How Big Brands Subjugated Startup Brands at SXSW

As I catch up from #SXSW, I'm a bit behind in sharing my thoughts here, but plenty more are coming. I did get a column out in Ad Age before the show wrapped – not the easiest feat, but a good excuse to squirrel away in my hotel room for a bit and recover. The final version with a much better headline is at Ad Age, so you may just want to head there, but my original version is below.

How Big Brands Subjugated Startup Brands at SXSW

During South By Southwest (SXSW) 2014, I tweeted, “Here&39;s the list of all the amazing tech that launched at sxsw this year,” and then posted an image of a 404 ‘page not found’ error. It was a joke, but it felt all too real in Austin.

Years ago, when major corporations with massive marketing budgets started to come to Austin and sponsor SXSW Interactive, they were seen as an invading species. On the surface, it was a typical story of colonization: a peaceful and not particularly clean shaven species lives in harmony; a better dressed species with expense accounts causes hotel room prices to skyrocket; the happy, furry people either die out from logo asphyxiation or put on suits and join the invaders.

While some feared that narrative, what really happened for awhile was one of symbiosis. Marketers wanted to work with the technologists and tinkerers who had made SXSW their favorite escape. They wanted to reach the early adopters. They wanted to increase their share of voice, but also encourage more conversation. The technology enthusiasts, meanwhile, saw opportunities for private corporations to fund their and validate their business models. As a bonus, the marketers often sponsored pedicabs, food trucks, and open bar parties. For the tech products like Twitter and Foursquare that spread so quickly at SXSW that they attracted mainstream media attention, marketers were lining up to run campaigns. The quest for startups to launch the most buzzed about product excited developers, marketers, and journalists alike.

This year, however, that quest plateaued. Startups were everywhere in Austin, but the buzz about individual startups was muted. I kept asking people what startups and technologies they saw that were exciting. Barely any could name any startups that stood out, even though many of those people had a number of startup executives’ business cards in their pockets. A lot of marketing executives were meeting with startups, but usually these were companies they had heard of or were recommended by agencies or venture capital firms. Few people I spoke experienced anything completely new.

Some of the more interesting technologies were those deployed by large brands, rather than startups. Oreo used 3D printers to create cookies on demand based on trending topics. IBM branded a food truck that used its Watson technology to recommend ingredients. Jagermeister (a client) promoted a new mobile social application. None of these featured prominent startup partnerships. Yet all tap into technologies like rapid prototyping, recommendation engines, and mobile video that continue to be important areas of innovation by startups and major brands alike. Meanwhile, automotive brands such as Chevrolet are showcasing advances in telematics – an area where startups have typically been far less pronounced compared to the car manufacturers themselves.

In this sense, brands really have taken over the domain that they know best: buzz. Many brands have matched their sponsorship investments with investments in strategy, creativity, and public relations that have turned SXSW into yet another brand bowl. Who won? Google, Samsung, Mondelez, Chevrolet, or IBM? What about surprise entrants like Pennzoil with its real-life Mario Kart races? None of it matters, even though the buzz of the big brands is drowning out that of the startup brands.

What does matter then? I spoke with a senior marketing executive from a financial services company, and he told me he’d rather spend half a million dollars to send 100 people from his company to Austin than create some branded experience there. So many brand marketers are using that approach, even if for many, it’s more like sending 5 or 10 or 20 people. Practically every marketer I encountered said they sent more people this year than ever. And they’re motivated to learn and forge connections, even if they party as hard as the Interactive veterans too.

That’s why SXSW hasn’t become some logo-fueled episode of Invasion of the Startup Buzz Snatchers. Startups still have the upper hand here. They’re the main attraction. Marketers are lining up to meet the best of them, whether the startups are doing something totally new or they have spent the past few years proving their models. These marketers don’t even care who counts as a startup. What marketers appreciate is that SXSW attracts a self-selecting mass of creative, interesting, innovative and curious technologists. Marketers want to learn from almost any of them, partner with the most relevant ones, and perhaps invest in, acquire, or try to compete with those they think are most impactful to their business.

That makes it harder to write stories about what startup got the most buzz. But it does provide the underpinning for the stories that will spring up through next year’s SXSW and beyond.