Why a B2B Startup Is Betting $7M on a Super Bowl Ad | Tech Crunch

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Some people watch the Super Bowl for the actual football game. Many see the event as an excuse for the halftime show or to eat wings and other game day snacks. Some look to it for better software solutions for their company — perhaps?

Papaya Global expects. The late-stage global workforce payments startup is running a 30-second ad on Sunday. The announcement is meant to highlight the company's software, which helps other companies keep payroll compliant for teams across borders. The commercial takes place inside the office and is a relatively lackluster Super Bowl ad compared to Super Bowl giants like Budweiser and McDonald's, which each year draws on comedy, celebrity and high production value.

Considering Papai is a B2B software company, Papai's announcement is not very flashy, but not surprising. While it's not uncommon for B2B startups to advertise through traditional consumer tactics, running an ad during the Super Bowl is very different than buying ads on a NYC subway or San Francisco highway billboard. This year's Super Bowl ads cost $7 million for a 30-second slot.

Bernd Schmidt, a professor at Columbia Business School who focuses on branding and advertising, says you don't see many B2B companies advertising during the Super Bowl because, while it has a huge audience, it's too broad to be effective for most companies. But he says there may be at least one reason for doing it: It boosts prowess and shows the company has money; It helps businesses stand out in a crowded category.

“It gives you bragging rights,” Schmidt said. “Now I can say, 'Oh we made an announcement at the Super Bowl.' It changes the picture. You look like a major player, like a serious player.”

According to Jessica Malamud, the company's VP of brand and communication, that's a particularly big factor as to why Papaya decided to do the Super Bowl ad. Malamud said the employee payments space has gotten busier since the company first launched. Startups including Oyster HR and Remote are booming. Additionally, name recognition is really important in a category like payroll providers.

“We're in an environment where it's no longer a green field,” Malamud said. “We've grown and become a hyper-growth company and had a lot of success, but it's all green. Now we have to fight harder.”

While the exposure will allow many new people to learn about Papaya, the majority of people who see the Super Bowl ad do not need to know about Papaya, and Papaya does not benefit from knowing about it. But because Papaya works with companies in a wide range of sizes and industries, Schmitt said, the ad has a better ROI than a B2B company with less customer focus.

“If you have the money to do it, it doesn't seem completely crazy,” Schmidt said. “For a B2B company where a few companies sell to large companies, this seems like a crazy idea. If you have a more diverse target, much smaller targets, the longtail of all these B2B companies, that might be OK.

It is difficult to track whether an ad campaign is successful or not. If McDonald's advertises the burger during the game, it can see sales of the burger before and after the game. It is beautifully cut and dry. B2B sales cycles don't work like that, making ROI difficult to calculate. A company may gain interest in Papaya from an ad but be locked into a contract with another payroll provider for months or years, for example, making it difficult to follow up on ad-driven sales.

Hila Pearl, director of communications for Papaya, said the company doesn't think of advertising as a direct lead-generation strategy.

“We can sell more because it's not,” Pearl said. “Obviously yes, we want to see a very direct ROI, but

We all understand that it is a brand building or brand awareness game. This is not a lead generation play. In my mind, it was always more of a marathon than a sprint. It sometimes requires large investments to plan ahead to see how the vision translates.

There really aren't many B2B startups that have tried to represent this marketing path. But a line can be drawn between Papai's strategy and Squarespace's. While Squarespace is no longer a startup, it's more B2B-flavored than straight B2B — it helps small businesses build websites — and it ran Super Bowl ads for years in its early days.

David Lee, chief creative officer at Squarespace, told TechCrunch that the company decided to run those ads because it thought it had a great product that no one had heard of. Squarespace is already profitable with money to spend. It's not the right strategy for every startup, but Lee says it has led to increased business and brand recognition.

“You're trying to make sure you're relevant, which is a silver bullet to put you on the map instantly,” Lee says. “Everybody has to decide (whether) it's worth the investment; What I'd argue is that it's hard to get noticed today.”

While it's difficult for Papa's to track a direct ROI from the ad, seeing a commercial from the company during next year's Super Bowl will tell us if the company felt it was a success overall.

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