In March 2009 I wrote an article about “Why the Mobile Industry needs to keep an eye on Cable’s Canoe Ventures“. This article was prompted by what I saw at MWC 2009 (Mobile World Congress), where the mobile advertising initiative announced in 2008 at MWC between Vodafone, Orange, O2, T-Mobile and Three was quietly swept under the carpet. The reason: because it failed, through a lack of agreement and also a lack of engagement from the advertising industry.
Well, in Feb 2012 Canoe Ventures laid off 120 of its 150 employee, and from now on, with the 30 employees left, Canoe will focus on ads for video-on-demand / TV Everywhere. The MSOs (Multi Service Operators – Cable Cos to those outside the industry) that own Canoe publicly said they were spending $150 million on the joint venture. Likely they will have spent closer to $191 million on Canoe from the time it was announced to the time all of the laid-off employees leave. This was an expensive mistake.
True to my contention that we must learn from our mistakes: Why couldn’t Canoe be successful? This was an industry, the US Cable MSOs, that had a long history of working with the advertising industry. They worked together and brought in one of the leading advertisers to run this business, it looked like it had the ingredients for success.
The creation of Canoe was simply to expand the advertising dollars MSOs receive, currently about $5 billion out of a pie of $60 billion. The thought was that the MSOs could offer to the advertisers addressability and interactivity to expand the MSOs share of the ad dollars. They are significant players in the advertising business, so this rationale made sense, it was simply about execution. They knew the language Madison Avenue liked to hear – addressability – only targeting those relevant to the message giving efficient ad spend, improved response and recollection rates, and all the other measures used to see if advertising impacted the brands bottom-line in a region.
Everyone has their opinions on the reasons for Canoe’s demise, here are mine:
- In herding the MSO cats, it proved too difficult to get to the necessary customer data to enable addressability and critically implement the changes in the network to execute on that accessibility. Instead the focus was on interactivity, which for the advertisers comes after addressability. Interactivity ups the per impression cost by a factor of 10-1000, especially if the click requires a sample to be sent through the post. You need to be confident that accessibility works first, before upping the costs.
- They went through a number of business model changes and ended with a technology focus requiring someone else to sell the inventory they created, that is this dreaded “platform” that magically retains value without any direct customer relationship. They needed a direct Business Development and sales-force to open up the market and sell what they were creating. They had to persuade people to do something differently.
- I think we’ve seen enough failures to realize a preordained build-it-big approach that requires network operators to play nice together just doesn’t work. Businesses need to grow, find their place in the world that works. For example, they could have taken a number of approaches to improving accessibility, e.g. it could have been a project in NCC (National Cable Communications) Media, or a couple of different start-up approaches. Most of the MSOs are also partners in the cable spot business, through NCC.
What can we take from this to the current mobile operator initiatives is:
- Business development and sales are as important as the platform and require equal resourcing. A platform opening up a new business needs a direct paying customer relationship, someone else isn’t going to do it for you.
- Implement multiple approaches, do it your self (e.g. Comcast have a go), fund a couple of start-ups with different approaches, examine existing businesses and see if you can through a couple of small projects move them in the necessary direction.
- Listen to the customer (advertisers) on their needs, if the network operators limit your ability to deliver on what the customer wants, pack up immediately and do not waste their cash.
Mobile operators please take note.