THE ONCOMING MOBILE DATA WAR: THE NEXT BATTLE IN AN OLD WAR

At what now seems a long ago time I was invited to the finale of the 2014 UEFA Champion’s League live screening. It was the epic clash between the mercurial Athletico Madrid and the galactic Real Madrid. Going into the clash Athletico had overcome the giants from Milan, the ensemble from Barcelona and had left the Chelsea bus in tatters. They had done well indeed but the Real Madrid team had overcome 3 German teams to get to the final; Schalke 04, B. Dortmund and B. Munich. They too had overcome great odds. Now I’m not a football fan or enthusiast for that matter but I remember these details because in the middle of the match I got into a somewhat animated conversation with the epic Boaz Shani. One that would niggle me to no end till today;

I postulated that there was a data war coming. He said that what I was saying was what the market had said when Seacom had launched back in July 2009 and it was all speculation. He insisted that the telecoms had been too lazy to roll out and sell the requisite amount of fiber and internet connections that would drive economies in order to generate profits. He said that the internet prices as they were, were guarded by a “cartel” of people enjoying super profits and in whose interests it wasn’t for prices to drop. I was perplexed. So I probed.

“How about the many more people they would connect? They could make more money, they could translate the internet into all sorts of languages, answer all sorts of questions that farmers  and small businesses had,” I asked.

The answer came back clipped curt sentences. “That means nothing to them. Just last month I fired my internet service provider. I mean I’d been with these guys from the beginning. I had brought them lots of business. I had referred all my clients to them. And they just disconnected me without even a phone call or a notice or even an invoice. I now know they have grown too big to care about us small businesses. And that’s the problem with the whole industry”

“So where do we go?”

“The answer will come once the Google satellite is up and the country becomes one big hotspot. Well maybe not the whole country but even just Kampala. It will be enough for internet prices to plummet and these Telco’s to learn their lesson”

He made so much sense I almost believed him.  But I wasn’t convinced. If the Google internet was going to level the field why were the telecoms doing nothing about it since they would most likely be the hardest hit? My own observation had been that since the last great price wars that brought so much misery and tears to the category vows had been taken never to go back there again. Never

The price wars left everyone bleeding

But after the Airtel Warid merger the market had moved to stasis. Growth had almost plateaued. However Orange which hadn’t had much success in the voice category had been continually registering considerable success in the data category especially on the small screens which surprisingly didn’t reflect on why the big screens. Someone somewhere asked “What are those guys doing?”

So it crept up on us.

Slowly, deliberately, MTN Uganda’s communication started having social networking icons. It started with Facebook, then twitter, then YouTube and now you’ll find LinkedIn and Instagram. This of course followed by their recent release of the “What do crocodiles eat?” TV commercial shows a focus by the business on internet services as a priority.

The recent launch of Airtel’s “Switch On” – (good product review to be read here) also indicated that this area has growth potential.  What’s interesting with Switch On is the way it was built like a lifestyle product – not inflexible and rigid like most of the category products but responsive and built around how consumers live and use data. Almost intuitive – this was a win.

Even Smart East Africa Telecom, the newest market entrant in the Telco sector entered with a data offer. 30 days free surfing and data. The offer might be attractive and as most things in this market go, it will be tested. Ugandans never fail to test (they use the word “Jaribu” more than the originators of the word which is of Swahili origin)

However corporate war like the military war of days past has morphed like modern day warfare into something of a fight-between- handcuffed men. After the Uganda Communications Commission (UCC) put out their moratorium on all telecom promotions the market is likely to see an increase in the how-much-providers-will-offer-customers versus the previous who-has-the-lowest-price model. So there will be no dramatic price cuts and no front page news about this. Not yet. 

It will be who offers more.

But all the above is only an indication of war, nothing more. Well that may be true but when the two biggest players in the market – who ostensibly have the most to lose start shoring up resources and the small players do about or learn nothing from it, there is little wonder why they are small players.

Will the data war wait for Google to launch its satellites over Africa? I don’t think so. I think that with two more ISPs entering the market by end of year both heavily backed to drive data acquisition and marketing to the hilt we are likely to see moves and steps that will drive customers’ uptake and optimal utilization of the data space much much sooner. Here are 6 trends currently in motion that we are likely to see amplified going ahead:

1. The Age of The Device: We will see increased focus on devices and whether this is from the telecom network operators MTN, AIRTEL, ORANGE, SMART, UTL, etc. ) Or from devices providers (Transtel, Nokia, Huawei, etc.) themselves it will matter little. The biggest challenge in the past was access in the last mile; how would people access this wonderful world of the internet? How would they enjoy it? How would you sell them data if tehy had no smart phones? Given the wildfire growth of WhatsApp, Facebook and other apps I feel confident to say the device saturation will get there soon enough.
2. Product Recombination and Innovation: We will see more combined and spliced product offerings; those with more will offer less product and more options. Those with less with offer more product with less options. Confusing? If all you have is data, you will offer more ways to enjoy that data, (e.g. is smile@night/weekend  bundles) while if you are a telecom operator you will look to offer minutes, SMS and data packages/combos to customers as a way to entice data consumption. Whichever way you do it, its important that get to know that your data offering is solid.
3. Speed, Like Size Does Not Matter: Speed isn’t what it used to be. Customers don’t are for it as much as they used to just like women moved on from their obsession with size. Why?Because speed is a function of technology and investment. If a customer gets a faster phone they will enjoy more speeds, they know that but they are happy with what they have. If the ISP or telecom gets more money, they will invest in upgrading their users' experience to the next level of speed and tehy also know that. So speed doesn't differentiate. Stability is the key now. The connection has to be stable. It can be average speed but stable is important. And that is why Smile has picked its niche and is comfortably nestling in it. A stable connection means your download links won’t break but is also predictable and that is a critical thing with the web.
    
4. Experience Will Drive New Inroads: From the Orange Expo to the MTN Internet Expo we are seeing more demonstrability of capacity and possibility by providers and operators to bring an experience the public cannot find in great advertising. It doesn’t mean people will not need the great ads but it means before people buy they will want to “see” the Ugandan way – with their hands!
5. Sharing And Engagement Is The Master Key: When “#StanAirtelUg” hit the market about two years ago no one thought it as possible to do; to have round the clock response to customers online for the second largest telecom provider in the market? Impossible. But they did it. #StanAirtelUg proved that appearing superhuman, being indefatigable and being on point with customer responses was possible. To a point where “Stan” was the answer to everything. Was Airtel going to launch a rocket to the moon? Ask Stan. Would Museveni retire in 2021? Ask Stan (sic) even Stan doesn’t know that one. Anyway, the point being they broke a barrier and challenged the industry. Now at every moment the MTN Instagram page is filled with what they are doing, where they are or who they are rewarding. Is it exhausting, redundant, time consuming? Yes, but if they don’t do that people will never spend their MBs following them and will instead end up on the @Bus250 IG (Don’t ask how I found out). The truth is that other brands are building their engagement platforms as well but they are all following the leaders and that’s who we really talk about on here. We are seeing a lot more traction in the advocacy and NGO sectors too and that will continue to grow as engagement opens up an erstwhile apathetic young audience to issues and activism. If people can share it, they can talk about it – and you can talk to them.
6. The Rise of The Influencer: call them big wigs, influencers, twitterati whatever you call them. They are looked up to in the social media world and digital world. They can be recognized by followers, influence, responses, like, follows, RTs, Favs name it. People who in online speak “run these streets”. Whenever brands have had run-ins with them, there’s been carnage and bloodletting. Why? Because these customers are articulate, they are sharp, they are educated and mostly fearless. Some classic examples was the epic battle between Caleb and MTN when he started that page MTN SUCKS; they called him to their office and things got heated; then of course the dance of death that happens regularly between Dr. Thome and Umeme whenever there is no power in Bunga; the short lived spat between Collins and Vivo Energy didn't last since the brand capitulated. But its not been all bad because there are good moments too, for example when KFC launched in Kampala it was trending for two weeks on social media that there was food for 99,000/= or that hashtag #AtDuskWeRise; much spoken about but not as much done to raise the requisite amount of FOMO. My last example is the last how all the influencers came together to “"#BuyABrick"” for the 40 days over 40 smiles campaign to build a dormitory in Luweero for an orphanage. Splendid use of influencers and all done on a small budget. As brands move, they are going to need to build their own arsenal of influencers; people who will stand in their corner when the gloves are off. Yes, they can be bought but you don’t have that much money. So build engagement experiences and make them love your brands.

Image taken from @Ayampatra

The war is coming. I only hope we are ready both as customers and brands because surely this only where the fittest come out alive. Just like those real guys crept up on Athletico Madrid in that finale.

Spartan out!

Thought Leadership: The Game is Changing.

Uganda, the land of milk and honey, corruption and money. A beautiful kaleidoscopic picture of zen view sunsets and the gory dog-eat-dog world of modern-day capitalism. To the naked eye, the country is preparing for elections in 2011 but to the trained eye the powers that be are in anarchy.
Over the past few weeks there have been relatively few ads in the newspapers. Well this is what has been going on…

A couple of months ago all the media houses in Uganda got together and decided that agencies who book, sell, buy and plan media for the corporate machine owed them too much money and therefore they were going to stop running all adverts. They called a meeting to talk about this and they were right; agencies and clients together owed the media houses a whopping [Red Pepper style] UGX 5.9 Billion! They gave the agencies, who foolishly agreed, 90 days in which to address the delicate matter with their respective clients and get back to them. 

 90 days later.

A couple of weeks ago Robert “KaBush” (from hereon known as Bush), summoned the mother of all meetings, he and his Nation Media Group counterpart Dr. Githinji (did you know he was a gynecologist?) had amassed all their smaller and diverse media cronies and, seated at the head of the table, announced that all advertising was going to stop running. They had done what scholars and industry watchers had thought was unthinkable, let alone undoable. They had blacklisted all media agencies; a blanket ban.
The review meeting following this announcement showed that the agencies had managed to bring down their debt to about UGX 2.9 Billion claiming that some of their clients were adamant to pay or had stricter payment procedures and therefore had not been able to remit the balance in the 90 days pending. So all advertising was going off air.

He shouldn't have:

1. Been positioned as the leader of the fight against the corporate machine because that evening nearly all MDs, CEOs, and CFOs of the corporate machine met separately to discuss this new turn of events while simultaneously the agencies also met to digest this new twist to things.

2. Put a blanket ban on the all the agencies because not all agencies had failed to pay. Therefore the whole industry being victimized for one agency’s lack of fiduciary wisdom was not perceived as just or bright.

3. Stood together with his competition to try and “Enforce” a measure that he felt was for the “greater good” because in the end he will still be standing alone to his shareholders to account for what’s happening to their investment.

The results of the meetings.

The Bush meeting ended up with an alliance signed in blood committing all the media houses to a cooperation where if you owe any single media house money e.g. Observer, you will not get be able to run your advertisement in any other newspaper. Of course this would mean increased cooperation amongst the media houses but it also posed the precarious question of commitment and solidarity. In a time when the market is shrinking and print media budgets are quickly being replaced you don’t want to be caught biting the advertisers’ hand. 

45 extra days were given and ZK Advertising, the second largest spender of advertising in East Africa since 2009 and Ignition advertising were blacklisted. All their advertising was blocked and no work would be coming through them from anyone. Instead, the media houses circumvented the agencies and went directly to the clients and got the adverts directly.
The MDs and CEO meeting resulted in reimbursement bills to their secretaries for coffees and networking time spent discussing “industry re-formation”. They all however agreed that what Bush had done was undesirable and they would have to find a way of punishing the bad boy for his behaviour. “Let’s pull all our advertising from him”, someone whispered, but just like the whisper, he was asked to speak quietly because they all needed Bush.

The agency meeting yielded slightly more than the above because they ended up forming something called the Advertising Association of Uganda. (AAU?) Kind of funny considering how much weed and alcohol those guys consume no?) They, on the other hand decided to give a united position to the Media Owners’ Association, which had triggered all of this. Some radicals said they should get together with their clients and force the media houses to apologize and come to more amenable terms of payment and relationships.

What does this mean for the future?

Bush and the Gynecologist are definitely not being loved in a lot of client circles and if you are keen there will noticeably be reduced invitations to them to attend corporate functions in the period ahead. 

A certain guerilla caucus has come together to find all the ways in which the Vision conglomerate and the Nation behemoth are replaceable starting with the newspapers. Starting at the top, they are re-doing the research, figures, rationales, and psychographics to justify why all the FMCG companies and the corporatocracy should shift from mainstream media and now invest in more audience-driven forms of media. Perhaps new media even; blogs, Facebook, websites, Twitter, You Tube, mobile phone ads, etc. Its no secret that Fireworks has a team dedicated to online/new media; surveying, analyzing, studying, experimenting. Are they about to propose a radical shift to their clientele that will extend the advertising frontier, once again?

The smaller players in this convoluted power play have failed to get their erections up to speak up for their rights and so they are doing what they know to do best; going behind the big media boys and saying ”Those guys are doing their own thing, you just give me my ads and I will run you.” The disconnect this has created is not to be ignored. The agencies have not and will not. What they do next with this crack will probably shake the media industry like we have never seen. Perhaps a total advertising blacklist of New Vision, or the Nation Group?

Let’s wait and see.

The agencies have become galvanized under one umbrella body. Whether this is a good thing or not can only be seen with the passing of time. The Scangroup behemoth (East Africa’s largest spender and biggest marketing services provider) is in search of a Ugandan Telco to bolster its ranks. They already have the East African Breweries and the regional Lafarge business to cater to. When I spoke with CEO to one of the agencies that handle one of the Telcos, she said, “What I think we should do is organize as the big agencies and squeeze these small motherfuckers out of business. Because if we dare try and stand against the media houses, they will go behind our backs and confuse our clients and next thing you know we will be royally shafted here. They can do it.” What she meant was squeeze the agencies without big clients out of business by negotiating better commissions from the media houses through bulk buying. What this would do in essence would be to force the industry to re-align reporting, billing and fiscal control procedures. So, one uniform billing document recognizable across the industry, one process. A clear signal of progress in the industry but what does it truly mean for the clients? In a world of organized and unionized advertising, there are no surprises, no game-changers, and definitely no lowered costs. The client looking for clear, distinctive and outstanding advertising and market presence will have to literally go rogue, but which agency will, or can? The argument can be made that a lot of agencies will think out of the box and go rogue. That is until they become isolated by fellow agencies, over charged by the media houses and soon rejected by the corporate machine; killing creativity, and dulling the sharp, incisive edge that it takes to cut through today’s’ advertising clutter. What is dizzyingly clear though is that the industry will never be same after this. 

Bush promised the powers that be a platform on which he would deliver the 2011 election. He gave them Bukedde TV, has opened a radio in every mainstream local dialect and is on a roll to revamp the local language papers. This happens amidst an environment where all media houses are trying to acquire more media houses. KFM, currently the most listened to station in inner and greater Kampala, is shopping for upcountry stations to bolster its arsenal of listenership and footprint, while Dembe FM recently acquired the rural based Rwenzori FM. So as the media landscape’s tectonic plates continue to shift and change one thing is for sure; we are on the cusp of something that has happened in very few other countries: Uganda is preparing to leap frog – Again!