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Why PR for Startups?
The document discusses Sequoia Capital's TAM/SAM/SOM framework for evaluating startup investment opportunities. It explains that Total Available Market (TAM) is the overall market size, Serviceable Available Market (SAM) is the subset that could use the startup's products/services, and Serviceable Obtainable Market (SOM) is the portion the startup can realistically obtain. For startups, public relations is important to grow awareness and trust through earned media coverage in order to expand the SOM and give marketing efforts a larger audience. As coverage increases, the startup can obtain a larger portion of its SAM. PR also helps startups bridge to new markets as their products evolve beyond the initial SAM
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Why PR for Startups?
- 1. WHY PR FORSTARTUPS? SHIFT Communications March 10, 2014
- 2. 2 Sequoia Capital hasa wonderful market research framework as part of their pitching process for funding to determine how viable an investment a startup might be. The framework is called TAM/SAM/SOM, short for Total Available Market, Serviceable Available Market, and Serviceable Obtainable Market. TAM SAM SOM THE SEQUOIA MARKET MODEL
- 3. 3 Total Available Marketis the largest possible portion of the population that could be in the broad market for your products or services. As an example, our TAM here at SHIFT is any corporation in business. After all, everyone needs public relations, right? TAM SAM SOM THE SEQUOIA MARKET MODEL
- 4. 4 The Serviceable AvailableMarket is the section of the market that could buy your specific products and services. In our example, SHIFT is not a small business boutique PR firm. Businesses who want a PR firm that just specializes in, say, public policy and lobbying, would be in the SHIFT TAM but not in our SAM, because we don’t offer services that would fit those needs. Other companies who want a PR firm that delivers exceptionally low prices ($10/month PR!) would also be in the TAM but not our SAM. TAM SAM SOM THE SEQUOIA MARKET MODEL
- 5. 5 The Serviceable ObtainableMarket is the portion of the market that you can realistically obtain through your PR, marketing, and sales efforts. This part of the market is your audience share, your leads generated, and your customers. SOM is dependent on your specific competitive landscape and how many resources you’re able to devote to capturing this market. A boutique PR firm, for example, would have a very different looking SOM than SHIFT, and SHIFT would have a very different looking SOM than global mega-firm Publicis Omnicom. TAM SAM SOM THE SEQUOIA MARKET MODEL
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- 7. WHY PR FORSTARTUPS? 7 How does public relations fit into this picture, especially for startups? In the beginning, most startups look like this. The global market for the startup’s industry may be huge, and even the market opportunity may be decently sized, but the startup itself has little chance to gain share of mind. Marketing can do an outstanding job of monetizing the SOM, but if the SOM is tiny, revenues will be tiny and an investment will not meet expectations. TAM SAM SOM
- 8. WHY PR FORSTARTUPS? 8 The first job of PR is to grow awareness and build trust through earned media, from traditional coverage to social media discussions to paid syndication and advertising of earned media coverage. There are lots of people in the SAM that could buy from the startup, but none of them are obtainable (SOM) if the startup has no awareness or trust. Thus, PR has to expand the SOM with earned media. TAM SAM SOM Hit
- 9. WHY PR FORSTARTUPS? 9 Each piece of earned media coverage, each hit, helps to expand the awareness and trust of the startup, growing the SOM into more and more of the SAM and giving the startup’s marketing efforts more of a chance to grow revenue from the SOM. TAM SAM SOM Hit Hit Hit
- 10. WHY PR FORSTARTUPS? 10 With sufficient coverage, with sufficient awareness and trust, the startup becomes a legitimate force in their SAM. The PR agency working on their behalf builds connections and relationships in the media (traditional and new) so that the startup can obtain a significant portion of its accessible market. The SOM ideally grows into the SAM. TAM SAM SOM Hit Hit Hit HitHit Hit Hit Hit
- 11. WHY PR FORSTARTUPS? 11 After a certain point, a startup may find that its market changes, or its products and services evolve. With the great relationships that PR built on behalf of the startup through launch, a great PR agency can bridge the gap for the startup to expand outside of its launch SAM into a larger SAM with its new products and services. TAM SAM SOM HitHit Hit Hit HitHit Hit
- 12. WHY PR FORSTARTUPS? 12 This is where the investment in PR pays off significant dividends for investors and startups. The startup’s new products and services have pre-built relationships with media that can accelerate growth and revenue. Instead of having to launch into new SAM territory cold, the startup’s PR agency can “land and expand” existing media relationships to garner new coverage quickly. TAM SAM SOM Hit Hit Hit Hit Hit Hit Hit Hit Hit Hit
- 13. WHY PR FORSTARTUPS? 13 This is why PR is so essential to a startup and why investors who are funding startups need to allocate budget not only to marketing, but to public relations and advertising as well. PR not only helps startups grow in early awareness, but provides the bridge to make the leap to an established company when the startup outgrows its initial SAM. TAM SAM SOM Hit Hit Hit Hit Hit Hit HitHit Hit Hit Hit Hit
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- 15. AGENCY OVERVIEW 15 BOSTON NEWYORK SAN FRANCISCO SHIFT is among the top 5 firms that “will feature heavily in a future where PR is at the hub of a new era of brand communications that transcends marketing.” ESOPEMPLOYEE STOCK OWNERSHIP PLAN 125+PROFESSIONALS TECH& CONSUMER VOTED “SAVVIEST SOCIAL PR AGENCY” BY 500+ B2C AND B2B MARKETERS SMALL AGENCY OF THE YEAR DIGITAL/SOCIAL AGENCY OF THE YEAR 2013 2012
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- 17. SERVICES 17 Digital Properties Management Media Outreach INTEGRATED MARKETING STRATEGY Marketing & PR ROI Analysis ENGAGEMENT Launch& Event Execution Digital & PR Technology Auditing Crisis Strategy Brand Messaging Creative Development & Production Paid Advertising Thought Leadership Programs Discovery & Research RESEARCH & ANALYTICS CONTENT CREATION Digital/Social Communications
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