Tuesday, April 29, 2008

Monetize Your Site With Sponsorship Deals

Have you thought about getting a sponsor or co-branding partner to help promote your product or service, and earn a few bucks while you're at it? The big guys do it alllll the time. I was watching the show GossipGirl tonight and checked out their website. They have deals with Sunsilk, Verizon, Old Navy, Second Life, Vogue and Rolling Stones magazines.

With tons of new sites and blogs being created by the nanosecond, getting a sponsor may be a one way to monetize your "digital assets". Even if you already sell your own products and services on your website, having an established brand buy ad space will give you more credibility. And yes, you can get Google AdSense pretty easily but unless you have humongous traffic, it won't pay. Cutting a deal directly with an advertiser can be much more lucrative. Think you don't have enough page views? Think again. One thousand unique visitors may not sound like much but there may be advertisers out there that are interested in even that small number of "eyeballs".

This is a topic I'm very interested in so I attended a workshop recently at the NY Women's Chamber of Commerce on how to get sponsors and brought back a few good tips:

There are two types of sponsorships:
1- grants from foundations or city, state and federal agencies, and
2-corporate money

Of the two, corporate dollars are easier to get a hold of. Start by inquiring at your target company's community relations division or their public relations office. If they don't have such a thing then keep asking until you get to the right person. And you don't have to stray too far away from your "hood" - look for businesses near you. For an event I was organizing last week I went after The Container Store located a few blocks away from my venue. Unfortunately they never got back to me, but now I know where to go and I'll try them again for another event in the future.

Sponsors have deadlines and they usually run out of money by June, some, like American Express Open, even as early as April. You'll be competing with others for the same sponsorship dollars so start early in the year. Build a relationship - invite them to your functions, take them out to lunch, send them information about what you do, take pictures of the event and send them copies. Keep them involved in the process. Find ways to always be on their mind. Research and see what kind of events they like to sponsor. For example, banks are now big on financial literacy.

Pick sponsors that fit in with your business. The closer you are aligned with their goals, the better chance you'll have of hooking up with them. Tell them about the demographics of the people attending your event or visiting your website. How many people do you expect at your event? How much traffic do you get? These are things they'll want to know.

Give them different sponsorship levels to choose from, and tell them specifically what they'll get. Like the "Gold Sponsor" will get their logo on your fliers and website, but a "Platinum Sponsor" will get that plus time to do a presentation, or be introduced to the audience, and will allow them to distribute marketing materials at their own table.

Corporations also have foundations (it's a tax break for them) for specific causes they sponsor. Foundations only give grants but they're very easy to apply to.

Set up advisory boards and court people that work in organizations you'd like to get money from. Another idea is to attach yourself to a non-profit organization and ask them to be a partner of your event (think of all the companies that have the pink ribbon for breast cancer awareness!). Corporations like it when you do this. It's like a "Good Housekeeping seal of approval".

It's like you have to think of yourself as the head of a media business, and do what they do to make money.

Do you have any good/bad experiences with sponsors? Please share!

Tuesday, April 15, 2008

Outlook for Startups in NYC

Last night I attended another great meeting put together by the folks at the NY Software Industry Association (NYSIA). I'm a total new media geek and software is what it's all about, so I've gone to a few of their events and I usually come out with good contacts and new ideas. It was held was the posh Park Avenue offices of JP Morgan/Chase, who generously donated the space and I believe were also responsible for the yummy sandwiches and soft drinks. After a bit of nibbling and networking we all sat down inside a comfy auditorium (left) and Howard Greenstein, the evening's host, gave the introduction. The four panelists participating in the discussion (below right) were all venture capitalists and angel investors, and the topic of the evening was "Running a Tech Business in NY: Challenges & Payoffs".

When Howard asked about the downsides of NYC, Jason Olim, founder of CDNow broke the ice and said that finding entrepreneurs to co-venture with is hard in the city. "New York doesn't have the startup optimism you see elsewhere. The "gold rush" mentality that allows people to walk away from great salaries to join startups isn't present here. There's an optimism deficit," he added.

He also pointed out that NY is all about media, advertising, and financial services, but there's no real tech culture. "There's no MIT or big name tech school here. Unless that happens you won't see it."

Krakoff of Boston and California-based venture capital firm Sigma Partners thinks there is a lack of support networks here so lawyers end up taking a bigger piece of the pie.

Hank Williams, Founder and CEO, Kloudshare, remarked that if you're willing to go across the Hudson, the number of engineers expands substantially. For many tech startups the question is, is it worth it to set up a development office outside of NYC? Taking it a bit further, Jeffrey Stewart, Founder of Mimeo.com said that he has recruited people from Ohio and other places, including outside the US, like China and Argentina.

On the plus side, Roger added that there is a growing number of entrepreneurs supporting the community now and that ideas coming out of New York are amazing. "If you're going to be in the marketing business you need to be in New York."

The focus then moved to "hot" industries. For Roger it depends on the time frame. He likes green technology, though that may take longer than 6 - 12 months to take hold. Other areas he sees becoming popular are things having to do with re-inventing data centers, like virtualization and green data centers. Precision marketing and social media were also on his list. Hank thinks interdisciplinary stuff will start picking up steam, like taking software to non-digital spaces. Jeffery believes that there is an overcapacity of technology out there that hasn't been product-ized, so he's keen on companies that can do this.

Then came the question on everyone's mind: how will an economic slowdown affect new companies? The panel seemed very upbeat about the prospects. Jason indicated that if this environment creates job seekers it's great for startups. If you're in a high growth business, a bad economy will help you gather your resources, according to him. Hank explained that when you're a small company going from $0 to $500K, macro economic trends won't affect you, except if you're raising money. For Roger the question is, how do you create the highest demand for your product? He sees ad markets getting bumpy during these hard times. Jeffrey thinks a slowdown is the best time to start a business.

I guess that's good news for those of us starting out! Have you been affected by the economic downturn? How are you coping? Please send in your thoughts!

Wednesday, April 9, 2008

Interview with Web Entrepreneur Michelle Madhok

When Michelle Madhok, founder of shefinds.com, pitched her idea for an online shopping site to AOL, Lucky and Shop Etc. back in 2004, she got shot down by all three of them. At the time she had just ended a 5 year stint at AOL, where she spent 5 years overseeing women’s content. “AOL was a great place to find out what women wanted, with 35 million subscribers, 52% of which are women, says Michelle, who is also founder of Momfinds.com.

For Michelle, the online shopping bug started out as a pastime, doing personal shopping for colleagues and co-workers when they didn’t have time, or didn’t know what to buy. Then she graduated on to sending links of shopping sites to her friends. That’s when she got the idea to do it on a larger scale. But none of the established internet sites she contacted seemed interested, so she decided to do it on her own.

“On Craigslist I found a crazy Ukrainian to build the site. I bought the domain name “shefinds.com” from a porn site that wasn’t using it anymore (love it). AOL had given me a severance so I was bootstrapping, working out of my home with one full-time person, putting together an email newsletter and a blog. It slowly started picking up steam. We got requests from people who wanted to write for us. The more money we'd make the more people I would hire (she now has 40 writers). I then hired an editor and a web designer to produce the newsletters.”

Michelle looked for sponsors right away. She joined affiliate programs like Linkshare and cj.com. Then Bare Necessities offered to sponsor her newsletters and paid her $200 the first time - she was thrilled!

About three months later, smaller businesses like jewelry designers and handbag designers that couldn’t afford to advertise on sites with big female audiences like iVillage contacted her directly and asked to place ads.

When I asked how she promoted her site, Michelle said that she hired someone to help with SEO (search engine optimization), but word about her shopping site spread virally. Now they do weekly “ad swapping” with other sites, and they have deals with MSN, Yahoo!, Real Simple and Lifetime to syndicate their content.

Michelle started out by investing $20,000 of her own money in 2004, and last year made $400,000 in revenues. “I worked hard for it”, she says. “I wrote 600 invoices last year! But it’s nice to work for myself.”

Right now her margins are over 30% but her goal is to increase them to 55%. “We’re still ramping up to get there. I don’t go out trying to sell ads - people come to us, so I need to hire an ad sales person.”

I asked her what advice she had for others that are starting out and here’s what she had to say: “At the beginning I did everything really cheap. I didn’t touch my savings very much. Your first attempt should be a test. Try to find inexpensive legal advice. Always barter or negotiate on price – I got my head shots for free because I exchanged them for free ads.”

She also believes in making your mistakes on someone else’s time/dime. Michelle found consulting gigs through The Hired Guns at first (they place people in specialty positions). She worked on an email marketing campaign for Pfizer which really helped her with her own business.
In addition to her two sites, she's got more in the works. “We want one for brides and then one for the home, and one for food. We want to be the hip consumer reports for shopping online in different vertical markets,” explains Michelle.

That's me and Michelle chatting at a recent Forrester networking event for the new book, Groundswell (a great read for anyone interested in social media). More pictures in my Facebook page.

Wednesday, April 2, 2008

Bounce Your Way to Success

Failure - a word that's been in the news quite often recently. In the last 3 weeks we’ve seen Eliot Spitzer step down as governor of New York State – in one of the most high profile scandals of all time - and Bear Stearns, the 6th largest investment bank in the US collapsed after 85 years as a financial powerhouse.

As a business owner, I dread the prospect of failure, especially when I hear statistics like 1/3 of new businesses fail in the first 2 years, and then there's all that talk of our economy going into recession.

On any given day I make at least 2-3 decisions – some of them work some of them don’t. But according to Barry Moltz, author of Bounce, The True Path To Business Confidence, what's important is that you let go of the successes and failures, and just keep moving forward. It's not about bouncing back, because sometimes you don't come back to the same place. It's just bouncing - being flexible and not getting stuck analyzing what happened to death.

"We are taught that there is always something to learn from failure. We are told that the only reason failure “comes” is to teach us something. Sometimes when we fail there is nothing to learn- it just stinks. Failure is only valuable when we see it as part of the entire learning cycle even when there is not always something to learn," explains Barry.

When I asked him recently what the motivation was behind the book, he said he was tired of all those business books that promise "5 steps to success" and push us into a quest for that "magic formula". He says that true business confidence comes from riding success and failures, and developing resiliency.

Here are three tips he gives in his book:

Strive For Minimal Achievement
There is incredible power we can get in business by striving for minimal achievement—focusing on being great at a few things at a time. This is becoming increasingly difficult as we are raising a generation of attention deficit individuals. When was the last time you did one thing at a time? Focus gives power. This does mean that if our customers ask us to shift our business and it is profitable, we should not try to accomplish this. Many businesses start out providing one product or service and morph into a different business. We need to remain focused on doing a few things well but always be open to new ways that our business can change and grow.

Downsize Your Dreams
In business, we are always told to conquer that mountain. Do what you love and the money will follow. Have No Fear. Failure is not an option. Success will breed more success. And we start to believe it. But we are many times disappointed because we don’t get there. We feel let down. We feel like a failure. We feel that maybe we are not working hard enough! We get frozen and paralyzed. To move past this, we need to downsize our dreams. We need to realize the successful companies are built one customer at a time and one employee at a time. Speed kills. Figure out what success looks like for us in addition to money. What is our "money plus" goal? What will make us happily successful?

Too Much Money Makes You Stupid
Everyone must eventually deal with limited resources. Accept it—limited resources are a fact of life. Sometimes we get into the “if only we had” game, where we decide that if we only had this resource—skills, training, the right people, new intellectual property, or (the big one) more money, then our success would be guaranteed.
This is delusional. There will always be something you lack in your business.
Making a go of it with whatever resources you have at a particular point in time is the nature of business; scarcity can be a competitive advantage and the barrier to entry that makes you more successful as you learn to operate lean and mean.
Will Eliot Spitzer bounce? What about Bear Stearns? Barry, veteran of a few bounces himself, says yes. "Most people do if they keep taking action. Martha Stewart did. Spitzer will reincarnate in another form and the people of Bears Stearns will find other jobs and will be pushed to other opportunities they may not have looked at before," he adds.

Are you ready to bounce? Check out Barry's "Bounce Video Challenge" - he's giving away $1000 to the winning entry. I'd love to see one from Eliot!