State of the Media

Without vision, we perish

The problem with marketing in most technology companies is that it isn't marketing. It's sales support. And most marketing VPs are, in reality, sales engineers. Real marketing is a conversation. A marketer doesn't just listen to the customers, but to the customer's customers, and to the the people that influences those people. After he's done listening, he then starts thinking and formulating responses and directions that he believes will open paths for the sales people. Before he responds, he tests his hypotheses with this audience he's developed to establish a reality basepoint and only then hands off to the sales team.

And if he doesn't see any paths open for the sales people at least three years down the line, he arranges for an exit for the company that provides value for everyone involved -- his company, the company's customers, and the acquiring entity.

I've been thinking about all this with the news that another small technology company went away in a "fire sale" of the assets. The good news is everyone kept their jobs and got raises. The bad news is they left a bunch of money on the table a couple of years ago that could have given the investors something back, kept everyone's jobs and given the company an opportunity to make a real difference in the industry and economy. All this came about because they ignored the advice and insight of the marketing team two years ago. They believed their own sales hype. Always a bad idea.

While sales is a crucial element of any company, it isn't the real driving factor of success. Sales is short term, marketing is long term. Sales is reactive, marketing is proactive. Our focus on sales is what drives the irrational swings of the stock market, creates corporate failure, hampers investment in and development of new technology, and puts us in the situation we are now: faltering economies and pessimistic expectations for the future.

Market-driven companies succeed without solid products. Market-driven industries grow year after year. But market-driven corporate philosophies are like eagles. We don't seem to have many left.

Asking the wrong questions

I hear lots of questions about the state of the media and how companies can communicate their messages in our current situation. Most of them are not to good. Here's a few to consider:

What's your circulation? (Asked in reference to New Tech Press)

That's a really bad question, at least if you're honest about what you want to accomplish. Most companies have stopped advertising and supporting B2B media because they claim the circulation doesn't reach their target market and they don't want to advertise to a bunch of people they don't care about. That's why I said "if you're honest." The real reason companies don't support mass media is because they think the can get it for free through PR.

Can you get us into EE Times/Information Week/BusinessWeek? (asked in reference to Pr services)

Again this is both bad and dishonest Companies that ask this question don't spend anything to support the media because they claim it doesn't "reach" their target market, but they still push their PR companies to get the broadest possible coverage in as many magazines as possible. Why? Because the see that as "free" advertising. After all they pay the PR reps very little now adays so it's a good deal for them. the problem is that the media has figured that out and is no longer supporting that model. So the answer to the question is, probably not unless you have a technology that is so stupendous that they can't help but see the value. As Patrick Mannion pointed out yesterday the semiconductor industry hasn't yet figured out why they aren't getting the coverage they used to get. What Patrick didn't say is that there are few companies in technology who have figure that out.

What experience do you have in this technology?

What job seeker hasn't heard this before? It happens to PR agencies, Ad agencies, and even publications when they are talking about reporters. How's this for an answer: Well, you've just said you have no competition, therefore you are either doing something so new that no one has experience in it or it is so useless that no one else wants to do it. At least, that's an answer I heard a VC give a company that told the investor that the company had no competitors.

Let's be very clear about what our situation is. What you remember being the case 10 years ago no longer applies; there are no guaranteed results anymore because everything has to be done different than you've ever done before; and there are customers for your products and services out there that you don't know about and, more importantly, don't know about you. The mass media is the only way to reach them and you better figure out how to work with them and support them if you want to succeed.

Asking the right question

In the past 24 hours I've had an chance to experience the polar extremes of marketing savvy in the technology world. On one side was the CEO of a pre-funded biotech firm looking for PR representation. On the side, was Milan Lazich, vice president of marketing for Magma Design Automation. What made this remarkable is that the biotech guy, a member a the hot new tech niche, was clueless, and Milan, representing a significant member of the brain-dead EDA industry, is a voice of sanity and reason.

I was recommended to the biotech guy as an out-of-the-box communicator. He was supposed to be disappointed in the PR firms he'd already approached because, number one, they gave him "cookie-cutter" approaches to communication and, number two, they were "to expensive."

So he opens up the discussion with the question, "How can you help me?" Now I could have played the game and given him the stock answers about the value of communication and ROI, etc. etc., all of which would have created another form answer that he would have dismissed. Instead I said, "I have no idea."

I had looked at his website when I was alerted that he was going to call and it said nothing of value. I did a couple of searches on his name and found virtually nothing. There is no history, no message, no apparent value in what he or his company does. And yet he wants me to tell him how I would raise the perception of his company.

His question can only be answered by a rote response, which he was tired of getting. So I ignored his question and told him what he needed to do. I told him to get funded first and stop wasting his time talking to PR firms until he had done that. I told him to establish a budget that he is willing to spend on marketing (not just PR) and be willing to share that with the consultants he talks to. I told him when he did that, call me back and we'll have a meeting so I can determine if he has what it takes to represent his company to the world or if he or a member of his team needed to be trained.

He didn't like any of that, but that was the right answer to his question. Right now, I'm pretty sure this guy is going to underspend on marketing, spin his wheels with an inadequate program with a consultant he won't listen to, and be out of the business inside of three years. I could be wrong… but I doubt it.

The whole thing depressed the snot out of me. Then I had coffee with Milan today.

I've mentioned him before calling him one of the few real marketers left in his industry (a compliment he prefers to qualify as an overstatement.) He has some new responsibilities in the industry since his CEO, Rajeev Madhavan, got elected to the industry council board a few weeks ago. Milan's now the chairman of the communications committee of the council, charged with getting the word out about how "wonderful" the EDA industry is. That's a job akin to explaining how well the surge is doing in Iraq (it may be doing well, but no one believes you.)

We talked about a lot of stuff, including Brian Fuller's the company is the medium is the message" concept. During our time, Milan gave this great statement about the cost of marketing. He said "if you only have enough budget to print up fliers at Kinko's and pass them out at street corners," you still have to figure out why that material would be important to the audience … and what is important to the audience is not going to be your product.

In other words, the most important thing you can say is what the audience wants to really know. Wow. An EDA guy that gets it. Of course it had to be Milan.

What's going to happen is that a group of people are going to conspire on how to fix the image and messaging problems of an entire industry. I damn well expect that it will benefit Magma if Milan has a say, but it will also benefit everyone else who gets with the program. A rising tide lifts all boats.

Viva la revolucion!

Wisdom and Ignorance part 4: The reality of leadership

In the last post I talked about how just about every company, in particular startups, believes they are truly leaders in their field, even though, in reality, they do business in the same way as everyone else; they create products and services that have little differentiation from the rest of the field; and ignore the majority of customers in the market to go after the same 5 to 10 customers everyone else goes after.

There was a book that a lot of people quote, as the basis for marketing practices, called "Crossing the Chasm" by Geoffrey Moore. In it, he rightly states that you need to find a need that no one else is meeting and take leadership in it, but there are two issues that the book's adherents miss. First, Moore's premise only works for disruptive innovation and most startups and even established companies make small advances in standard technology (make it smaller, faster or cheaper). Second, Moore's definition of leadership means the innovation actually has to be seen by the market as leadership while most startups believe that if they say they are a leader in enough press releases then the market will believe it.

Drew Lanza at Morgenthaler stated as much in my interview with him a few weeks ago. And he doesn't seem to think making small advances is a bad thing. The venture community will fund companies that can make money by being competitive. Not every company needs to be a leader. If you can, that's great, but it is not necessary to be successful.

So let's just put it out there. There are rarely leaders in any industry; just groups of companies waiting for someone to choose a direction for them to all go. 99.999 percent of every industry is doing business in the same way everyone else is. The chance that any one company is actually a leader is very small. What you need to do is create the perception that you are doing something valuable. That takes time. That takes relationship. That takes conversation with the market. That takes the ability to be able to listen to the market, not just talk at it. And it takes a decision to not be part of the herd. The question is, how do you do that?

Next Week: Leader? Who says?

Wisdom and ignorance, Part 3: Mine is bigger than yours

I have about 30 years as a communications consultant. I've worked with hundreds of companies massive and miniscule. I have pitched business to or researched thousands. In all that time and research I've learned pretty much every B2B company believes…

• … they are doing business different than everyone else,
• … they are doing business better than everyone else,
• … they are a, or the leader in their field,
• … there are only 5-10 potential customers for their product.

There are some basic problems with those beliefs, because, with rare exception, every company waits to see what some other company is doing before going in a particular direction. And before the other companies move in that same direction they wait to see if the first mover is actually successful. Until they are successful they first mover is widely derided as being delusional.

Case in point: Apple and the iPod. When the iPod first came out, there were all kinds of critics. "Apple is a computer company, what do they think they are doing." Apparently they knew well what they were doing and the sales of the iPods has turned into a boon for their computer sales as well. The iPhone is on the verge of doing to the cell phone market what the iPod did to the music industry. Did you know that more than 70 percent of the smart phone browser market is now owned by Apple's Safari? And that 29 percent of the smart phone market is owned by Apple now? That's after only 8 months on the market! Everyone is following Apple now with products that have the look and feel of Apple products. Even Microsoft.

In reality, most companies in a given industry go after the same 5-10 potential customers and ignore 500 to 1000 other customers they could have. Even if there are companies in the industry that don't compete technologically with each other, they compete with each other for the ever decreasing budget of those 5 to 10 companies. With the trend toward consolidation, those 5-10 companies will be 2-3 in 10 years which means the identified market for most tech companies is shrinking. A few companies get this and do whatever they can to get a paying customer, preferably one that pays the full price. These rare companies will succeed more often than those concentrating all their sales efforts only on what is in the sales VP's contact file. These companies are stepping out in a new direction rather than follow the crowd. And a few others might follow them. Keep that in mind: if you think you are a leader, turn around. If no one is following you're not a leader. You're just taking a walk.

Technology companies used to advertise heavily in the media. That's no longer true. They started to advertise heavily during the dotcom boom because dotcom companies were getting all the attention. Some electronics industry companies started calling themselves "dotcom" companies, just to get attention, even though they had little to do with the industry.

I had a friend who was a TV weatherman and right before the bust he decided to launch a competitor to the Weather Channel's website. He made a presentation to a big VC firm to get funding. When he was done with the presentation, one of the Vcs turned to his partners and said, "Gentlemen, when my local weatherman starts a dotcom company, it's time to get out of the market." My friend didn't get his funding, his company went under, and the VC fund sold all their holdings in dotcom companies, six months before the bust.

My point is, if you go after a market that someone else has had success in, you are not a leader. If you try to improve on an accepted technology, you are not a leader. And if you follow marketing practices that give the same result that everyone else is getting, you are not a leader. You are part of the herd.

There is really nothing new under the sun. The only hope you have is to get other people to believe you are something new. You don't do that by telling them in your news releases that you are a leader. You don't do that by spreading your news release, copied pretty much word for word from another news release, all over the Internet. You do it by getting someone who knows how to communicate with your market. And in most cases, that person doesn't work for you.

Next, the realities of leadership.

Conventional wisdom or prevailing ignorance. Part one

(Here we go. I've been thinking on stuff for several weeks now and have mapped out a multi-part post on conventional wisdom, which is just a nice word for herd mentality. The opinions expressed are my own, but the are based on the insights of dozens of journalists, analysts, investors, entrepreneurs and even qualified marketers, some of whom have been quoted and interviewed on this blog. I don't expect a lot of agreement here, but I ask that before you react, just consider for a moment, that I might be right.)

I was at a tradeshow recently and listened to a panel of experts talk about the state of their industry. What was entirely remarkable was that in the midst of an economic downturn; when their industry as a whole is growing slower than the rest of the economy; when Wall Street it self was calling the industry an horrible investment opportunity, these experts believed all is well in their own little section of the world.

This was not an isolated instance. Whenever I talk to someone about the state of any industry, the general belief is the industry is in trouble, but each individual states publicly that their company is doing just fine.

There are two reasons for this. First, the economy really isn't as bad as one might think. Second, people believe their own marketing. These are not mutually exclusive reasons.

The economy is not in great shape right now, but to read the media accounts we're on the verge of a sustained worldwide economic collapse. However, I've been hearing that prediction since 1970 from economists, journalists and preachers. If someone keeps saying it, eventually it's going to come true, but it's not something I would bet on. But one of the big reasons the economy is the way it is is because we don't really have much of a media left to filter out the marketing crap. All we have left is what we are telling ourselves.

At the conclusion of the panel session, through which I was consistently shaking my head in stunned unbelief, I heard several people in the audience congratulating themselves on attending such a positive event. Looking at the badges of these commentators I noticed they were all with the leading companies of the industry, and they were all marketers. These companies are congratulating themselves, as well, on completing years with between 1 and 4 percent annual revenue increases. In this same year, multiple start ups actually went bankrupt or were picked up for pennies on the dollar of investment. The market "increases" for the big companies came from, in no small measure, from the growing lack of competition in their industry.

The marketers can't see this because they have divorced themselves from the concept that they actually need third-party endorsement of their positions to know where they really are. That's why industry is cutting it's support of not only media but independent market research. Like I said yesterday, it's bad news if it doesn't line up with your world view and therefore it is not reliable.

Our economy would be much healthier if we had real analysis of the market data. At the moment, that analysis is dying a slow death from lack of support, and the closer we get to that death, the worse it is going to get for our economy. But before we get to that, we're going to look deeper into the marketing group think. Later.

Good news, bad news

Over my career I've heard people decry the preponderance of "bad news" in the media, but no where is that complaint heard loudest but in the technology industries. What is interesting, however, is no one can actually give a definition of bad news other than there was once a story that portrayed their company or technology in a bad light. In other words, it didn't exactly line up with what the CEO want the article to say.

Last week, we had a long conversation on the blog with Ry Schwark of Mentor Graphics who complained that start ups in his industry got the lion's share of the coverage in trade publications (which isn't true except in his own perception) but that too can be considered "bad news" in some circles.

This weekend, while standing in line at Safeway I picked up an issue of Newsweek with the subhead "The real media bias." The article inside stated that what the media is really biased toward is not political, but in favor of conflict. Regardless of what you believe, Newsweek makes a good point. I logged on to SFgate.com (the SF Chronicle site) and took a look at the articles on the front page and all but one had to do with some sort of conflict.

Having considered all this for the past few days I now have a good definition of what "bad news" actually is. It is conflict. Anything that states a position of perception that is contrary to what an entity in power considers correct is bad news. An industry leader (and that means anyone who doesn't call themselves a leader in the news release) is going to consider any news coverage of a competing start up as a conflicting message and therefore bad news.

Let's contrast that with what might be considered "good news." For an entity to call something good news it would have to be something that agrees with its position. But everyone else competing in that space would have to consider it either "bad news," or worse, "a puff piece."

In that definition any news that does not directly benefit an individual is either bad news or puffery.

But I'm going too set a definition of news that most journalists would agree to. "Bad news" is anything that presents a conflict, like a lawsuit or bad financials. Good news is anything that benefits the larger community, like a cure for cancer or a way to cut the cost of semiconductor design. And real news is information that someone may not have had before... regardless of anyone's marketing plans.

If we want to get back to real journalism, we have to accept that we live in a community larger than our own household.

How blogs will replace journalism

This has been a busy day. My third posting. But alot is happening. And one thing that might be very important has happened in my little community.

Brian Fuller, Chris Edwards and John Blyler have all made comments about my past few blog postings, including the one with the interview of Drew Lanza, to analyze not only my facts but my appraisal of the state of the media.

Now Drew made the comment that blogging doesn't provide the analysis and insight that traditional media has provided in the past, but lacks the resources to to today. But when you put three or four bloggers together to talk about a particular topic, an analysis arises. (By the way, Chris, great job on wrapping up Drew's comments).

We're seeing it happen before our eyes folks.

Wake up and smell the coffee!

Rick Merritt at EE Times. has a post out of CES regarding the wireless industry that bears reading. Once again semiconductor companies are shelling out truckloads of cash to present tired, repetitious information at a trade show that continues to damage their credibility and that of an entire industry.

The last wireless company I consulted for assured me that what they were demonstrating at CES was "real" and not just a demo; that they had customers ready to talk about how it was being implemented and would shortly be delivering product to the consumer market. That was two years ago and it still hasn't happened. In fact, that same company is at CES this year with the same story. The three other wireless companies I considered working with (but didn't) are also saying the same thing at the same place. No one believes their story either.

After that first foray into the wireless industry, and giving up some of my credibility with the press by convincing them that this company was the "real McCoy," I learned my lesson well. This is an example of an industry that is just not getting it.

I've said it before and I will say it again … trade shows are not the place to do press relations, public relations or marketing; it's a place to meet customers that have already heard about you through your press relations, public relations and marketing program. It's a place to talk about your real accomplishments, not what you hope to do. If you don't have that kind of story to tell by the time the trade show deadlines come around, then you shouldn't go. I'm convinced that most of the budget spent at CES would be more effective and profitable at the gambling tables and brothels in Nevada.

It's time to wake up and realize that the marketing practices of the 1980s don't work for startup companies, especially in the IC world. Wake up and do something different.

OK, I feel better now.

If it walks like a duck, it's not an eagle

Marketing is generally defined as a process that identifies, anticipates and supplies consumer requirements efficiently and effectively. Marketing communications, publicity and advertising exist on one side of the marketing effort, pushing information to the customer. The media and analysis communities are on the other side of marketing providing information to create the messages that are pushed to the customer.

Public relations exists along side of marketing and serves the marketing effort, but it is not a subset of marketing because it is not directly involved in the sale of products and services. Instead, the activity of public relations is the engineering of opinion in the marketplace. It is, in essence, the conversation of the market, where the various publics – the media, the consumer, and industry – participate in defining and building the economy.

A public relations practitioner is one who acts as an advocate for all the various parts of the marketing community – the media, the industry and the customer. Before they distribute the information they participate in the development, providing insight to the client about what the market is saying; what the media is looking for; making the messages clear.

Once the information is complete and the story appears clear, they help decide who the correct recipients should be, when they should receive it and then monitor how well the recipients interpret the information by their responses.

Sometimes the response is not acceptable to the client. The client will often assume the media is "lying" or pushing an opposing agenda; that the customers are uneducated or that the competition has skewed reality. The practitioner must, at that point act as an advocate for all the publics and press the assumption that the message may have been inaccurately crafted or that it contradicts the "reality" of the publics they are attempting to converse with, keeping in mind that the goal is to engineer opinion, not just promote assumptions.

But as wonderful as all that sounds that is generally not what is done.

Most of what is called public relations is actually just publicity. The primary activity of publicity is the distribution of news releases and arranging press meetings. Someone who does this primarily is not a public relations practitioner, but a publicist. There is little concern for the needs and interests of the media, nor of the customer. There is also no need to be concerned for the needs and interests of the corporation they serve. The role of a publicist is reactive. A publicist takes a bit of news and delivers it to as many information vehicles as possible, with no particular regard for the content.

There is nothing wrong with this activity because it serves a purpose, which is the dissemination of information and it can be part of the public relations process. But it is not what defines public relations nor is it a substitute for it.