PR Still Lead Discipline for Most Tech Start-Ups
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PR Still Lead Discipline for Most Tech Start-Ups

While the expectations of marketing escalate, funding for marketing resources and activities continues to decrease well out of proportion to that of other departments, according to a new study by Launch Pad.

Paul Holmes

While the expectations of marketing escalate, funding for marketing resources and activities continues to decrease well out of proportion to that of other departments, according to a new study by Launch Pad, a San Francisco-based high-tech marketing consulting firm, and Blanc & Otus, the high-tech public relations subsidiary of Hill & Knowlton. The report highlights ways in which start-up marketers are changing the tactical marketing mix and succeeding despite small budgets.

Marketing Expenditures for Technology Start-Ups surveyed marketing executives in business-to-business high-tech firms about marketing dollar allocation. The 2002 study found that annual budgets for all departments within high-tech start-up companies continue to shrink, but that marketing has suffered the largest decline, with the average budget decreasing in absolute dollars from $2.8 million in 2001 to just over $1 million in 2002, and declining from 20 percent of corporate expenditures in 2000 to a mere 13 percent in 2001.

Engineering, on the other hand, has increased its percentage of corporate expenses from 29 percent in 2000 to over 50 percent in 2002.

“Right now, marketers are under pressure to generate leads for the sales department, while also being responsible for everything from telemarketing to business development to documentation—all with fewer resources and far less funding than ever before,” said Shelley Harrison, founder and CEO of Launch Pad. “They are being highly creative with their tactics and the ways in which they allocate their precious funds.”

Public relations continues to get the largest share of overall marketing expenditure, increasing its share from 19 percent to 25 percent over the last year. It is also seen as the most effective marketing tactic for start-ups. Outbound lead-generating telemarketing saw the largest absolute dollar increase compared with budgets in 2001, reflecting every company’s need for demand generation.

“Marketing programs should directly support your business plan, but selecting which marketing programs are the most appropriate has been a challenge for technology start-ups,” said Greg Spector, CEO of Blanc & Otus. “The Launch Pad report provides marketing executives with a road map for developing programs that improve the bottom line and support existing business objectives.”

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