For most ad tech, martech, and commerce companies, with global growth aspirations, the topic of entering the U.S. market will come up sooner rather than later. It’s clear why: the U.S. is home to the world’s largest consumer market and, according to research from eMarketer, U.S. ad spend is on track to reach USD$220.96bn (£168bn) in 2018. Expansion is often seen as an indicator of company maturity: for VC-funded businesses, the U.S. generally presents a more risk-friendly environment than the UK, EU, or Asia, and tends to be the destination of choice for follow-on scaling rounds. Yet the peculiarities of the market often seem to stump even those who, at least on the surface, appear to be well-positioned for in-market success. Luckily, some clear patterns are evident even across companies in very different verticals. Writing exclusively for ExchangeWire, Ana Milicevic (pictured below), principal and co-founder, Sparrow Advisers, a consultancy specialising in ad tech, martech, commerce, and emerging industries, shares the top three challenges and how to avoid them:
1. Don’t shortchange your go-to-market (GTM) strategy
No matter how solid your GTM is in your home market (or other global markets you’ve already expanded to), chances are you’ll need to adjust everything: from your messaging, through how you tackle competitors, to who should be in your prospect pipeline. This will require some solid cross-functional, in-market expertise.
It’s not as simple as swapping out FMCG for CPG in your collateral. The competitive space in-market may be quite different from what you’re used to. Say you’ve pioneered an innovative technology. While in your home market, you may be up against smaller incumbents; here, you might be in consideration with tech behemoths and will need to adjust what you highlight as key advantages. Understanding who your prospects will think of as competitive to you is key to tailoring a good in-market approach – and that might not be something that they’ll readily share with you, so you need to take a proactive approach. Just as your competitors are likely to be different, so are your clients. If you’re calling on the largest companies in a sector in your home market, that doesn’t necessarily translate to the same spread here: the market is larger and that may lead you down some initially not-so-obvious avenues. Once you’re clear on the competitive landscape, and desired client base, shift your focus to messaging: what’s your story; what tone are you using (is it direct enough?); and are your case studies relevant (no one here will have heard of the large supermarket chain back home whom you consider a marquee client).
It’s tempting to start from a tactical collateral review for a variety of reasons – cost frequently comes up as a major driver here. But even the best messaging in the world will fall on deaf ears if it isn’t targeted to the right audience in-market. Don’t shortchange your go-to-market strategy: it’ll likely make everything from pipeline-building to hiring easier.
2. Be smart about hiring
Labour regulations are favourable to employers (especially compared to Europe) and both hiring and firing tend to be much easier. Your new hires will generally be able to start within days or weeks of accepting an offer, but you’ll likely get to experience some sticker shock at salary and benefits levels. Do your homework to understand what typical salary ranges and bonus structures are for the roles you need immediately. Resist the urge to calculate how many people you’d be able to bring on board ‘back home’ for a similar amount of money: it’s fundamentally a different equation. If you’re trying to hire away from large companies, are your salary and benefits good enough to make candidates easily turn down a counter offer? If the job entails traveling to the main office, can you focus your recruiting efforts on expats who may welcome the opportunity for a few business trips back home? Finally, are you working with the right in-market recruiters and making sure your company’s mission is being communicated to candidates in an attractive way?
One thing that is often overlooked when budgeting and charting team size is how many people you’ll need. Professionals in the U.S. tend to specialise early in their careers and often don’t have the same range of skills or experiences as more well-rounded hires from other markets. For example, a marketing professional in Asia can expect to have worked on everything from advertising copy, through case study development, to event management; in the U.S. that work may need to be handled by three different people. Working with carefully selected consultants can bridge this gap easily vs staffing up a full-time team of employees right out the gate.
3. Understand how your clients will pay for your services
Figuring out which budget your prospective clients will use to pay for your services, and which budgets are potentially in play, is one of the wiser investments you can make when considering market entry. Are you aiming for the general digital budget, the ‘experimental’/innovation budget, the shopper marketing budget, or the IT department budget? The same company can successfully make a play for all four, with the understanding of how the client (or your execution partner, if you’re working with one) can successfully sell this internally. It’s important to constantly re-evaluate this, but doubly so around budgeting season. And speaking of budgeting season, is the company you’re looking to work with on a calendar year or fiscal year budgeting cycle? All too often, we’ve seen companies pitch in Q3 expecting a Q4 deal only to be told they’re in the budget for the next fiscal year (meaning that any deal is likely 2+ quarters away).
Many aspects of new market entry have gotten easier over the past five years: like setting up a new physical office and getting all basic operating needs taken care of. That may be doing its part in masking the legwork, discipline, and market understanding needed to set up for continued in-market success. The best analogy I’ve found is that of mountain climbing: even the most experienced climbers prepare for specific summits (and choose their sherpas wisely along the way).