Thursday, 1 October 2009

Internet advertising now bigger than TV in the UK

Based on figures from the Advertising Association and WARC, a report from the IAB and PricewaterhouseCoopers shows that internet advertising was the only sector to grow in the first half, taking a total of £1.75bn.

For the first time ever, in the UK, internet advertising has outstripped advertising on TV. Interesting maybe, but how does that effect the ECM, BPM or BPO sector and, more pertinently, why am I bothering to mention it on this M&A blog??

Two reasons I mention this in an M&A blog:

1) Marketing has changed massively in just the past 18 months and the majority of companies from our sector are at least five years behind. They see and hear the changes but they do not react - Knowledge without wisdom. There are so many channels of communication and routes to their prospective clients but very few companies in our sector use them effectively . The majority in this sector are operating a sales led revenue process when they should be marketing led. They still place great emphasis upon sales people and too little upon their marketing. Sales people are still an integral part of the process but more and more companies need executives who can communicate effectively through a variety of media to their target audience, leveraging the great marketing tools that are now available.

2) If you want to maximise your return in the M&A world then you must become adept at marketing (as well as all the other sections of the equity wheel) and embrace the new means of communication. If you are buying, then, to maximise your investment, you need to look at that company and treat it like a raw diamond plucked from the ground. What skills, assets, technology, network, synergy has your company got that can take this raw diamond, cut and polish it to ACCELERATE their company EQUITY VALUE. How does your 1+1 =3? If it doesn't, where is your return? Too often the critical eye is upon the acquired company and not upon the acquiring party. It is a question all acquirers should ask themselves. "How will we add value to that company?" How will we make it better, stronger, more valuable.
If you are working towards a sale then you need to be aware of the value first class marketing can add to your company. Don't tidy up your website 2 months before you want to sell the business and expect it to add equity to your company. However, if you give yourself time, you can create an EXIT PLAN so that you can generate a constant supply of leads to your sales force and you have a replicable process, then you have equity value. You will also have increased your historical revenue in the lead up to your sale, which also adds worth.

The reality is that most companies in our sector either overlook the marketing piece of their business or are just out-of-date in their approach, unable to leverage the tools and communication channels that are available to them and instead, expend their energies whipping their sales force for lack of sales that is a result of THEIR poor marketing.
With the internet and the increasing number of options available to companies to convey a message, marketing is more critical than ever. Marketing will continue to increase in importance and the sales process will shrink.
Focussing exclusively on sales to the exclusion of marketing is a bit like a builder building a home by piling brick upon brick without mortar. It is fast and for a short time looks like they are getting results but........................................ ultimately, it ends in tears.

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