• by Masha Geller , October 16, 2001

Start-ups are infamous for their way of spending money in the past, but now it looks like they've changed their ways. According to the latest findings of Launch Pad, a San Francisco-based high-tech marketing consulting firm, and Blanc & Otus, a high-tech communications company, dramatic reallocations have occurred in the marketing budgets of business-to-business high-tech start-up companies recently.

Despite the economic conditions they now face, these start-ups have - drum roll, please - INCREASED marketing spending in absolute dollars from $2.2 million in 2000 to $2.8 million in 2001, though marketing spending as a fraction of total expenditures fell to 15% from 20% in 2000.

As part of this striking shift, companies have cut back on their mass marketing efforts generally in favor of smaller, more targeted programs. For example, researchers found, online advertising investments fell by 72% and print advertising programs by approximately 44%, whereas direct marketing programs increased an average of 300% for online and 150% for off-line.

Successful marketing departments are using programs with quick, measurable returns in terms of sales prospects or revenue. Gone are the expensive long-term brand-building activities. Advertising and event programs have been pared back. Instead, companies have turned to targeted, measurable lead-generation programs.

"The key points made in this report are absolutely correct, especially the overspending on mind share building programs that lack clear objectives," said Craig Patterson, president of J. Walter Thompson Technology Communications Group, "We have always argued that the true measure of brand strength is market share, not mind share. Market reality rules, and this report restates the basic rules for those who have forgotten."