Why Marketers Should Care about a Google Phone
Come on, be honest. Chances are good you’d have nodded, maybe added mobile to your list of things to look into when you had time, and then forgotten all about it until Steve Jobs got up and introduced the world to the iPhone. And the brands that already had cellphone strategies in place—or at least on the drawing board—got to steal a few giant steps on those that didn’t.
Well, you just may have a second chance at being an early entrant, thanks to another company not known for phones.
Google is, by many press reports, on the verge of announcing that it will market its own smartphone design, built on the proprietary Android platform that now powers the Motorola Droid phone being offered by Verizon Wireless. The difference is that this phone will be sold directly to consumers, who will then contract with a wireless carrier on their own—or more likely with the help of a consumer electronics retailer—to set up service. (The futuristic image above right is an artist’s conception, not the actual phone.)
That’s a different model from the iPhone, which so far is available only on the AT&T network, where it has been such a hit that reports suggest its heavy users may be straining the network, leading AT&T to consider data surcharges .
There’s also the possibility that Google would become a wireless carrier itself, delivering voice calls purely over IP networks, so that buyers would only need to shop the carriers for a data plan. It’s a long shot, but the company with the biggest global IP centers in commerce has the bandwidth to do it, and the lawyers to fight what would be a pretty certain anti-trust battle.
If a pure-play Google phone does arrive—and reports suggest that employees are already field-testing a model called nexus One, produced for Google by maker HTC—that could shake up the mobile space in ways that could benefit marketers generally, and perhaps marketers of consumer mobile phones in specific.
First, that latter group. Mobile phones in the U.S. are sold “locked”—that is, they’re tied to a particular wireless carrier or group of carriers. These carriers subsidize the costs of the phones to consumers and in return get the revenue benefit of increased data traffic on their networks, as well as a share of the revenue from some of the ads, text and display, delivered over the phones. That’s good money for them at a time now that voice traffic revenues are at rock bottom.
If selling “unlocked” phones, outside the retail channels laid down by the carriers, becomes as popular here as it is almost everywhere else in the world, that could provide the fuel for a new explosion of tech development that could bring some new capabilities to the mobile audience. (Also some iffy phones and plenty of dropped calls and network slowdowns, but that might be the cost of progress.)
But without wireless carriers subsidizing the cost of the new phones, they could be pretty expensive. Reports suggest that the true cost of an unlocked Google phone might be as much as $600. No phone at that price point is going to have the traction to change any kind of game. It might succeed better overseas, but none but the geekiest of U.S. customers will lay out that kind of cash.
Google may be planning to get around this pricing problem in a number of ways. First, it may be possible to sell a Google phone in both locked and unlocked versions; those same early reports have the pilot Nexus Ones running on the T-Mobile network.
But some observers suggest that Google may be willing to keep phone prices low to win market share. And the way they could do that might be what should interest marketers in this phone initiative.
In a phrase, it’s mobile search. Google made its name in PC-based search, automating and streamlining a concept first built by Goto.com, a company that Yahoo eventually bought in 2003. And it’s done well on the desktop, both in terms of market share of searches (65.6% of searches in the U.S. in November, according to comScore) and per-ad revenue.
But growth in paid clicks on Google ads has reportedly slowed to 14% year over year in third-quarter 2009, down from the 52% year over year increase posted in Q1 2007. Google wants to shore up those click rates and has said in the past that it sees mobile search as a key to doing so. In fact, Google VP of search product and user experience Marissa Mayer was quoted in a Tech Crunch blog post to the effect that the company estimated that the number of Google searches on mobile roughly doubled from late 2008 to 2009.
By getting more mobile phones using its Android operating system, Google can build that mobile search base more quickly. It’s also been suggested that mobile search ads might command higher click prices than the PC-based ones, because Google would have richer user data with which to target the relevant ads.
Google’s rollout of a branded mobile phone could mean an intensified effort by the company to promote both mobile search marketing and local search marketing, “which is a huge space with a lot of small players who can’t defend themselves well,” says Kathy Sharpe, CEO of digital agency Sharpe Partners.
Read the rest of the article including more quotes from Kathy Sharpe, at The Big Fat Marketing Blog
