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You might be underestimating the number of companies who absolutely don’t know what they are doing budget-wise yet they manage to stay in business, and threw a

You might be underestimating the number of companies who absolutely don’t know what they are doing budget-wise yet they manage to stay in business, and threw a lot of dollars in ads/marketing without deeply analyzing its effectiveness, just because raising money at stellar valuations was free until a month ago. Anecdotally, I happen to work for a 300 people saas company who just started drastically cutting expenses with the goal of reducing burn rate and delaying the need for another round of financing in this terrible environment: ads were one of the first few things to be dramatically cut (the second one was some super inefficient AWS spending). The ads budget shrank from 6 figures a year to near 0 overnight, and it’s unlikely to return to its former level any time soon. Also, half of the marketing team was laid off. Having 30 people in marketing for such a small company was definitely way too much (just like engineering, sales, ...), and it anecdotally proves GP’s argument. All consequences of the fact that money was free.

joshuamorton 7y ago
No it doesn't prove the claim that the marketing tram and budget won't regrow after the economy improves, nor the claim that marketing and advertising was being done wrong or unnecessary. All we have to go on for that is your opinion about how the company was being run, which isn't backed by any sort of data.
- deanmoriarty 7y ago
  It is my opinion, but an informed one. A couple executives just plainly admitted how crazy inefficient our spending was, so I just can’t imagine how they could possibly go back to blow nearly a million a year in ads any time soon, or ever, when 90% of our revenues come from traditional enterprise deals that don’t have anything to do with ads, for the most part. They are all just worried that they will have to accept a down round in a year, and are trying to mitigate that. By the way, this is true for engineering as well, where I work: now that we figured out how to remain productive while cutting 40% of our AWS costs (spot instances, killing idle instances more often, ...), will we ever go back to be inefficient and leaving idle AWS clusters up at night just because “money is not an issue”? Very unlikely. And the marketing department wasn’t being run any more efficiently than engineering, budgets were just fat because money was free for nearly a decade.
mywittyname 7y ago
A young, growing company is going to throw whatever at the wall and see what sticks. That's just how to learn what works and what doesn't. I wouldn't extrapolate that experience to large companies that have weathered dozens of downturns. I'm not saying that large companies all have a clue what they are doing vis-a-vis marketing, but there are a few giants who understand their only asset is their brand. Think companies like P&G or Nestle. Largely, the biggests differentiating factor between toothpastes or frozen pizzas is brand awareness and distribution deals. These are the companies that know exactly how much more money they will make if they change the color red to yellow on a box for a product sold in Georgia.
onlyrealcuzzo 7y ago
I think you're underestimating how much big companies spend on online ads compared to small companies. Most big companies have big non-terrible marketing teams that know how to track the effectiveness of their ads. Most of the times, they have ROAS requirements. If the ads aren't making money, they get turned off.
12xo 7y ago
If this is the case, you should be thinking about your own job. There are very few companies that can stay afloat without new customers. And even fewer SaaS companies as churn is amplified during a downturn. Do you know what the CFO is telling their lieutenants about now? Cut all superfluous spending and reduce monthly expenses. That means your sales people are going to be getting calls from their clients asking for a fee reduction or a contract revision. Very few SaaS companies are critical or defensible.
- deanmoriarty 7y ago
  I 100% agree, in fact a couple weeks ago I gave my notice despite me being insulated from the current layoffs. I had been wanting to do this for a while, and hearing the CEO giving projections of how much our revenues are going to shrink due to covid, compared to our crazy speculative company valuation, was the last nail in the coffin. They should have managed the company better and more frugally, so I vote with my feet. This is my last week and I’ll be starting next week in a much more solid company with a much better compensation too, wish me luck :-)
  - 12xo 7y ago
    Nice user name. Good luck!
wastedhours 7y ago
> and threw a lot of dollars in ads/marketing without deeply analyzing its effectiveness, just because raising money at stellar valuations was free until a month ago. And in turn, I think you're overestimating the impact of profit-limited capital dependant companies on the advertising landscape. I was managing a 6 figure ad budget all by myself at an established but small non-tech company and had full E2E tracking flows for pretty much every £. "Burn" isn't a thing in almost all companies out there. You want to spend a dollar, you need to tell your boss exactly how it'll make you a buck fifty.

joshuamorton 7y ago

No it doesn't prove the claim that the marketing tram and budget won't regrow after the economy improves, nor the claim that marketing and advertising was being done wrong or unnecessary. All we have to go on for that is your opinion about how the company was being run, which isn't backed by any sort of data.

deanmoriarty 7y ago
It is my opinion, but an informed one. A couple executives just plainly admitted how crazy inefficient our spending was, so I just can’t imagine how they could possibly go back to blow nearly a million a year in ads any time soon, or ever, when 90% of our revenues come from traditional enterprise deals that don’t have anything to do with ads, for the most part. They are all just worried that they will have to accept a down round in a year, and are trying to mitigate that. By the way, this is true for engineering as well, where I work: now that we figured out how to remain productive while cutting 40% of our AWS costs (spot instances, killing idle instances more often, ...), will we ever go back to be inefficient and leaving idle AWS clusters up at night just because “money is not an issue”? Very unlikely. And the marketing department wasn’t being run any more efficiently than engineering, budgets were just fat because money was free for nearly a decade.

mywittyname 7y ago

A young, growing company is going to throw whatever at the wall and see what sticks. That's just how to learn what works and what doesn't. I wouldn't extrapolate that experience to large companies that have weathered dozens of downturns. I'm not saying that large companies all have a clue what they are doing vis-a-vis marketing, but there are a few giants who understand their only asset is their brand. Think companies like P&G or Nestle. Largely, the biggests differentiating factor between toothpastes or frozen pizzas is brand awareness and distribution deals. These are the companies that know exactly how much more money they will make if they change the color red to yellow on a box for a product sold in Georgia.

onlyrealcuzzo 7y ago

I think you're underestimating how much big companies spend on online ads compared to small companies. Most big companies have big non-terrible marketing teams that know how to track the effectiveness of their ads. Most of the times, they have ROAS requirements. If the ads aren't making money, they get turned off.

12xo 7y ago

If this is the case, you should be thinking about your own job. There are very few companies that can stay afloat without new customers. And even fewer SaaS companies as churn is amplified during a downturn. Do you know what the CFO is telling their lieutenants about now? Cut all superfluous spending and reduce monthly expenses. That means your sales people are going to be getting calls from their clients asking for a fee reduction or a contract revision. Very few SaaS companies are critical or defensible.

deanmoriarty 7y ago
I 100% agree, in fact a couple weeks ago I gave my notice despite me being insulated from the current layoffs. I had been wanting to do this for a while, and hearing the CEO giving projections of how much our revenues are going to shrink due to covid, compared to our crazy speculative company valuation, was the last nail in the coffin. They should have managed the company better and more frugally, so I vote with my feet. This is my last week and I’ll be starting next week in a much more solid company with a much better compensation too, wish me luck :-)
- 12xo 7y ago
  Nice user name. Good luck!

wastedhours 7y ago

> and threw a lot of dollars in ads/marketing without deeply analyzing its effectiveness, just because raising money at stellar valuations was free until a month ago. And in turn, I think you're overestimating the impact of profit-limited capital dependant companies on the advertising landscape. I was managing a 6 figure ad budget all by myself at an established but small non-tech company and had full E2E tracking flows for pretty much every £. "Burn" isn't a thing in almost all companies out there. You want to spend a dollar, you need to tell your boss exactly how it'll make you a buck fifty.