How Smart Companies are Opening New Multi-Channel Markets

The race is on.Brick and mortar companies are rapidly shifting to multi-channel markets primarily through e-commerce sites targeting customers locally, regionally and nationally.E-commerce is not eliminating brick and mortar stores but opening up new venues or other ways to sell products and services.

In the process these companies are eliminating ineffective traditional marketing and using search optimization and search marketing instead.These companies are searching for online solutions that automate the buying process and create 24/7 sales.

The relationship of online sales to offline sales is becoming more blurred and more complicated.For some products, especially high consideration products like automobiles, consumers research online to learn what they need to know and then purchase offline.

Other products are researched offline and bought online; this is a strong trend that many specialty stores are now seeing.The consumer will get the look and feel of a product and then buy it cheaper online.

Many of these specialty stores are finding it increasingly difficult to remain competitive as their cost of sales is greater than e-commerce stores.

Flexible entrepreneurs are now using their offline presence to drive online sales.Others are using their online presence to drive offline sales.Many companies are now doing both.

Companies now have these new options thanks to search technology and especially "local search".Companies can now target local, regional and global prospects and customers by using organic and pay-per-click marketing campaigns.

The initial beneficiaries of this new technology are those companies using local search; geocentric local search technology has now made it much easier to market across a region instead of just a locale.Many brick and mortar stores are finding innovative ways to leverage search technology to boost their brick and mortar products and services.

For 25 years Mike Fine ran Fineline Screen Printing before expanding into Cheapfasttees.Mike had been doing business only locally because marketing outside his immediate area was prohibitively expensive.

Using search technology and his existing screen printing facility, Mike now offers a discounted volume product he can sell throughout the United States.It all began as Mikes local market stagnated he began looking at ways to utilize the excess capacity of his equipment.

"When I looked at my equipment over a 24 hour period I found that most of the equipment wasnt being used most of the time," said Mike, "and since I was paying for it all of the time, it occurred to me that it wouldnt cost me more to use it more and expand my sales through an e-commerce website.Cheapfasttees was the natural business evolution for me."

Many companies already have a good infrastructure in place with fully operational phone and computer systems.

Only minor changes in inventory tracking and bookkeeping are needed to accommodate new online business.

Strangely the biggest challenges many of these companies face is psychological.

E-commerce and search marketing have advanced so quickly many companies have found the necessary mental adjustments difficult and at times impossible.E-commerce requires some degree of computer sophistication but the biggest challenge is implementing effective search marketing campaign strategies.

This requires a change of mindset or a shift in the Gestalt as managers and owners are faced with the new realities of search marketing.Search marketing must be developed and implemented internally and old style managers often resist taking on these new tasks.

But many entrepreneurs now realize that if they dont take control of their search marketing strategy their competitors will and beat them to it.This is because the markets are unforgiving of those that decide search marketing is optional.

Even local businesses are discovering they are losing business to competitors that are able to run effective local search marketing campaigns.

"Its simply a matter of being found by those that are ready to buy," says Mike of Cheapfasttees.
About the Author

Jack D.

Deal owns JD Deal Business Consulting, Carmel and Santa Cruz, California 95062 831-457-8806.Related articles, ideas, strategies, tactics and tips can be found at

Relaited Links:

• Networking Your Work at Home Opportunity: More Money, More Friends
• "Finally...The Free Internet Marketing Guide. After 3 Years and 40,000 You Now Have it"
• The Secret Marketing Weapon

Ingenious Indeed

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http://www.ingeniousmedia.co.uk

LONDON -- Past-their-prime rock bands are used to being ignored by record labels and mocked by the music press. But, in Britain, they've found a new groupie: venture capital.

A boutique London investment bank, Ingenious Media PLC, is financing comeback albums. Last month, it signed UB40, a reggae band that had a No. 1 hit in 1988 with the song "Red Red Wine." Other artists working on CDs for Ingenious include veteran rocker Peter Gabriel, and the techno punk band the Prodigy.

The firm, which specializes in media and entertainment deals, pays for the acts' music production, marketing and CD distribution. Its partners came up with the idea to start two funds to back faded groups three years ago. It has raised $79 million.

Fans often fill up concert venues to hear older acts perform their hits, but they typically shun their new record releases. Ingenious figured with the music industry suffering its worst downturn ever, record companies were reducing spending -- and some veteran acts would be eager for more support.

Duncan Reid, commercial director at Ingenious, says it targets British bands, from punk to pop, who aren't signed to big-name labels. Ingenious calculates that there is less upside with these old groups (which is often why record labels pass) but less risk of a bomb.

Ingenious and the artist or artist's manager discuss distribution and marketing strategies together and then hire third parties to do those tasks. "We are in there giving the benefit of our experience and advising and overseeing," Mr. Reid says. Ingenious' records are released globally.

So far, Ingenious has financed 15 albums and agreed to pay for seven more, spending roughly between $400,000 and $2 million each, according to regulatory filings. From that pipeline, two have been released. One, by a Welsh grunge band called The Heights, sold poorly. The other, by 1990s band Travis, is selling reasonably well, Ingenious says. Record labels typically expect 5% of their acts to be profitable.

Ingenious set up two music funds and receives an annual fee for managing the funds and 20% of any profits. But the funds aren't generating profits yet. Tax consultants say that most people are attracted because under United Kingdom law investors in the funds don't have to pay tax on any profits and get a one-time discount on their overall tax bill.

Ingenious's Mr. Reid, a former tax accountant himself, takes an approach to scouting that befits his graying stars. Mr. Reid, 49, doesn't go to concerts to check out bands. Instead, he and his partners at Ingenious rely on sources in the music industry to introduce them to acts looking for financing. The company has also found some new bands through contacts at independent labels.

"We spent awhile putting the word out there that we were doing these deals," Mr. Reid says.

UB40's investment advisers, Coutts, a London-based unit of Royal Bank of Scotland Group PLC, suggested the band see if Ingenious would fund it. UB40's contract with EMI Group PLC's Virgin label ended in 2005. Their business manager, Lanval Storrod, says the eight band members felt other record companies weren't effective at promoting "heritage" musicians -- an industry term for performers over 40.

"The biggest problem for heritage bands is record labels tend to market everyone the same whether they are a boy band or have been around 20 years," says Mr. Storrod. An EMI spokesman said it has a good relationship with UB40.

As one of the world's best-selling reggae bands, UB40's members thought the group was a good bet because sales of its new album would likely cover production and marketing costs even if it wasn't a hit, Mr. Storrod says. The band had an idea that could be tough to market: Its new CD would focus on political and social issues.

Ingenious put up $2 million to make, distribute and promote the album, which is scheduled for release at the end of the year or early next year. Any initial profits will go to the Ingenious fund. Once the fund's investment has been paid back, the fund and UB40 will share any additional profits.

One aspect UB40 likes about the deal: Unlike a record label, Ingenious executives haven't asked for an update on the album or visited their recording studio in Birmingham.

Record labels, hit by rampant piracy and falling profits, have been cutting back on the number of bands they support. With the power of the big record companies diminishing, bands are trying new ways to put out music.

After a 40-year relationship with EMI's Capitol Records, ex-Beatle Paul McCartney announced in March he would join Starbucks Corp.'s label, Hear Music. Mr. McCartney released an album through 10,000 Starbucks coffee stores in June. The release sold 500,000 copies by early August according to Nielsen Soundscan.

In the U.S., some rock acts are also drawing on private-equity support. A & M/Octone Records, based in New York, has backed the rock band Maroon 5 and several other groups. The label is a joint venture with Vivendi SA's Universal Music Group and several private investors.

Big record companies say they aren't threatened by the efforts to produce music without them. Bands "are not equipped with the necessary specialist skills to take care of business" such as hiring producers, designers, photographers and publicists, says Max Hole, an executive vice president at Universal Music Group International, the overseas arm of the world's largest music company by market share. "We are experts in providing these services and skills, which allows the artist to create and make music."

Ingenious was founded in 1998 by theater producer Andrew Lloyd Webber's accountant, Patrick McKenna, a former partner at accounting firm Deloitte & Touche. One of Mr. McKenna's early clients at Deloitte was English singer Peter Gabriel. The two men became friends, and Mr. Gabriel invested some of his own money in the Ingenious music venture-capital funds.

The two men agreed Ingenious would invest in Mr. Gabriel's next album, and in January, Ingenious paid $2 million for a 24.95% stake in Mr. Gabriel's 14th album, scheduled to be released next year. The deal gives Mr. Gabriel control over promotion and distribution of the still-untitled album in North America. Elsewhere, Mr. Gabriel is still signed to the Virgin record label.

Ingenious doesn't ask its rock stars to act like rock stars, something that appeals to the 57-year-old Mr. Gabriel, says Mike Large, chief operating officer of Peter Gabriel's management company, Real World Holdings Ltd. Musicians of Mr. Gabriel's age and experience are "not hungry for the circus of publicity, touring and autograph signing," he says.

"We know we have a great fan base who will buy the record if you tell them it's out there," Mr. Large says.

Dave Goldberg, a music entrepreneur at Benchmark Capital, a U.S. venture-capital investor, says it's too early to say if Ingenious's approach will take off in the U.S. "But we are going to see more and more of these different ways of creating financing for bands," he says.

[Via Startup Journal] 

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