In Microsoft Changes Its Marketing Tune for Lackluster Zune, AdvertisingAge outlines the changes in the company’s new Zune 2 promotional strategy:
…Zune is dropping its original strategy, which painted the iPod as an isolating device and Zune as more social because its tunes can be shared among users. Now the campaign is centered on the individual and tagged “You make it you.” The iPod “has become a superficial status symbol,” said Mike Harris, partner-strategy for [Microsoft ad agency] T.A.G. Zune is more personal, he said.
When Microsoft launched Zune last year, it wanted to establish the brand and emphasize its unique wireless sharing ability to create a “stark contrast” to the iPod. Peter Kingsley, group manager for Zune brand marketing, explained the approach to CNET:
A key principle to our advertising creative is authenticity, in that the Zune brand is about celebrating great artists and the real people that enjoy it.
Hmm. After its first year, Zune gained less than 11% market share in the $250+ players-with-hard-disks category (cf. Apple’s 86%+ share) and 2.2% overall share among all MP3 players. For a company that spends $1 billion in advertising, its paltry $9 million ad budget in 2006 underscores Zune’s lowly status in Microsoft’s strategic focus hierarchy.
So what does Microsoft do for Zune 2? Double the ad budget ($17 million for the next six months), change the ad agency (McCann-Erickson’s new T.A.G. unit in San Francisco) and drop the “Welcome to the Social” strategy.
With the iPod having a near-invincible lead, Zune 1 took the alternative, anti-entablishmentarian approach by featuring quirky arts and sharing themed campaigns, which I declared a dud in an earlier article, Consumer markets: Time for Microsoft to exit?
Now the new youth-oriented agency, is planning a more aggressive TV-heavy approach. As can be seen at ZuneJourney.net, there’s a Beatlesque, happy-to-be-alive, psychedelic streak to the campaign:
The first Zune 2 TV ad is Ballad of Tina Pink, featuring “Lake Michigan” by Rogue Wave (1:05 min video):
Is this going to work?
Let’s recall that Microsoft first ignored the iPod, then attacked it for being closed and touted its own ‘many options’ approach with its hardware partners. Christine Andrews, lead product manager of MSN, at the introduction of Microsoft’s music service in 2004:
We’re different because Apple is a closed system. If you want Apple, you have to use the iPod. A lot of people want choice and we offer that.
When that didn’t work, it complained about its partners not delivering compelling hardware, abandoned its PlaysForSure platform and got into the hardware business to compete directly against its erstwhile partners. Now that Zune 1 has flopped, Microsoft is playing its ultimate card: ‘we’ll get there by version 3.’ Chris Stephenson, GM of global marketing, Microsoft Entertainment:
We are very much aware of the strength of our competition, but once our company gets into something, it will not give up…It’s good being in the No. 2 place — we can fight the good fight.
As I argued earlier, Zune has no compelling advantage over the iPod, other than being not-the-iPod. With the possible exception of Sony (that apparently cannot write software if its life depended on it), there’s really no other company better positioned to challenge Apple’s digital music hegemony than Microsoft. But is Microsoft being delusional here or is Zune 2 just a bridge to Zune 3 that’ll crush the iPod?
At the company’s financial analysts meeting this summer, Robbie Bach, president of the Entertainment and Devices Division at Microsoft, outlined Microsoft’s ‘version 3’ strategy:
We think of this in the hundreds of millions of dollars of investment…It is something that is going to take time. This is not a six-month initiative.
At this rate of ad spending alone this should be a five-year initiative. Does Microsoft have that much time? And what of the brand strategy that’ll run that initiative? Robbie Bach:
We have to drive a new brand: Zune…We have to drive people who think about iPod as the brand to think about other things.
Is that clear?
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Consumer markets: Time for Microsoft to exit?