“On our own, none of us are going to find a solution, but together we can.” It might sound like rousing political rhetoric but these are the words of Louise O’Sullivan, head of marketing communications at Renault, in reference to the car manufacturer’s partnership with BMW, Nissan, Toyota and Vauxhall.
The consortium was formed through the Government and launched in February 2014 to raise awareness of ultra low-emission vehicles in the UK. Surprising as it may sound for competitors to collaborate so openly, it is in fact a growing trend among brands, particularly for nascent markets driven by new technologies or companies that want to embrace the world of connected commerce to achieve international reach. Increasingly, there is a thin line between being a competitor and being a powerful ally.
The Go Ultra Low campaign, facilitated by the Society of Motor Manufacturers and Traders (SMMT), has been orchestrated with the ultimate aim of helping the UK to become a world leader in marketing the technology, a project centred on its GoUltraLow.com website. For Renault, the initiative promised to tackle the same barriers it was facing as a brand. “The SMMT asked each manufacturer to list its main challenges when it came to selling low-emission cars, and we all separately identified the same things – namely, people didn’t take the cars seriously, they were worried they would run out of charge, they believed the technology would change quickly. They were all common issues.”
Any new market needs critical mass to move it forward, and by partnering with its key competitors, Renault saw an opportunity to make a bigger impact than it could on its own. O’Sullivan says: “It has given us access to people within Government, creating a real two-way communication. This sort of market isn’t going to grow unless there is will at a national level and the infrastructure is in place, and each car maker [in the consortium] realises that.”
While Renault has joined forces with its competitors on an awareness raising campaign, Telefonica-owned O2 has gone one step further, partnering with competitors to launch a service offering that breathes life into a similarly embryonic market – that of targeted mobile advertising. O2 partnered with competing phone networks Vodafone and EE to form Weve, which launched in September 2013, and David Plumb, director of Telefonica Digital says “the writing was on the wall fairly quickly” when the company’s O2 Media division was trying to tap into this market alone.
“We had some success but our business customers said it is no use being able to reach only a quarter of the market with targeted advertising, and not the majority. Scale in digital is critical – that became really clear.” Weve claims to be able to reach 80 per cent of all UK consumers, with almost 23 million opted in to receive targeted mobile advertising from the three networks. “Very quickly the business model looks very different,” says Plumb.
Accessing new markets
Other companies have joined forces with competitors to access new markets. Software company Postcode Anywhere specialises in capturing address data online; more than 8,000 UK organisations use its product to ‘auto-fill’ address fields in online forms. In March, the company partnered with Australian company DataTools, in order to tap into the large Australian market. DataTools’ specialism is data cleansing.
Postcode Anywhere chief technical officer Jamie Turner says: “We would have been competitors in Australia but we realised that, while our address capture offering is much stronger, we can’t really deliver it over there. Their cleansing offering is much stronger than ours, and they are keen to internationalise it, so there is a very good quid pro quo.”
Postcode Anywhere’s data capture technology will be branded DataTools in Australia, while in the UK, Postcode Anywhere will start to offer DataTools’ cleansing technology under its own brand. “They are in Australia with an established customer base to start selling to. It’s the same here: we can take their technology, repurpose it with our international data and try to build a fully international solution. It helps us both to grow in a real spirit of partnership without treading on each other’s toes,” says Turner.
Another brand that views a multinational competitor as essential to its existence is second-hand bookseller AwesomeBooks, which sells via Amazon. “Amazon has allowed our business to become a going concern because of its reach, and from there we developed a brand and a business model
to cater for avid book readers, who are the core audience on our site AwesomeBooks.com,” says co-founder Mubin Ahmed.
He estimates that around 30 per cent of the company’s sales come from Amazon’s various marketplaces, and the company also partners with sites such as eBay and Play.com. “Partnering in this manner is vital in the books business. Margins are very thin and volume is key.”
The chance to achieve volume by expanding geographical reach is a door that can only be opened to many companies by digital giants such as Amazon. “Huge chunks of international audiences are opened up and these emerging markets often provide the quickest route to expand both volume and margin,” says Ahmed. “Our business, for example, ships around 35 per cent of all products overseas. This would be impossible without the likes of Amazon and eBay allowing us to piggy-back on their customer bases in those territories.”
But while the rewards can be sizeable, making such partnerships work can be challenging. Telefónica’s Plumb says: “Most of the time when we speak we have to have a lawyer in the room, as we have to be extra cautious to ensure we don’t say anything we shouldn’t [that would violate competition laws]. You have to build the trust of the partnership to succeed in that type of environment.”
Renault’s O’Sullivan adds that a third party – in her case the SMMT – is essential. “You need that other party, that almost independent steering committee.”
Often the increased pressure of such alliances hinges on the involvement of the right personalities. As Plumb says: “You need people who know how to partner and get on. We are three shareholders of a business and we have to sit round a board table together – building strong relationships is really important. It’s not for everybody.”
Indeed, O’Sullivan says that numerous car manufacturers were invited to be part of the Go Ultra Low initiative. “Some came for a few weeks and said it wasn’t for them. You need a collaborative spirit,” she explains.
A key part of this lies in striking the right balance between individual interests and group objective, she adds. “You have to have a very open mind and, to some extent, leave your competitive hat at the door as you go in. There is a balance of going in openly but obviously retaining your own commercial interest.”
That is not to say that each brand will not have its own clear marketing objectives within a partnership – Renault monitors web hits as well as brochure leads and test drive bookings generated through the joint campaign, tracking those that originate on its own brand site as well as those coming from links on the Go Ultra Low site. “We have seen around a 20 per cent increase in web traffic since the start of the campaign in mid-February,” explains O’Sullivan.
Go Ultra Low ensured that the multimedia plan agreed by the member companies gives equal weight to each manufacturer, while the three mobile networks involved in Weve have also taken practical steps to ensure that each one is well represented. “For example, when we deliver an ad it comes from O2,” says Plumb. “That is the brand that sends it, so our customers are not confused. And for Weve, when we go to [advertisers such as] the Tescos of this world and say we have aggregated across three operators but the actual message comes from O2 or whichever network, it keeps it straightforward.”
For Postcode Anywhere, a successful partnership has come from adopting a practical, rather than emotional, mindset. “You realise that you have to take out the ego and look at it purely on a commercial basis,” says Turner.
“This partnership will get our technology out there and, actually, DataTools’ brand is much stronger than ours in Australia – no-one has heard of us there,” he says. “Historically, we wanted to get our brand out there but now we don’t mind either way. All we want to do is get people using our technology and driving the export revenues. As soon as you get into that mindset it is a lot easier.”
AwesomeBooks’ Ahmed has taken a similarly philosophical approach to the future of business in a digital world, describing the company’s partnership with Amazon as a “commercial reality”.
He believes such a model is sustainable, citing not just Amazon but companies such as Tesco and Play.com as brands that have realised their strengths lie not just in the retailing of their own stock, but also in providing a wide selection of relevant stock from other trusted suppliers.
“This is a truly symbiotic relationship and one for the future,” he advises.
Case study: Ethical consumerism
Online shopping site Giveasyoulive.com enables consumers to raise money for the charity of their choice at no extra cost when they shop. In November 2013, it formed an unlikely partnership with Freegle, the online community scheme that promotes reusing unwanted items rather than buying more. The competing viewpoints of the two organisations have been reconciled, enabling Freegle supporters to donate to Freegle whenever they shop with Give as you Live, at the same time as boosting shopper numbers.
Freegle is run on a budget of £10,000 a year and it was looking for a new revenue stream when it came across Give as you Live, which works with more than 3,500 retailers – all offering commission on sales generated – and over 220,000 charities. A phased partnership was agreed, which began with an awareness campaign to promote Give as you Live to Freegle’s members.
“Freegle is about re-use, which doesn’t obviously go hand-in-hand with a website promoting shopping,” says Give as you Live head of communications Steff Lewis. “However, we were both keen to promote an ‘ethical consumer cycle’ to show Freegle users that they can replace their ‘Freegled’ items through Give as you Live and will be supporting Freegle as well as getting the best deal online.”
Freegle’s user base is not used to receiving email marketing campaigns from the organisation, or being urged to support it financially, so it was important to take a soft approach, using the collaboration to explain clearly the position the charity is in, how it is run, the funds it needs to continue and how Give as you Live can help. “In order to get this message across, it was key that Freegle integrated Give as you Live into all of its marketing touch points – its website, social channels and emarketing campaigns,” says Lewis.
To date, 2,217 of Freegle’s 1.6 million members have signed up to shop with Give as you Live and this is increasing every day. Freegle has raised over £1,790 through the site so far. “If all of Freegle signed-up users shopped, the annualised revenues could exceed £65,000,” says Lewis.
Managing director, financial services
As technology drives dramatic changes in consumer behaviour and expectations, banks will need to become ‘everyday banks’, positioned to fulfil customers’ financial and non-financial needs.
For example, when people want to buy a home they think about searching for properties, finding the right location and identifying the best lawyers to help. The everyday banking principle is about banks moving beyond their traditional role as enablers of financial transactions and providers of financial products to playing a deeper role in the digital and commercial lives of their customers, engaging them at the start of that journey. For instance, a bank could partner with online home-buying portals to provide relevant information at the right time, or it could create a content-rich site that encourages an online community to share their experiences of buyingproperty. It is not only banks that have an opportunity – people’s way of life is changing and brands across all sectors need to anticipate this change.
Five observations have informed our idea of the everyday bank. First, there are more companies competing outside their core industry as digital breaks down the barriers to entry. Second, changing consumer behaviour means they no longer need to go to a branch to do their banking – they can do it on the move. Third, in challenging times, how do banks make sure there are additional sources of revenue that help drive ‘new profit booms’? The fourth driver is the fact that technology has made it simple for companies to collaborate and offer services. Finally, as banks face being relegated to utilities that provide the back-end product, they need to ensure they engage with customers. Ultimately, banks need to make life simpler and more convenient for customers, anticipating and reacting to this changing world to ensure that banking is not invisible.
It means that banks need to look at companies that they consider to be competitors; rivals could be strong allies in five years’ time when faced with a player who could try to take market share from both. For example, think about a retailer and a bank coming together to provide a set of common services rather than a bank setting up a retail outfit and a retail outfit trying to create a bank.
Brands need to clarify what they are good at and identify the right partners to complement their brand position, to provide a plausible (and seamless) offering to consumers. In addition to working out how to adapt to changing consumer behaviour and move away from a product-centred approach to an approach truly designed around customer’s needs, the biggest challenge will be to win consumer trust in a sector other than the one for which thay are renowned. It is time to act.