Jared Tame

The year is 1957. James Vicary has the entire advertising world convinced that he has successfully demonstrated a technique that would enable advertisers to allow them to control anything consumers do. He claims that he has broken the code of subliminal messages by placing them in motion pictures, bringing in audiences, and recording the results. His claims showed that the embedded messages of "Eat Popcorn" and "Drink Coca-Cola" increased the sales of popcorn by 57.5% and Coca-Cola by 18.1%. He holds a press conference, taking retainer fees (an up-front deposit) from advertising agencies. Shortly after, he packs up, leaves town, and disappears, never to be seen or heard from again. He beat the reporters and was gone before the story even surfaced. He left no trace; no bank accounts, no forwarding address, and he also left with $4.5 million (equivalent to $22.5 million today) in both advertising agency and client money. Wherever you are, Jim, you've pulled off the largest scam in advertising history.

There's a lot of history in advertising, and deception is one of the biggest issues. You can trace most of the negativity towards advertising back to The Great Depression. It's not to say that advertising is a bad profession (it actually used to be an elitist profession), but there's a lot of distrust towards advertisers and claims that can't be backed up.  That may affect us as entrepreneurs, even to the point where we may resist using many forms of advertising and marketing in our startups.

I think a lot of us would say that most of today’s startups were created without a penny put into advertising or marketing.  I love the examples of YouTube and PayPal because they were started by alumni of the university that I attend, and I’ve had the opportunity to chat with both of the founders from these companies.  I have also spent some time looking at YouTube and PayPal’s marketing strategies and found them to be great examples of models for explosive growth.  It’s easy to look at the successful companies today and say “Yeah, they didn’t do any advertising.  They just had the right thing at the right time at the right place.”  But I think these companies deserve a lot more credit than that.  First, let’s dispel the myth that YouTube and PayPal paid little attention to their marketing tactics.

YouTube was started by giving away an iPod every day, for several months.  I don’t remember this happening because I was a “late adopter” and found out about YouTube from another friend that found a particular video funny; he sent me a link through an IM program. That’s kind of cool how it works though: people could video tape their iPods that came through the mail, and then upload it to YouTube, for other people to watch. YouTube didn’t just tune in on marketing though.  They also placed a lot of importance on product development and rapid iteration.

My current stance on marketing vs. product development is that you can’t exist without the two.  I would argue that product development and marketing are the two things that will launch any startup with a valuable concept into explosive growth.  Of course, no method of advertising, no matter how great it is, will ever completely be responsible for sustained growth over long periods of time.  Advertisers would probably argue that YouTube and PayPal never technically “advertised,” because the definition is strictly defined as a “massive, paid attempts to persuade an audience to buy or do something.”  Either way, they had to spend a little to make a little.

PayPal is another good example, and it was another startup I wrote off as “one that didn’t pay any attention to marketing.” PayPal  originally offered $10 to each member that signed up, and $10 for referring a friend.  I remember signing up, but I forgot that I was actually paid $20 when I first jumped on board.  I remember not being interested, and the thing that sealed the deal for me was getting the $20.  A lot of PayPal’s early stage funding was spent on making PayPal's growth explosive, and offering incentives to sign up is just as good a reason as anything else.  It also helped that PayPal was backed by Ebay, which was a substantial boost to their growth as well.

If you walk away with anything, you should realize that product development and marketing is becoming a huge barrier to entry for competing startups. If you can build a great product that finds its way in front of a large audience, you’re set. If you want to be #1, don't be afraid to use different forms of advertising (whether you or your own users are doing it) and spend money, just don't do it carelessly. Don't let your negative views on advertising affect your decisions to promote your startup effectively--at the end of the day, there are many methods of marketing and advertising that still work very well.