Business Owners Compare Notes on AdWords and Staying Competitive
Earl Wilson/The New York Times Susan Parker: The cost of producing dresses in Asia has gone up.At the most recent meeting of the She Owns It business group, the members discussed saying no — to customers and to efforts that don't advance their companies' big picture goals. This post continues that conversation, touches on the pros and cons of Google AdWords, and explores the challenges of thriving in a changing market.
Katie Finnegan, a co-founder of Hukkster, said that user acquisition is the biggest challenge for her start-up, which acts as an online shopping tool. As a result, marketing is Hukkster's top priority. Still, the company must make choices about which marketing initiatives to pursue. "Sometimes we have to cut the cord even before they've had the chance to prove themselves, which is somewhat frustrating," Ms. Finnegan said.
Google AdWords was one initiative that didn't make the cut. "It's a pretty expensive channel for small companies," said Erica Bell, Hukkster's other co-founder. Testing to determine which keywords drive traffic simply wasn't worth the expense, she explained — especially when lower cost options like Facebook and Pinterest were proving effective. Hukkster's strategy has been to emphasize the marketing efforts that work. "We will test new opportunities, but we have to do it in such a small way," she said.
AdWords didn't prove to be a very good option for Jennifer Blumin, who owns Skylight Group, either. Skylight creates massive event spaces, typically in historic locations, for corporate clients with big budgets. But the company's problems with AdWords were different from Hukkster's, Ms. Blumin said.
One of Skylight's employees spent four years working for Google, and the company was able to devote considerable time to developing a search engine optimization strategy that worked — sort of. Skylight was "inundated" with inquiries, Ms. Blumin said. But they came from the wrong prospects. "They're like, 'I want to do a conference and I have $100,'" she said.
"They're not in a position to buy," said Deirdre Lord, who owns the Megawatt Hour.
"And you can't set your AdWords for 'people who really want to spend a ton of money,'" Ms. Blumin said.
Susan Parker, who owns Bari Jay, noted that Hukkster's potential consumer could be anyone, while Skylight seeks a more specific target.
"Exactly," Ms. Blumin said.
Shifting gears, Ms. Parker said her company, which manufactures bridesmaid and prom dresses, faces a "major issue." After years of double-digit revenue growth and profitability, she said she expects 2014 to be disappointing.
"You can tell that already?" Ms. Lord said.
Ms. Parker explained that the bulk of Bari Jay's orders, which were slow for January, come in the first three months of the year. Bridal or prom dress manufacturers make money in the first half of the year, and lose it in the second, she said. "But the point is you make enough money that you more than make it up," she said.
"The problem is people want cheaper and cheaper dresses," she continued. And more people are choosing ready-to-wear options sold, for example, at department stores.
"Is that what you think is happening?" Ms. Lord asked.
"I think that's part of it," Ms. Parker said, adding that as the cost of producing dresses in Asia has climbed, Bari Jay's products have become too expensive for its customers.
"Labor's going up there, right?" Ms. Lord asked.
"Labor and material — everything," Ms. Parker said. Based on their design and complexity, Bari Jay's dresses are also expensive to make. "My construction of my dress is actually really great," she said. But she has found that it may be too good for a bridesmaid's dress that will only be worn once.
To figure out how she might cut costs, Ms. Parker bought some of her competitors' dresses and sent them to her factories to show them which expensive features could be eliminated. "I have to cheapen my dress," she said.
Adding to the problem, Bari Jay's designer is "very high-end for what we are," she added. Ms. Parker and her sister, the company's co-owner, have encouraged the designer to limit expensive elements like bead work, because her designs take an already-expensive product and make it even more expensive.
"Would it make any sense to have high-end and a lower-end ready-to-wear line?" Ms. Lord asked.
"I don't want to do ready-to-wear because I don't have stores that will stock it," said Ms. Parker, who sells to small specialty shops. Ms. Parker's father, who founded the company, did sell to department stores, which would carry ready-to-wear products, but Ms. Parker said she doesn't want to sell to them because they offer lower margins. Besides, she said, Bari Jay's look is already high-end. It would not easily translate to a lower-end option.
In future posts we'll explore the owners' continuing challenges. Do you have any suggestions?
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