Buzzgain

Our good friend Todd posted a very good piece on how PR helps raise venture capital. In it, he quotes a survey from BIGfrontier Communications that has the following statistics:

Startup companies that engage in PR campaigns are 30% more successful in getting funding within one to three months than those that don’t.

Forty-four percent of the respondents who used PR outreach received funding in the one-to-three-month time period versus 14% of those that did not.

Seventy-eight percent of respondents who said PR helped in their funding efforts are planning to use some of their VC dollars for additional PR.

Ironically, the survey also found that only 18% of the 300 startups surveyed had a PR program in place during the funding process.

So it begs the question why dont startups employ PR as a marketing strategy early as they can? Or why dont they hire a PR agency quicker?

Running a startup myself and having a background in Marketing, I can tell you my main reasons are the following:

1. PR is not easy. Putting an ad campaign on Google for paid adwords is dead simple. Buying a target email list is relatively easy. Putting together an email campaign (or a poorly conceived spam campaign) is easier. Attending a trade show and putting together a booth to attract customers is easier than having to build relationships with reporters and bloggers. PR depends on people. Other marketing forms are dependent on money and processes. Entrepreneurs who have a background in technology prefer working with things that are predictable (since everything else about the startup is unpredictable).

2. PR takes time. That’s the one thing entrepreneurs and smaller companies dont have enough of. Yes, everything takes time and there’s a return on time (ROT, not ROI) and PR does provide a great return on time. Only if you have done it before can you navigate the landscape. Most first time entrepreneurs have not.

3. Hiring a PR agency is “expensive”. The average quote from any good PR agency you’d get for even a 2-5 person startup is $10,000 a month in Silicon Valley. I can do a Google ad words campaign with less than $100 budget per month. Here’s the funny part: If that becomes $300 budget daily, that’s as much as PR. But its in bite-sized chunks.

4. PR requires specialists. The first marketing hire is paid to “put together a website, manage a trade show booth”. There are not enough qualified PR individual consultants to help smaller companies with smaller budgets.

5. PR is not tied to the lead generation process or the board level agenda. PR generates awareness and that’s not easily accountable. In my board meeting every month, I get asked about my lead generation funnel. Never have I been asked to show the recent press clips about the company.

Finally, making your mark through the noisy world right now is tough. There are innumerable startups in any given field and there’s way too much noise with multiple companies providing the same message and solutions. Given that reality, how is spending on PR justified if you are going to be yet another startup in the crowd?

Having identfied the reasons why entrepreneurs dont invest in PR, we’ll follow this up with possible solutions for how the PR world can adapt to the challenge in a future post.