Losing first-mover advantage

When Apple introduced the iPhone, Steve Jobs was hoping for 1% market share. And while the audience coo’ed about the original iPhone, it wasn’t nearly as smart as it evolved to be with the app store which came a year later. Apple invented the smart phone/computer in your pocket- and is once again about to lose it’s first mover advantage.

Go back to 1984 to learn a lesson Apple. When the Mac was introduced and there was “the computer for the rest of us” there was nothing else in the category (except maybe the Amiga). The enemy was Microsoft- a company that didn’t even make a computer. Apple has seen its fortunes rise and fall with the all important market share- and the battle has taken it close to the edge of non-existence. Now, sitting on $54 billion in cash, once again- Apple is taking a huge gamble- fighting the Android operating system from Google- a company that tried to make a phone and failed (the Nexus 1).

As of this week- Android operating system, which is FREE, took third position in smart phone operating system market share. That’s third with a bullet- in a little over a year, it’s passed the iOS which has been out for 4 years.

Android is now larger than the iPhone on the world stage, analysts at Gartner said today. Google’s phone platform jumped to 10.6 million phones sold, or enough to overtake the iPhone and take 17.2 percent of the market. The researchers believe Apple sold more iPhones than it shipped, at 8.47 million, but the higher number was still enough to put it at fourth place with 14.2 percent.

via Gartner: Android has overtaken iPhone worldwide | Electronista.

The Google Apps store is quickly catching up with Apple’s in number of titles as well- and this is where the real money is for software. This is where Apple has to learn that no matter how great their hardware- the money is in Software- especially when every single iOS units buys an average of 5 apps- which Apple makes money on.

The market share in the US would be much larger if Apple ended their “exclusivity” deal with AT&T early. In fact, right now, paying AT&T off to allow the iPhone to come to other carriers before the Christmas buying season would be a smart move. Offer AT&T the profits on every Verizon app store sale through Jan 1, 2012, offer a lump sum for every AT&T switcher between now and Jan 1, 2012, but don’t continue to not be available to so many who are making moves to Android because of lack of competition. Winning that market share is infinitely more expensive in the long run.

Apple also has to look at each iOS device now as a part of its iAd strategy– which will pay more for every user connected, the revenue from AT&T will pale in comparison very soon- unless iOS gets marginalized again by Android. Smart phones are the most important data gathering devices for martketers that we know of. Google is a master at this game- and will be increasingly harder to beat.

If Steve Jobs- or anyone at Apple has the smarts to look at their own history, they’ll know that market share by having more carriers is worth more in the long run than anything else. It’s bad enough we have 2 year contracts and early termination fees to battle- now, the enemy is giving away software- and if you think it’s not dangerous- go ask Marc Andreesen what happened to Netscape once Microsoft started giving away Internet Explorer.

When it comes to marketing efficiency and software sales- market share is everything. Letting your competition leapfrog you because of stubborn business models is insanely stupid. There is no rational reason not to end the exclusivity deal with AT&T early- even if it costs Apple in the short run.

WiFi Kindle at $139 may be the answer for newspapers

Newspapers around the world haven’t learned that half their name is no longer valid. Unfortunately- what they’ve built as NewsWebsites may qualify as the best example of how not to build a website.

The key to the news industry is the first part of their name: NEWS. The rest of it- if it isn’t absolutely relevant to their readers- isn’t worth the paper it’s soon to be no longer printed on.

For as long as newspapers have been in business- they’ve been a one-to-many ad sponsored vehicle. Those days are over. Now, they have to learn how to be a one-to-one conversation- and know as much about you and your interests as they know about the things they are supposed to cover. Unfortunately- no one in the corporate suite has figured it out yet- and they are still selling impressions- by the thousands, instead of meaningful relations.

And while the iPad from Apple may be the ultimate way to provide a multi-media experience on a screen- these are areas that the newspaper industry is still playing catch up on. Sure – a little video here or there, and of course- photos in color (although if you look at their print editions some newspapers are still printing some pages in black and white). But- iPads are expensive and Apple isn’t exactly being easy to work with on the data collection side.

With Amazon’s new $139 wi-fi Kindle– or any of the numerous Android powered tablets hitting the market these days- the economics of publishing “Newspapers” digitally is now practical: of the $200 or so collected for a 1-year subscription- at least that much is spent on the printing and distribution of the dead wood with oil on it. It’s time for newspapers to take a lesson from the phone companies and start handing out Kindle’s for a 2 year subscription. So what if you can read other newspapers- or books on it, put your logo on it and lock customers into a “better news experience.” Make the content slightly better than the print or typical online experience- and tailor the ads like a Hong Kong custom suit- expressly for the reader. Work to sell the relationship to local businesses- who are struggling for a way to reach the masses without being obstructive- and build a community that’s talking to each other.

People still want news- and especially news that’s relevant to them. But- being assaulted by random ads in the internet age has no more relevance today than back in the sixties when Howard Luck Gossage said “People don’t read ads. People read what interests them, and sometimes it’s an ad.”

Transforming the marketing formula

There is a reason we’re not “The Next Wave Advertising” or even say we’re an ad agency (unless forced into a corner so that people know what little mental box to check off). It’s because back in 1988 we knew advertising was already dying.

What they taught us in “marketing” and in “advertising” was that it’s all about deliver a product to match up the consumers needs with our products and services. Only one small problem in our eyes- consumers who had unlimited choice and the entire globe to buy from- and an abundance of information aren’t rational- they are emotional.

The nice science of the “4p’s” didn’t work. It wasn’t Product, Place, Price, Promotion” – it was what makes me happy. Selling was out- stories were in. People activated when charismatic leaders put on great performances- just look at what Steve Jobs did with Apple- and has refined over the years.

That Apple computer had a position called “Evangelist” was the writing on the wall- not a VP of sales- but a fracking Evangelist. Which would you rather have on your business card?

We thought the most cogent explanation of business to date was one from Peter Drucker- that business only had two tool- marketing (in the broad sense) and innovation- hence our name.

But our methodology was all Apple- it was style with substance. It was stories and sales. It was more about “In Search of Excellence” – the first mega-business best seller book by Tom Peters and Bob Waterman, than about marketing and advertising- we wanted customers to delight in the process of buying things.

One of our hero’s is still David Ogilvy, the founder of Ogilvy advertising- and even though he died in 1999, with the epitaph “I’d like to be remembered as a copywriter who had some big ideas” his firm lives on- and is still generating big ideas for big clients.

Recently, they posted their new take on the 4ps- which they believe as given way to the 4E’s- and we concur:

from Product to Experience

from Place to Everyplace

from Price to Exchange

from Promotion to Evangelism

EXPERIENCE Discover and map out the full Customer Journey on your own brand – in your own country.

Develop your knowledge of new media and channels the way a chef masters new ingredients. Try new things – do something that doesn’t start with TV or print.

EXCHANGE Appreciate the value of things, not just the cost. Start by calculating the value of your customers – and what their attention, engagement and permission are worth to you.

EVANGELISM Find the passion and emotion in your brand. Inspire your customers and employees with your passion.

via The 4Ps Are Out, The 4Es Are In | Ogilvy & Mather.

The reality is that even the best advertising only brought customers to your door- you still had to do the final sale. The best ad agencies in the world now tell their clients- we’re not only going to do your ads- but we’re even going to tell you how to ask for the sale- how to answer the phone. It’s why Burger King has finally found an ad agency in Crispin Porter + Bogusky that’s delivered the kind of growth that BK hadn’t gotten out of the traditional agencies they’d worked for previously. Pull through the drive thru- and the voice on the speaker will say “nice order” after you finish. Crispin has even helped with product development- typically not a part of what an ad agency does.

The move from a media creation and buying agency to one as partner and consultant has been difficult for many agencies and clients alike. With the overload of media and messages that the typical customer experiences everyday- there is one thing that will always outperform any ad: an amazing experience with your product or service.

So before the next meeting with your ad agency- instead of asking what the next ad is going to look like- maybe it’s time to discuss what the next customer should experience- because that’s where the money changes hands if it’s done right.

Will e-reader tablets change advertising too?

Just watched this video about the future of magazines via e-readers. Nothing mentioned about newspapers (who need a new metaphor for presentation of content more than do magazines which have evolved over time).


The video really showcases an elegant interface, but it’s still a very 1 way mechanism- with no discussion of feedback, learning about the user, or delivering custom ad feeds, very much a designers solution as opposed to an advertising based/business model based solution:

The concept aims to capture the essence of magazine reading, which people have been enjoying for decades: an engaging and unique reading experience in which high-quality writing and stunning imagery build up immersive stories.

The concept uses the power of digital media to create a rich and meaningful experience, while maintaining the relaxed and curated features of printed magazines. It has been designed for a world in which interactivity, abundant information and unlimited options could be perceived as intrusive and overwhelming.

via Digital Magazines: Bonnier Mag + Prototype | Bonnier AB.

The real value is being able to deliver custom ads, with feedback to advertisers- do you like this ad, this product, do you want to learn more, or you want to buy? Will the content be a pure cash buy for the user, or will advertising still support it? And best of all, we’ll finally know who is reading the ads.

Remember, without the need to print- and distribute, the costs for content producers drop considerably. However, the cost of getting readers willing to pay- that’s another matter. While we may solve the hardware issue, solving the content value equation- and the amount of intrusion of advertising is a much bigger problem.

What will be most critical is a single publishing standard- so that one e-reader can read any content and advertisers can reach all readers based on your personal preferences. The only other remaining challenge is getting enough of these readers out all at once. It will have to be fast for publishers to transition smoothly. With magazines and newspapers dropping like flies, maybe it’s time for a national e-reader initiative as part of a green tech movement. Every newspaper, every magazine, should consider ending printed publications by banding together and delivering an e-reader as part of the subscription cost.

The faster we move to digital print, the faster we move to better, more trackable advertising.

Is CRM the next wave in marketing?

Customer Relationship Management (CRM) has been around for a while. What’s changing is that old ways of reaching and interacting with customers just aren’t working the way they used to.

Now, more than ever, it’s about doing business with people you know and brands you trust. Brand value isn’t just connected to sales, image or size, it’s now based on how well you build and maintain trust with your customers and potential customers. For service to be outstanding, the more you know about your customer, the more opportunities you have to over-deliver and build wow factor into every transaction.

We’ve been looking at data driven CRM and how the 800 lb gorilla in the market is Google with the amount of knowledge they can gleen from your surfing habits, your e-mail (via g-mail) and the relationships you establish online (through links and locations online). Google may become the central clearinghouse for all things advertising, while taking a nice cut to be the agent in between advertisers and customers. Unless you like the idea of paying a middleman, now is the time to start harvesting your data that resides in your A/R files, your Rolodex and card files- looking to establish and continue relationships with people that already know you.

Maintaining connections within your sphere of influence can be time consuming and difficult, if done on an individual basis. Opportunities may be missed, or overlooked due to changing priorities and being asked to do more with less. We’ve started looking deeply into online CRM tools like the open source software SugarCRM and it’s offshoot vTigerCRM at The Next Wave.

Our goal is to make sure we maintain our relationships in a systematized fashion, where the entire organization has access to our collective customer base.

There are plenty of other CRM systems out there, including Salseforce.com and solutions from Oracle, SAP and down to ACT! and Goldmine, however, it’s our philosophy to believe in the power of open source to eventually eclipse the closed wall competition. If your organization hasn’t implemented a CRM system as part of your marketing plan, it’s time to start.

The value of value.

I read an incredibly stupid post this morning about how Google would have to shut down YouTube because it wasn’t making money.

It would seem that a lot of companies should have been doomed for not making money, including the American automotive companies, but that’s not how finance works when you are the 800lb gorilla in your field.

A lot has to do with trust and confidence in a corporations ability to convince people that it has intrinsic value. Newspapers have been getting away with this for years, even though their business model died when CraigsList went global.
Didn’t people say Google would never be able to successfully monetize search?

YouTube is now the second leading search site. People now want to watch video to answer questions as well as reading text.
If you’ve seen the new audio transcription tools in Adobe Premier, you know it’s not long until video is easily searchable as well. That will change the value of YouTube considerably as the largest depository of video online.

Getting back to value, most people don’t realize that all those annoying ads they can’t stand have value to them- because they were used to subsidize the content they’ve been enjoying for “free” for all these years.

The mass media have been asleep at the wheel, believing that as long as they have great content, they’ll have big audiences and can continue to count on advertisers accepting that some of their message will be skipped or delivered blindly.

Those days are over.

No advertiser will be willing to accept less than 100% targeted delivery in the near future, and this is where Google will deliver the ultimate power play of modern business history.

Google was never in the business to monetize content: it’s in the business to monetize you- the viewer. By building a trusted relationship, based on providing a superior service (search) they have earned the right to become your middleman in serving you premium content in exchange for showing you personalized relevant ads.

They know you from your search history. They know you from your browsing habits. They know you from your gmail account, your Google voice account, pretty soon, you realize you have a benevolent big brother who knows you better than you do. Google has been called the database of future intentions- and by comparing you to others like you, they can make some pretty good guesses of what you’ll like and won’t like- much like Netflix and Amazon do with their suggestion engines.

You watch ads relevant to you, they serve you the content you want, advertisers reach exactly who they want, Google gets a better understanding of you with each ad and your response (did I mention you’ll have to respond to every ad with a brief thumbs-up, thumbs-down or answer a few questions?)

As the mass media model fails- Google will be in the unique position to be your agent in brokering ads to pay for your content.
That’s their business model, providing value to you and to the advertiser, and YouTube is one of the keys.