Revolutionary Measures

The open and the closed – marketing post-Brexit

The Brexit vote has highlighted a deep division within English society that is likely to define and drive politics over the next decade. Essentially many traditional Labour voters in Northern/Midlands cities and Conservative supporters in the rural shires all voted to Leave. At the same time those in dynamic cities such as London, Bristol and Cambridge overwhelmingly favoured Remain, irrespective of their political allegiance.download

The result? Political chaos in both the Labour and Conservative parties as traditional voters move from defining themselves as left or right wing, to more about whether they are open or closed. This defines their complete world view. Polling by Lord Ashcroft shows that Leavers share opposition to multiculturalism, social liberalism, feminism, the green movement, the internet and capitalism. By contrast, Remainers are much more open to globalisation and immigration, which they embrace.

In many ways this isn’t unexpected. Globalisation, which has shifted jobs and people around the world, has caused major disruption, and, while it has benefited the economy as a whole, it has sidelined certain groups. All through history this sort of change leads to a fear of the new, which is manifested in religious or racist persecution as people define themselves based on the past, rather than the present or future.

What feels unique is that the two groups – open and closed – are so similar in numbers, yet completely different in their outlook. This has an impact on marketing, adding another layer of complexity to reaching and engaging with audiences. How can marketers ensure they are reaching the right target groups in a post-Brexit landscape?

Obviously certain basic items appeal equally to all consumers – there is no Leave bread, though marketers have always known you are going to sell more artisanal focaccia in Hoxton than in Sunderland. It is as you move up Maslow’s Hierarchy of Needs to more aspirational purchases that what will appeal to one side is likely to put off another. The open group are more likely to be sophisticated early adopters, pro-technology and renewables, while the closed group are more suspicious and needs-driven.

This has to be taken into account when you are planning your marketing strategy. Which products fit best with the open and closed personas? Geographically where should you make them available? Which celebrities should you bring on board to endorse them? Marketers are probably more likely to be Remainers than Leavers, meaning they will have to ensure that they put their feelings aside and understand their audience if they want to appeal to Brexiteers.

Just as there is no easy answer to the political chaos caused by the referendum vote, neither will marketers find it simple to define and target their audiences. Given that it will be at least two years before Brexit is completed, meeting this challenge will be central to success in our uncertain, interesting times.

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July 13, 2016 Posted by | Cambridge, Creative, Marketing, Social Media | , , , , , , , , , , , , , | 5 Comments

Tech startups are booming – or are they?

The tech market across Europe is on a roll. According to Dow Jones VentureSource European startups raised €2.1 billion (over $2.8 billion) in Q2 2014 from VCs, the highest amount since 2010. The average size of the 365 deals was €2.2 million, up from €1.5 million in Q3 2013. Essentially that means every day of the quarter four startups got funding from VCs.

European Union flag

European Union flag (Photo credit: YanniKouts)

At the other end of the company journey, Tech.eu counted 92 tech exits in Q2 2014, up 70% from Q1 2014. 10 of these were IPOs, showing a healthy move back to the stock market for tech companies. And while deal size was undisclosed in 72% of cases, 15 were for over €100 million.

So, does this mean that everything is rosy in the tech market and your startup will receive its deserved funding in a heartbeat? Unfortunately not, and there are three worrying points behind the figures:

1          What is a tech company?
I’ve always been suspicious/puritanical on what makes a startup ‘tech’ rather than part of any other sector. Taking a look through both the Tech.eu list of exits and its corresponding index of EU tech funding rounds so far in 2014, I don’t see that many companies I’d class as technology. IPOs and exits included:

  • Takeaway platform Just-Eat (food)
  • Zoopla (property)
  • Markit (financial information)
  • Oldford Group (gambling)
  • M and M Direct and Game Digital (retail)
  • eDreams Odigeo (travel)
  • Jobsite (recruitment)

Companies that received the largest amounts of funding mirrored this list – Delivery Hero, which has raised $285 million to date, is an online food ordering platform, while Ozon ($150 million) is an online Russian retailer.

There are what I’d consider genuine tech companies receiving funding (Klarna is a payments provider, Tradeshift is B2B software and Elasticsearch is a search and analytics engine). And looking at the IPOs, Zendesk (customer service software) also fits into my narrow definition of proper tech.

Obviously consumer facing companies need large amounts of funding – they have to market themselves and launch into competitive marketing which takes cash. But my complaint is that technology is part of every business, so just because you sell via the web, that doesn’t make you a tech company. After all, in the early days of the telephone, no-one created a new category for businesses built on the communications power of the phone. By lumping these companies into ‘tech’, investors and commentators overlook the genuine technology companies making software and hardware in favour of more glamourous consumer businesses. It was exactly the same issue in the dotcom boom, with anything that had a website being lauded to the skies as a tech pioneer.

2          Europe lagging the US
The European figures for funding look strong, but in the US private tech companies raised $13.8 billion in the same period. We’re talking about a similar size market in terms of people, yet nearly five times the investment. No wonder that many EU tech firms are crossing the pond to tap into US funding. Zendesk is a good case in point. While founded in Denmark, its successful IPO was on NASDAQ, where it has seen its share price nearly double from $9 to around $17.97 currently.

Clearly, there are structural and funding issues that need to be addressed to convince European companies that this is where they need to build their startups if we are to build a vibrant tech sector across the EU.

3          Selling out too soon?
Some companies are never going to have the scale to survive on their own and fit better as part of a larger entity. So, trade sales are a vital part of the tech ecosystem – investors get their money back (hopefully), enabling them to invest elsewhere, while founders and management teams are able to move on to the next big idea.

But looking through the crop of acquisitions the largest amount (37%) were by US companies. Facebook and TripAdvisor made two European acquisitions, and the likes of Cisco and Intel bought one business each. The risk is that too many smart European tech businesses don’t turn into long term, billion dollar companies with their own ecosystems around them, as they don’t get the chance to grow before being snapped up for their technology or market position. That holds back the wider European tech economy and reinforces US dominance. It would be good to see longer term backing for European tech, with more IPOs and acquisitions by local companies, rather than selling out to US giants.

I don’t want to come across solely as a whingeing naysayer, as it is great news that funding is up for tech businesses across Europe. But I think there needs to be a narrower focus on what tech actually is amongst the media and investors, and a longer term attitude if Europe is ever to come close to building a sustainable tech economy across the continent.

 

 

August 6, 2014 Posted by | Cambridge, Startup | , , , , , , , , , , , , , , , , , , , , | 2 Comments