Marketing Budgets
Deep Thoughts, MB&F, Uncategorized

Marketing Budgets

Sorry I have not been writing much.  My head is a bit out of it all with the new baby.  If there are any topics you would be interested to hear my take on, feel free to suggest in the comments – a jumping off point might help me.
That is exactly what I got when Fred Wilson blogged yesterday about marketing budgets for venture stage tech companies.  If you have a moment, you should read his post and some of the comments.  I found it particularly relevant to the watch industry, where marketing budgets are sky high.  Here is the comment that I left, reproduced below:

I could’t agree more, Fred.

My current business, high-end mechanical watches, is dominated by marketing budgets. The big brands fill the ad space of every magazine you can pick up on the rack, and little guys pop up every day with millions of dollars who want to start their own brand – their first step is always a huge marketing budget.

Coming from a background in tech, I had never seen anything like this. My company is structured a lot like a tech startup. We have (comparatively) no money, but we have ideas. We believe that if we make the best products, tell an interesting story, and work hard to tell it to the right people, good things will happen.

The results have been tremendous. I, the President here, and our CEO in Switzerland do all of the PR ourselves. We create personal relationships with the journalists and clients and therefore have full control. We administer our social media accounts and connect for free wherever possible (have ~9000 fans on facebook and make 150 watches/year!) We can launch a new product on an hour’s notice and are widely admired in the industry for having some of the most covered, most talked about product releases.

Precisely the fact that we do not spend money and instead fully exploit free resources and our skills is perhaps the single biggest factor that has let us reach the top of our field. The drawbacks are that it is incredibly time consuming, and you need to find people with unique and broad skill sets (being capable of successfully communicating is, unfortunately, not as common a skill as it should be, and often comes without other necessary skills for running a business).

Thanks for the thought-bait. I could go on this one for a long time.

Best,
Steve

 

The comment itself even turned in to a bit of marketing, although it was completely unintentional.

  • Ok so this is as usual a great topic. When you buy a “big umbrella brand” (as I call them) 35-40% of the watch price is marketing. The numbers are staggering for the corporate brands. The little guys, they don’t have that kind of budget – and their prices sometimes reflect that as well (although not always). The problem in this industry is that “if we make the best products, tell an interesting story, and work hard to tell it to the right people, good things will happen.” is far too optimistic a view – it works in tech, not watches IMHO. The independents, they have ideas and innovation, but no cash – the big boys, they swim in cash, but zero thought, zero innovation, zero everything – except marketing budgets 🙂 That’s partly why so many independents have gone the way of the dodo and will continue doing so in 2011. Additionally, the watch industry is not a self-supportive ecosystem – quite the contrary. So you’re really on your own out there. I’m not suggesting the tech industry is an gentler among competitors but in tech, we understand that the tide lifts all boats. In horology, they just wait for you to drown 🙂

    • Thanks, Jerome. Why do you believe that my view is optimistic? It certainly has worked with MB&F. Where has it not worked? Certainly, if anything, it is overly simplistic (i.e. it still takes great budgeting, logistics skills, etc). The problem is that very few companies actually make amazing products, even fewer are able to do it with a cost structure that works, and you can count on one hand those who do all that and still have the skill set to properly build the brand.

      • Well I think you might be one of the very few brands in that price range who’s succeeded at it that’s why 🙂 I agree on the product side, and I suspect you’re right about cost structures otherwise those who try wouldn’t keep failing at it economically – and as you point out, there’s only one Max – But I guess what I meant is that someone reading your post thinking about doing the same thing might be lured into an unrealistic optimism. The industry is not structured for brands like yours to succeed, on the contrary – that’s why you’re one of the very very few UFOs out there in my opinion.

        • It is EXTREMELY difficult; I don’t mean to imply anything less. However I believe it is the only way to build a brand that is robust in the long run and honest to customers.

          • You’re probably right, and you have the experience/success to prove it!

  • Edwardlien

    there r shopping advisors for super VIPs that u might reach out to market MB&F products, this way u get more max perhaps?