The answer? Social media. “That’s been a key to the growth of our business; effective use of social media through Twitter and Facebook,” says Leo, who launched Comparabien in South America with co-founder Alfredo Ramirez. “It helps with brand awareness in Peru and other countries.”
The company compares money, insurance and telecoms through a website, not dissimilar to leading UK brands such as Go Compare or Moneysupermarket.
In 12 months they have expanded into Argentina, Brazil, Colombia, Chile and México. But Leo wants more and advertising is essential for financial comparison companies. “Our strategy will go hand-in-hand with that [advertising]. We are now raising a second round of funding, and half the budget will go into advertising,” he says.
Leo is about to leave his current role, managing Cass’s incubators in London, to concentrate on the start-up full-time. So far his partner has been the acting CEO and face of Comparabien in the Americas. Leo hopes to use that freedom to tackle more emerging economies, but so far social media has been essential to their growth plan.
“Without a doubt it is essential for start-ups,” Leo says of social media marketing. “If you have the right product and a good story to tell, people will share it for you, and that adds value. Twitter and Facebook are awesome tools to get your brand recognized, and to go past the early stage.”
Leo is not the only MBA utilizing the free marketing tool. Scores of business school entrepreneurs are struggling to make their name heard and establish a brand, without spending thousands.
Competing with companies that have larger budgets is tough, not least because MBAs are still likely paying off tuition. Leo has just ten staff, and the worry is that those with more coffers at their disposal may push fresh start-ups out of the limelight.
But there are ways to stand up to the giants. Internet marketing has changed the game, says Dominic Joseph, co-founder and CEO of Captify. “In the past, advertising channels were controlled by large brands that yielded big spending power. But internet marketing has changed all that,” he says.
Captify specializes in targeting online consumers with ads relevant to their interests. The company’s clients include American Express and Virgin, but they also work with small and medium sized enterprises.
“Internet marketing is opening up opportunities for businesses large and small to access more tailored and effective advertising,” says Dom, who founded Captify two years ago with Adam Ludwin. Today they have more than 500 advertising clients and the company is backed by Panoramic Growth Equity, a UK-based private equity firm.
“Now, even the smallest retailer can compete on a local, national or global scale by using digital advertising to access new audiences,” Dom says. It is more useful than traditional forms of advertising. “In a print publication, there’s no way of telling if your ads have had an impact, or even if they’ve been seen at all,” Dom explains.
“By advertising online you automatically get access to a much broader audience. And it’s more measurable because you’ll be able to see who clicks through to your website as a result.”
Social media is more targeted, agrees Hanan Kattan, co-founder of EBS Digital, an online marketing agency. “It is much more targeted to a businesses' ideal clients and it yields specific and measurable results, versus the spray and pray approach to traditional marketing,” she told BusinessBecause.
The company specializes in increasing revenue for businesses using online marketing. They work with dozens of small and medium sized companies in the UK, in partnership with Google.
Even paid social media marketing is more cost-effective, she says. “Social Media needs to be part of the overall online marketing strategy to be effective and to yield the best results,” says Hanan, who launched the company about four years ago.
“It is essential for all businesses, no matter what size, to have an online marketing strategy to survive and to thrive in the 21st century.”
Other MBA start-ups are taking advantage too. “We get about half our traffic through social media and probably one-fifth of our sales,” says Connie Nam, who launched Astrid & Miyu, a jewellery design company, in 2011. Connie met her business partner during an MBA degree at London Business School.
The company has grown in stature over the past three years and their products have been featured in glamour magazines Grazia, Company, Marie Claire and Vogue.
“It’s been a much bigger portion of our business,” Connie says of utilizing social media. “And it has been really impactful. A lot of our customers are on social media, and they spread the word for us.”
They spend a little on Google and Facebook advertising, but would prefer to hire a dedicated social media manager to reap the benefits of the platform. That may cost a little more, but is more effective than paid advertising, says Connie.
“We have a dedicated person on the platform 24/7 who joined us about five months ago. So in a way it’s free, but you do need someone to run social media,” she says. “But a business shouldn’t oversee or neglect this; the traffic we get from social media is three times higher now [with a manager].”
Leo says their spending is small, but they also hired someone to take care of online marketing.
Social media is a good way to catch users’ attentions, but new technology is making it even more effective. Dom hints that new tech, such as Search Retargeting, which enables ads to be served based on what consumers have searched for and shown intent to purchase online, are the future.
“Now, new technology combined with the power of big data is making it possible to achieve even better targeting, at a more granular level.”