer, was saying, ‘Well, we have 11 business units. We’re on a ten-year journey of digital transformation. Work with these three; don’t waste your time on the other ones, right? But let’s just start—let’s get a quick win.’ So he reduced the risk by picking a business unit, which I thought was really brilliant.”
EG: “It’s about what you cut off and what you commit to. And it takes a bit of enterprise maturity to do that, to understand their legacy systems, embedded business processes. You know, cultural and political realities that cannot be changed overnight.”
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NN: “The noise level is just ridiculous. The number of companies that are out there talking about their technology…I mean, I’m in the industry, and I can’t even keep up. So I can only imagine from your [big company] vantage point. So we find that to be a challenge. Because just getting through to a conversation for us is 80% of the game.”
RF: “So I actually think within the Valley, there’s a lot of very good guides who will get you [enterprise CMOs] to good companies that can solve your problems. I think that can be done direct through venture groups, or just reaching out to board members you know. I don’t actually see executives doing that consistently as often as I would expect. I think that’s very valuable.”
EG: “I’m just going to double down on what Ross said. If you have really good partners, who are well connected in this ecosystem, take advantage of it because the services firms do have good intelligence out here.”