By Dennis McCafferty
This article appeared in the December 2005 issue of Web Host industry Review magazine. Click here to subscribe for free.
January 10, 2006 — (WEB HOST INDUSTRY REVIEW) — You’re ready to produce a winning marketing plan. Your hosting operation is starting to take off, and it’s time to let the world know about it. You want your marketing division and its very capable vice president to lead the way when it comes to winning strategies on acquisition marketing, trade show appearances and public relations - not to mention brand awareness, loyalty gauging, target customer research and other critical points.
Of course, there’s one problem - you don’t have a marketing division. That capable vice president and his gung-ho lieutenants pretty much amount to you and your small staff. With that said, do you have the marketing resources to take your hosting operation to the next level? Of course you do. You just have to figure out how to use the resources you have.
First, you need to understand what the Web hosting industry has become, and where your company fits into that context. Then you need a sense of where you want to be within that universe. Some Web hosts dimiss more developed marketing efforts, thinking they can grow just by cutting prices. But that tactic can cannibalize a Web hosting business.
“Web hosting has turned into a commodity,” says small business consultant Michele Pariza Wacek, founder and president of marketing agency Creative Concepts and Copywriting (writingusa.com). “It is no longer enough to just offer hosting at a good price. There’s way too much competition out there. There will always be someone out there willing to service customers at a lower price. What do you do? Drop your price until you price yourself out of existence?”
Not a great game plan. But with a strong marketing plan, smaller hosts seeking growth can avoid this fate.
The first consideration is, naturally, budget. A Web hosting firm on a tight budget can assemble a marketing plan without blowing the company pension fund on an outside consultant. There are tools available that make it easier to come up with an effective marketing plan in-house, among them mplans.com from Palo Alto Software.
“A consultant can charge anywhere from $1,500 to tens of thousands for a marketing plan,” says Tim Berry, small-business marketing consultant and co-author of On Target: The Book on Marketing Plans. “Software to help write a plan is as affordable as $99.99.”
Smaller hosts just getting off the ground can also get a leg up on marketing support from bigger fish.
“We have a strong focus on our indirect channel and in the small and medium business area,” says Jim Ciampaglio, director of SMB reseller sales for the viaVerio program at Verio (verio.com). “We work with a number of reseller partners who are smaller hosting companies. As part of the viaVerio reseller program, we would provide marketing support, materials and resources to these hosts. This type of reseller relationship allows them to build their business, augment their current offerings and receive marketing support from a larger, established hosting company.”
That kind of support will help a company get out of the gate, but there’s much more to plot out after that. After coming up with a plan, a host must create milestones that will help it accomplish its strategy, Berry says. You need marketing tasks - with budget and specific people in charge of the tasks - and concrete deadlines. And for many hosting companies getting off the ground, a solid acquisition marketing strategy must be in place.
“This is probably the most important aspect for these types of companies - marketing to get customers in the door and buying services,” Berry says. “Whether you are calling customers to tell them about your service or doing focused targeted online marketing, you need to make this a very important part of your plan.” Here, too, he suggests being as specific as possible about where you will market, how much money will be spent, when this will be finished and who is responsible.
Loyalty marketing as a follow-up to acquisition is also key. Think of innovative but simple ways to inspire loyalty. Berry suggests a free month of service every year, for example. But the main thing is staying in touch. Loyalty marketing within the customer base is often perceived as a bit of a Rubik’s cube among hosts. But it shouldn’t be. It’s neither complex nor expensive.
“It’s simply picking up the phone and checking on your customer,” says Joel Smith, who founded the small hosting company Plugit.com, out of his home in Pensacola, Florida and is now co-founder of AppRiver (appriver.com), an email security services provider. “Visit them often and find out what challenges they are facing and see if some type of hosted solution could solve their problem. Get the picture? This helps hunt down a possible vertical, as well as provide high levels of customer service that keep customers your customers.”
There’s always the need to elevate your brand awareness - a challenge that, at first, may seem impossible. Again, here, a focused, effective marketing strategy in place from the beginning might make the task seem less daunting. In establishing a higher profile for their services, hosts often need to market their strengths in an indirect fashion, because that’s how many brands are built.
“These customers go through what I like to call “trusted advisors,’” Smith says. “That’s a computer consultant who has 20 or 30 business customers; what he recommends to his customers goes. Very few factors can compete with his advice. So you have to establish your worth as a host to these kinds of advisors. You have to reach them.”And how, exactly, does a host do that? One way is to establish a niche in a specific industry. Establishing a solid track record of success for one industry customer will lead to similar success with other customers in the same field, and soon, the trusted advisors within that field will have your company’s name foremost in mind as the word is spread.
“Over the years, I have come across several successful hosting companies that service only the insurance industry, movie promotion sites or non-profit organizations,” Smith says. “Sometimes, when you pursue different verticals, you will notice that your hosting base will end up largely made up of one particular industry, due to referrals and word of mouth. Look out for this trend, and when it starts to happen, embrace it. Get booths at industry events. Purchase ad space online and in print trade publications. Your growth potential will be exponential and marketing dollars [will be] well spent.” The key, he says, is finding an underserved industry and then investing in it.
Indeed, pursuing that route is often fundamental to the survival for small hosts. “The niche to pursue could be the low-cost market, as Serverpronto.com has,” says Pedro Sostre, creative director of Sostre and Associates (sostreassoc.com), an Internet marketing consultancy for small hosts and other businesses. “Or it could be the gaming market, which Insomnia365.com has latched [on to]. The number of potential niches is almost as limitless as the technologies available. Choosing a niche will help particularly small hosting companies by forcing them to focus their marketing efforts and dollars in one area. This is a good thing because a small company does not typically have the budget to advertise to a mass market successfully.”
Once you’ve chosen the niche, you must maximize your relationship with that market. Frankly, a host has to get out there and hustle to establish needed brand awareness, experts say. And much of that hustle requires shoe leather - not e-marketing.
“You have to evaluate your strengths and capitalize on them,” says Scott Testa, chief operating officer at Mindbridge (mindbridge.com), a small application service provider that also competes in the Web hosting market. “For example, if you host a lot of real estate sites and are targeting that market, you have to get the most out of it. Join influential organizations. Get testimonials. Meet as many people as you can in that particular market. Branding is important, but it’s hard to measure. What you can measure is the number of leads or new business opportunities you get from your marketing efforts.”
As for budgeting - Smith figures that as much as one fifth of your revenue should be devoted to marketing and building a client base. And that should increase to one third of revenues once you begin to make it back. “Remember the old “early to bed and early to rise’ saying?” he says. “In the hosting business it should be “early to bed and early to rise, work like hell and advertise.’ In this commoditized market, equipment and data centers only have value for the people running them. I’ve seen hosting companies with six employees bringing in more revenue than hosting companies with 60 employees because they outsourced all the gear and just resold someone else’s services.”
Like the larger hosts in the competitive pool, small hosts are perfectly capable of taking advantage of the free, buzz-building tools out there on the Web. So they should. “One of the first pieces of advice I give is learn to blog,” says Jeremy Porter, founder and president of Reaction Marketing Group (aboutreaction.com), which has provided marketing consultation for small hosts and other businesses. “Blogs might not get the leads pouring in as a direct result, but they’ll help your search engine rankings and can position you as an expert in the industry if the content is right. PR for PR’s sake doesn’t make sales happen. Publicity in outlets your customers read does.”
This brings up a key decision: do you hire a PR firm to do the press pitching, and help bring up your profile on the trade show and conference circuit? What kind? And what size? Berry suggests finding one with very little overhead.
“This way, you have professionals helping you get placed,” he says. “But you aren’t paying big money. Try and see if you can sign up someone who will bill you on results, as in interviews given or articles published per quarter.”
And when you get those interviews, be smart about them. Know the audience. Otherwise, your precious wisdom could be cut out of the final version of the article or broadcast. “If you’re dealing with traditional media outlets, such as print magazines, request a media kit,” Wacek says. “That always comes with an audience breakdown.”
Because many Web hosts can’t afford to spend a great deal on marketing, their Web sites become their best salesperson and marketing tool. Porter suggests that these companies invest heavily in search-engine marketing, to increase site traffic and lead generation efforts. This is especially key for hosts that have carved out a distinct customer-base niche.
“Web hosting is one of the most competitive areas for search-engine marketing, so they’ll need to find pockets of opportunity that are aligned with what they do best,” he says. “Instead of ‘shared hosting,’ consider ‘Web hosting for doctor’s offices’ or something specific that a significant number of searches are done on each month. Getting visitors and potential customers to your site is less than half the battle. Once they get there, what do you want them to do? A lot of companies overlook the importance of designing and maintaining an intuitive Web site. Have your mother try to navigate your Web site looking for something. It can be an eye-opening experience.”
And it never hurts to translate everything into plain English. “Don’t assume that everyone knows what your products and services are,” Porter says. “Some people don’t know what the difference between shared and dedicated hosting is - it’s your job to educate them and to help them figure out what they need.”
Another marketing challenge is distinguishing the products you offer. Adi Sideman, CEO of small business marketing solution developer Oddcast (oddcast.com) is finding more and more hosts seeking his company’s animated character product SitePal for this very reason. Increased awareness about these offerings is a key toward the conversion of fleeting customers to permanent ones, and static business relationships into growing ones.
“They want payment systems, back-end database applications and marketing tools - like the product we develop,” he says. “Having an entire suite of solutions provides the hosting company with additional opportunities to gain a larger wallet share from their customers. Think about it. You can offer domain registration and hosting and talk to your customers once a year at renewal time - or you can provide them with a suite of products and hit them at various times during the year with special offers and other deals.”
And don’t be afraid to give away what you plan to sell, at least at first. “Don’t launch new offerings until they’ve been tested and you can report on the success,” Sideman says. “Spend money on giving the solution away, to five or six key clients. Let them take it for a test drive and in exchange ask them if you can do a case study that reports the results.”
Hosts should also consider investment in customer and general target market research, along with competition research. Much of this can be done for free, by Googling competitors’ names online and calling up the most recent articles published, for example. Government and market-research sites provide great industry stats, as well as customer projections. And, Smith says, it’s worthwhile to get to the insiders.
“Getting to know industry analysts can be worth the investment,” he says. “Ordering their reports and research analysis products makes them very happy. After purchasing a few reports give them a call or attend an event they are also attending. Introduce yourself and let them know what you are up to. Analysts can quickly point you in a direction that is soon to be hot or one that is up and running and in high demand. Do yourself and them a favor and order a few reports beforehand to get the ball rolling.”
Growing hosts should also be cautious about spending too much on channel marketing. “That’s usually an expensive market,” says Berry. “Resellers and distributors often want big cuts, and sometimes require marketing spends as well as very good margins. Channels can give you branding and awareness because they increase your exposure and availability, but they’re inherently very capital intensive.”
It may be wise to outsource the pay-per-click marketing campaign work to professionals. “Running a pay per click campaigns without a professional at the helm is a major mistake being repeated by too many businesses,” says Danay Escanaverino, marketing manager of Global Resource Systems (grscorp.com), an interactive advertising and marketing company. “The days of the five cent-per-click campaign are over. There are many highly competitive verticals in pay-per-click that require an advertiser to spend upwards of $5 per click on a popular keyword. That’s why outsourcing this work to a company that specializes in this kind of advertising is a very good idea. An experienced search marketer can manipulate keywords, landing pages, creative and many other factors to boost your conversion rates and deliver positive ROI.”
