Could a CMO discover the next Facebook?
Marketers are becoming increasingly entrenched with digital-media startups, often kicking the tires on a new service or social network even before consumers have had a chance to give it a spin.
It's a mutually beneficial arrangement. Startups bring marketers in to help imagine ad products, forging relationships early and gaining credibility by wrangling big brands' involvement. Marketers, in turn, get a peek at what's new and next in digital media, often at a bargain rate, and a chance to stay a half-step ahead of their consumers and rivals. That's not to mention the good chance that they'll look pretty cool in the process.
Over the past few years, some progressive marketers have popularized the model. PepsiCo was an early partner of location app Foursquare, and American Express ran a pilot program in March and subsequently launched a nationwide rewards program tied to check-ins on the service. Virgin America, one of the first advertisers on Twitter, also launched the first deal with Loopt for the reverse-Groupon, in which consumers-pick-the-deal discounts on flights, just last week. More conservative marketers are now scrambling to partner with the next hot digital things before anyone else has read about them.
Consultancy Medialink, for example, has organized Silicon Valley tours for marketers such as Unilever and Bacardi to meet partners. Chobani yogurt and Arizona Beverage Co. recently partnered with social network Consmr, which aims to be the Yelp for packaged goods.
Wrigley and movie-vending-machine company Redbox recently partnered with Tap.Me, a mobile-gaming-rewards network backed by agency investment unit Rockfish Brand Ventures. While Consmr and Tap.Me haven't won much attention from media or even consumers for that matter, that 's OK. In fact, it's kind of the point.
"After so many years of the world moving so fast, we know new companies are launching much more quickly and becoming part of consumers' lives faster," said Dave Rosner, who often plays matchmaker for brands and startups in his role as exec VP-director of digital and innovations at Initiative . "So the idea of waiting, where it used to be safe, now is sometimes not."
General Mills' venture arm has been at it longer than some, having added digital media to its existing focuses on food tech and emerging food brands two years ago. Trying out startups doesn't present much risk for a top 50 advertiser like General Mills. "These are usually small-scale pilots, and there aren't a lot of dollars thrown at it," said Meredith Schwarz, the head of General Mills Ventures.
But a broader pool of marketers seems to feel the risk of waiting outweighs the small price for experimenting, which often runs on par with a measly web-banner buy. Between $25,000 and $50,000 is usually the price tag for test -and-learn campaigns, said Dave Knox, partner at Rockfish Brand Ventures and former Procter & Gamble marketing executive. "The cost of learning is very cheap," said Tristan Walker, Foursquare's business-development director. "Later, when your competitors start to come in, you'll already know how to scale your business."
Take PepsiCo, which was one of Foursquare's first brand partners back in early 2010, when the location-based service had fewer than 1 million users. Since then PepsiCo has run multiple programs with the company. Today, Foursquare has 10 million users.