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 how marketing can be 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 younger entrepreneurs everywhere know that without marketing, even the best product gets buried. The startups and small businesses I’ve interviewed with in North America still don’t grasp this. They’ll spend money on a Shopify subscription, a slick website, or some organic social media posts and call it “marketing.”
Drives me crazy.
Paying for an e-commerce platform is infrastructure. Hiring someone to maintain social media content and website updates is upkeep. That’s not marketing. That’s overhead. Some of the owners 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, I found myself explaining how marketing is how we generate awareness, demand, and trust. Like what? You’re a CPG product. Their focus was just building distribution partners to push the product. This made ZERO sense. 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 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?
I learned this the hard way because early days in my first startup, we didn’t do a lot of marketing but on my second startup, my co-founder and I basically spent 25-33% of our funds 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.
Same goal, different mission working between East and West
March 29, 2024