LIVEdigitally

Headline: “AT&T and Apple Announce Simple, Affordable Service Plans for iPhone”

So maybe I’m missing something, but I would think anyone who has a budget for a $599 cell phone probably isn’t so price-sensitive about their service plans. Although I guess all the kids who’ve saved their allowances for it might find it an incentive. I see this type of stuff all the time with my consulting work. Companies who have a great product/technology/service, but don’t seem to focus on the key messaging to actually sell the product/technology/service. I always look to TiVo’s early marketing campaigns as my pseudo-case study.

TiVo launched in 1999 with a huge marketing campaign (rumored above $50 million - huge for a startup!), focused almost exclusively around one key message: pause live TV. I still remember the first time I saw the ads (TV ones too), which, as a TiVo owner, confused the heck out of me. Here’s the thing - it turns out nobody really cares about pausing live TV, it doesn’t make much sense to a non-TiVo person, and even then it’s just a fringe benefit. There are two features that I think TiVo could’ve worked with and gotten much better results:

1. Instant Replay - “Miss that shot? TiVo puts you in charge of the Instant Replay!”
2. Season Pass - “No need to manage piles of blank tapes, TiVo’s Season Pass records all of your favorite shows, no hassle required.”

Overall, the iPhone marketing team has done quite a good job. Then again, the iMicrowave, iLunchbox, and iCeramicPotterySet would probably generate just as much buzz too. I just like to keep my eyes out for when companies misalign their target market, their key benefits and value proposition, and their messaging…

I still don’t quite understand the key motivators that’ll drive iPhone sales, but I do agree that they’ll be selling a boatload.  Assuming there’s no big price drop, I don’t see them moving 10 million in year one (nor 45 million in 2009, come on!), but somewhere in the 4-6 million certainly seems right to me in comparison with a worldwide smartphone market of 113 million units this year.  Then again, since the experts themselves seem to argue about whether the market is going up or down, who knows how big the market really is?

One thing that’s for sure is there’s a chunk of people with a fever, and that fever can only be cured by one thing: iPhone.  They want it, and want it bad.  Americans today have a lot more gadget lust than years ago, and are willing to pitch tents, camp out, and overpay for their “gottahaveits”.  When the Xbox 360 launched in North America, it sold out within hours, and was on eBay for ridiculous prices.  A former coworker of mine managed to get 4 Premium units and sold two for $2500 each, but the record was apparently set at $10,400.  Here are a few predictions I’ll make:

1. They will not have 3 million units ready by June 29th.  The lead-times to build such high-quality, customized hardware are probably 8-12 weeks, and they’re probably still wrapping up the final software release now, which doesn’t give them enough QA time to load it on all the devices AND ship them to their distribution centers AND ship them to AT&T stores, all of which is not quite overnight.
2. Diehards will be seen camping out outside of stores as soon as the 24th.  Photos will be taken, put online, and Dugg within hours.  Despite a “6pm local time” statement, by the night of the 28th, I predict no fewer than 50% of all locations stocking iPhones will have one camper.
3. Major metropolitan areas will be sold out within 30 minutes, and few, if any, units will be available by close of business on the 29th.  I doubt we’ll see shootings, but there’ll be no fewer than 3 fights on record nationwide.  I’ll give a slight outside chance on one AT&T store being vandalized by frustrated customers.
4. The first wave of public dissatisfied grumpiness will start one week after launch, and steadily increase.  There’s so much hype and the expectations are just too high.  Don’t get me wrong, this won’t be a bomb like the last time Apple was involved in a phone, but I anticipate backlash.  My belief is that human nature shows that people root for the underdog, but turn on a winner, and Apple’s moved into the ‘winner’ camp of late.  I do predict that the iPhone will have higher return rates than anything else both Apple and AT&T sell (at present).
5. Expect heavy eBay gouging for iPhones for the first month.  Yes, you’ll need to be in contract, but still, they’re comfortable enough betting on AT&T customers, so there’s nothing to prevent someone from signing up, paying out the cancellation fee (or just transferring service to another phone), then selling out the unit online.  Assuming I’m correct about unit shortages for the first week-to-month, I think we’ll see some skyrocketing on eBay, and I’ve polled around some peers for their opinions as well:

Jeremy Toeman: $5000 will be the record price for an iPhone sold on eBay.

Michael Gartenberg (Jupiter analyst): “you’ll see units with an asking price of 3k and more than a few sold at $1,000 or above”

Ryan Block (Engadget Editor-in-Chief): “all bets are off with unlocked [phones]”

Dave Zatz (tech blogger and Sling Media employee): ”due to a two year contract, if the price points hold the same for both the new *and* current customers, there won’t be much of an initial aftermarket ”

Veronica Belmont (said whilst prepping her latest CNET podcast): “[I] predict they hit $1200″

Ben Drawbaugh (EngadgetHD writer): ”if there wasn’t the 3 million units rumour out there, I would say about 700, but I think there might actually be enough to go around, but I’m not good at predicting these types of things”

Ross Rubin (NPD analyst): “availability is still unknown but, if it approaches the level of consoles during last year’s holiday, I’d guess $2,500 to $3,000.”

Kevin Tofel (Managing Editor, jkOnTheRun): “The new math: how many ebay Wii’s will equal one iPhone. I say three.”

There you have it.  We’ll see who’s right and wrong in the coming months.  Either way, they’ve done a heck of a job building buzz and hype.  Now it’s time for sales.

I use the phrase “must-read” on something when I feel it has such a quantity of interesting content that it shouldn’t be marginalized by summary.  Brian Solis’ post today on “the future of communications” falls into this category.  I don’t agree with everything - but that’s okay, I don’t have to (I’d be a little scared if I ever 100% agreed with anyone’s manifesto on anything!). 

More importantly, it stimulated my thinking, and anyone in the business of online marketing should give it a glance.  Maybe you’ll learn something.  Maybe you’ll be inspired.  Maybe you’ll disagree completely.  No matter what, you won’t waste your time. 

Good job Brian.

One of my philosophies on being a consultant is I should be absolutely comfortable sharing information with current or prospective clients.  In my early meetings with potential clients I typically go straight into making suggestions as to how the companies can best leverage social media, communities, “the blogosphere”, and other so-dubbed “viral” marketing activities. 

I know this is an atypical practice, as many consultants believe it’s important to hold every tactic close to your chest.   In my opinion, if I can’t add more value over the coming months than I did in the first hour, there probably isn’t much point in hiring me.  In that spirit, here are a few “DIY” viral marketing activities any company can easily incorporate into their strategies.

1. Have a half-decent product!
   This is actually the most important item on the list.  You can’t spread word-of-mouth on a bad product (although you can do so with a gimmicky one, but that’s a different matter altogether).  If you are having trouble accepting this, just look to the movie industry for literally hundreds of examples.  For an easy one, think back to last summer’s Snakes on a Plane - it had huge buzz prior to opening, the word was a-spreading and everything looked rosy until one critical moment: audiences saw the movie, which was terrible (I got 23 minutes into it on Moviebeam before stopping).  So much for the buzz.  The counter-example, by the way, was Borat, which had mild buzz prior to opening, however was funny enough to get audiences recommending it to friends.       

   One of the reasons we have a “product polish” team in my consultancy is specifically to help companies with mediocre products transform them into better ones.  It’s much more fun to create marketing activites for a quality product than a subpar one, and I personally make a practice of not taking clients whose products I don’t feel can capture their customers’ hearts and minds.

2. List your product on Wikipedia and other sites.
   Before you go out and spend a ton of money on Google AdWords and SEO consultants, take a few minutes (yes, minutes) to make sure you’ve listed your product wherever you can. Any open directory, any technology/product/service database, etc.  Look up your competitors’ products, make sure you are in every place they are.   Also, be sure to put up posts or articles that aren’t overwhelmingly biased as these’ll get edited out by the community quite quickly.  It’s free, it’s fast, and it helps contribute to the groundswell of sources your customers may be using to find products like yours.
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3. Have a blog, post thoughtful articles, and link link link.
   Jason Calacanis once wrote a blog post titled “blog or die” - it’s not specifically on target with my point here, but it’s a good read nonetheless.  Customer behaviors are changing unbelievably fast, and brand loyalty today only seems to exist for a certain company that uses more white lexan plastic than the rest of the world combined.  Consumers are showing increasing interests in company’s personalities, services, and behaviors - and, of course, pricing policies.  Companies that look to the future are seeking ways to engage directly with their customers, and one ridiculously simple way to do this is to write a blog.  It doesn’t have to be updated daily, or even weekly, but it also can’t be as sparse as a quarterly dollop of chatter.  Also, when it comes to company blogs, quality is much more important than quantity.  Finally, the blog should link out.  A lot.  Linking to other bloggers helps show them how you are actively engaging in the conversation.  My rule of thumb on linking is this: any article I read that helped me form an opinion on a topic deserves a link from me when I blog about that topic.  As a corollary, don’t overlink or link just because you want attention - you won’t win brownie points through insincerity.
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4. Start a dedicated community and engage your customers.
   This is usually on the top of the list of my ‘freebies’ - there is no more effective online tool that I know of to support word-of-mouth marketing than an online community. This can be a fairly vague and nebulous area for some, so to be clear: at a minimum, it’s a discussion forum on your Web site (phpBB is free), or at the other end of the spectrum you can outsource the community technology and even the moderation services to a company.  At Sling Media, for example, I worked with Chicago-based Capable Networks to set up slingcommunity.com.  They were responsible for all the technology and moderating (both of which can be massive infrastructure requirements, so don’t downplay their importance!), and we were responsible for engaging with our users.  As a result, our customers got the opportunity to directly interact with us, provide feedback, and praise or complain about the products.  While it wasn’t rosy at all times, having the presence helped (and still helps) us be on top of whatever issues were important to the customer base, and helped current and prospective customers get a better feel for what type of company we built.
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5. Enable tinkering.
   While I am strictly not a believer in “if you build it, they will come” marketing philosophies, I do believe “if you let them hack, they will market your product for you.”  Amongst the dozens of reasons why Friendster lost the initial round of the social networking wins, one was they were more uptight about their product than Cameron Frye.  No ‘fake’ personalities. No API. No nothing!  And then there’s MySpace, possibly the ugliest combination of Web pages since Geocities enabled the blink and marquee tags.  But MySpace was more interesting to individuals because you could uglify it so much.  You can build widgets. You can build badges.  You can make themes.  It’s extremely extensible.  Take a look at Facebook’s recent moves - all about extending their platform.  Give people the opportunity to make your product/service their own, and it will signficantly contribute to your word-of-mouth potential.
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6. Create and live by an open & honest communications policy.
   This one is a little trickier for most companies.  First up, keep your spin to a minimum.  No, you don’t have to bare the company’s soul to the world, but admitting mistakes wins a lot more praise than making up implausible stories.  Consumers are much smarter than most marketeers give them credit for, and they can sniff out a lie mid-sentence.  When you consider the power of discussions and the individual’s ability to create noise, the less opportunity you have for dumb scandals, the better.  As an example, at Sling Media I implemented a strict policy that no employee was to add comments about the Slingbox on any blog or review site (such as CNET or Amazon) without disclosing their employment status.  Why?  Well, look at the Amazon page for the Slingbox Classic - it’s averaging 4.5 stars from 176 reviewers (at the time of writing).  If the company can honestly state that none of them are employee-fed, then they gain a heck of a lot more trust than if there’s suspicion about shills.  Again, if you have a good product, there’s no need to artificially pump it up - trust your customers to do this for you, they will. 
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7. Improve upon your product.
   1.0 is never perfect, so don’t stop there.  For a consumer electronics device, I recommend software updates at a minimum of 3 times per year.  Fix bugs, improve your UI, add features - do whatever you need to strive to make your product the absolute best in category.  This shows your customers you are supporting them in the long-term, which increases their loyalty to you, which increases the chance they’ll praise and recommend your product to their peers.  This is especially effective if done in conjunction with your community, as it shows them you are paying attention.  There’s nothing more frustrating than buying into some product or service, and getting the feeling they only care about new customers.  Give a little something back to your existing ones, and it’ll go a long way.

So there you have it, seven easy things any company can do to inexpensively help get the word out.  You’ve probably noticed that none of these fall into the classic “outreach” marketing programs - but that’s part of what makes them so effective. I’m sure some people will find these obvious, but I hope others will find value in them.  If you have any other tips like these, please leave comments - would love to hear them.

Just read this article at the WOMMA blog, it seems that 4 out of 5 dentists marketers like Crest viral marketing’s impact on brand awareness:

More than half of marketers say they are planning to launch multiple viral efforts in 2007, and more than 80% of “very experienced” marketers say that viral marketing builds awareness.

Here’s a link to the original article with the source data, if you are at all interested in learning about the effects of non-traditional marketing, give it a read. 

As a consultant in this space, I am getting a little frustrated with the saturation of the term “viral marketing”.  I’ve heard from marketers who place a “digg it” button on their home page and say “hey, now we’re viral!”  Another not-so-favorite is “we have a myspace page, yay!” 

In my eyes, viral marketing is a concerted effort to get people to talk, share, or otherwise inform others about your product, company, service, offering, etc.  More than that, it’s about a campaign, not a link.  Sure, your campaign might involve digg or myspace, but that’s not the campaign itself.

Expect to see a lot more on this topic from me in the future.