Get a demo Do I subscribe? News sign-up
Print

Why brands work with startups

News, 03 February 2016

NEW YORK: Brands most frequently turn to startups for help in areas such as social media, content marketing, analytics and mobile advertising, a study from the Association of National Advertisers (ANA) has shown.

The ANA and the Consumer Technology Association polled 171 client-side marketers, as well as conducting in-depth interviews with 12 senior executives.

Among the approximately one-third of brand owners which had previously allied with startups, a 53% majority did so in the social media space. Content management and development came next on 49%.

Research and analytics scored 45% here, ahead of the 43% registered by mobile advertising, and marketing automation on 39%.

The main objectives behind these programs, the analysis revealed, typically involved buying solutions to solve clearly-defined business problems, rather than acquiring technologies outright.

And the primary benefits of partnering for brands included the ability to leverage up-and-coming tools, stay ahead of emerging trends, drive innovation and secure competitive advantages at a "reasonable cost".

The fact that startups are passionate, nimble and client-centric were among the broader characteristics that proved particularly attractive for marketers.

Fully 88% of brands funded these endeavours through existing marketing budgets, the research added. Another 53% called on agencies to help foster such tie-ups.

A major obstacle to working with startups, the study continued, was a failure to articulate their product offering in a "meaningful and relevant" way.

Further hurdles incorporated security risks, especially if sensitive data is involved, plus potential legal and compliance issues.

Some marketers also expressed a concern that their fledgling partners may not be able to deliver on their promises – or might even go out of business before projects are completed.

Data sourced from ANA; additional content by Warc staff