After a month and a half of working with a mobile gaming project in Shenzhen , I can’t help but feel proud of how many young entrepreneurs here understand the value of marketing. It is so refreshing to be in a meeting an half the time discussing very aggressive marketing initiatives with the goal of being original and built into the foundation of feature launches.
This stood out to me for some reason. I don’t think this is a regional thing as much as it is an age and mindset thing. I could be wrong but I think young entrepreneurs typically understand that without marketing than their older counterparts. They have pointed out how competitors who perform average marketing initiatives let their best product get buried. It is a little different in North America: I think most companies go hard on marketing with the exception of some aged family businesses. They’ll spend money on a Shopify subscription, a slick website, or some organic social media posts and call it “marketing.”
Bare minimum
Paying for an e-commerce platform is infrastructure. Hiring someone to maintain social media content and website updates is upkeep; it's not marketing. I consider it more as overhead. Some business associates and operators I cross paths with still don’t get that those things keep the lights on, but they don’t actually get new customers in the door.
When I was on a CPG project for a regional brand, I found myself sitting in a meeting where the marketing team was the sales coordinator. No discussion on how to generate awareness, demand, and trust with the brand. Their focus was just building distribution partners to push the product on the sales front with no marketing support. This made ZERO sense to me and what I discussed mad zero sense to them because that's how things have been for 20 years! They referenced another well performing product they had and bragging about spending fifty thousand dollars on marketing. Then I break down the numbers. Twenty thousand went to a website, fifteen thousand to packaging design, and another fifteen thousand for a brand video. I kindly explained that nnone of this is marketing. It is design, production, and creative asset building. Important, yes. Revenue-driving, no. If sales stall, then what? Let's say sales doesn't stall but what about money being left on the table because marketing didn't hit untapped markets.
I'm babbling because I learned this the hard way in my early days in my first startup, we didn’t do a lot of marketing and it was a purely sales push but on my second startup, my co-founder and I averaged 25-33% of our available budget on marketing. I now realize a good product owner will ask how much they should budget for marketing, and the answer depends on the industry, but there are rules of thumb every product category and sku will possess. This data isn't difficult to obtain.
I had this discussion with my entrepreneur group chat and someone said it’s easier to perform marketing in East Asia because their operation and labour costs are lower. I bet to differ good sir. I would argue their margins are slimmer and they’re forced to focus on scale volume. The US has the luxury of 30-40% gross margin. These poeple barely hit 10-15%!
Of course that comment came from someone older which probably lead me to write this if I’m honest. He’s proof that North American small businesses struggle with this gap are often led by older business owners who succeeded in an era when word-of-mouth or a good retail location was enough. That is no longer reality. Younger founders, like the ones I see here in Shenzhen, understand that attention is the scarce resource, and they budget for it.
Seeing this has made me realize I’m likely going to be more selective working with businesses that does not have a proper marketing budget. Because now I’m certain they can’t build a business this way, they’re just building a product and hoping luck will do the rest.