Why AR is more important than PR for a Startup [Startup Saturday]

rocket-for-startups.jpgResearch by SageCircle, H&K (in multiple Technology Influencer Studies conducted by Penn, Schoen & Berland Associates), Lighthouse AR and other AR advisory groups has consistently shown that the most significant influence on purchases is peer recommendation and personal contacts.  Second is industry analyst opinion, which leads all other influence including advertising and PR.  For a startup attempting to break into an existing market or carve out a new market space this is critical information.

For a startup, traditional PR is certainly important and should not be ignored, but allocation of resources to AR can provide a higher ROI.  Press is very transient and even an outstanding article or mention does not have staying power over the long run if it gets buried in the clutter of a Google search.  Analyst reports have a much longer shelf life and may be referred to months after they are published as a relevant research note is more likely to surface during a research search on the analyst firm website.  Good research consumers will then contact the analyst firm for an update or discuss the report during an inquiry.

Industry analysts also convey information at industry events, act as sources for reporters, and can even have influence on Wall Street.  It is therefore critical that they are well informed of your company strategy, products, and services.  This needs to be an ongoing process to maintain a top-of-mind status, especially for a startup that does not have high name recognition.

The most important aspect of the analyst influence for startups is that many large enterprise tech buyers use analyst client inquiry to get input on their vendor short lists for product purchases. For example, in the 2007 H&K PSB buyers study, when it comes to creating short lists 57% of tech buyers said analyst opinions were “most important” versus 29% for media coverage. In multiple SageCircle studies of tech buyers from 2002-2004, on average 60% of buyers said they added a vendor to a short list because of analyst commentary and an average of 30% said they removed a vendor from a short list based on analyst opinion. It is also critical to note that getting added to a short list by an analyst results in a super qualified lead because most buyers will subconsciously take the analyst suggestion as a form of endorsement.

Because AR and PR have different goals and objectives, and work in different fashions, care should be given to not just assuming that a PR department or agency can also cover AR.

AR can also provide the link with key analysts that may assist with opinions about product development, message testing, launch planning, press release reviews and advertising campaigns. Smart use of savvy analysts as advisors can improve a vendor’s products and marketing resulting in increased market competitiveness.  These activities also lead to increased awareness in the analyst community.

SageCircle Technique:

  • Be sure you have experienced staff dedicated to the analyst relations function
  • Educate executives and product managers on the importance of analysts for both inbound and outbound activities
  • Focus on a small core of key analysts in your market
  • Involve analysts early and often and use of mix of interactions to maintain close contact

Bottom Line: The investment in AR does not have to be large, but if you carefully look at the ROI you may find you are significantly under spending. Frankly, if the choice is whether to first invest in AR or PR, then tech vendors selling to mid-sized to large enterprises should give AR a higher priority because of its ability to directly drive sales opportunities.

Question:  AR Teams – Are startups getting proper support for AR?  Analysts – What areas of new technology most interest you?

Are you getting the most from your analyst interactions?  SageCircle can help

  • Review your overall analyst plan with a free diagnostic
  • Provide training for new AR staff or those who need a refresh
  • Assist in educating your executives on the importance of analysts

Visit www.sagecircle.com to learn more about SageCircle’s services. Or, call 650-274-8309 to speak with a representative about how SageCircle can help you with a free diagnostic.

0 thoughts on “Why AR is more important than PR for a Startup [Startup Saturday]

  • Interesting post. However, I take issue with the bold and sweeping claim that “allocation of resources to AR can provide a higher ROI” (than PR). First of all, I understand the point you’re making but I think we need a caveat here concerning the UK market and US market with regards to analysts’ impact. I thought the H&K study was focused on the UK market? Also, do you find that startups typically have the proper infrastructure to approach and work with analysts to get the most out of the relationship, or is that not the case?

    Ironically enough, was on a call today with an analyst focused on the data management and enterprise apps/SaaS market. We were talking about a project on behalf of a client – webinar, white paper discussion – and what the analyst can do for my client. For the low, low price of $25k, said analyst will draft a 14-16 page white paper that “we can use in marketing efforts.” For that price, my startup client gets three months of PR, ongoing counsel, five releases, a case study, dozens of clips in IT trades and various vertical pubs read by his target audience, AP stories and a blog post in WSJ Business Technology blog. Now that awareness has been achieved, let’s go after the analyst community who are all banging down the door of my start up client!

  • Richard,
    I am aware of several studies over the past almost ten years that reach the same conclusions about the impact of the analysts on Enterprise IT buyers. These studies mostly covered the US and EMEA, so the data might be suspect for APJ. If you slice and dice the results the percentages will vary somewhat by country, but the basic conclusions are that analyst influence is second only to peer networks. This means that vendors selling to Enterprise customers should indeed invest in the infrastructure necessary to appropriately work with the analysts. Unfortunately most startups, and many established companies, put a disproportionate level of effort into PR rather than AR. I believe this is often because they are viewed to be the same and PR is well understood. Since executives do not realize the difference they do not invest in the AR infrastructure.

    As to the “white paper for hire” analysts – we have strong evidence that these sorts of activities have little influence. What you have described is a PR marketing plan and the term “analyst” is bogus. It might create awareness – but I doubt it will influence any real analysts more than a few solid briefings at no cost. That $25k expense might not cost as much as funding an AR headcount, but investing in talented and experienced AR staff will produce the long term impact the company needs. AR is not a one-shot deal, and should not be compared to a three-month pseudo-analyst marketing blitz.


Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.