Distribution, SaaS And The Death Of Advertising

A big percentage of the press coverage around the release of iOS 9 has been about ad blocking. Apple has made it possible for consumers to stop all those annoying banners and pop ups. Cue much consternation about the future of revenue generation on the Internet. Content blogs and sites which depend on advertising for all their revenue are predicting a bleak future. 
 
All this noise has made me think a bit more about the growth challenges facing SMB SaaS startups. Most of these businesses rely on the web in various forms to reach potential customers. The obvious impacts of a reduction in general online advertising would be:
 

• Shift more focus to other ad platforms. Main option is social media where Facebook looks like a big winner in the short term.
• Double down on inbound marketing. The trend has been running in this direction for a couple of years and this should accelerate.

Short Term Windows Will Close

Fine and good. But the reason for fearing ad blockers is more fundamental. People don’t like being bombarded with ads. There is a limit to how far Facebook and others can push. Content marketing which is just brochure ware is also seeing its audience dwindle. Over time direct advertising channels will narrow and become much more expensive to access.
 
The good news is that there is a different approach for SMB SaaS. Distribution is the answer. I used to think of distribution in an old fashioned model. It was about getting the product to the customer. With cloud based SaaS this could never be a problem? 

A New Definition For SaaS Distribution

Correct in the physical sense. But in SaaS distribution now means reaching the audience. Advertising channels may shrink but the audience - the market for SaaS products - continues to grow. More consumers have access to a reliable connection and a smartphone every day. Software is eating the B2B world. Whole sectors are being transformed by digital. 
 
So if distribution is the key how does your SaaS reach this growing audience? Modern software has unlocked this door. The key is integration. The ability to link SaaS products together makes every product a potential channel for others. Most SMB SaaS solves a narrow well defined problem. In startup mode there is a minimum feature set so this is even more pronounced. But integrate your product with the forest of other exciting new software. Each SaaS becomes the gateway to a whole ecosystem of solutions.

Make Your API Your Sales Force

Your API can become your best sales tool. Integration with other SaaS can open up distribution through a bunch of channels:

• Big general integrations such as eMail, calendar, Facebook and most recent Slack. These have a wide audience but also a lot of integrations. Hard to get noticed but on the other hand a real barrier if you don’t have them.
• Website builder/ CMS platforms. Wordpress is the daddy of this sector. Other are now offering a platform for SaaS apps. For example Weebly recently launched an App Centre. 40 SaaS products are available to their 30 million users.
• Business focused integration platforms. Salesforce is the largest and Xero is growing fast. Great for B2B apps. There are a lot of apps that integrate. But these platforms use category tags so you can narrow down to your closest competition. I know of at least one SaaS business in Scotland that has built its success on the Xero platform.
• Channel focused integration offer another growing option. Companies like Maestrano (Australia) and Trendzer (Scotland) have built a one stop shop. SMBs can get everything they need for their online business. From social media basics and Office 365 to complex SaaS software. These guys operate with a major channel partner like a bank or a telco. The channel brings access to big customer bases. Integrating with it offers high conversion rates but maybe lower average subscriptions.

Will Integration Led Distribution Work For SaaS?

The strategy is right. Reaching a big customer audience that is already open to using SaaS in their business manse sense. It must be more effective than battling with rising costs from Adwords or Facebook. And falling conversions.
 
It will not be free. As the number of apps on each platform grows the fight for attention will rise in cost. We might also see some of the big platforms exploiting their app centres as a revenue stream. 
 
As always the key will be execution. Choosing the right platforms and doing the right work to maximise the benefit will deliver results. I expect that better insight on this will emerge in time. Right now, I am working with one SaaS company. They are experimenting with this approach. I will let you know when they crack the code.
 
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