Why every startup requires PR

One of the questions we’re asked most frequently by investors and venture capitalists is whether a startup should make the investment in a good public relations program. While the obvious answer (from a PR agency perspective) is a resounding yes, we thought it would make good sense to explain why. The role of public relations is to build awareness and trust of a brand, whether it’s a centuries-old institution or a startup founded yesterday.

Startups are often asked as part of the funding process to provide a sense of how viable they are. Let’s look at one of the leading viability assessment frameworks from investment firm Sequoia Capital. The framework is called TAM/SAM/SOM, short for Total Available Market, Serviceable Available Market, and Serviceable Obtainable Market.

Sequoia Capital Startup Model

Total Available Market is 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?

Sequoia Capital Startup Model

The Serviceable Available Market 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.

Sequoia Capital Startup Model

The Serviceable Obtainable Market 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.

Sequoia Capital Startup Model

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.

Why PR for Startups?

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.

Why PR for Startups?

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.

Why PR for Startups?

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.

Why PR for Startups?

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.

Why PR for Startups?

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.

Why PR for Startups?

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. The first stage of a startup is making it viable by expanding the SOM into the SAM; the second stage of a startup is expanding the SAM into new areas of the TAM with new products and services. 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.

Why PR for Startups?

If you’re an investor wondering how we can help a startup grow, contact us and let’s chat about the companies under your care!

View and download the entire presentation here:

Special thanks also to SHIFT VP Karl Scholz for his input and insights into the startup PR process.

Christopher S. Penn

Vice President, Marketing Technology

Newsletter subscribe

Posted on March 10, 2014 in Advertising, Marketing, Public Relations, Startups, Strategy

Share the Story

About the Author

Christopher S. Penn is an authority on digital marketing and marketing technology. A recognized thought leader, author, and speaker, he has shaped three key fields in the marketing industry: Google Analytics adoption, data-driven marketing and PR, and email marketing. Known for his high-octane, here’s how to get it done approach, his expertise benefits companies such as Citrix Systems, McDonald’s, GoDaddy, McKesson, and many others. His latest work, Leading Innovation, teaches organizations how to implement and scale innovative practices to direct change.

Christopher is a highly-sought keynote speaker thanks to his energetic, informative talks. In 2015, he delivered insightful, innovative talks on all aspects of marketing and analytics at over 30 events to critical acclaim.

He is a founding member of IBM’s Watson Analytics Predictioneers, co-founder of the groundbreaking PodCamp Conference, and co-host of the Marketing Over Coffee marketing podcast.

Christopher is a Google Analytics Certified Professional and a Google AdWords Certified Professional. He is the author of over two dozen marketing books including bestsellers such as Marketing White Belt: Basics for the Digital Marketer, Marketing Red Belt: Connecting With Your Creative Mind, and Marketing Blue Belt: From Data Zero to Marketing Hero.

Back to Top
Get Fresh PR News Delivered Weekly!

Get Fresh PR News Delivered Weekly!

Want fresh PR and earned media news delivered to your inbox? Sign up for the SHIFT HAPPENS newsletter!

You have Successfully Subscribed!