Tikto Tidbits #8 - Growth, above and below the line
We look for 'scaling risk' in our investments so we've got a big focus on how to deliver growth for our companies. Our friends at Fieldhouse PR gave us a great insight about the usefulness of 'above the line' marketing, shared below.
Above whose line?
Tech businesses, especially those backed by venture capital at an early stage, tend to be extremely focused on data and feedback loops. It makes a world of sense: do something > understand the performance data from 'the thing' > improve 'the thing' > repeat.
I've witnessed the vast majority of people that I've come across in tech being more comfortable in a data-rich environments where performance can be accurately assessed. When it comes to marketing, we're talking about campaigns and attribution. Think of: cost-per-click analysis for an online marketing push. These targeted programmes are what's known as below-the-line marketing; you set parameters for the campaign up-front and assess their success accordingly.
I've come across far fewer people who are comfortable with marketing that is less targeted, more mass-media, otherwise known as 'above the line' marketing. Given the relative lack of attribution here it can sometimes feel as though these above the line campaigns are somewhat of a dark art. Either that or people find solace in that it's a channel and part of a marketing mix/overall strategy who's performance in aggregate is a useful metric.
An insight into the beauty of PR
We all have lightbulb moments where we suddenly achieve much greater clarity than we had previously on a subject. Talking to Cordelia and Nicky at Fieldhouse PR the other day, they delivered one of these lightbulbs when we were talking about this very newsletter.
I'll post the performance metrics for the newsletter in coming missives but suffice to say that the audience is predominantly my existing network from Venture Capital and my emerging network in M&A and Private Equity. It grows every week as I repost on Twitter and LinkedIn + add people that I've met during the week. So, those people who have joined since inception (thank you) are either part of my direct network or have a strong relation to it.
If I wanted to step on the gas and grow my audience, I could put some money behind an Ads or Facebook campaign looking to put an advert in front of people who I ~know might like to read what I'm writing. It's a good way to grow, but it won't work over the long term. Sooner or later, that pocket is likely to exhaust itself.
PRO TIP: if you want to expand your audience and discover new types of customers you have to use above-the-line marketing. That could be through PR or perhaps reaching out to new communities, as we discussed in our last letter.
In order to reach new customer groups, you'll have to go beyond the comfort of a data-rich environment and risk failure. A failed marketing campaign is a luxury to an extent. Above the line isn't necessarily a good tactic for businesses in precarious economic situations. However if you're looking to grow beyond what you know, and to discover new customers and audiences, PR and other above the line marketing (like TV) starts to look less like a luxury and more like a necessity.
Tikto
At Tikto, we purchase majority stakes in breakeven or EBITDA profitable tech businesses then follow that up with incremental growth capital. We bring our network of entrepreneurs and operators to help execute a business plan for the next phase of our portfolio companies growth.
Until next time!