Achieve Market Leadership

Many real and wannabe macro-economists like to debate which economy will grow the most in the next 20-30 years: India or China? Singapore or Taiwan? Much of the arguments boil down to whether central control is more or less effective than entrepreneurial and organic growth (see Glenn Gow’s article “Gaining Competitive Advantage” on Crimson Consulting’s website for more insight on how a company can effectively compete against an established market leader.)

Now we can bring that debate to the mobile internet. Apple represents controlled and centralized growth with the iPhone, even keeping a lid on who gets access to the SDK and managing the distribution of new applications via iTunes. Google seems to be taking the opposite approach with the Android platform. They have just announced the 50 winners of development seed capital, which according to Eric Zeman at InformationWeek, cover a broad range of location-based services, security, safety, social networking, and media applications.

Over the next few years we will be able to watch to see which approach works better. There is room in the market for both to work, but for different audiences. My guess is:

• Apple, by controlling the technology environment, will be more expensive but able to assure a more reliable platform that will appeal to the affluent masses;
• Google, along with other Android players, will offer a broader range of applications, customization, and lower prices, but at a cost of platform hiccups and a greater need for do-it-yourself fixes, which will appeal to techies and new entrants.

Hmmm. Sounds like Mac versus PC?

Many of us were pleased to see the Sprint-ClearWire deal announced last week. This is an important next step for the mobile internet (see my earlier post “In Search of Mobile Broadband Tipping Point for more information on drivers for growth in the mobile market).

One key in the Sprint-ClearWire deal is that each of the major players brings something valuable to the party:

• Sprint has plenty of spectrum, a national operation, and a customer base. And with their base wireless business in decline, they have a motivation to take some risks and try a new game.
• ClearWire has an established operation and the visionary mind of Craig McCaw. Craig is usually ahead of the industry in thinking about ways to meet customer needs in new ways, and drives technology choices rather than letting them drive him. He also knows how to make money on the way toward the vision.
• Google is visionary, supports open systems, and appears to understand the importance of the mobile internet.
• Comcast has a customer base and needs a “quadruple play” (TV + internet + telephony + mobile) asset.

Some of my predictions are:

• While WiMAX will be the lead technology, this team will be technology-agile if something better comes along or WiMAX falters.
• While there is initially much discussion about PC cards to connect laptops to the network, we will see more focus on mobile handsets featuring communications (telephone and written), games, media, browsing, and navigation services.
• Other companies are likely to join this consortium — including content providers and key application providers. They will want the favored position and insight gained from being a charter member.

What do you think might be coming based on this announcement?

Many have heard the story about Eskimos having 32 words for snow, given how important it is in their lives. Similarly, technology companies have many different classification for technology workers — from CTO to CIO, and from lead web developer to database architects. Most technology companies have a very clear idea about what these jobs entail and who qualifies for them.

But many technology company executives are lost when they set out to build a marketing department. When I ask them what flavor of CMO (chief marketing officer) they need, they often freeze up. And when I start to discuss the various roles that might fall under the CMO, they get confused. In many cases they believe that the CMO handles just advertising and public relations, while the technology groups do the product development and management. These beliefs are a leading reason why many technology companies hire their marketing team just before they launch, instead of realizing that hiring the right marketers at the start of the development effort might have targeted their products more effectively at customer needs.

In the interest of clarifying the picture, here is my basic list of marketing roles. I list them roughly from the most conceptual and strategic to the most operational. One person can perform more than one role, but generally the adjacent roles on this list group best together. (For a complete selection of articles on many of these roles and their unique challenges, see Crimson Consulting’s Insight page.)

• Marketing strategy - where (customers & products) and how (distinctive competence) to compete
• Business development - key strategic alliances, and channel partners
• Product:
  • Product/service strategy – what products/services to sell to which target customers with what value proposition
  • Product design and development – what features and functionality, design, packaging, etc.
  • Product management -what prices, discounts, bundles, etc. through which channels
• Channel:
  • Channel strategy – what sales and distribution channels to use to get to market
  • Channel program design and management – how to attract and manage the desired channel partners
• Marcom (short for marketing communications):
  • Brand strategy – what the brand should mean to customers and how to build that
  • Advertising and Promotion – what messages in which media choices
  • Public Relations – how to convey the right messages through news sources, spreading the good and limiting the bad news
  • Promotions and Events – what other means to get the products and services in front of customers
• Demand generation:
  • Campaign design and management – what is the best mix of promotional and sales campaigns
  • Direct Mail/Direct Response – managing one-to-one interactions with prospects and customers
  • Web design – best design and layout of the web site(s) to attract customers; optimization of search engines
  • Operations -managing the processes and logistics of the campaigns
• Customer Service:
  • Customer service strategy and policies – determine the nature of the ongoing relationship with customers
  • Call Center – manage the (inhouse or outsourced) telephone sales reps, email responders, click-to-chat teams
• Sales
  • Direct – manage the customer-facing (inside or outside) sales reps
  • Indirect – manage the distribution channels
  • Telemarketing – manage the (inhouse or outsourced) telephone reps who make sales.
  • Administration – ensure proper processing of all the orders

Some companies put all these roles under the CMO. Others divide the CMO role into several different senior roles along the lines of strategy, business development, product, marcom, customer service, and sales. Some look for generalist CMOs to “cover the waterfront” across these roles, while others look for CMOs with particular strengths along this continuum and then support that person’s weaker areas with key hires.

Regardless of the approach and organization strategy, it helps to think broadly about the important roles within the marketing function and the best way to get the work done.

The New York Times ran an interesting story about how the Apple iPhone is going to take a bite out of RIM Blackberry sales. I have credited RIM for doing an excellent job targeting the corporate market for email and PIM synch functions, while making the CIO comfortable about security. They opened up the corporate smartphone market with a head start on Microsoft’s Exchange offering.

However, as I pointed out in my blog “Enterprise Customers are People Too“, RIM may have squandered their lead by failing to innovate quickly. This article describes how they are stepping up to the challenge on device development. Where it falls short is to look at the entire “system”.

Smartphones are more than stand-alone devices. They are increasingly part of a broader system or network of computers, applications, and networks. RIM scored early wins by seeing how to incorporate a smartphone into a corporate network. Apple plans to match this by announcing that in June they will support Microsoft Exchange as well as offer corporate VPN and security features. I am still looking for evidence that RIM understands that when they add media functions (music, etc.) they need to understand that Apple has a lock on the iTunes application and many propriety playback devices.

I am a sample of one, but may represent many “corporate” users. I held off buying an iPhone, needing Outlook Exchange functionality, but will buy iPhone over Blackberry because of the way iTunes pulls down my favorite podcasts and because I have iTunes connectors in my cars.

More and more the tech community is becoming a large system in which devices, content, networks, and applications must “play well with others”.

There has been a great deal of focus on broadcast Mobile TV over the past several years, on the DVB-H and MediaFLO standards. Many European and Asian mobile operators, as well as Verizon Vcast, Sprint TV, and AT&T in the U.S. have launched or are launching 8 or 9 real-time, broadcast, mobile TV channels with great fanfare. New products, services, and press announcements have dominated the news at the last two annual CTIA conventions.

I am a skeptic about the success of real-time mobile TV though. Even back in 1992, Bruce Springsteen sang about 57 Channels and Nothin’ On. And now in the age of declining TV viewership, increased (TiVo) time-shifting, explosive growth of YouTube, and other forms of media “snacking” and personalization, I have trouble seeing how real-time mobile TV will catch on.

Some analysts, such as in this Slash Mobile article, are still predicting explosive growth. Others are saying that the industry is solving the content, device, pricing, and network challenges — paving the way for growth (see my earlier post on 2007 Mobile Internet Scorecard for more info on the challenges the industry still faces.) Lately though, we are hearing some contrarian voices, such as BBC Worldwide mobile director Peter Mercier citing M:Metrics stats showing just a 1.2 percent UK take-up: “The hype you’ve seen at past 3GSMs about mobile TV is not warranted by the real growth. Mobile video itself is probably one of the least used applications on a device.” And Jeff Herrmann, Nielsen Mobile VP , said: “Not that many countries outside Asia are using it in a big way, but proportionally fewer Americans are watching mobile TV than anywhere else surveyed”.

It would seem a more efficient use of precious spectrum if users were to consume broadcast video, or even do some time-shifting with their mobile devices, using them as mini-TiVos. And there might be a small segment of users with real-time needs, such as watching sports events. But my bet is still on personal casting. I predict that if most people want to grab a quick video on their mobile device they are going to be more likely to watch some clips downloaded or stored on their device, such as from the Onion News Network or something more serious. I think the opportunity is to break the real-time broadcast TV paradigm and use this broadcast spectrum for mobile data.

The shift to the Mobile Internet will require the support of advertising funding to make it affordable for the masses. Advertisers will shift to mobile media as they:

1. See the number of users increase, and
2. Discover the impact of targeted and interactive advertising models (see Building A Successful Mobile Web Content Strategy).

One leading indicator is for advertisers to move away from the standard pay-for-impressions model, measured as CPM (cost per thousand), for interactive advertising.

A recent blog entry by Andy Plesser for AlwaysOn describes how VideoEgg is taking the first step to price their online ads by the number of viewers rather than the number of impressions. The interview with Troy Young nicely describes how this is a move along a continuum of pricing models.

This is a good early move. Once advertisers embrace this (which could take some time given the inertia in that industry) it will make online media more valuable, attract more funding, and lay the ground work for further extension to the mobile world. While the mobile extension will have to accommodate smaller screens, slower speeds, and shorter viewer attention spans, it offers the advantages of knowing the location and the activity (sometimes referred to as “presence awareness“) of the user. This, in and of itself, may be worth the price.

How do you see the mobile internet changing the way advertisers do business?