“There’s no such thing as bad publicity.”
This old adage, often attributed to showman and circus king P.T. Barnum, essentially asserts that press coverage is always beneficial on some level, at least when it comes to businesses and individuals living in the public eye. For companies the idea is that, even if the coverage is negative, the media attention is still helpful because it provides an opportunity for consumers to learn about your brand and the products and services you offer.
For startups, especially those in the early stages, the appeal of press coverage is hard to resist. By definition, the founders are launching a new company and must build awareness of their brand and product from the ground up. More mature companies might be able to rely on other awareness-building tactics like word-of-mouth and paid advertising, but these channels are often challenging for early-stage startups.
In order for word-of-mouth to be an effective strategy, your business needs to already have some customers, or at least a sizable group of people who know your product exists, who can go and tell their friends about it. Paid advertising sidesteps this issue, but presents a new one: your business needs to have money. Many early-stage startups are bootstrapped, and even those that have received funding usually don’t have cash to spare for advertising. These factors make free press coverage all the more appealing and can lead founders to double down on that old sentiment espoused by Mr. Barnum.
But, as is almost always the case, the reality is a bit more complicated than the slick showman would lead you to believe. And when it comes to early-stage startups, the reality is that getting press coverage too early in the company’s lifecycle can actually have some real downsides, even when the reporting itself is ostensibly positive.
Two of the potential consequences include driving traffic to a startup’s website before they’re ready and making it difficult for a startup to change their concept down the road.
Driving Traffic to Nowhere
Venture capitalist and 500 Startups founding partner Dave McClure created a framework for the customer lifecycle and conversion behavior called Startup Metrics for Pirates. He summed up the five steps of the lifecycle in the AARRR acronym: Acquisition, Activation, Retention, Referral, and Revenue.
When a startup receives media attention, there’s typically a spike in traffic to their website as individuals reading the coverage click through to learn more. In this way, press is a big win for Acquisition. The difficulty for early-stage companies, though, comes with converting these folks to the next stage of the funnel.
In order to truly complete the Activation phase, the individual needs to sign up for a user account or otherwise become a customer. But if the press coverage is coming so early in the company’s lifecycle that they haven’t launched the product yet, the startup can’t make the most of this press-driven spike in traffic.
Sure, they can (and should) try to capture some of the website click-throughs by asking folks to sign up for a newsletter or email updates. But the unfortunate reality is, by the time they launch the product, it’s likely that a large chunk of those folks will no longer be interested … especially if the company experiences any pivots.
Hindering the Ability to Pivot
Chances are high that a startup will pivot at least once during its early stages. A famous example is Groupon, which began its journey as a platform for online activism called The Point before transitioning to daily deals.
Making these sorts of changes to the product and business model is often a natural result of testing out the founders’ initial hypotheses to get from product idea to product-market fit. And it appears that pivoting once or twice is actually the sweet spot, with the Startup Genome Report finding that these startups “raise 2.5x more money, have 3.6x better user growth, and are 52% less likely to scale prematurely than startups that pivot more than 2 times or not at all.”
So how does press coverage fit into all this? When journalists write about early-stage startups, they generally provide a fair amount of detail about the product. This description then gets cemented into the minds of folks who read the article, click through to the startup’s website and sign up for email updates. If the founders later decide to pivot, it’s likely that a lot of folks who signed up based on the original idea won’t be interested in the new vision.
At best, this renders the press coverage fairly useless, since the signups it drove are unlikely to convert to customers in the end. But at worst, it can actually hinder the pivot itself. A product’s earliest supporters are often the most vocal, and if these folks are really passionate about the original idea, they might try to convince the founders to stick with it instead of the new concept — even if the data supports the pivot.
Without a doubt, press coverage can benefit startups by creating awareness about their company and product. But for companies in the early stages, the coverage can also have a negative impact by driving folks to the website before the startup is ready to convert them into users and by making it difficult for the startup to pivot, if necessary, down the road.
The lesson for founders? Be thoughtful the next time they write a press release or receive an inbound request from a journalist and consider whether the startup is at the right stage to make the most of the media attention. It turns out timing really *is* everything.