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Relevancy + Profitability = Wow!
by Andy
October 11, 2013

An article in Friday’s WSJ (http://on.wsj.com/1g6CSuk) had me saying, “Uh-oh, here we go again.”  Just like in 2000, and to a lesser extent in 2007, lots of technology companies are going public without any profit or run rates of success.  In fact, “68% of US-listed technology debuts this year, or 19 out of 28 deals, have been companies that lost money in the prior fiscal year or past 12 months,” according to Jay Ritter, Professor of Finance at the University of Florida.

The hope is they can grow faster by going public, and worry about profitability later (build a wonderful product and amass fervent users, then make money via ads, subscriptions, etc.).  While Facebook has finally gotten its groove, you can’t say the same for Groupon (a company enjoying very strong revenues but still showing negative income).  Twitter is expected to go public shortly and while it reports strong revenues, earnings are likely to be negative like most consumer-oriented tech firms.

The article also showed an interesting chart.  While unprofitable tech companies have better first-day performances, profitable tech companies perform far better over the first year and three years – by a lot!

I bring all this up because relevancy marketing is very much based on communications techniques used by the tech sector.  Here, it’s critical to explain where the category is going and get the audience to agree with you.  Once the audience agrees, then you showcase how your product/service is well-positioned to take advantage of this future reality.  When done well, it creates a level of obviousness that compels the market to align with you.

This is why tech firms race to the podium to showcase their views and big idea.  Their objective is to get funded.  Once funded, they start building the product and then run to the next podium to keep the vision alive (and get more funding).  And it works in spite of the logical warning signs as 2/3’s of all tech IPOs lost money this year.

Imagine what more mundane companies — read profitable with measurable track records of success — could do by leveraging a similar communications approach?  Relevancy marketing is far less expensive than current methods of communications, yet far more effective.

Once the market starts to share your vision for success, the more they’ll want to take advantage of partnership opportunities you can provide.  Rather than wait for the market to discover you by chance, I suggest chumming the waters and providing a map.

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