AIM Compliance

Working in a corporate law firm I noticed that little attention was initially paid to AIM Rule 26. It was widely perceived as an afterthought - something that the NOMAD could do. It was just never really discussed.

Then the AIM Team started issuing warnings to the advisers. All of a sudden website compliance was a big deal. NOMADs and Lawyers all had to do something to comply with this previously overlooked rule. Yet it still seemed that no one was quite sure who was responsible. Companies looked to the NOMADs who in turn looked to the lawyers. Unfortunately, nothing much has changed since and compliance remains at a distressingly low level.

There are innumerable AIM listed companies which still don't have even the most fundamental info available on their website. I am sure that it is only a matter of time until someone is hit with a hefty fine. This is why it is so important that someone takes responsibility for this process and ensures that the websites have everything they need. It will save a lot of pain and money in the long run....

Aim Rule 26

The recent introduction of AIM Rule 26 has, for the last 6 months, been the bain of my existence. You see, as an ex-analyst at a London-based “boutique” investment bank that acts as Nominated Adviser (“Nomad” for the more banking astute among you) for AIM-listed companies, I’ve spent the best proportion of my working life bringing companies up-to-speed with this particular rule introduction. AIM Rule 26 required any company listed on AIM and, as of 20 August 2007, any company proposing to list on AIM to have particular information published on their website.

“At last” I hear you cry from behind your seven trading screens, “I’ve always wanted to know the age of the Vice Chairman of the remuneration committee of the backwards firm my granny has unwittingly invested my inheritance in”.

Well, I say cobblers.

Useful information is one thing but it’s beginning to look more and more like a box checking exercise as companies scramble to incorporate everything from the latest annual report (useful) to the company’s change of name certificate from its recent reverse acquisition (useless!). And the punishment for non-compliance; a hefty fine, public censure or suspension (or all of the above!).

But joking aside, a one-stop shop for (predominantly) pertinent information is helpful indeed, and it’s a wonder why such measures haven’t been taken to provide such content before now. However, whether we like it or not, AIM Rule 26 is here to stay and now corporate financiers, financial pr advisers and web designers will have to add a few more hours to the ever increasing tally to get companies fully up to speed before admission….

How to advertise in an increasingly competitive market.

With such a large number of companies advertising often very similar products, it begs the question, where should I focus my marketing spend? There is no easy answer to this, and in fact the reality is that it will vary considerably as per company. This year could be crucial for many companies, especially in the areas of technological advancement and the struggle between products such as Leopard and Vista. Now more than ever, a company’s marketing campaign can shape their future. With the economy tightening up due to recent drops in the FTSE and fears of further falls to come, the importance of advertising in the most efficient manner is paramount. In my opinion, there are three areas of cost-effective, measurable mediums that will make all the difference; viral, mobile, and paid search. More than an opinion, market trends reveal the increasing belief in relatively new forms of marketing.

The real issue is not simply how much money you can afford to pour into advertising, but simply how effective your marketing is. How many sales conversions were won and how much brand awareness was created? For example, the Nike viral with Ronaldinhio was viewed an estimated 50 million times worldwide, showing how successful viral marketing can be while remaining very cost-effective. The Cadbury's advert that ran over the rugby world cup became the England good luck charm and in fact created an increase in share prices, yet cost £6.2 million. The gorilla drummer became truly successful in viral form with over 7 million views and 100 spoofs on YouTube, which of course cost them £0. It is no surprise therefore that Cadbury have announced a shift in advertising budget next year to viral campaigns, revealing a market realisation in the power of a good viral.

Television network advertising revenue fell by 5% in 2006, and some reports support the theory that internet advertising spend could overtake television by 2011, or even as early as 2009, though this may be a little optimistic. Large companies are increasingly looking towards digital to generate new sales. Research reveals that those who rate products online, usually a young male audience, have a disproportionately high influence on consumers. Virals, campaign sites, and CRM’s offer a cost efficient measurable means of advertising to these users, and there is growing demand for these services.

Mobile marketing has seen tremendous growth over the last few years. There are 2.2 billion mobile handsets worldwide, with more mobile phones in the UK than people. The UK leads the way in mobile web access with over 80% being WAP enabled, and 54% of users connecting to the web through their mobile regularly. In 2005, the number of users connected to the web via their mobile phone overtook the number of people connected to the web via a home computer. Bluetooth technology has also been trialled by many large companies including HSBC. Though this was relatively unsuccessful, there is an opportunity for a more effective use of mobile technology that can generate better results and provide a much larger return on investment.

Paid search growth was 44% up year-on-year to £762.3 million which highlights the fact that of the £32 billion spent by consumers online in 2006, around half were due to paid search engine campaigns. In July alone, over 1.4 billion search queries resulted in an 80% click-through rate. Marketing budgets are increasingly shifting towards online advertising, and Google Campaign Management offered at a very competitive rate offers the opportunity to make the most out of digital branding.

Despite these mediums having the potential of delivering successful campaigns, the fact is that without the right content, they will still not necessarily work. The HSBC mobile campaign is an example. All forms of digital and mobile marketing should be content driven and tied in with other forms of advertising, much like Cadbury. We may see a dramatic reduction in advertising budgets as a result of an uncertain economic climate, and so the need to come up with original innovative ideas is key.

Predictions 2008

With the Microsoft keynote just gone and receiving mixed reactions and the Macworld 2008 expo just around the corner, I thought I would make some predictions about what I see coming up in 2008. So here are some specifics and some trends that I think we will be seeing in the coming year:

Apple to release a New iPhone.

Apple’s strategy in revenue maximising has been displayed in its iPod range for a number of years now. Products are impressive but are also continually upgraded with extra features on a step by step basis. The iPhone will probably not increase one feature at a time because it is a more significant purchase than an iPod and therefore any upgrade will need to be significant to differentiate itself from the previous model. The extra features the new iPhone may have are listed below:

3G Chip
GPS Chip
Sky TV on O2
More Memory

5 Mega Pixel Camera

Wifi Areas Expanding

Malaga has recently started a town wide wifi network. Will larger towns and cities follow suit and how robust will these networks be? There are a number of security issues concerning the way that the network has been achieved in Malaga but more robust networks may be achievable in the UK, especially is mobile operators embark on a joint scheme. Mobiles that take advantage of making calls over a wifi network are going to increase with the mobile networks having to work hard in order to maintain and generate revenue. There is already a large number of places offering wifi, Starbucks and Wetherspoons to name but two and the penetration residential wifi will continue to expand. A more specific area for the expansion of wifi is on the commute.

A number of trains currently provide their passengers with a wifi offering. Expect the number of these services to increase. This will help raise the uptake of content being viewed on mobile and other wifi capable devices on the move. YouTube on your ipod Touch for example. This could also be a catalyst for more media to be consumed on the move digital like news. The Times current online offering and the BBC’s mobile site are well prepared for this. However, some brands, especially those in the magazine sector have been slow to adapt and could find themselves sliding faster than they had expected, especially in areas such as classified sales.

Blu-ray to beat HD DVD.

Over the last week there has been some significant developments in the battle between Sony and Toshiba. I predict the battle will be finished by the end of the year with Sony being the clear winner. However, I wouldn’t be surprised if Blu-ray was then rapidly beaten by an iTunes download service that allowed users to download movies for a limited period of time. This may have to wait until download speeds are fast enough to download movies in a comparable definition to Blu-ray but the convenience of the service will be hard to match by retailers and traditional rental companies.

I hope these three things all come true and I am heralded as the new, modern day and better looking Nostradamus.

A Short Guide to Advertising Spend

I am often asked how much a company should spend on advertising annually. Obviously my immediate answer is lots! However, to try and actually be helpful, I have written a short guide to advertising spend.

There are three means of establishing the right advertising budget for you, and that greatly depends on a number aspects.

A typical response is to work out your companies latest annual profit and times it by the average industry spend on advertising. These rates are as varied as the multitude of products and services available in the modern market, and generally come down to the nature and competition of the industry. The confectionary industry is known to have one of the highest spends on advertising at around 18.1%, with industrial manufacturing companies often at the bottom with rates as low as 0.2%. This form of advertising, though easy to work out, should only really be taken as a guide. Often simply breaking the mould can result in a greater market share or increased profits.

The key factors to consider are the size of your company, its age, the competition and whether it sells to businesses or consumers. Consumer based industries will often need a higher ad spend than business to business. They are influenced more by shifts in consumer culture and can be strongly influenced by fads and seasonal fluctuations and therefore need additional spend to retain customers and generate new ones. If your company is new, you may wish to spend more money on generating initial interest and creating a brand presence that will be invaluable later on in your company’s future. You may wish to generate more advertising presence than your competitors, which could certainly be a costly affair, but may make you the market leader. Once all these factors have been considered, a percentage of revenue can be put aside and used for advertising spend. This is a much more in-depth means of calculating a figure for spend and you may wish to take advise from a consultant or speak at length with your advertising agency.

The final means, and perhaps most relevant, is to ask yourself a few questions.

1 – Who are you targeting?
2 – What is the most effective means of targeting this audience?
3 – How much will it cost?

If the answer to 3 is too large a sum, then you will need to re-evaluate 2 or even 1. One of the advantages of digital advertising is that you get more for your money. Television and national paper advertising is not necessarily the most cost effective method of promoting your brand or products. Some of the most successful marketing campaigns have been viral, such as the Trojan contraceptive adverts. It is important not to fall into the trap of viewing advertising as additional spend. It can be lost income if not carefully planned. Having said that, it is also equally important not to simply grab a figure and run with it. Work out various strategies and the potential revenue generation from running with them. Also look closely season to season to evaluate whether increases or decreases in spend are mirrored in sales. In the end the right amount is bespoke to each company, though many consultants would certainly advise between 10 and 15 percent for SME’s. It is always worth talking to someone with an outside perspective, 10 to 15% of your revenue sounds like a lot, but loosing the additional and repeat business advertising can bring more than makes it a worth while investment.

Finally, be aware of the size of your company. SME’s may not benefit from simply plugging your brand. An effective brand image is key to your companies success, but initially focus on direct response forms of advertising such as CRM’s and Search Engine Campaigns. They are cost effective and deliver financial results.