Early in October, Yahoo! made big news by acquiring Overture, a global leader in commercial search services on the Internet. Just before then, I had spoken with Matt Strain about how marketing can work effectively within a technology-driven company. Matt is the former Director of Strategic Marketing for Overture's Web Search Division, AltaVista.
Matt spoke about how he brings the customer perspective inside the company. Whether working with Engineering, Finance, Sales or the Executive Team, he credits the unique value that marketing brings to the company to its understanding of the customer.
In addition to his role in strategic marketing at AltaVista, Matt is an instructor in the e-commerce program at San Jose State University. (He also teaches an online seminar on e-metrics for us here at MarketingProfs.com.) Matt cites his years with Apple's development in countries throughout South and Southeast Asia as his formative marketing experience. Here is an excerpt from our discussion.
Young: What role does marketing play at Overture's Web Search Division, AltaVista?
Strain: It's an interesting time for us because we're in the process of merging three companies: Overture, AltaVista and the Web search unit of the Norwegian company Fast Search & Transfer. Overture has been primarily a B2B brand; AltaVista has been a consumer brand; and Fast has both a consumer and a B2B side, providing search results to business partners. So there's an exercise now: how does the branding play out?
Young: I imagine there is strong brand recognition for both Overture and AltaVista in their respective customer segments. What are your considerations for developing an integrated solution?
Strain: We are looking at how customers perceive the various companies and their strengths and weaknesses, as well as the emotional ties that people have to a company they've been with for years. If we make a change, we must consider how Overture will be perceived, which the advertising world now sees as one of the strongest successes on the Web, and how AltaVista will be perceived by consumers, which has the legacy of being one of the first great search engines. We are also trying to analyze the issue from a stockholder perspective. Then the question is, Do you go with one brand, or do you do a combination of the two? One area being discussed is the creation of an ingredient brand—an “Intel Inside” approach.
Young: Do you, as a marketer, participate in strategy discussions?
Strain: Yes. I came here at the beginning of the year looking at how we can grow traffic and users at AltaVista. To a novice user, most search engines look fairly similar—a page of text search results. So, with that in mind, I started working with an engineer who had technology that presented search results in a very different way, on about four different dimensions. We looked at what was going on with the leading search engines and asked ourselves what could be done to add significant value and differentiation to the search experience.
Young: What is the role of marketing in this product development process?
Strain: It's critical. We were designing the new search product from the point of view of what would benefit specific segments of customers. In technology, this can be challenging. So what we try to do is work out a couple of different areas looking at the traditional search area, but also combining that with some of the things that are happening in the online community and self-publishing space. Working with Engineering and customer advocates from the outside, we identified the intersection of those three needs.
Young: How have you worked with Product Development and Engineering?
Strain: The engineers had products that were about 85% complete—very exciting, functional prototypes. You have to remember that AltaVista was the pioneer in search and holds an incredible portfolio of search patents. As a marketer, I could quickly identify a project or two and take an almost completed product to market. With one of the engineers, a product manager and a user experience guru, our small nimble group of four set out to complete the product. Working together as a team, we have taken a product that was sitting on someone's hard drive to what I think will be one of the more interesting products to be launched in the search space.
Young: At what point does Finance come into the picture to evaluate investment decisions? How do you make an argument for financial support?
Strain: In this case, it was done in a nontraditional way. Because this product is so different from anything on the market, we could not apply the approach of basing adoption and revenue projections on similar products that had been introduced in the past. Also, we were looking to develop a product that would generate buzz and change the discussion of what is important in the search space. So, my recommendation was that we position the product as having as much value in driving awareness and traffic as in generating short-term revenue.
Young: Did top management understand the need to emphasize efforts to invest in awareness and use?
Strain: Top management definitely understands the need to increase brand awareness and position the company as a leader in the space. Fortunately, because we think it will be a hot product, I believe there will be an excellent opportunity for monetization. However, one option in a case like this is not to burden a new technology with heavy revenue expectations, but to release the product and carefully observe adoption and usage patterns before forcing decisions on how it can best be monetized.
Young: In the post-dot-com era, investors are less patient than they were. Does that make it more difficult for you?
Strain: Yes and no. The nice thing about being a public company is that we don't have traditional VC [venture capital] investors who we need to answer to. So we're able to take a more strategic approach. I suggest thinking of it as having a portfolio of products: some are stable products and we know how they are going to perform, and other products carry a very different risk/reward profile. So far, all senior management is very excited about the opportunity for this type of new product. They see it as a way for AltaVista and Overture to redefine how search is used.
Young: For you, personally, what does it mean to have respect as a marketer in an organization?
Strain: It's a couple of things. As a marketer, it means that others believe that you understand the market and that you can appropriately represent the customer within the company. That's the source of credibility.
Before I came to AltaVista, I was working with Apple and Palm to help them understand specific customer segments. My approach was to conduct in-depth, one-on-one interviews with customers from a specific segment. I recorded these conversations, edited them, and presented [to managers] customers talking about why they did and didn't buy from the company. This made managers uncomfortable.
It did, however, get their attention in a way that a survey or traditional market research couldn't. It also helped to bridge the gap between Sales, Marketing and Engineering by reducing the issues to individuals with faces and personalities.
So I think respect from a marketing standpoint is if the company feels the marketer understands the customer and can represent the customer in those conversations; that's probably the most important thing that they can do. There are the strategic and the tactical marketing things that need to come into play, but if you're able to really understand who your customer is and how they perceive your product and company, that's the source of respect.
Young: How do you know that you have respect?
Strain: A good sign is when others in the company seek out you—especially others from non-Marketing groups. This may range from [attending] Engineering staff meetings through to interviewing non-Marketing staff or representing Marketing in skunk-works projects. I also take being invited out to lunch or drinks as a good indicator of the respect that others have for you. And, lastly, when others come with contentious issues, I take it as a sign that they believe you're the one that will listen and get something done.
Young: You're coming from a company with a B2C perspective and now marrying that with a B2B perspective. Is there any difference between the two in what it means to have respect?
Strain: Of course there are differences in the business models and the metrics used to evaluate the business. However, the basics of understanding the market and connecting with the customers remain the same. I see the AltaVista/Overture combination as one that is very complementary and one in which the combined company is able to offer a much more extensive range of products and services to a wider base of partners. From what I saw, each company had a high degree of respect for the other.
Young: When you say metrics to run the business, what are the metrics that Marketing uses to run its business?
Strain: From the B2B standpoint, Overture has three sets of customers. One is the advertisers that are paying for the paid listings. The other is the partners who are displaying those paid listings on their sites. And, ultimately, there are the end users, who, when they conduct a query, see the results of their query with the combination of paid listings and the editorial results. AltaVista has both: people who have been business customers because they are either paying for inclusion in the results or they are paying for paid listings.
Obviously, the key from the consumer marketing standpoint is, What's the experience on the site? Are they coming back to use it repeatedly—you know, how do we get to be their primary search engine? It's a balance of two or three sets of customers.
First, there are several “customers” in the search space. There are the 30+ million users who come to AltaVista every month. At a high level, search engines evaluate metrics such as page views, unique users, queries per user, yield-per-page and retention.
There are also a slew of metrics to evaluate the relevancy of specific results. There are also monetization metrics that include how various advertising units are performing. Major search engines evaluate these from the perspective of user experience and revenue potential.
Second, there are the advertisers. The majority of the advertising in the search space is moving to paid listings. For this, metrics would include things like the coverage rate (how many pages contain a listing), click rate (what percent of listings get clicked on), and the cost per click (how much money is being generated for a specific click).
And, third, for search engines that syndicate results to other partners, there is a combination of these metrics that evaluate how the syndicated search is performing on their site.
As the search space continues to heat up, I believe segmentation and retention will become increasingly important.
Young: That is a lot to juggle. I used to work in the magazine business and we had two primary sources of revenue: advertising and circulation. But your business sounds even more complicated.
Strain: Yes and no. In some ways it's easier because of the ability to measure. If you think of Internet search as a direct marketing channel, you'll see many similarities. The user types in a query and the search engine delivers algorithmic results combined with the paid listings.
The algorithmic, or editorial, results are analogous to the magazine content, and the paid listings with the advertising. Unlike a magazine, we are able to get incredibly precise with the offer presented to the searcher. I believe this results in a much more valuable and mutually beneficial marketing experience. The good news is that the complexity is being reduced as the paid search vendors (Overture and Google) release increasingly sophisticated tools to track conversion and ROI.
Young: What work habits and skills have made you most successful?
Strain: There are no secrets. Business is about people. I try to invest time to maintain personal and professional networks inside and outside of the company, [and] inside and outside of the industry.
In a world where business models, partners and products change rapidly, it's important to be able to access expertise and perspectives from many different areas. Related to this, I try to stay close to the customer without letting technology get in the way of the people who are at the other end of the Web site or who are buying my product.
Young: What was the most formative moment in your marketing career?
Strain: I was in my early 20s, working for Apple Computer in Hong Kong in the late '80s where I was hired to grow Apple's education market. The university computer departments and chancellors were staffed with professional who had been in the field longer than I had been alive. I was selling against “safe” products—IBM—and against competition with much deeper resources.
There are two things that turned this around. I invited one senior representative from each of the five universities (the head of the computer science department or the chancellor of the university) to attend Apple's University Consortium in Australia. Wives were also invited. This was a meeting attended by the computer science heads from the world's leading universities.
So, instead of being the new kid on the block selling a risky product, in one case I watched the head of Carnegie Mellon's computing initiative berate the head of one of Hong Kong's leading universities for not having a Macintosh lab. The conversation was not about products but about philosophical approaches to education, to offering choice, to being on the cutting edge.
As a follow up to this, I identified individual professors within each of the universities who had a passion for combining education and technology. Within the year, we had Macintosh labs in each of the institutions with teachers and students committed to developing on the platform.
The lesson: leveraging influencers and focusing on customer with passion to help evangelize products.
Young: Sounds like you could have written the book on customer evangelism.
Strain: It was wonderful training ground for learning the power of customers and listening to customers.
Young: Apple has a very different culture from many companies. In what respect does culture dictate what marketing needs to do, or can marketing influence culture?
Strain: Marketing needs to be authentic. The brand needs to be a thread that runs through the company. These days, customers are skeptical and will draw and quarter you if you're not authentic. Apple truly had people who were out there trying to change the world and working there because they believed in something more than just making margin on a product and selling boxes. It comes through the products, people and customers. If your customers are passionate about it, if you have the kind of product that lends itself to that and if there's a culture that promotes both—as well as the execution, which Apple does very well—I think that's a recipe for success.
Young: Does that make cross-functional teams work well?
Strain: It needs to be something that is supported from the top and throughout the organization. But yes, I do think a shared passion helps cross-functional teams work well. Of course, there needs to be a balance between passion and execution. There's a risk of people not executing toward the same goal. Apple suffered from this at times. The key is to combine passion for the products and customers with a passion for execution. This requires strong leadership that is able to articulate the goal and milestones to reaching the goal.
Young: How do you work on your professional development?
Strain: One is just doing as much networking as possible: finding interesting people, talking with them, exploring ideas. Another is to align myself with projects that I think are important. And three, I just try to stay fresh on technology. In general, I think it's important to stay current—that way you can add value and perspective to those around you.
