Monthly Archives: July 2016

July 25, 2016 · 11:21 am

Why Free Data Is A Bad Thing For You

Everyone likes “free.” Heck, there are plenty of marketing tomes that say “free” might just be the most powerful word in marketing. Well, as usual, I’m here to burst your bubble about one particular aspect of something free which I find detrimental to us all. It’s something aggressively marketed by T-Mobile and Verizon but others do it as well. It’s called Zero-rating of data. Their “Binge On” and “FreeBee Data 360” offerings provide subscribers with free streaming media that doesn’t count against their data plans.

The basic concept is that ISP‘s – in this case the two aforementioned wireless carriers – don’t charge consumers for data used when the consumers use specific sites or services. That’s pretty appealing. In fact, T-Mobile reports that mobile subscribers who sign up for their “zero-rated video” offering immediately double their consumption of video. So why is this a bad thing?

Verizon bought Yahoo this morning. They previously bought AOL. One might expect that those two companies and their services will become zero-rated for Verizon customers. While T-Mobile has yet to buy a competitor, one can easily imagine them assembling their own lineup of content and service providers. Cable providers have been doing the same thing for a long time with fledgling cable networks. They take equity in these companies and, in return, provide carriage on a better tier (meaning it’s more widely available). These cable providers are also ISP’s.

The reason our digital ecosystem is flourishing is that until recently there was no one picking losers and winners. Zero-rating does exactly that. Think about the food court at a mall. There are two restaurants side by side, but one serves free food which is paid for by the mall landlords. Which one do you think will have the longer line, regardless of the quality of the food served? If a new streaming service enters the market but there is no data charge to visit their entrenched competitors, what chances do they have to succeed?

So yes, everyone likes free but in this case free is a bad thing. It will restrict the development of new companies. It will give more power to the gatekeepers. It enables internet providers to gain a significant advantage in the promotion of in-house services over competing independent companies, especially in data-heavy markets like video-streaming. Does that make sense?

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July 22, 2016 · 11:45 am

The Importance Of Eating It

This Foodie Friday we turn to a business lesson surfaced by hospital food. My mom recently had a short stay and her sole complaint (after heart surgery!) about the experience was the food. As it turns out, she is far from alone in this. This article from an Ottawa newspaper (via First We feast) tells the story of a how a hospital changed the nature of its food service. It’s the reason why that’s instructive to the rest of us.

One of the administrators actually ate some of the hospital food. What happened next was that he got some other managers to do the same.  For a week. As the article said:

He and other managers didn’t particularly like what they tasted and saw. After food managers choked down three meals a day for a week, there was a consensus that things had to change.

Nothing like eating your own dog food, right? But that’s a critical part of serving our customers well and each of us needs to do that on a regular basis. When was the last time you tried to go through checkout on your own online store? How was the experience? How about trying to return what you purchased or put in a call to your customer service department? My guess is that none of your top managers have done any of those things in a while.

Several years ago I wrote a post on eating your own dogfood. That had to do with believing in what it is that you sold. I’d like to extend that concept to not just believing in it but actually experiencing it so that your belief is grounded in reality and not through rose-colored glasses. The hospital administrator answered a complaint about the food thusly:

 “Our management team has recently eaten hospital food for a week and agrees with your observation that we need to improve the presentation and taste.”

That answer is one I’d believe as a consumer because it’s grounded in some first-hand experience with their food. When was the last time you tasted yours?

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July 21, 2016 · 11:12 am

Mass Markets And Mass Media

I’ve written a number of times over the last few years about the changing patterns of content consumption and how those changes are affecting the media business. I read some statistics last week that make me think we’re almost at the tipping point where we’ll see some irreversible things happening that affect not just media but marketing as well.

First, the statistics. The report is GfK‘s The Home Technology Monitor and while there wasn’t much “new” in it, the acceleration of some trends is interesting:

New findings from GfK show that US TV households are embracing alternatives to cable and satellite reception. Levels of broadcast-only reception and Internet-only video subscriptions have both risen over the past year, with fully one-quarter (25%) of all US TV households now going without cable and satellite reception. TV households with a resident between 18 and 34 years old are much more likely to be opting for alternatives to cable and satellite; 22% of these homes are using broadcast-only reception (versus 17% of all US households), and 13% are only watching an Internet service on their TV sets (versus 6% of all TV homes). Overall, 38% of 18-to-34 households rely on some kind of alternative TV reception or video source, versus 25% of all homes.

Why this is meaningful has to do with the symbiotic relationship between mass marketing and mass media. As Ben Thompson put it in a Stratechery post:

The inescapable reality is that TV advertisers are 20th-century companies: built for mass markets, not niches, for brick-and-mortar retailers, not e-commerce. These companies were built on TV, and TV was built on their advertisements, and while they are propping each other up for now, the decline of one will hasten the decline of the other.

As you can see from the chart, viewing of traditional TV by young people in the first quarter of this year (traditionally a high-viewing quarter as many people stay inside during winter) dropped precipitously. There aren’t many mass markets and there really aren’t mass media. Why, then, are we focused on measuring things that are no longer really relevant? Anyone?

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