Microsoft/Yahoo Deal Makes Google Stronger

August 12, 2009

Bing-Yahoo-search-engineNot 0nly do I not believe the hype that the deal between Microsoft and Yahoo will hurt Google, I actually believe it has positioned Google to grow even stronger. Why?  Well lets take a close look at the deal first.

Under the terms of the agreement, Microsoft’s Bing will power all Yahoo search sites, and in return Yahoo will sell premium advertising for both companies.  This creates a partnership where each company is using one of its strengths to help the other.  It creates an atmonshpere of no competition among these two companies, essentially making them one company in the search industry, and thus the number 2 competitor to Google in the area.

What the deal does not do is add any more ingenuity or creativity to either company.  What the deal does not do is set up a jointly run division with new talent and new ideas.  It takes the Bing search results, puts them on Yahoo’s sites, and allows advertising to flow freely across both companies’ websites.

Google has come out publicly and welcomed the competition when most people expected them to challenge the agreement, much like Microsoft challenged Google’s own search deal with Yahoo last year.  This deal, like that one, must pass scrutiny by anti-trust regulators.

However, if it does pass, as many expect it to, I think Google has made the right choice not to challenge it.  They will still remain the dominant player in the industry, at close to 70% of all search traffic.  And the combination of #2 and #3 in the industry will make the barriers to entry that much higher. Now, instead of a bunch of small competitors chasing Google, you will have a solid #2 player who will hold off some of the competition that Google should have gotten.

In addition, I think that this deal will send some competitive energy Google’s way.  It will keep them on their toes, make them take a few more chances in their search strategy, and maintain that culture of innovation that has taken them so far.

Of course this is only one man’s opinion.  What do you think?  Is Google better off with Bing and Yahoo on the same team or are they in trouble for this first time in years?


Home Depot vs. Lowe’s: Where is the Difference?

July 6, 2009

battle-homedepot-lowes-200x267drWhen multiple companies operate in the same space, the space has to be big enough to support them all, or one of the companies will eventually differentiate themselves and prove victorious at controlling the market.

 

Sometimes, the market is big enough to support more than one leader.  And when this happens, you most often see two companies that are so similar, it is hard to tell them apart.

 

I saw a commercial for Home Depot this morning, and without seeing the television screen, I assumed it was for Lowe’s.  They both say the same thing, the voiceovers even sound the same (even though Lowe’s tries to use Gene Hackman’s voice to stand out).

 

It got me to thinking, what is the difference between the two companies?  I have shopped at both, purchased from both, and been satisfied with both.  But after thinking about it, I can’t come up with one single point of emphasis or difference that would cause me to choose one over the other.

 

Both have brand awareness, but has either worked towards brand loyalty.  You would think that one of the two companies would try to differentiate themselves in such a way to gain market share over the other.  But, from what I can tell, both are satisfied sharing the market with the other one. 

 

There is a danger in becoming too complacent.  If neither company is actively pursuing an industry that they can dominate, where is the innovation and creativity coming from.  There is no motivation to change and grow.  Eventually a new player can come along and stand out from the rest of the industry.  And when that happens, it may be too late to change and adapt.

 

These two companies may be comfortable coexisting in this way, but if you own or operate a company, you should be very careful how similar you are to your competitors.  Standing out is the best way to build awareness and loyalty at the same time so you can grow and keep your customer base.


Direct Comparison Ads: Do They Work Best?

June 16, 2009

49d620c72962eAdvertising works when it is done right. There is no question in that.  Companies spend millions of dollars on ad campaigns trying to target the right market and convince them of something.

I have always been somewhat of a self-appointed critic of advertising.  Partially because of my fascination with the industry and partially because I have very strong opinions.  I love investigating what the ad is saying, where the message is coming from, and whether or not it is successful.

Sometimes you see an ad on TV and you think to yourself, how did this make it out of the original brainstorming discussion?  Other times you see something that blows you away and you wonder how someone could dream it up.

Lately there is an intriguing trend that I thought was worth analyzing.  Direct comparison ads are becoming quite popular, and companies are sticking with them for an extended period of time.  So one has to think that they see better results.

Direct comparison ads, for the sake of this post, are any advertisement that calls out the competition blatantly and says why one product is better than the other.  Some companies that are currently running these type of ads are Microsoft (vs Apple), Apple (vs PCs), 5 Hour Energy (vs Energy Drinks), Time Warner (vs Verizon Fios), Dominoes (vs Subway/Quiznos), and Total Cereal (vs Go Lean).  There are many others as well but that is enough to prove my point.

This has long been a popular style of advertising, going right after the competition and trying to lure away customers because of a claim that you are better.  That are rules and guidelines surrounding it, and you have to be careful about what you do and do not say about the competition.  But, if executed well, these companies have seen that the effects can be strong.

For a long time Apple ate away at the market for personal computers with their “Mac/PC” ads showcasing how easy Macs were to use.  Now, Microsoft has countered with ads featuring “real people” looking for new computers and choosing the more affordable, just as useful, Dell or HPs with Windows.  And those ads have resulted in a spike in purchased of those PCs over Apple Computers.

My only issue with this type of ad campaign is that you run the risk of sounding bad.  Personal attacks against other brands can come back to bite you if A) They are found to be incorrect or B) The competition changes something to top you.  Personally, I have found that Time Warner makes some useless claims in their direct comparison ads (such as comparing the ease of reading the bill with that of Fios).  I have Time Warner, and the bill is confusing.

What do you think?  Do you find direct comparison to be effective?  Let me know why or why not in the comments below.

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Just Compete Already

February 4, 2009

Why are there so many companies that sell an energy drink? Why are there so many deli’s in New York City?  How is possible for a Quiznos to succeed across the street from a Subway?

Competition. There are enough customers out there looking for something different.  They are willing to try something just because it is different.  They are looking for something that gives them a different feeling, something to tell their friends about, something that sets them apart.

A company does not have to be markedly better to succeed in a competitive market.  They just have to be different.  Different is good.  Different is important.

Don’t be afraid of being different.  Apple is different than Microsoft.  Starbucks is different than Dunkin Donuts.  FedEx is different than UPS.  They all compete for your business.

As a hopeful entrepreneur, it is easy to be talked out of entering a market because there is too much competition.  They’ll say that there is no chance for an online bookstore called Amazon to take on the retail giants.  You’ll say, but we’re different.

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The Truth about the Facebook/Google War

October 29, 2008

Google embodies everything that we dream the internet can be.  Their search engine transformed the way we found information.  And through the years, it seems like they lead the way for other internet companies to build their own space.  They represent freedom.

Facebook represents the newer, more united internet.  A network of people that grew out of control because it filled a void that we never even knew existed.  They lead the way in an area that has taken off in the last 3 years.  They are the epitome of social networking, and continue to grow their aspirations almost as fast as they grow their reach.

For these two companies, to say that they don’t directly compete would be very shortsighted.  Almost every online company must be aware of others, and these are the two giants of our time.  They are far and away two of the most innovative companies on the net, and they have enough money and power to dream and accomplish many things that we have yet to even contemplate.

As they grow, they also grow fearfulof what other internet powers meet do.  Though they will not openly say it, they must be afraid of losing out on the next big thing, or being beaten to the punch of some new project they are working on.

The poll from my last post shows that the majority of respondents felt that it was a good thing that these companies have been fighting back against each other.  And of course, in the traditional business sense, competitionis a good thing.  The internet, which represents freedom of ideas and information, must be a competitive marketplace, with no one company having too much control.  In this way, the pressure these companies put on each other will lead to each of them working harder.

But competition, perhaps especially on the internet, can make companies fearful and greedy.  This is an area that we have only started to understand.  Internet startups and entrepreneurs have proven that there is a limitless value to the online world.  We have only scratched the surface of its use.  And it seems that if these two giants worked together they could unlock more of the hidden magic in this marketplace than working against each other.

In my eyes, competition is good for the consumer when a market has limits.  When companies battle over set market share, they add value to their products and get better.  But in a field that has no limits, does a head to head battle make sense?

The internet is still a fresh, relatively undiscovered field.  In the coming years, we will no doubt develop new uses that are yet to be conceived.  And it is going to take companies acting on their own terms to continue to innovate and develop these new areas.  A Facebook vs. Google internetmay not be the best scenario for anyone involved.  The two companies share many of the purest and most innovative qualities that have made both of them successful in the online world.  They should continue to develop these commonalities and find a way to coexist without competing in order to get the most out of the internet in coming years.


Innovate to Find Your Blue Ocean

July 11, 2008

Innovation can come from a number of different situations.  Sometimes innovation comes out of necessity: to prevent a company from going out of business or to prevent an industry from losing touch.  Sometimes innovation comes out of luck: product development gone wrong or a “just for fun” project goes the distance.  And sometimes innovation is a well-planned strategy.

Companies that live on innovation have always found their place in the market.  The book, Blue Ocean Strategy, written by W. Chan Kim and Renee Mauborgne, is excellent read on this subject.  Instead of fighting in the red oceans, where bloody competition is the name of the game, Blue Ocean companies create their own uncontested market.  They take an existing idea and change it to find a new market.

A company that is built out of this type of strategy is innovating all the way.  Built from the ground up on the ideals of innovation, they tend to change the game for many well-established organizations, and open up consumers eyes to greater ideas and expectations.  Some great examples they use in the book are Cirque de Solei and Southwest Airlines, two organizations that approached old industries in a new way to capture their own market.

What is your Blue Ocean?  Stop cutting prices.  Stop the negative ads against your competitors.  Find your own market and let innovation guide you to even greater success.


March Madness

June 17, 2008

Success is not a winner take all game.  It’s not division 1 college basketball. You see, in division 1 college basketball, there are very few, if not only one winner.  It doesn’t matter how good your season was, it will almost certainly end in a loss.  The only teams that end the year with a win are the national champs, the winner of the NIT Tournament, and a few terrible teams that don’t even qualify for their conference tournaments.  It is the sport with the fewest winners at the end of the year, the ultimate test.

The point is, the business world is not like that.  In fact, when the economy is working like it should, and businesses are acting responsibly, it should work exactly the opposite.  There is room for success for all companies.  Sure competition is important, and there is only so much market share to go around in certain industries.  But you can always carve out your niche and achieve the type of success that you want without destroying everyone around you.

I am not trying to kill the competitive drive inside each one of us.  All I am saying is that there is a point when people can become hyper-competitive and lose the point of starting a business in the first place.  We should not try to achieve total domination of a market, we should try to achieve something that helps your customers.

Find the part of the market that fits your company’s strategies and go after it.  Once you have it, you can extend your offerings or marketing strategy to chip away at other segments of the market.  That is how to grow a business and that is the mindset that will lead to success.  Ridding yourself of that winner take all mentality will open you up to collaboration, outside help, and joint ventures that will lead to greater successes in business and in life.