How Does Your Software Firm Compare to ORCL?
Start-ups through mid-sized software firms have a tough time competing with large firms for mindshare, editorial coverage, advertising placement, brand awareness and press coverage. These smaller firms have considerably fewer internal resources and may lack the reach, capital, market presence or buying power to help them win the hearts and minds of software buyers everywhere.
Let’s look at Oracle (ORCL) for a moment. Oracle is one of the largest software firms in the world. ORCL has recently reported revenues of approximately $22.43 billion (source: Yahoo Finance). Their marketing budget is reportedly 1.7% of total revenues (for an outstanding assessment of Oracle’s Marketing budget, see “Oracle CMO Opens the Books on Marketing Spending, ROI” in B to B magazine, www.btobonline.com, 7/14/2008). This equates to approximately $381 million available to Marketing. This sum alone dwarfs the total revenue figure for all but their largest competitors.
The B to B article also noted that Oracle:
- produced 6,623 marketing events last year
- 347,000 attendees were at these events
- 56% of Oracle deal closures could be linked to one of these events
That article also indicated that Oracle spends approximately $4.6 million/year on public relations (PR). That figure works out to approximately $383,000/month on PR. With many press releases costing approximately $400/release to place on a newswire, Oracle is certainly getting a lot of press releases out and/or keeping a lot of PR agency types well paid. Many software firms couldn’t even afford an annual PR budget of $383,000 let alone a figure like Oracle’s.
This piece isn’t a criticism of Oracle as they have actually reduced Marketing spend as a percent of total revenue over the last decade. My colleague, Vinnie at Deal Architect, is always watching the SG&A costs of software firms and he would likely applaud Oracle’s cost reduction efforts here. Total marketing spend as a percent of revenue has declined from 5% to 1.7% today.
In fact, we should look at what Oracle is doing right:
- reducing total Marketing spend as a percent of sales
- scaling back print advertising and focusing more on online ads
- measuring effectiveness of events and tying event activities to deal closures
- moving away from traditional press releases and embracing more social media (e.g., blogs)
For smaller software firms, there are tough calls one must make when competing with an Oracle-sized firm. Does your firm:
- Create compelling events, newsletters, copy, etc. or are they relatively similar to those of competitors?
- Maximize its PR potential? Are the items generating buzz? Do they reinforce the brand you want to create in the market?
- Speak to its prospects or does it serve up self-congratulatory messages/pieces? How narcissistic is your copy?
- Get the value it should from its PR firm? Tele-sales group? Etc.
Want to know how to get more for less? Here are some tips:
- Get really focused on your message and what your brand is supposed to be about. It if doesn’t fit handily on a bumper sticker, it needs work. When I engage with many tech firms, they confuse their brand with:
o product line names
o sector names
o mission statements
o their life story
your brand should be a phrase or descriptor that anyone instantly recalls about your firm.
- Tie every press release, event, webinar, collateral piece, white paper, etc. to this brand. Accenture never lets you forget that they help create “high performance companies”. What is your firm doing for (not to) customers?
- Create unique collateral and events that also ties back to your brand. Don’t send out signed baseballs to prospects if your product has nothing to do with baseball. If you stumble across a ‘neat’ give-away for a promotion in a catalog full of these ideas, chances are your competitors have also. Find something else. Anyone can do the easy stuff and it isn’t memorable. Be the first and be unique – you’ll be memorable and you’ll get people to return calls.
- Make your collateral, events and messaging highly relevant to your prospects. Generic Marketing materials rarely attract much interest. Get verticalized! Speak the language of subsets of your target market and watch how much more engaged they’ll become.
- Speak to customer problems and concerns first. Quit trying to tell us about your firm, your products, your development team, your…. No one likes to listen to a egoist. Technologists love to talk about their creations and toys. Customers want to hear about your knowledge of their business. Make your Marketing customer focused – it’s hard to do but massively effective.
- Segment, Segment, Segment. Your firm can’t be all things to all buyers so quit trying to be the universal answer to all of our prayers. Be content to get half the market or less for now. Next, figure out which segments, verticals, micro-markets, etc. are most inclined to want your solution, have the crushing business need and can afford it. Look for niches where buyer demographics and psychographics converge with your firm’s strengths. Look for spots competitors under serve.
If you need more tips or help getting more value from your Marketing group, drop me a line. I know a few great folks who can quickly push you to the next level. Maybe, we’ll be writing your effective Marketing spend here soon.
Finding good Finance Software is always difficult, but everything here seems to be legit.
Posted by: Scott (Business & Finance) Jankins | July 27, 2008 at 12:28 AM
Brain, there is a huge difference between Oracle and other Software providers. Oracle is the giant in Business world specially in finance sector.
I think the reason Oracle has reduced it's marketing budget from 5% to 1.7% is that they have got enough goodwill and market share that they have no need to spend that much on Marketing and they may be focusing more on their core activities.
Adopting modern way to release their important information, for example, blogs are for sure a vital need today.
And focusing on online advertisement is for sure the best way today to speak and interact with global audience instead of using paper media, which interacts with a particular range of readers only.
lastly, the tips you have given for smaller software firms are excellent. I highly appreciate that.
In a nut shell, this is an exceptional and unforgettable post. thank a lot for that.
Posted by: Due diligence data room | February 20, 2011 at 08:20 AM