tag:econsultancy.com,2008:/topics/financing Latest Financing content from Econsultancy 2015-04-03T14:30:00+01:00 tag:econsultancy.com,2008:BlogPost/66258 2015-04-03T14:30:00+01:00 2015-04-03T14:30:00+01:00 Equity crowdfunding comes to the US, sort of Patricio Robles <p>It's not <a href="https://econsultancy.com/blog/9548-the-crowdfund-act-everything-you-need-to-know/">the CROWDFUND Act</a> that everybody has been talking about for years and which may never be put into place, but it does pave the way for businesses to raise up to $50 million in offerings that aren't open only to wealthy investors. </p> <p>The new Regulation A+ rules give companies the ability to sell equity in two tiers. Under a Tier 1 offering, companies can offer up to $20m in equity to the public over a 12 month period.</p> <p>Companies will need to have their financials reviewed and an offering circular approved by the SEC. Under a Tier 2 offering, companies will be able to offer up to $50m in equity to the public over a 12 month period.</p> <p>In addition to the Tier 1 requirements, audited financials must be provided, and ongoing disclosures similar in nature to those publicly-traded companies are required.</p> <p>The buzz around Regulation A+ is due to the fact that under both Tier 1 and Tier 2 offerings, companies can sell equity to non-accredited investors (individuals who don't have more than $200,000 a year in income or a net worth of at least $1m).</p> <p>In Tier 2 offerings, non-accredited investors will be limited to investing 10% of their net worth or net income, whichever is greater, in an effort to prevent individuals from betting more than the SEC believes they can afford to lose.</p> <p>Importantly, non-accredited investors will be able to self-report their net worths and incomes, so companies will not have the burden of verifying this information.</p> <p>Combined with the fact that companies using Regulation A+ can freely advertise their offerings to the public, Regulation A+ is being hailed by many as a groundbreaking development that will usher in a new wave of equity crowdfunding in the United States. But will it really?</p> <p>A Regulation A+ offering isn't going to be cheap to prepare and according to some observers, the total cost could run companies upwards of $100,000.</p> <p>Additionally, the offering circular that the SEC must approve is expected to receive the same level of scrutiny as an SEC Form S-1, the document companies must prepare for a traditional IPO.</p> <p>Fortunately, Regulation A+ does allow companies to test the waters before they prepare their circulars, so in theory some of the costs could be delayed until companies have confidence their offerings will be successful.</p> <p>Despite this, given the minimum costs, disclosures required and reviews that companies will be subjected to, it might be appropriate to think of Regulation A+ offerings as mini IPOs rather than the true crowdfunding campaigns proponents have been seeking.</p> <p>Certainly, there are reasons to believe there won't be a flood of new companies raising money using Regulation A+, but that doesn't mean that the SEC's new rules aren't a step in the right direction.</p> <p>Giving young companies more ways to raise capital is almost certainly a good thing and it would be surprising if, at a minimum, Regulation A+ doesn't result in at least a few interesting, innovating businesses getting capital they might otherwise not have.</p> tag:econsultancy.com,2008:BlogPost/66154 2015-03-04T10:16:21+00:00 2015-03-04T10:16:21+00:00 63% of businesses plan to increase their marketing budgets in 2015: report Jim Clark <p>The results of the survey could be seen as a further sign that marketers are getting better at securing buy-in and financial support from the C-suite.</p> <p><em><strong>What best describes your plans for your overall marketing budget in 2015?</strong></em></p> <p><img style="vertical-align: text-bottom;" src="https://assets.econsultancy.com/images/resized/0006/0408/increase-blog-flyer.png" alt="" width="470" height="307"></p> <h3>Factors driving this trend</h3> <p>Increased connectivity means that consumers are more empowered with information than ever – from researching a product on their desktop at home to using a mobile device in-store as a virtual sales assistant.</p> <p>For example, a recent <a href="http://www2.deloitte.com/uk/en/pages/consumer-business/articles/digital-influence-in-uk-retail.html">Deloitte report</a> found that digital devices are influencing 33% of in-store retail sales, equivalent to almost £100bn.</p> <p><img style="vertical-align: text-bottom;" src="https://assets.econsultancy.com/images/0006/0405/wifi-at-the-grocery-store.jpg" alt="" width="424" height="283"></p> <p>This has raised the profile of marketing departments, which are increasingly orchestrating consumer relationships - and CEOs are now looking to CMOs and marketing departments as a key growth drivers.</p> <p>A good example of this is British Airways, which <a href="http://www.marketingmagazine.co.uk/article/1330124/british-airways-splits-marketing-department-major-reshuffle">announced</a> in January that it was splitting its marketing department to bring it closer to the airline’s commercial operations.</p> <h3>Marketers are investing in ways to cut through the clutter</h3> <p>At the same time, keeping customers switched on to brand messages remains a challenge. Connected consumers are dealing with more “clutter” than ever - and there are some fairly frightening statistics floating out on the web, ranging from 500 to 5,000 advertising messages a day. </p> <p>This has led marketers to rethink their digital strategy, replacing tried and trusted methods with more precise data and analytical insights on customer behaviour.</p> <p><img style="vertical-align: text-bottom;" src="https://assets.econsultancy.com/images/resized/0006/0407/spam-blog-flyer-blog-flyer.jpg" alt="" width="470" height="178"></p> <h3>Increased importance of digital marketing technology</h3> <p>For example, according to the Marketing Budgets Report, 79% of companies are planning to increase their spending on digital marketing technology – an increase of 13% since 2014.</p> <p>Technologies that marketers are particular focused on include A/B and multivariate testing (50% are planning to spend more in this area) as well as CRM (48%) and marketing analytics (42%).  </p> <p>This is clearly an exciting time to work in marketing, where boardroom support and budgets are rising, and the increased ability to attract and retain customers means the influence of the marketer within businesses will only increase this year.</p> <p><strong><em>The <a href="https://econsultancy.com/reports/marketing-budgets/">Marketing Budgets 2015 Report</a> looks at the extent to which companies are increasing their budgets across a range of channels and technologies, comparing online and offline budgets while also looking at the balance between acquisition and retention marketing. </em></strong></p> <p><strong><em>Almost 600 companies participated in this research, which took the form of an online survey between December 2014 and January 2015.</em></strong></p> tag:econsultancy.com,2008:BlogPost/65805 2014-12-01T11:21:00+00:00 2014-12-01T11:21:00+00:00 Successful corporate-startup ventures. Pt 2: Doing the deal Frank Lampen <p>Although various intermediaries are springing up with experience in this area, some of these lack the statutory regulation necessary for arranging these deals.</p> <p>As more corporates look to deals with startups, in some cases we’re finding that initiatives are being created without full internal alignment around whether the objective is short term innovation or long term financial return.</p> <p>This in turn creates issues around whether the money is coming from operating expenditure or capital expenditure. <strong>The route chosen has big implications on who the right internal stakeholders are.</strong></p> <p><img src="https://assets.econsultancy.com/images/0005/6380/IU_Corporate_Venturing_2.jpg" alt="choose the right path for your corporate startup venture strategy" width="615" height="435"></p> <p>If you are intending to take an equity stake in a startup, it’s helpful to understand how different the world of VC and angel finance (where startups tend to raise most of their money) is from the realm large listed companies.</p> <p>The two worlds have such fundamentally different attitudes to risk and control that corporates can quickly find themselves facing challenges in either getting the startup to agree terms, or in getting internal approvals within their own organisation.</p> <p>Before you start on the deal, <strong>you need to look at your organisation and honestly assess whether key stakeholders have a true picture of the length of time before they can expect a return, the risks, the likely additional capital needs the business will have, and who in the business will take the P&amp;L hit from any writedowns</strong> (and inevitably there will be some writedowns).</p> <p>Once you’ve got that alignment internally, framing the deal well requires you to adopt a win-win style of integrative negotiation rather than the hard-bargaining negotiation that might be more prevalent in your organisation.</p> <p>Even if long-term equity gain is not your principal reason for forming the partnership, we’ve seen many times how putting some money on the table to become a shareholder can lead to better outcomes than simply paying for services or only trying to use non-monetary value added.</p> <p>Once you’re a shareholder, you’re much less likely to bargain hard for a deal which might satisfy your short term interests at the expense of the startup’s long term future.</p> <p>There isn’t really a shortage of investment capital right now, and for the good companies it is certainly an investee’s market not an investor’s; so <strong>if you want to work with the best, you want your deal to be smartest, best-value one on the table</strong>.</p> <p>If you can’t, or won’t, compete on deal terms to work with the best startups, it’s worth questioning whether you should really be doing this in the first place.</p> <p>In summary, doing the deal in the right way requires you to consider:</p> <ul> <li>What the real value exchange is.</li> <li>The time horizon in which your organisation needs to see a return.</li> <li>Whether you’re funding from capex or operating expenditure.</li> <li>Having the right internal stakeholders aligned.</li> <li>Covering off the likely future capital needs and taking account of the possibility of writedowns.</li> <li>Adopting win-win negotiating strategies.</li> <li>Having deal terms that are at least competitive and ideally the best in the market.</li> </ul> <p>In the final post we’ll look forward to how you keep your organisation engaged, and how you can be a great partner to the startups you work with.</p> tag:econsultancy.com,2008:BlogPost/65744 2014-11-12T09:15:00+00:00 2014-11-12T09:15:00+00:00 Four key trends from our Value of Marketing research David Moth <h3>1. A joint failure to understand marketing ROI</h3> <p>A common criticism of marketing is that it fails to deliver a tangible ROI – and it seems digital technology has failed to render those arguments obsolete.</p> <p>Only around a quarter of finance directors (24%) knew the return on investment from marketing – even approximately. </p> <p>Interestingly, the percentage for marketers was even lower at just 17%.</p> <p><em><strong>Do you know what your return on investment from your company’s marketing is?</strong></em></p> <p><img src="https://assets.econsultancy.com/images/resized/0005/5942/screen_shot_2014-11-11_at_15.30.16-blog-full.png" alt="" width="615" height="488"></p> <p>This is a worrying development for those who believe the rise in digital technology and data-driven marketing will give us a more accurate measure of ROI.</p> <h3>2. Differences in measurement cause a disconnect between marketing and finance</h3> <p>The research also reveals that marketers and finance professionals don’t see eye-to-eye when it comes to what share of revenue and sales are directly driven by marketing activity.</p> <p>Around six out of ten (59%) marketers believe that marketing directly drives more than 20% of their company’s revenue. </p> <p>Perhaps unsurprisingly, only four out of ten finance directors (38%) share that opinion. </p> <p>According to Kristof Fahy, CMO of William Hill:</p> <blockquote> <p>There is still a disconnect where an organisation can have several versions of the truth. I’ll be given different sets of figures from different teams that all paint different pictures. </p> <p>But at the end of the day we are a FTSE company where the MD has to be able to stand up and justify it. A single version of the truth is what we need and where we struggle.</p> </blockquote> <h3>3. Marketing and finance differ in both language and personality</h3> <p>An inability to speak the same language is one of the main reasons for the various conflicts that arise between finance and marketing teams.</p> <p>For marketers, speaking the language of finance is seen as being very important when it comes to building credibility at the highest levels of the organisation.</p> <p>Similarly, marketers need to be careful of using their own vernacular with senior management. </p> <p>Joby Russell, marketing director at Confused.com, described how this leads to difficulties:</p> <blockquote> <p>A part of the tension is language problems. Often people working in a given channel in a deep way use language that isn’t consistent with how senior management talk to each other. </p> <p>The higher up you go, the less technical language is used. FDs don’t have time to learn marketing language. A big part of my job is decoding.</p> </blockquote> <h3>4. Marketers see themselves as more important than finance realises</h3> <p>There was a significant difference in opinion between finance and marketing when it came to the importance of the latter for the business.</p> <p>While 77% of marketers agree that ‘marketing is a critical function within our business’, just 62% of finance directors feel the same way.</p> <p>Similarly, only 43% of finance directors believe that ‘the head of marketing has significant strategic influence on the business’, compared to 62% of marketers.</p> <p><em><strong>For the full results of this research, download the <a href="https://econsultancy.com/reports/the-value-of-marketing">Value of Marketing Report</a>.</strong></em></p> tag:econsultancy.com,2008:BlogPost/64819 2014-05-12T11:08:10+01:00 2014-05-12T11:08:10+01:00 Digital agencies' daily rates increased by 6% since 2012: report David Moth <p>Just under half of respondents (47%) said that their average charge-out rates have increased in the last two years, with only one in 10 having decreased rates. </p> <p><em><strong>In the last two years, what percentage change has there been to your average charge-out rate?</strong></em> </p> <p><img src="https://assets.econsultancy.com/images/resized/0004/7877/changes_to_rate_card-blog-full.jpg" alt="" width="615" height="439"></p> <p>The <a href="https://econsultancy.com/reports/digital-agency-rate-card-survey">Digital Agency Rate Card Survey</a> is based on a survey of more than 320 UK digital agencies carried out in 2014. </p> <p>The principal objective of this Econsultancy research is to show what UK digital agencies charge for different types of skills and levels of seniority, and to understand how and why rates may vary, for example by size of company. </p> <p>The survey will help you benchmark day rates for more than 50 individual job roles including positions such as creative director, digital content strategist and social media consultant.</p> <h2>Expected change in rate card</h2> <p>The survey also asked respondents how they expect their daily rates to increase in 12 months’ time.</p> <p>Overall the average rate of increase is predicted to be 7%, though the largest agencies (turnover of £5m+) project a rise of 5% compared to 8% for small and mid-size agencies (turnover &gt;£5m).</p> <p>The increase in digital rates is coupled with a rise in the amount of advertisers who are introducing performance-based elements into their contracts with agencies.   </p> <p>A separate survey by the World Federation of Advertisers found that 11% of respondents already feature incentives in their contracts (up from 7% in 2011).</p> <p>A further 37% of those surveyed say they planned to implement performance incentives, 36% said they wanted to explore value-based compensation and 66% said they wanted to link agency income more closely to their own performance.</p> <p>However it should be noted that the WFA only surveyed 43 member companies, though they did represent more than $100bn in annual ad spend.</p> tag:econsultancy.com,2008:BlogPost/64248 2014-02-03T10:54:00+00:00 2014-02-03T10:54:00+00:00 71% of businesses plan to increase digital marketing budgets this year: report David Moth <p>Looking specifically at digital budgets, the proportion of companies increasing their spending has been remarkably consistent since 2009. This year the figure was 71% which is the same percentage as last year.</p> <p><em><strong>What best describes your plans for your overall marketing budget in 2014?</strong></em></p> <p><img src="http://assets.econsultancy.com/images/resized/0004/2527/chart_1-blog-full.jpg" alt="" width="615" height="491"></p> <p>The Marketing Budgets report is a bellwether for the health of the marketing industry. It looks at the extent to which companies are increasing their budgets across a range of channels and technologies, comparing online and offline budgets while also looking at the balance between acquisition and retention marketing.</p> <h2>Level of increase</h2> <p>The survey also asked respondents by how much they would be increasing their marketing budgets this year.</p> <p>According to the data, companies will be increasing their overall marketing budgets by an average 26%. However around three in every four companies (73%) stated they will be increasing their budget by up to 30%.</p> <p>Looking specifically at digital marketing budgets, only 12% of companies who are increasing their budgets are planning to do so by more than 50%.</p> <p>The average budgetary increase this year is 27%; this is similar to last year’s figure of 28%.</p> <p><em><strong>By how much are you going to increase your digital marketing budget in 2014?</strong></em></p> <p><img src="http://assets.econsultancy.com/images/0004/2529/chart_2.jpg" alt="" width="615"></p> <p><em><strong>Click <a href="http://econsultancy.com/reports/marketing-budgets">here</a> to download the new Marketing Budgets Report 2014.</strong></em></p>