Most companies still invest into marketing only with the existing cash reserves. Foppa, the marketing growth investor, has launched new Fixed and AdCredit services that empower marketing teams to utilize the full potential of marketing and advertising activities.
Finnish marketing growth investor Foppa has launched two new financial services, Foppa Fixed and AdCredit, to help companies through the “Marketing Valley of Death”, that most companies that don’t invest enough into marketing, fall into. Foppa Fixed is for paying the marketing budget as installment payments, and Foppa AdCredit for payments with extended payment terms.
The new services will complement Foppa’s revenue-based financial service, which has been operating since 2019 with great success – Foppa’s revenue in its first full year of operations was over 2 million euros, and it has invested into companies’ marketing budgets with over 15 million euros.
“We are like Klarna for advertisers. With the help of our services, companies can spread their marketing and advertising budgets over the course of months or even years, which is when the real return on investment for marketing happens,” says Antti Kaihlanen, founder and CEO of Foppa.
Kaihlanen founded Foppa after a decade of working in advertisement as well as an Interim CMO of Invesdor, Nordic crowdfunding platform. He recognized that although companies were raising big rounds from investors, barely any of that money went into marketing. With the combination of knowledge from both industries, Foppa’s financing solution has been the perfect addition to more conventional equity and debt rounds.
Equity rounds help companies grow, but if enough funds are not invested into marketing, companies too often get stuck in the “Marketing Valley of Death”, as Kaihlanen describes the state of stagnation. When marketing investments are too low, companies are unable to climb up from the valley where no one has heard of them and thus, are never able to enter the hockey stick of growth.
The new services can also be utilized by marketing agencies to offer more flexible payment solutions to their clients.
“Companies keep saying that they are investing into marketing, but they are actually just putting in money that they already have – and immediately if it seems that revenue incomes are slowing down, the first thing they do is to cut back from marketing. Marketing return on investment might show up to three years after the investment, so it’s a game of persistence. We want to help companies to understand that the best investments into marketing are big, continuous, and measured,” continues Kaihlanen.
The launch of the new solutions come at a perfect time, as studies show that marketing budgets are increasing from 2021 to 9.5% of companies total revenue. However, they are still not quite at the level of pre-pandemic budgets. Foppa has already helped multiple big marketing agencies and companies to keep on investing into marketing activities so that the looming economic downturn would not be seen in their customer acquisition and brand building activities.
One of their customers is Evoke, which is looking to almost double their revenue in 2022.
"With the help of Foppa, we have been able to invest significantly more in marketing than usual. Foppa's new kind of financing model distributes marketing investments throughout the year. For instance, now we don't have to pay for a 100,000-euro TV advertising campaign all at once, as it wouldn't even have been possible before," says Evoke CEO Mikko Lähdetie.
By taking away the financial risk, Foppa ensures that companies can continue investing in the best activities that pay off. If it seems that the chosen strategy is not working, meaning that overall business and revenue are not growing, Foppa will help the company to find the right channels and means to help the overall revenue grow.
“With bigger budgets, marketing managers could afford the tools and measures that executing successful marketing takes. By identifying the right channels, tools, and messaging, and then investing in those, marketers have an easier time to prove to their CEOs and management boards that marketing does pay off. We all know that small investments bring back small returns,” Kaihlanen concludes.