While it’s difficult nowadays to write about telecoms or the mobile sector without drifting off into other areas of the TMT industry, Zeitgeist spent an evening last month as a guest of Accenture in Cambridge, discussing the successes and failures of the recent Mobile World Congress in Barcelona. It came in the middle of a year so far that has already some significant shifts from mobile companies, in terms of branding, operations and revenue streams.
2013 has seen some interesting news in mobile. The week before last marked, incredibly, the 40th anniversary of the first phone call made from a mobile phone. This year also saw Research in Motion renaming itself to BlackBerry, with shares sliding 8% by the end of the product launch announcement for its eponymous 10 device. It saw Sky acquire Telefonica’s broadband operations, while responding to major complaints about the speed of its own broadband service. It has seen Huawei, which in Q4 of 2012 sold more smartphones than either Nokia, HTC or BlackBerry, come under scrutiny particularly in the US for its lack of transparency. Moreover, after much editorial ink spilled on Facebook’s lack of initiative and innovation in mobile, the release of the ‘super-app’ Chat Heads has piqued interest as it looks to compete with Whatsapp, Viber, iMessage et al., which Ovum reckons cost MNOs $23bn in lost revenue every year. This news mostly pertained to developed markets; JWT Intelligence’s interview with Jana CEO Nathan Eagle features some interesting insights on mobile trends in emerging markets.
Interestingly, 2013 thus far has also been witness to the beginning of more flexible contracts and payments. At the end of March, T-Mobile USA announced it would offer the iPhone to customers for cheaper than its rivals, and customers would not have to sign a contract. It effectively ends handset subsidies – something which Vodafone pledged to do last year and was punished by the stock market when it failed to do so – spreading the full cost of the phone over two years “as a separate line item on the monthly bill”, which may strike many as still quite a commitment. Customers must pay the bill for the phone in full in order to be able to end their tenure with the network. The New York Times elaborates, “Despite T-Mobile’s promise to be more straightforward than other carriers, some consumers might still find it confusing that they have to pay an extra device fee after paying $100 up front for an iPhone.” In the UK, O2 is going a similar route. At the end of last week the company announced similar plans to T-Mobile. While still keeping contracts as an option, the FT explained the company was looking to a plan, dubbed O2 Refresh, “that decoupled the cost of the phone from the cost of calls, texts and data. Customers will be able to buy a phone outright, or pay in instalments over time, and then sign up to a separate service contract that can be cancelled or changed at any time.” Although O2 said in the article that they expected customers to pay the same as they would on a standard contract, the new plans by both network providers will surely add to customer churn. Brands will have to work harder to develop true loyalty rather than relying on the lock-in feeling that adds to switching costs for many customers. Conversely, this added flexibility may make the providers feel less like utilities, creating more choice and differentiation.
At the aforementioned conference Zeitgeist attended last month, Accenture hosted an evening they dubbed “MWC: Fiesta or Siesta?”. It soon became apparent that many of the speakers invited were less than enthused with the conference this year. This was partly because there were no extraordinary leaps in technology or hardware on offer. It was also because of, as one speaker lamented, “the proliferation of suits”. Another speaker complained it was like listening to The Archers: long storylines “that ended up having no conclusion”. The very essence of the conference though is not about trendsetting, or cool new consumer devices. Mobile operators are utilities, the excitement around such an event is not going to be as visceral as that of SXSW or Embedded World. It led some to wonder whether the “real innovation was being developed in such ‘niche’ events, away from the “glitz”. Moreover, perhaps Samsung’s decision not to launch their new S4 handset at the Congress alluded to this lack of excitement, or at least a wish not to be drowned out by other announcements.
Among exciting trends on display at MWC, M2M – something Zeitgeist has written about before – was front and centre at the conference, particularly with regard to cars. Phablets continued to make their foray into the consumer’s view, with bigger screens meaning more data transfer. Zeitgeist wondered whether such a transition would put even more pressure on networks already struggling with large data handling. And although Firefox’s new OS gave some – including those at GigaOm – hope that it could provide more innovation through diversified competition in the marketplace, others, including Tony Milbourn, Executive Chairman of Intelligent Wireless, speaking at the event, thought it “underwhelming” after “lots of hype”. Bendable screens were also to be found at MWC, but those speaking at the Accenture conference like Richard Windsor of Radio Free Mobile said it was early days and much was still to be seen from this new type of phone. Its potential though, he readily conceded, was formidable. Wearable technology was a huge issue at the conference and one that Zeitgeist is particularly interested to see develop, especially as companies like Apple, Sony and Google enter the fray.
It seemed then that the Mobile World Congress failed to reflect what is turning out to be a tumultuous year in telecoms. Not only is there an increasing desire to address consumer needs – in the case of more flexible contracts and more consumer-facing company names – but as economies sputter their way toward ostensible recovery we are also starting to see M&A activity return to the sector. Time will tell whether new technologies, such as M2M or bendable screens can breathe new life into the sector.
A little over a week ago, consultancy Analysys Mason hosted a webinar entitled ‘Mobile loyalty schemes: best practice examples and key learnings’. Zeitgeist listened in…
Speaking in the webinar were Tom Rebbeck and Helen Kapapandzic. One of the key messages in the webinar was the distinction between customer retention and true loyalty campaigns. Retention can be achieved through short-term measures (e.g. discounts), loyalty is about longer-term investment. Keeping a customer loyal can benefit both the business and also the end user. According to a recent article in the Wall Street Journal referenced by the consultancy, there are myriad benefits to longevity at work, in marriage and by staying with the same providers and businesses. Loyalty it was noted, however, can only support other elements of a service that must already be in place.
For telcos, the key is in reconciling operator wants with customer needs. In the telecoms market in the Western world, where seemingly everyone has a mobile handset of one sort or another, the strategy has moved from winning new customers to keeping current ones. The market is saturated with a flat if not slightly falling rate of growth.
Churn is likely to increase this year over last year in the UK, but not in France. When Zeitgeist asked the reason for this disparity, he was told the reason was that telcos in the French market had focused a significant amount of marketing specifically on decreasing churn. In the UK, the increase is due to the beginning of the expiration of 24-month contracts (such as those affiliated with iPhones), which conversely made churn decline in 2010.
The webinar continued with a roundup of some selected case studies currently being employed by telcos around the world. These took the form of either financial or social-based schemes, and sometimes both. Aircel, for example, was an invitation-only service, offering special invitations to events, exclusive offers, and worked on a points-based system. Proximus seemed to be the most fun offer mentioned, focused as it was on younger customers, who would always be incentivised as there was always a prize guaranteed.
Vodafone’s loyalty scheme, with sponsorship of Formula 1 racing and the London Fashion Weekend, is deservedly well-known. With a simple thank you, and no requirements to join, it serves as an attractive loyalty tool. The loyalty scheme from Starhub seemed to be one of the most innovative and well-developed, a Quintessentially-esque programme, replete with triple play offers.
While it is tempting to think of customer loyalty schemes for telcos as similar in construction to those of supermarkets, the reality is in fact very different, as the consultancy pointed out. Tesco’s enormously popular Clubcard, as recently written about in The Economist, is there for the business to get as much information as possible on customer buying habits, to the extent that it could effect your insurance policy. Telcos already have a significant amount of data that illustrates user behaviour based on a much smaller range of products (SMS, data).
Those schemes that didn’t work, which the team at Analsys Mason came across, were ones involving points-based schemes that were extremely complicated, and might involve getting out an Excel spreadsheet. This kind of thing can be too time-consuming, and ultimately appeal to customers who are already loyal. As a trend, some operators were discontinuing points in preference of social, or simply overlaying it to create social engagement. Of course, as we all know, the key to a successful B2C campaign is often about personalisation. The difficulty though lies in the fact that it is usually easier to measure top-up schemes than emotional ones. This, however, does not alter the importance of personalisation. Rewards to drive tenure, celebrate anniversary of contracts or personal birthdays are all small touches which could be much more widely employed, said those at Analysys Mason.
In all it was an engrossing and stimulating lecture on consumer preferences, technological development and trends in communication. Zeitgeist looks forward to the next one.
As with every summer, the tennis season kicks into high gear with the French Open (aka Roland Garros) in Paris in May, and the Championships at the All England Club (aka Wimbledon) just two weeks later. Brand Republic today published their list of the 10 Best Tennis ads. The sport’s popularity pales in comparison to other pursuits in the UK, and questions always abound at this time of the year as to the country’s woeful showing at the majors. It’s an especially sore point when one looks at recent successes in golf.
Demand for tickets however at the four annual Grand Slams has never been higher. Getting a seat at such events then is a tough ask. Recently, the French Open began making tickets available online for direct purchase. This included being able to select specific days, courts and seats. Of course, having such an easy route meant that there were one or two people who had the same idea as Zeitgeist. Even accessing the website on the stroke of the hour the tickets became available put him behind 3,560 other eager tennis fans (see picture at end of article). Prima facie then this democratisation of ticket availability – rather than having a lottery and corporate hoardings – is a good thing. From a practical perspective however, does it make sense to do it this way? Can or should there be priorities given, based not just on how much people are willing to pay for tickets? Why not give those who actually play the sport more of a priority, or using Foursquare, see how many other tennis tournaments people have attended and judge their passion for tennis based on that. Can they have ticket giveaways to those who “like” Nadal, Federer, etc. on Facebook? It’s a thorny issue; perhaps the route the French Open has taken is the least worst option.
All the slams provide diverting iPhone apps too. However, if you’re going to the effort of providing a service, better make sure it works. Zeitgeist was presented with the below image on their phone while sitting on Court 1 at Wimbledon on Monday, June 20th.
After the New York, London, Paris and Milan Fashion Weeks – which Dazed condenses into some key trends - comes the hard sell. We know that increasingly people are shopping online, not only while in the comfort of their home but also while out and about, with 25% of shoppers on their phone looking at a store’s website at the same time as they are in a physical shop, according to ForeSee. The stats for those luxury demographics bear even more consideration; Luxury Daily recently reported that 20% of those earning $150k p.a. or more shop via their phones.
As usual the Louis Vuitton show in Paris was streamed live online. The brand was one of the leaders in pioneering the idea of making such events available to hoi polloi. While some esoteric fashionistas may turn their noses up at the democratisation of luxury, they are increasingly swimming against the current as such efforts become more commonplace. Mere days after Marc Jacobs had taken his bow at the end of his latest collection for Louis Vuitton, the site fashionshow.louisvuitton.com was alive with myriad content, including in-depth interviews with Jacobs et al. It’s a beautiful microsite and worth checking out. At the weekend Zeitgeist decided to browse the Vuitton website from the comfort of his bed on his iPhone. One of the nice little things about the Louis Vuitton website is that to navigate there, all you need type in is “lv” and you are redirected to the site. Unfortunately, the same cannot be said for the mobile internet, where Zeitgeist was instead directed to a website for car insurance. Not a pleasant experience. It’s all the more important to have bought these keywords for mobile devices when the user will find typing less easy and is also likely to have less time than when they are using a desktop computer. It’s a shame because otherwise Vuitton’s digital presence is above reproach.
Worse still was when Zeitgeist then tried to visit Gucci by typing in “Gucci” into their Safari browser on the iPhone. The Gucci logo appeared and all seemed well until it transpired that he had arrived at the German site. Rookie mistakes like this do a disservice to a brand, and hurt it all the more the more luxurious it is.
On the more impressive side, the always admirable Lanvin, doyenne of Mount Street and invader of Savile Row, has finally launched a European e-commerce site, showcasing, as Luxuo puts it, “Lanvin’s dynamic style, the spirit of Alber Elbaz, and the creative wealth of its collections”. The site as whole manages to convey elegance, insouciance, history and contemporary style. Luxury brands have had a hard time adjusting to the online revolution, uncomfortably wondering how to translate the rarefied atmosphere of a boutique into the world of the Internet. Fashion’s Collective puts it best, in an article on redefining exclusivity,
The answer is to redefine what exclusive means. Rather than exclusive being the clientele the brand attracts, it should instead be the experience the brand conveys. Here, the focus shifts to the brand to provide value online just as they do offline. By curating the images, videos, copy, content and experience a brand publishes online, exclusivity is created.
While others have floundered, Lanvin passes the test with flying colours. Very impressive and very distressing news for the Zeitgeist credit card.
Charles de Gaulle once commented, “China is a big country, inhabited by many Chinese.” As astute as this observation was (and is), it was hoped that a trip that Zeitgeist paid to London’s Victoria and Albert Museum ten days ago, entitled ‘Going Global: Advertising Works UK China 2010′, might provide a little more insight. The Institute of Practitioners in Advertising described the morning as,
A conference in association with UKTI and linked to London Design Festival looking at the value of advertising and how the UK can act as a creative hub to Chinese brands seeking to go global.
Hosted by the IPA, the conference involved talks from a series from numerous luminaries from Ogilvy, BBH, McCann Erickson and JWT. Our emcee for the morning, IPA Director of Marketing Ms Janet Hull, noted that the UK was the fourth largest market in the world for ad expenditure. Ms Hull also talked about the increasing interaction between UK and China advertising; senior BBH and M&C Saatchi people have been on IPA visits throughout China over the past 18 months.
The great Rory Sutherland (whom Zeitgeist has mentioned in previous articles on behavioural economics and neuromarketing) was next up, speaking in an introductory manner to the morning’s proceedings, stressing that “value is subjective”, that it is created at the point of consumption. Added value exists mostly in the mind, he went on, not in the physical atrributes – “the atoms” of your product. He gave luxury brands as an example of this. He also pointed out that China currently has six brands in the top 100 (six years ago they only had one), according to WPP’s BrandZ survey (which Zeitgeist played a small part in helping develop). He foresees many more Chinese brands entering this pantheon in the next few years. One of those brands is China Mobile, and it was the Chief Representative of this company, Henry Ge, who would speak next.
Launched in 1995, China Mobile is now a $53bn brand. A recent survey conducted revealed 74% customer satisfaction with the brand, higher than any landline or mobile provider in the US. Curiously, not only do they have a very high loyalty rate, they also have a very high return rate, suggesting that perhaps of those who do leave, most will come back. Mr. Ge talked next about brand strategy, talking about how the company offered different plans (divided by pricing, services and rewards) in order to exploit customer segementation, while also seeking differentiation from competition and pricing for sustainable growth. Also of interest was to hear the development of the brand’s USP over the last ten years. In 2000, the brand’s selling point was coverage. In 2010, it’s platform, referring to Apple’s iPhone and Google’s Android OS, as well as more specifically mobile shops and apps. The future? Well, according to Mr. Ge, the future is all about experience, putting the consumer in control. Nothing new you might think; it will depend on how China Mobile and others execute this. It gels well with a recent article in the New York Times which stated “spending money for an experience… produces longer-lasting satisfaction than spending money on plain old stuff”. Of course, as a company comprised principally of engineers, Mr. Ge confessed that those at China Mobile would be understandably nervous about such a shift in power.
Orlando Hooper-Greenhill, Director of Global Planning at JWT spoke next on HSBC, aka Hong Kong Shanghai Banking Corporation, set up in 1865. Any regular traveller would be able to tell you of the bank’s perpetual presence on “jet bridges” – the bits linking the airport to the plane – the idea behind which, Orlando stated, was to say goodbye to you as you left one country, and for it to be the first thing that says hello in a new country. HSBC’s proposition rests on the suggestion that even though their offices are spread the world over, they still provide superior service through their local knowledge. This was exemplified when Orlando showed the room two TV ads for HSBC, one from the US and one from China. Zeitgeist has had a terrible time tracking down the Chinese ad, and at the time of publication Orlando hadn’t responded to our request for where we could get our hands on a copy to post here. Needless to say the ads demonstrated an insight into each audience that it was targeting more than simply laying its cards on the table as to what services the bank could provide. He also presented the audience with a fascinating graphic, which Zeitgeist did manage to track down, see below. It puts into context just what a large audience is waiting out there for your advertising messages (albeit an audience with some maturing to do still).
Next up was Li Fangwu, Assistant Secretary General of the China Advertising Association. He began by mentioning that it was in 1978 when the ad industry as we know it (or don’t) today was “restored”, presumably as part of the Beijing Spring, currently with 170,000 agencies and over a million employees, which is quite staggering. However, Mr. Fangwu was forthcoming as he showed that year-on-year advertising turnover had declined since 2005, which made Zeitgeist realise that China is not completely immune to the effects of a recession. Most amazing was the advertising law dating from 1994, currently under revision. The levels of bureaucracy involved in getting advertisements legally processed was stupefying. Hopefully the blurry pictures below of the numerous government bodies needed to rubber-stamp their approval of a campaign gives an impression of the dizzying complexity currently involved. The word ‘byzantine’ comes to mind.
Nick Blunden of Profero was up next, who spent part of the beginning of the conference polishing up his presentation sat on the row in front of Zeitgeist and a colleague. Mr. Blunden was full to the brim with interesting, topical statistics proving the oft-proved power of the Internet etc. One of the more interesting stats was that smartphone handsets will find their way into the hands of 250m pairs of hands this year, quite a figure. Among some of the more innovative and intriguing case studies he mentioned were Pepsi’s superb Refresh campaign, Lufthansa’s MySkyStatus and Diageo’s Windsor campaign in Korea. Last but certainly not least was Chris Macdonald, CEO of McCann Erickson did his best to convince Zeitgeist that he shouldn’t shoot off to the Cote d’Azur when the Olympics (and the unwashed masses in their millions) descend upon London in 2012. An informative talk all round, and surely but a taste of things to come as China’s sphere of influence grows.
If Content is King, then last week saw the gentry discussing how best to serve their master. The other day Zeitgeist watched a fascinating roundtable from the TechDisrupt conference, where talking heads with varied interests discussed how content would be created, distributed and consumed in the future. The below are some of the more pertinent and interesting things we managed to peel from the chat.
Sarah Chubb, president of Condé Nast Digital, noted that Apple was lending a helping hand to the sales of the publishing empire’s magazines. Since the launch of the iPad (recently revealed to have sold 2m units in 59 days), Chubb states that the device has played a significant role in boosting sales. Regarding the iPhone / iPad split, she says 60% of GQ readers are accessing the publication through their iPad, 40% through the iPhone. For Vanity Fair, fully 90% is from the iPad, which is incredible after such a recent release and given that the iPad was only released outside the US in the last week or so. In related news, it was announced today that The Financial Times “iPad app has registered three times more downloads in its first two weeks since launch, than its iPhone app managed”.
Fred Davis, founding partner of Code Advisors, ruminating on how people perceive content now, makes the declaration, “It’s not about owning, it’s about accessing”. This is crucial. This is ‘I want my MTV’ for the next generation. As we have moved away from purchasing tangible goods like CDs – and to an increasing extent DVDs and books – the pleasure of owning content dissapates. People, however, still want to be able to use that content, and use it immediately. This is where, helpfully, cloud computing comes in. Perhaps this new type of demand makes the iTunes model – when compared to Spotify et al. – antiquated. Buying a track on iTunes is about owning content. It can be bought quickly and easily over your phone via a Wifi or 3G signal, but once purchased, the song is on your phone, it is not kept in the cloud somewhere for you to access at any time from any device. It is not easily shareable.
John Hagel of Deloitte talks of companies of the future having to make a choice between what they want to excel at: product development or customer relationships. In other words, product profitability or audience profitability. Is the company’s USP going to be “Come to us because we know your product” or “Come to us because we know you“? Zeitgeist ponders whether a company, GE for example, might not be able to manage both.
The IPTV service Boxee recently signed a deal with Google to make use of its Android OS, linking with Google TV. In related news, units that the OS operates on outsold iPhone for the first time this quarter. The CEO of Boxee, Avner Ronen, was also one of the speakers present at the conference. Taking an optimistic stance, Ronen stated that one of the benefits of increased fragmentation and availability of content was that, in a free market mindset, the more content published, the more competitive the environment and thus the better the content.
Of course, piracy is an enormous factor, and Davis pointed out that there is still a problem with people not equating downloading a song illegally off of Limewire with shoplifting from WalMart. Perhaps it is now too late for any efforts at education in this matter, as the MPAA seem to have singularly failed to educate the public. Chubb countered that people were now willing to pay for things in mobile that they wouldn’t normally pay for otherwise. This dovetails with the idea of paying not for the content itself, but for the instant access to it. The film industry, in particular, has combatted the threat of piracy in other ways. Now that international box office accounts for some 65% of a film’s total gross earnings, release windows are being narrowed for simultaneous releases. “Iron Man 2″ was released at the end of April here in London, a full week before the US launch. The world premiere was supposed to have taken place in Leicester Square, but sometimes even savvy film execs come up short, especially against volcanic ash.
Ultimately, the way we interpret ownership is undergoing significant change. What we used to be possessive of, with the arrival of the mp3 we suddenly felt inclined to share. Increasingly we do not have need of the physical product, merely the ability to use it when we wish. This might easily be linked to the continuing vogue for ephemeral clothing that is besetting the fashion industry, where cheap clothing is made to be worn once then tossed aside like New York Times stock. Zeitgeist thought it fascinating to watch these people prognosticate on the future of content; they may all be completely wrong, of course, but then that’s the interesting thing about the future, isn’t it?
There was much more discussed, and you can see the whole video here.