Saturday, October 19, 2013

Leak Marketing: Are Product Releases Shifting Fundamentally in the Realtime Era?

Press leaks are nothing new to marketing. Be it spy photos of automobiles on test tracks, scuttlebutt gleaned from overheard or off-the-record conversations or just plain pinching of information, people love to hear about products before they're released to the public - and the media knows that rumors are always hot news. It reminds me a bit of a rule of thumb wisdom in financial markets that drive a lot of financial information services development: buy on the rumor, sell on the fact. People love betting on the outcome of events, to the point that the final truth of the event itself becomes almost anticlimactic for many folks.

But in an era in which the broad realtime capabilities of Web publishing and social media are tipping the scales of what draws people's attention for breaking news, it seems that leaks are starting to shift the contours of how products are released in some ways that make the Wall Street model a bit more relevant. Take the recent release of Apple's new iPhones, for example. Under Steve Jobs, Apple cultivated one of the strictest approaches to product secrecy in computer technology marketing. In many instances, it appears that new employees were first assigned to fake projects, just to ensure that they were trustworthy about keeping secrets about the products that Apple was developing. Tight security and policies limited the "need to know" scope of information distribution in Apple to a degree that would make an investment bank or hedge fund proud. Yet in spite of these efforts, there was ample information about the new iPhones available prior to its September launch, including thorough glimpses into service manuals for details on specifications. By the time that the launch event came around, little was left to the imagination.

The pending release of Google's new Nexus 5 phone from LG, expected to be launched sometime in the next couple of weeks, is no exception and in fact may have raised the art (or science?) of leaks to a new level. Initially, when the traditional Android release "mascot" statue was unveiled for the new "Kit Kat" version of Google's mobile device software, someone happened to notice in an online Google video an unusual camera with a Nexus logo being used by a Google staffer taking photos of the event. Analysis of this photo was followed by analysis of other leaked photos, including a remarkably accurate 360-degree model of the expected phone. Additional videos, service manual leaks, postings of Nexus 5 cases and accessories as well as accidental (or not) postings of the actual phone on the +Google Play Store have revealed almost all of the key details of this device before a firm announcement date for the phone is even at hand.

What's different about this massive and broad generation of leaked information about new tech products is that it spreads so very quickly and organically via social media and the blog-driven tech press. There was a time when press leaks to friendly journalists could be used to provide carefully controlled views of what new products might be like - and undesired leaks were so valuable that journalists would guard them carefully as their own to ensure maximum readership. Today, in the link-driven online media, it's very hard to own the traffic generated by leaks, even when your publication may get attribution. And often via social media, it's everyday people in various product support roles that generate the core information about new products, subsequently picked up by the mainstream press but usually thoroughly analyzed online in social media before those publications have had a chance to weigh in on the leaks.

Is this a good thing or a bad thing? Well, we could debate that for a long time, but the simple truth is that it's a thing of some kind, and it's not going away. If markets are conversations, as The Cluetrain Manifesto book first advised us about Web-driven marketing nearly fourteen years ago, then the conversation about new products has shifted permanently to leak analysis as part of consumers' purchase decision process. As Google points out in its more recent Zero Moment of Truth view on marketing in an online era, these conversations have insinuated themselves into the traditional product lifecycle to the point that they have become a permanent and influential part of it. Consumers absorb data about potential purchases via trusted sources that include friends and social media connections and join in the conversation about new products well before they even approach a store shelf or online storefront. In other words, while traditional marketing is a component of a consumers' view of a branded product, the conversations about that product now affect its brand radically before it's even available for sale.

I am thinking about this especially in terms of the two-headed release of new iPhones recently. Apple had invested a great deal in the concept that slightly less expensive iPhones with colored plastic cases and warmed-over performance specs could be a big hit, along the lines of Apple's refreshing of its iMac PCs several years ago. Those iMacs were a big hit, not because they were any better than the previous Macintosh computers functionally but because the introduction of the colored and interestingly shaped units caught the public as being something new and fresh. By contrast, by the time that the colored iPhone 5c hit the market, there were widely available photos, lots of analysis of their potential pricing, specs and worthiness - and the release of a new line of Moto X phones from Motorola Mobility with twice the number of colors available on the iPhone 5c and the ability to mix and match colors on a custom basis. So not only did some of the pre-launch analysis of the 5c possibly tamp down desire for it, it also seems to have helped Google's Motorola Mobility one-up the 5c in both looks and certain features and performance.

On the other hand, leaks seemed to both help and hinder Apple for the launch of its iPhone 5s. This premium phone had plenty of accurate and near-accurate renditions beforehand, as well as fairly detailed information about its potential performance specifications. Apple's initial launch strategy was to restrict the sales of the 5s and to promote the sales of the 5c, expecting that the less expensive colored phone would have more sales. This was true for only as long as Apple kept its sales of the 5s restricted; as soon as supplies were loosened up, the 5s went on to booming sales, now twice those of the 5c model. The gambit to broaden profits and markets for iPhones via the 5c seem to have stalled, while the luxury image of iPhones have been supported better by the metal-finished iPhone 5s models.

No doubt leaks had shifted buyer opinions about the 5c more than Apple had reckoned, making their dual introduction somewhat flawed. It turned out that given the choice between several colors of an inferior model and a few simple choices of a superior model, most consumers had already made up their mind that the extra money was worth it before the phones were even rolled out. My guess is that Apple's analysis of pre-release leaks of the two new product lines may have caused Apple to restrict the 5s sales initially to create an image of greater popularity for the 5c model to get its sales going, but this strategy does not seem to have been able to overcome apparent consumer rejection of the 5c's value proposition.

So what we seem to be entering is an era in which leaks need not only to be managed, but listened to very carefully and, in effect, surfed for maximum precision in product launch. You might say that leaks are becoming free market research in a much bigger way, because the reactions to the leaks are much more quantifiable via online semantic analysis tools in a rapid fashion. This again brings us back to the Wall Street analogy: there had been real-time stock quote, news and trade information available in electronic form for decades, but it wasn't until software tools to perform analysis of that information in real-time became popular that the flow of analysis began to affect the sales, trading and marketing strategies for stocks significantly.

All of this does not mean that product development secrecy is doomed or unnecessary, but it does seem to mean that careful and timely analysis of how your markets are responding and generating product rumors and leaks is becoming as important as monitoring feedback on the products themselves. In essence that "Zero Moment of Truth" - the point at which a Web-informed consumer has made a decision about what product to buy- has shifted in many ways to a time frame that actually precedes the beginning of the classic marketing communications cycle. Consumer response to leaks and rumors now guides how we formulate those communications, both in terms of their content as well as their targeting and timing. To some degree consumer marketing has always tried to whip up a frenzy ahead of time, but now it must be analyzed much more carefully and deliberately and far earlier in the product lifecycle. As such, it turns out that properly staged and analyzed leaks can be used via Web content analytics to provide free and relatively unbiased raw data for market research that can affect product content, launch strategy and communications.

There's a risk/reward ratio in this leak management scenario that requires some careful analysis and research to substantiate its ultimate value, but this is only the quantification needed to gauge the exact details of how to manage a clear opportunity. I believe that focusing on this phenomenon and developing best practices for integrating into product and marketing lifecycle planning is going to have to be an essential tool in our management toolkits for many years to come. Glad to help you with this, as always.
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