Understanding the Rapidly Changing Mobile Handset Marketplace Through Brand Advocacy The Relationship Between Advocacy and Share Contact: Tom O’Brien MotiveQuest LLC [email_address]

What is Brand Advocacy? Brand Advocacy , the active sharing of one's beliefs, interactions, stories, experiences, thrills, and disappointments in regards to all the products and services that fill offices and garages, closets and cupboards, dreams and realities, is a concept that is changing the nature of marketing. Brand advocacy is not a new concept. Measures of brand strength like loyalty and propensity to recommend are fundamental to marketing. However, the difference today is where the conversation is taking place. And that's online. With passionate, credible experts sharing their points of view on everything to everyone, word of mouth is no longer a one-to-one activity. A good or bad review that leads to a sale, or not, is only a click away.

SHIFT: The rapid fade in the influence of traditional media channels is pushing advocacy to the fore as a measure of brand health. TIME IMPACT AWARENESS SALIENCE ADVOCACY

“ SMART” SUCCESS: Treo and Blackberry anticipated consumer needs fueled by online advocacy and brought people a smarter phone. Online Brand Advocacy Market Share Needs Product Product Needs Results Results

US MARKET SHARE: Blackberry and Treo had eaten away at the top 4 even before the launch of the iPhone.

EXAMPLE MOTOROLA SHARE: Motorola’s Advocacy (measured by Online Promoter Score) was plummeting in the face of this wave of smartphones. iPhone Launch

AND IPHONE ARRIVED: Apple reacted to the category shift with iPhone and changed the mobile handset category forever in three major areas. Category Market Share Category Meaning of “Cool” Category Paradigm Category Shift Thin -> Personal/Interactive

BUZZ SHIFT - 2005 vs. 2007: The net result was a shift in drivers from thin to personal/interactive. Source: All Cellular Data, June 2005 & June 2007 Personal Interactive Touch Screen Efficient Intelligent Smart Functional

APPLE: Apple really transformed the market gaining advocates and a 3.2% share of cell phones with a $500 phone.

COOL 2005 VS. 2007: The arrival of the iPhone changed the meaning of “cool” from physical (hardware) to interactive (software). COOL WORDMAP – JUNE 2005 vs. JUNE 2007 Source: All Cellular Data, June 2005 & June 2007 Note: WordMap is designed to expose the relationships between words. The WordMap shows the top 100 relevant words to a concept (AT&T and Cool). The relative sizing of the bubble represents the number of occurrences of a concept or word. The distance between a word and its concept is dependent on the relevance of the word to its concept. When a given word is relevant to 2 concepts the words move to the middle area between the 2 concepts. RAZR Little Looks/Colors Camera Case Useful iPhone Sexy User interface Megapixel (mp) Touch screen Enjoy/Toy 2005 2007 June 2007 June 2005

Note:

WordMap is designed to expose the relationships between words.

The WordMap shows the top 100 relevant words to a concept (AT&T and Cool).

The relative sizing of the bubble represents the number of occurrences of a concept or word.

The distance between a word and its concept is dependent on the relevance of the word to its concept.

When a given word is relevant to 2 concepts the words move to the middle area between the 2 concepts.

DRIVERS OF SENTIMENT - FEATURES : And finally, the iPhone changed the paradigm of the category from communicators to computers. Source: Cellular Data, 1/1/2007-7/31/2007 Ranked by iPhone’s lead over the category iPhone’s lead over the category Category‘s lead over iPhone

CATEGORY CORRELATION: Share will increase (decrease) by 39% of the increase (decrease) in online promoters for the previous quarter. High degree of confidence with a p-value = 0.25% (statistically significant p-value = 5%) change in online promoters change in share

High degree of confidence with a p-value = 0.25% (statistically significant p-value = 5%)

EXPLORATION SUMMARY: A new business landscape The energy of the cellular category has shifted from communications to computing, from hardware to software. This will change the business model of both the phone manufacturers and the retailers. In the new world, money will shift from products to services and those with the best software/service model will win the war. Key players in the market could have foreseen this shift by listening to consumers earlier.

The energy of the cellular category has shifted from communications to computing, from hardware to software.

This will change the business model of both the phone manufacturers and the retailers.

In the new world, money will shift from products to services and those with the best software/service model will win the war.

Key players in the market could have foreseen this shift by listening to consumers earlier.

APPENDIX

THE ONLINE PROMOTER™ SCORE: Methodology Summary Measures the number of people online that are recommending your brand to others Developed as part of an on-going relationship between MotiveQuest and Northwestern University to find insight in the voices of consumers Built on top of sentiment to aggregate the total commentary of an individual about a brand Differentiates persons who discuss more than 1 product and assigns a score to their most favored brand Jacquelyn Thomas Professor of Marketing Communications Northwestern University “ We co-created this methodology with MotiveQuest and are very intrigued by the strength of the statistical relationships between the measure and sales results.”

Measures the number of people online that are recommending your brand to others

Developed as part of an on-going relationship between MotiveQuest and Northwestern University to find insight in the voices of consumers

Built on top of sentiment to aggregate the total commentary of an individual about a brand

Differentiates persons who discuss more than 1 product and assigns a score to their most favored brand