I always love a good rule of thumb especially when it tells me that what I was doing anyway may actually be a good idea.
I’m reading my way through a great little ebook called Start Small Stay Small by Rob Walling. Now, Staying Small may not be the obvious objective for your startup but you shouldn’t dismiss the idea out of hand. I was ‘raised’ in the software industry on the theory that you had to grow and keep growing to stay viable. As with so many other things in our business, this idea no longer applies automatically, all the time. You’ve got choices. (See Small Giants by Bo Burlingham for a great read on the topic of why staying small may be a viable strategy in many industries.)
In one chapter, Walling presents a rule of thumb for using the magazine industry as a proxy for expensive market research you couldn’t afford to do for yourself. Buy the book if you want the details. As others have said, each chapter is probably worth more than the $19 price tag he’s charging for the whole book.
The gist of the idea is that the specialty magazine business is all about market segmentation and that you can use the rates specialty magazines charge for their own advertising as gauge for market size. Since magazine rate cards are usually easy to find on their websites, you can do market segment research simply by identifying magazines that cater to your segment and looking up their rate cards.
Walling sums up his rule this way: “The idea is that if a market has a magazine devoted to it, it’s large enough to provide enough customers and if a full-page ad is less than $5,000, the market is small enough that you’ll be able to effectively market to it.” (If it isn’t obvious to you why software startups want to find markets ‘small enough’ you really do need to buy and read Wallings’ book.)
Now I’m already pretty far down the path of producing a set of phone apps for Registered Nurses. PasswordRN is available in the iPhone and Android marketplaces and Hokan is hard at work in the next room on our follow-on product, TimerRN. So I considered blowing by this chapter of Wallings’ book and figuring I’d just use it the next time I wanted to identify a market segment. But I decided that was cowardly — I might as well find out what the rule would tell me, even if it wasn’t likely to change my direction much one way or anther.
So I asked intern Dani to do the research for me and I’m thrilled with the results. It took her about 90 minutes to find the sites, find the rate cards, and send me an email full of affirmation. Here are her results, cut right out of her email message:
American Journal of Nursing–Product – Full page x1 $8,520
Critical Care Insider – Full page x1 $5,940
Home Healthcare Nurse – Full page x1 $2,330
Cancer Nursing – Full Page x1 $2,330
Journal of Infusion Nursing – Full page x1 $2,600
Men in Nursing – Full page x1 $2,560
Nursing Research – Full page x1 $2,325
Nursing2010–Product – Full page x1 $15,280
Nursing Management–Product – Full page x1 $8,520
If you wanted to take Wallings’ heuristic as gospel, you MIGHT think the nursing market is a actually a bit big for me. Which would be a hoot given how hard I’ve had to work to convince some of my partners and advisors that there’s a market here at all. But the fact is that I need the overall nurse market segment to be oversized since my market is actually Registered-Nurses-with-smartphones. And while that may be a small subsegment today, given the rate at which smartphone usage is growing, the intersection of nurses and smartphone users is looking pretty good to me this afternoon.