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Marketing in the Internet - as seen from Italy


by Giancarlo Livraghi

gian@gandalf.it



No. 17  - April 2, 1998
1. Editorial: A gust of wind
2.  New communication tools in Italian families
3. The little devil and other mysteries
4. Understanding research and surveys
5. Re-inventing the wheel

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1. Editorial: A gust of wind
I like the wind. It cleans the air, sweeps away the fog, spreads the seeds from which new plants will grow.

I've crossed dozens of times the short stretch of sea from the Ligurian coast to Corsica. It's only eighty miles; ten minutes in an airplane. But it takes 15 or 16 hours at five or six knots in a small sailboat (much more if tacking). For over half that time, normally, we see nothing but the horizon, because there is a haze that hides the distant mountains. ("Navigating" the net is more like sailing than flying on a jetliner... with the added problem that there are no up-to-date charts or pilot books, no lighthouses or beacons; the points of reference and the coastline keep changing, quite unpredictably).

Only in one of my many crossings the conditions were unusual. It was sheer magic. There was a gentle, steady wind and almost unlimited visibility. The air was so clear that we never lost sight of land. We saw the Alps behind us, Cap Corse straight ahead, the mountains of Tuscany on the east side. When we came in sight of Sardinia, an island 50 miles away seemed so close that we almost felt we could touch it. On a tiny VHF radio, that generally has much less reach, we heard a coast station 250 miles away. I leave it to experts in weather and waves to explain that extraordinary situation – but it's an experience that I shall never forget.

I would like to see something like that happen in the world of information technology in general, and especially the software we use to communicate. There's a thick fog, with millions of dollars fluttering around, that prevents us from seeing clearly what is going on.

I said six months ago in this newsletter that a few clouds were appearing on the horizon of the quiet sea sailed by the Microsoft armada. The storm has come, but it's no hurricane. I must confess that this Tackle of Giants leaves me quite indifferent. Which companies make more or less profits is a concern only for their shareholders.

What remains to be seen is if there will be a structural change in the market – and especially in the quality and price of the tools we are using.

Things have changed a bit since the days when Bill Gates was on the cover of almost every magazine worldwide, as the father and the leader of everything, including the internet; even when (not so long ago) he had done nothing at all about the net and had failed to understand its importance. Now the problems, that were well known to many netizens but ignored by mainstream media, are beginning to surface. On the cover of Newsweek (March 9) once again we saw a picture of Bill Gates, but this time trying to fence off the idea that he is the monarch of the Evil Empire. I never thought he was an angel; now I don't think he is the devil. He is only a smart and lucky businessman that has shrewdly exploited the weakness of antitrust regulations and the mistakes of his competitors.

I must admit that I find it amusing to see the same person that used to speak unabashedly about his claim for hegemony (including the net and its content) now suddenly posing as a fragile contender in a dangerously competitive market; and of course any monopoly is a problem. But this is not just a matter of breaking the wintel stranglehold on operating systems, and thus on practically every tool we use.

We need much more. Systems should become truly compatible. There should be a much wider knowledge of the availability of simple, efficient and inexpensive software; and of the fact that it is not necessary to buy expensive equipment to use the net. As I see it, there is only one solution: all operating systems should be freeware. When I say these things, people call me a dreamer. Of course it's technically possible, they say, but it will never happen. But the situation in which we are now is so absurd that in one way or another, sooner or later, it will have to change. Now we see Netscape making source code available on its next browser. If that remains an isolated episode in the browser war, it isn't much of an event. But if it were the beginning of a trend... there might be hope.

We don't need a typhoon. Just enough wind to clear the atmosphere and make the obvious visible – to political, economic and cultural institutions worldwide, and to millions of existing and potential users. Computers (and the net) would work better, and would be much easier to use. Prices would drop; the market would expand so rapidly that many companies (including today's leaders, as well as more of their competitors) would make lots of money. Above all, there would be an opening for many more people to use the new communication opportunities that now are available only to two percent of the world's population. Am I dreaming? Maybe. But a few clear minds in the right places are all we need to make that dream come true.

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2. New communication tools in Italian families.
In the first quarter 1998 issue of Social Trends there is a summary of surveys carried out by Eurisko. The analysis is based on several surveys covering the penetration of new media, the way they are used, the level of satisfaction and intentions for the future – including personal computers, cd-roms, the internet, satellite and "pay" television.

According to these surveys, this is the situation in Italy so far:

 

Penetration of new media in Italian families

Graf17a.gif (3934 bytes)

The green slice of the bars is the increase from November 1996 to June 1997.

Source: Eurisko


This confirms what we know from other sources. High penetration of portable telephones, low interest in pay TV and satellite.

There is a remarkable difference between the families that have (or "say" they have) a personal computer and those in which at least one person uses an internet connection. Only 5 percent of PC owners are on the net. This confirms that it's a cultural problem: the real values of the net are not understood, people are not persuaded by the hype and are uncomfortable with the exaggerated noise about risks.

This surveys also looked into "intention to buy". Here are the results.

Purchase intention of new media in Italian families

(percentage)Graf17b.gif (3128 bytes)

Source: Eurisko


Of course there is a difference between what people say, or think, they are going to do and what they will actually do. This survey is not a prophecy, it's only a picture of peoples' perceptions of what they may do in the near future.

There is room for an even higher penetration of cellular telephones (more people in the same families want one for personal use). There seems to be increasing interest in digital and satellite television, while people remain lukewarm about pay TV.

There is room for growth also in personal computers, though four of five families that want one already have one in their home. If purchase intentions turn into actual decisions, use of the internet could double in the next 12 months. But, as we have seen, we would need twice that growth to get close to a "European level".

 


Behavior styles and new technologies

These surveys included findings about lifestyles and attitudes. Eurisko defines six "technological styles", as in this map:

Graf17c.gif (3276 bytes)

Three of these styles are called "the excluded":

  • The Worried cluster (28 percent of all people interviewed) has the greatest resistance and the strongest concerns about the negative effects of technology on individuals and society. These are older people, with low education levels and a large percentage of women; their ownership of high-technology tools is the lowest in the sample, and so is their intention to buy.
  • Also the Left behind (24 percent) – adults and older people with low education and high income – feel uncomfortable with new media, but their attitude is not antagonistic. Their perception is that it's difficult to learn how to use new technologies; so the "revolution" brought by information technology is "for the new generations" and out of their reach.
  • The Curious (19 percent) are young, mostly students, that don't have the money and the family environment that encourage innovation for the more "favored" people in their age group. The presence of "new technology" tools in this cluster is relatively low, the intentions for the future are lukewarm; their attitude is vaguely curious, but superficial.

The other three styles are called "the included".

  • The Cautious (12 percent) have good education and social status, are in the central stage of their personal and professional life; they feel part of the change and understand its importance. Their level of equipment, and competence in using it, are quite close to those of the more strongly motivated groups (the Protagonists and Enthusiasts) but their attitude is different: disenchanted, practical, aware of the risks, skeptical about the promises and the hype.
  • The Protagonist style (8 percent) identifies a cluster that is predominantly male, in the "central" and most active age group, with high education and income and a high concentration of top-level professional people. They invest heavily in professional development and this drives their interest in new technologies. They are the most willing to spend money on new tools and new media. Their attitude is balanced: they are interested in the opportunities, as individuals and for the community, but concerned about problems and risks.

The Enthusiastic (10 percent) are teenagers or young adults – more male than female, with fairly high socio-economic status. They have a passion for the opportunities of innovation offered by new media. Their equipment and technical competence are comparable to those of the Protagonists, but there is a relevant difference in attitude. They have no precise sense of direction and no perception of problems and complexities; their drive is innovation per se, a desire to be part of a change that, they think, will certainly lead to a better world for everyone.

So far I have quoted, almost literally, the comments of the people that did the surveys. In reading their observations we must consider that the research was about "new technologies" in general, not specifically computers or the internet. I hope, one day, to be able to analyze in greater depth their findings about those attitudes and behaviors that relate more directly to the net and interactive communication.

Of course we can't take the figures literally, because clusters are not separate tribes and different attitudes can co-exist in the same person. But a few things are clear. Only 30 percent of the people have an "open" attitude toward new technologies. The other 70 percent have doubts and problems, that tend to keep them away; but those categories include people that could improve their lives considerably by being connected. If there are so few people using the net, or considering the idea of doing so in the next twelve months, we need to take a hard look at the information and education that have been provided so far. Continuing on that track would be quite unforgivable. Errare humanum, perseverare diabolicum.

And speaking of the devil...

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3. The little devil and other mysteries
Telecom Italia (our national telephone company) has just launched a major advertising campaign to sell itself as an internet provider. It's hard to understand why they have chosen a rather childish, superficial and crude style for this campaign. Their audience is not a bunch of illiterate or dumb people; it's easy to find out that existing and potential net users have a relatively high level of education.
Their campaign is based on a character called Mr. Net – a chap that looks like an accountant and flies like Superman. Mr. NetThe promise, of course, is high speed; and we all know that, even if they had better connections than they have been offering so far, it's not true. Or at least it won't be until the bottlenecks are cleared and the overwhelming volume of useless graphics and other time-wasters will begin to decrease.
It's quite likely that, in spite of its tone and style, this campaign will be successful. Because they are using sales promotion heavily; and because they will probably put more money behind their advertising that any other provider can afford. But they could achieve the same success, or probably more, if they used a less moronic style of communication and provided a bit of education on the real values of the net.
Things look even more bizarre when we get to a special discount for university students. The symbol for that offer in Telecom's advertising is a small child, sitting on a mouse and dressed like a little devil.

little devil

I wonder what made them choose that picture. I am not suggesting that an offer to students should be based only on overly serious and scholarly issues; students want to have fun as well, and of course they are quite right. But why should young adults identify in a two-year-old child? And why is he wearing a devil costume? Are they trying to exploit the idea that the main use of the net is to do something "naughty"?

Are they helping to spread the nonsense that is already too heavy in all media, and is keeping so many people away from the net, instead of fighting it as we all should?

(I haven't heard any feminists complain, but another peculiarity in this campaign is that all characters, so far, are male).

More seriously – there is a positive side to the heavy use of media to sell internet connection. Though poorly done, it comes at a time when there is growing interest and curiosity, and it could help to accelerate the trend. If Telecom's advertising (and I hope, some competitive reaction from other ISPs) increases the number of people using the net, that's good. Even if they make the wrong promises, once people are on the net (if they overcome initial disappointments) they have a chance of finding out what is really there that is interesting for them.

An unfathomed mystery in all this is why other providers are being so quiet and submissive in accepting the declared intention by "Mr. Net" and the "little devil" to gain at least 50 percent of the market. Is it reasonable for any company to have such a share, especially if that company is the only basic telephone supplier in the country, and de facto sets the (high) prices at which other providers buy the bandwidth that they parcel out to their customers? In addition to serious monopoly problems worldwide, we have our own on a local scale.

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4. Understanding research and surveys
Benjamin Disraeli used to say: There are three kids of lies: lies, bloody lies, and statistics. He is quoted often by serious students of this subject; including Darrell Huff, the author of a wonderful little book, How to lie with statistics, that was published in 1954 and unfortunately is forgotten (but not totally... the copy I have was printed in 1982 and that was the 43rd printing).

David Ogilvy said that research is like a lamppost. It can shed some light, but we should not be like a drunkard, that leans on it because he can't stand on his legs.

Of course the problems are not so much with statistics. There can be mistakes in sampling and in quantitative analysis, but statistics is a "nearly exact" science; or, more precisely, it's a mathematical science that measures how inexact the figures are.

It's much more difficult to understand what figures mean. The "qualitative" side of research is very important, the meaning of results depends on how questions were asked and how answers were understood. Anyone that has any experience of opinion and attitude studies knows that, depending on how the survey is set up, it can prove anything or the opposite of anything. Of course good research is not set up to prove a point but to find out what people are doing and thinking and learn from them.

Early in my working career, many years ago, I ran a serious risk. I was twentyfive. I found myself in Zurich, in the European head office of a large multinational company. Everyone else in the room was al least twenty years older than me, and with a much more important role and responsibility. I had studied a communication strategy very carefully and I was quite convinced that I had the right solution. They heard me out patiently, but then said that research proved me wrong. Before I realized what I was doing, I heard my voice say: "If that is what it says, there must be something wrong with the research". Much to my surprise, they didn't throw me to the crocodiles, but told the research people to re-analyze the findings. It turned out that there was something wrong with the research. So I wasn't punished for my arrogance, and probably that episode had a role in accelerating my career.

Reassured by that experience, and by many more of the same sort in following years, I became (and I still am) an awful nuisance in reading and understanding research and surveys. I hope this little confession will help to explain why I am so skeptical about data (and believe even less in forecasts) unless I've had a chance to understand how the information was collected and analyzed.

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5. Re-inventing the wheel
I have learnt a lot about communication, as well as many other subjects, from people who are neither famous nor recognized as "authorities". One of them is called John Williams. As far as I know, he never wrote any books or lectured in any university. He didn't have a senior management role. He retired a few years ago and I've lost track of him. But he had a lot of practical experience in the difficult business of international "coordination" of advertising. Ten years ago he wrote a short paper, that circulated only inside Ogilvy & Mather, about Re-inventing the wheel.

There was (and there still is) a lot of standard jargon about that, such as NIH (Not Invented Here) meaning the attitude of people in different places that always looked for ways of not using ideas coming from somewhere else. If something worked in one country, argued the "coordinator", it will work in others as well. You don't understand, said the local people, we're different. Today many companies have more rigid coordination (that's it, worldwide, and no arguments please) but the problem is not solved. I've worked on both sides of the fence (as the coordinator or as the coordinated) and I still bear the scars of those endless skirmishes. It was rather amusing to see how bewildered were the Americans (that generally were the originators of the ideas to be spread around the world) when they found themselves at the other end of the process because some idea generated elsewhere was to be considered for their market.

Another way of defining the problem (from the point of view of the coordinating center) was to say "Don't re-invent the wheel". John's stroke of genius was to say that re-inventing the wheel is exactly what we should do. To this day, very few people and organizations have understood the wisdom of that concept.

Let's assume that someone has invented a wonderful wheel. And let's suppose that several copies of the prototype have been produced, to be used in different parts of the world. That's expensive, complex and cumbersome. And we shall probably find that those wheels don't fit the cars, trucks, bikes or carts in most places.

Instead of carrying around heavy and useless wheels, we should let everyone have the blueprint of the wonderful wheel we have designed and tested. So we will all understand the concept and be able to make the wheels in such a way as to benefit from the qualities of the original invention and fit the local needs. We will also understand that, no matter how wonderful our wheel can be, there are places where it won't work, because they need sledges or boats or cableways or camels.

If this is true in traditional communication and marketing, it's even more so in the net.

First, the technologies. The weakest solution is to apply standard technologies and try to force the organization (and the people) to adjust. On the Procustes bed we will not only suffer a lot of pain, but we could get seriously maimed. It's much more effective, and easier, to define our objectives (including human needs) and adjust the technology. Even if that involves uninstalling lots of useless stuff and maybe writing some program, it's much less frustrating and painful than doing things the other way round. Also, the more we make ourselves like everybody else, the more we lose our identity and our competitive edge.

But it's even more important when we get to communication and relationships. Imitating literally what they are doing in the United States or Finland is just as silly at trying to persuade an Eskimo to behave like a Venetian. The big advantage of the net is that we can test, learn and adjust very quickly. Let's start with the blueprint: our strategy and our objectives. And let's learn from experience in how many different ways they can be applied. It's easy to ask the Eskimo how he wants his sledge, and make it to measure without moving away from our computer. But that needs expertise in the rarely practiced art of listening.

 

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