What should telco brands stand for?
In conversation with an executive from a major Internet company the other evening, I came across an interesting thought. His hypothesis was that telcos don't understand the resentment and anger that users have against the operators. Whilst the operators will attempt to match the softphone, IM and real-time communications features of the Internet players, their brands will get in the way of adoption. He isn't saying telco brands are poison: just that they don't stand for what the operators think they mean. Both sides will only be successful in new revenue-generating services deployment if they work together.
So what do telco brands really stand for? And what (if anything) needs to change in the horizontalised Telco 2.0 world? We've had out thinking caps on here, and below is our first effort at an answer. We'd love to get your feedback on this thorny question.
Global brand minnows, local brand giants
A Business Week article earlier this year pondered the same question: "Note to Telecoms: Rebrand or Die". They say that "there were no telecom carriers in Interbrand's most recent Top 100 Global Brands Scorecard." For an industry of this size, and it's awesome spending on customer acquisition and promotion, that's not a good thing to hear. However, the way the study is structured almost guarantees the exclusion of network operator brands. One of the listing criteria is "must have at least one-third of revenues outside of their country of origin." The regulatory landscape and interconnected nature of the core products means there are no truly global telecom operator brands (although the handset and network folk do quite well).
Looking at the details of the study, Interbrand list six key factors in their brand assessment. How do telcos fare?
- Recognition. Has the public heard of it, and does it mean anything to people?
Score: A+. I'd expect most people in most countries could tell you the names of all the leading fixed and mobile operators. They also have a very clear idea over what they do and the relative positioning of each major brand.
- Consistency. Does it mean the same thing everywhere, even though the product may be tailored to local tastes?
Score: B+. Those cross-border operators that do exist are often stitched-together patchworks or partial or total control, with diverse legacy customer bases, and often confusingly different approaches to the market that persist for years. Even national operators like Sprint operate through affiliate agreements that can create subtle inconsistencies and market confusion. But generally the picture's quite healthy.
- Emotion. Does it "symbolize a promise that people believe it can deliver and one they desire to be part of."
Score: C. Users like broadband and love mobility. But they associate most of the glory with the mobile handset, software providers and online services. Telco brands generally aren't ones people will tattoo on their arms or see as being cool.
- Uniqueness. Does it stand out from rivals?
Score: B-. Within each market there are often distinctive "quality incumbent", "challenger", "innovator", and "price leader" roles. However, brands sometimes try to be all things at once, and the rate at which users churn from one operator to another suggests they're seen as pretty interchangeable. For a while a few like Orange and Nextel really stood for something unique, but emulation has flattened out the differences. When a premium brand exist the pre-paid market, we'll believe something's changed.
- Adaptability. Can it respect local needs and tastes as well as expressing global needs and aspirations?
Score: C. The US market is too homogeneous to really qualify. The multinationals like O2, Vodafone and Orange have had a pretty mixed experience in creating locally meaningful instantiations of their global brand. DoCoMo has notoriously failed to export i-mode to other markets and localise the experience on a consistent basis. We're not convinced, but less than a "pass" grade would be mean.
- Management. Does the company leadership "champion the brand" and live its philosophy?
Score: D. Do you really think any of the telco execs really use all these advanced services? At least Steve Ballmer at Microsoft plays with his kids' XBox, and Bill Gates knows how to use Word and Outlook. Do you get the feeling that telecom executives are passionate about communications? When was the last time a telco exec stood up and screamed how wonderful his product is and shouted down the detractors? How many telco execs blog their passion for the business? (If Motorola's CTO can do it, so can you.)
Overall, it's not too bad a picture. However, just like nobody cares about our exam scores when you left school once your career gets underway, these are the backwards-looking scores from the old world.
Before we start on the forwards-looking side, a few other notes about telco branding.
The technology may be amazing, but the promises have been incredible
There are a number of problems that telco brands face.
Firstly, telcos repeatedly over-promise and under-deliver. This is particularly true of mobile network quality and coverage boasts, which simply don't seem to represent the indoors and out-of-coverage reality that users actually experience. There are plenty of other examples, with most early mobile web adverts probably the best example of confusion over truth and reality.
Secondly, telcos claim credit for parts of the value chain they didn't create. Your world. Delivered.?. Maybe, but users aren't fooled that it's Google and Yahoo doing a lot of the real legwork of service creation.
Finally, telcos consistently deface their brands as suppliers you can trust through usurious or hidden charges and weasel contract terms. It's not good to disappoint your customer once a month: that's aversion therapy, not brand building.
Operators need to address these tactical issues as well as the overall strategic positioning.
The core products are unbranded
Telecom is also rather a strange beast. The interconnected nature of the public services of telephony and messaging create services that everyone knows and uses. However, these services remain unbranded. Phoning and texting have almost faded into the background of society, and are taken for granted. You can contrast this with, say, the banking industry which brands the interconnect with powerful VISA and Mastercard logos. Even the airline industry in the era of paper tickets made a (weak) brand promise of "ticket portability" with the IATA logo, where you could get your ticket endorsed and fly on another carrier.
There's also no obvious answer to the problem of how to express the promise of "works well everywhere for everyone you know" compared to, say, a Skype client which "works well sometimes for a few people you know". Remember those "QC Passed" stickers everywhere on cameras and TVs when Far East manufacturers were trying to overcome perceptions of low quality? How will operators brand "IMS powered" premium products given the lack of history in platform branding? Again, no easy answers.
In other words, there are corporate bands (e.g. Vodafone) and portal or platform brands (e.g. Live!, i-mode, PCS Vision), but few specific product brands (e.g. Nextel's Direct Connect would be an exception) and nothing to represent the collective standardisation and interoperation promise of the telecoms industry.
The Telco 2.0 prescription (draft)
So, what do telcos need to do about their brand positioning?
Personally I subscribe to the branding is dead school of thought. Read the words carefully. Brands are not dead, but the activity of putting a false gloss on who you are and what you do just doesn't work any more. Users are too connected to alternative sources of opinion, and each other, to be fooled like they once might have been. They simply don't trust or believe marketing claims. Credulity is out, delivery is in.
That means you actually need to do something different or special, and not merely claim it. What you do depends on what Telco 2.0 strategy you follow. In a nutshell, it's a combination of product differentiation, platform and/or pipe. The branding strategy will follow the Telco 2.0 commercial strategy.
Branding the product
The product/service differentiation route looks arduous. Internet portals already have hundreds of millions of users, so their mobile offerings have a network of buddies from day one. They have portfolios of advanced collaboration and community applications. Operators have little track record and investment in product innovations. That probably rules out product differentiation through features for most operators.
So for operator-provided services the options for most are probably fairly simple: "cheap" and "reliable". The former is probably fairly self-explanatory. The latter raises some more interesting questions.
Many internet services have a tough time with reliability. Furthermore, there's a culture of "integrate it yourself" -- source your own hardware, security, support, connectivity. Although telcos aren't much better, pretty much every Internet service has some terms along the following lines:
Google may at any time and for any reason terminate the Services, terminate this Agreement, or suspend or terminate your account. In the event of termination, your account will be disabled and you may not be granted access to your account or any files or other content contained in your account although residual copies of information may remain in our system.
Do you really want your life's digital artifacts hostage to someone who could erase them at whim? The telco opportunity is to turn the sloth and expense of five-nines culture and lifeline service to its advantage. Make some strong promises about being there when users really need you. Then deliver.
Branding the platform
As operators recede from the services space, the successful ones will open their technology and business platforms and excel at partnership and joint marketing. They will still offer traditional mass-market services as a "hygiene" factor, but increasingly rely on third parties to complete the bundle. Value will be created through simplicity and integration of the total experience from awareness to post-sale support. This means adding on some APIs to enable partners to extend and improve the serivce, and integrate it with their communications and commerce hubs. Those APIs will also allow partners to access marketing, sales, logistics and support data.
In other words, telcos become market makers bridging users and other suppliers. Whilst we don't have a canned branding strategy, here are some of the "market making" brands we'd draw inspiration from in creating our brand strategy. Each one is an enabler, not the complete end product or outcome.
|Windows||Joining consumers and applications developers|
|Monster.com||Joining job seekers and employers|
|Joining searchers and advertisers|
|Playstation||Joining gamers and developers|
|iTunes||Joining music companies and consumers|
|Betfair||Joining punters and bookies|
We'd probably construct a similar list of services that are co-marketed as platforms, such as "Intel Inside".
Co-marketed services and platforms are a very special niche. We'll be looking at this a little more in our forthcoming Telco 2.0 report on Advertising-funded Services.
Branding the pipe
Few operators are rushing to embrace a "pipe" future (yet). Any such offerings are likely to either follow ISP brands, or be bundled into some larger entertainment or communications offering. We'll let you know if the Christmas break inspires us as to how we'd brand such offerings. T-Mobile have got close with Web'n'Walk, but the "Plus" and "Max" versions (which are the real "dumb pipe" variants) still are bolted onto a service capability (Web), which isn't wholly satisfactory. Ultimately, does anyone care about pipe brands? Maybe we'd look at "reliable transport technology" brands like Toyota or Honda for help.
Some closing thoughts
Brands are like children: each is unique, special and loved by a circle of devotees. There's no one-size-fits-all brand strategy. Some companies like IBM have been masterful at brand management as various lines of business have matured. The horizontalising forces of mature industries have made IBM divest itself of all kinds of previously "core" functions, like hard disk manufacture and computer assembly. At the same time as it created new lines of business such as services and outsourcing. The brand adapts to these changes. Telcos will likewise have to respond to fix their tactical and structural issues and make the brand reflect those changes.