But the rhetoric is shifting. There's increasing recognition that developing a product without considering the business model is inherently problematic. A major issue now is how to generate cash flow. Too many times the answer seems to default to: "Advertising will be our main form of monetization."
For some platforms and companies, the advertising answer may be viable. But for many others, a naive focus on ad dollars suggests a significant lack of knowledge about how the advertising industry works, and what's required to build a product that will simultaneously work well with advertising, make investors happy and benefit all involved.
Some companies and platforms hold fast to the old way of building a bunch of terrible ads into a site or experience that no one clicks. A more skillful integration fosters user experiences and helps brands deliver new interactions to their audiences. These integrations or partnership experiences are starting to happen more.
How can startups and brands work together? Here are some techniques I've seen work really well:
Leverage the strengths of each side. Brands have resources, with access to relationships they've spent years building. Big -power spokespeople? They have them. Relationships with major news outlets? You bet. What startups bring is a fresh set of eyes. They also often bring an ability to uniquely deliver the brand message. Take Birchbox. Its recent partnerships with Glamour Magazine and fashion label Madewell combined the power of large editorial and a major fashion brand with a unique delivery method that sends brand-sponsored products right to the user's mailbox.
'Powered by ' can be a very effective phrase. The consumer's focus should be on the experience or end output of content, not who built the technology, as Percolate has done with clients like MasterCard and Budweiser. It's a great example of the "powered by " model. The brand is front and center, not the startup, and the technology output speaks for itself.
Focus on the user, your audience is always the consumer. All sides involved should consistently be focusing on the consumer's desired reaction. Make it simple for the consumer to understand and share, to drive return engagement.
While these tips are valuable, they rely on the brand (or agency) and the startup to make a commitment to build something. Feedback and discussions with brands can be helpful, but the best way to see if any of the above will work is to actually go and make something.
Startup and advertising partnerships have been a hot topic of discussion everywhere and we know that it can work, we want it to work. It just needs to work smart.
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