An imaginary conversation that’s been spun out verbatim on countless occasions among cleantech companies burning through cash.
Growth stage companies in the cleantech sector are perpetually short on cash until they reach scale, and they often have to make hard choices about the value of their time versus capital outlays for the company’s infrastructure.
Inevitably, the marketing budget gets scrutinized. When the relevant parties meet to discuss priorities, the following discussion ensues:
CEO: “Niche market, limited audience, little public content; remind me why we need more than a website?” We’re facing a cash crunch in the short-term, and we’re trying to cut any fat out of our budget before going to meet with our investors. I need to understand the marketing budget.
CMO/Marketing Manager/Agency: (shifts uncomfortably in his/her seat because “fat” is a trigger word which
CEO: I understand why we need a website so people have a place to learn about what we do and a place for investors or the press to contact us. And Facebook doesn’t cost us anything other than someone’s time updating it. It’s the other stuff I can’t justify.
CMO/Marketing Manager/Agency: Can you specify what you mean by ‘all of the other stuff?’
CEO: The videos, for instance. We have a video about the company on the website. Why do we need to shoot more of them?
CMO/Marketing Manager/Agency: Do you watch reruns over and over again on Hulu and Netflix, or do you pick out new shows to watch?
CEO: Of course I pick out new shows, but we’re getting viewers to our website for the first time, and they haven’t seen the video.
CMO/Marketing Manager/Agency: Yes, that’s true, but 40% of our web views last month were from return visitors. If you don’t update the website regularly, why would they come back?
CEO: What about all of the money we pay for Google ads every month? Can we scale that back?
CMO/Marketing Manager/Agency: Sure. That’s the great thing about digital advertising. It’s much more flexible than committing to a TV ad buy or direct mail.
CEO: OK, so that’s one place we can save.
CMO/Marketing Manager/Agency: I didn’t say it’s a good idea. I just said we could do it. Stopping the ad campaign is like shutting off all the lights in your house. No one can find anything.
CEO: It shouldn’t matter. People just type in our name and Google finds us for them.
CMO/Marketing Manager/Agency: If they know our name. If they don’t know our brand name, they won’t find us without the ads, and last month, 45% of our leads came via Google ads. Do you want to cut back our lead generation?
CEO: (silence)
CMO/Marketing Manager/Agency: Look, I get the need to be efficient with the dollars we spend. I’m just not sure cutting off limbs to save the patient helps us achieve our long term goals. The reality is I can quantify everything I (we) do, and it’s part of a marketing strategy that exists to support the business plan you wrote. If the business plan has changed, then we should reexamine the marketing plan. Marketing is the fuel for the car. Without it, the engine doesn’t run.
CEO: What if we bring all the work in-house?
CMO/Marketing Manager/Agency: Do you want to hire another full-time employee? It’s unlikely we are going to find all of the skills we need in just one person so we’re still going to have to farm out some of the work.
CEO: We’re never going to get the financing we need to scale up when our investors see these numbers.
CMO/Marketing Manager/Agency: (deferentially) If your investors are looking for 8x-10x returns, they are going to want to see a marketing effort that will maximize the company’s EBITDA upon exit. Yes, they will be concerned about the cash burn, but they will be more concerned if we can’t show them how we will meet our revenue goals. Content marketing, social media and SEO all help drive traffic to our website, and more eyeballs equal more sales.
(Silent pause)
CEO: OK. Let me think about this a little more. In the meantime, how do you feel about canceling the water delivery service?
CMO/Marketing Manager/Agency: How do you feel about mutiny?