Mobile Fix – bolting on digital

The news of Waterstones’ £37 million loss, on the back of the recent retail casualties, prompts many to see the bookseller’s demise as inevitable, especially when Amazon is seeing huge sales in ebooks

We were reminded of a story we told when presenting to the Facebook sales team on the day HMV announced their bankruptcy. Before the announcement the share price had dropped to 1p, valuing HMV at just £5 million. Digging around, we found that 5 years earlier HMV had been valued at £500 million.

Now over these five years nothing had really changed. Back in January 2008 Amazon was a major player in music sales. Pretty much everyone then had an iPod so iTunes was a big player too. Whilst Spotify wasn’t around, LastFM was.

The thing that killed HMV was the fact the ‘new’ players just kept improving their businesses – investing in new features and perfecting the way their sites work. Amazon know that shaving 100 milliseconds of the load time of their site increases their revenue by $100 million. All the clever tricks detailed in the excellent Avinash Kaushik article we pointed to last week improve the experience of the user and drive more sales.

But whilst the new players were doing this what were HMV, Jessops, Blockbuster and Waterstones doing to make their web experience better? Was digital a core competency or just bolted on? Imagine our surprise to see that neither Jessops or Blockbuster have sites that are optimised for mobile. At least Waterstones do, so they are still in the game.

Fit for Mobile

We are finally seeing brands recognise the opportunity (and the potential threat) of mobile and the IAB report that 57% of the top 100 UK brands now have a mobile optimised site. So, some progress. Now the challenge for most is to get a good mobile website.

It’s only going to get worse (better)

One of the charts we often use in our consultancy work with clients is the Mary Meeker one showing that only 18% of mobile users currently have a 3G connection. So no matter how disruptive tech, mobile and social are being in a clients sector, it’s only just begun. When the other 80% replace their featurephones with a smartphone, then the fun really starts.

Cisco have predicted that mobile internet usage will grow by 66% each year for the next 5 years; by 2017, the average mobile user will watch 10 hours of video, listen to 15 hours of music, make five video calls and download 15 apps each month.

It’s worth digging into the full report as there is some fascinating data. The proportion of mobile traffic generated by the top 1% of mobile data subscribers has fallen from 52% in 2010 to just 16% last year.

This supports our learnings from talking with consumers – once people get smartphones they see that they are often much faster than their home or work PC and hence more and more usage migrates to mobile. And whilst there are still lots of power users out there, people learn behaviours from their friends and widen their mobile repertoire.

Some other key predictions are that by 2017 two thirds of mobile traffic will be video and that nearly half of all mobile traffic will be ‘offloaded’ onto WiFi.

Ofcom see a similar trend, saying that they expect a 300% increase in web usage (desktop and mobile) over the next 5 years. This is prompting a rethink about fibre;

“We will get to the point where there is fibre to every home, I am sure of it,” Ofcom’s chief technical officer Steve Unger said. “Copper has served us well and prevented us from having to take a step in the dark. Building a fibre network would have been difficult ten years ago.”

So this provides the context for the takeover of Virgin Media by John Malone’s Liberty Global. Nicknamed Darth Vader we can expect heightened competition between Malone and Murdoch’s Sky. Which should see us get to newTV a little sooner.

Some old time thinking that stands the test of time.

One of the original marketing geniuses, Claude Hopkins, was tasked to launch a brand of Suet in the 1930s and ran a brilliant piece of what we might now call Content Marketing. He was just missing the YouTube video and a bit of Facebook Liking…

Why not apply those principles to Cotosuet? Rothschild & Company were then completing a new store. They would have an opening in two weeks. I knew Charles Jones, the advertising manager, and I decided to go to him and offer a sensation for his opening.

The next day I did so. His grocery department was on the fifth floor and it included a large bay window. I urged him to let me have that window for a unique exhibit. “I will build there,” I said, “the largest cake in the world. I will advertise the cake in a big way in the newspapers. I will make that,” I promised, “the greatest feature in your opening.”

My idea was to make a cake with Cotosuet in place of butter. Then to argue that a product better than butter was certainly better than lard.

Mr. Jones accepted my proposition. Then I went next door to H. H. Kohlsaat & Co., bakers, and asked them to bake the cake. I told them to make the special tins which were necessary, to decorate the cake in a magnificent way, and to build it as high as the room. They did so.

At the time of the opening I inserted half-page ads in the newspapers announcing the biggest cake in the world. That was on Saturday, and that night the store was to open. After dinner I started down to see the cake myself, but the cars stopped on State Street long before they reached the store. I stepped out and saw before me a perfect sea of people. After a long time of struggle I reached the doors. At every door I found a policeman. The authorities had closed the doors because the crowd was too large to admit.

During the next week, 105,000 people climbed four flights of stairs to that cake. The elevators could not carry them. There I had demonstrators to offer samples of the cake. Then we had prizes to offer to those who guessed nearest to the weight, but every guesser had to buy a pail of Cotosuet.

As a result of that week, Cotosuet was placed on a profit-paying basis in Chicago. We gained many thousands of users.

Great marketing is still about two things. A great idea. And smart use of all the tools available to bring it to life.