Survey Finds Hi-Tech PR Budgets Rising
By Aimee Grove

November 13, 2000

SAN FRANCISCO: Internet and hi-tech start-ups estimate they will shell out an average of $715,000 on PR in 2000--and most wish they could spend even more. According to a survey released this week of senior marketing executives at more than 30 pre-IPO tech companies, cited PR and a corporate Web site as the most cost-effective means of raising awareness and building credibility for a young company.

PR was the second-largest area of marketing spending (an average of 15.9% of the total nonsalary budget) behind offline advertising, which grabbed 25.8% of the funds.

But at least a quarter of respondents said they wished they could have allocated more to PR budgets in 1999.

These conclusions were revealed in the study by Launch Pad, a San Francisco-based marketing consultancy, and Silicon Valley Bank, which provides seed money to emerging tech companies.

The two paired up earlier this year and recruited participants from a variety of b-to-b products and services. Respondents were required to have at least $2 million in venture capital funding and access to their company's 2000 marketing budget.

Advertising seems to be losing ground in the battle for budget share. For example, online advertising was mentioned by 12% of respondents as an area where they regretted spending money. Non-print advertising was pinpointed as the least cost-effective marketing activity.

According to Launch Pad CEO Shelley Harrison, one of the most interesting findings of the poll was the increased dismissal of tradeshows and conferences as an effective marketing tool; 12% of respondents mentioned these as areas in which they regretted spending money.

Overall, respondents estimate they will spend an average of $4.5 million--nearly half the sales budget--on marketing in 2000, and spending goes up incrementally according to the level of funding achieved. For example, marketing spending might be 7% for companies in seed rounds, and up to 25% by second rounds.

Start-ups cited generating company awareness, hiring good people and credibility as the greatest challenges.

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