Internet Sales vs. Channel Sales

In recent discussions with channel managers and internet marketing managers I've heard divergent points of view I'd like to open to public debate. According to the rules of internet marketing driven by analytics everything must be measured and all marketing expenses must be justified. This is also true for off-line marketing but measurement is not as precise. The beauty of e-marketing is that all internet touches are traceable -- pay per click, on-line ads, e-mail campaigns, downloads -- except when prospects buy your product or service off-line after learning about it from an e-marketing campaign without indicating the source.

Purchasing on-line is convenient for consumers and individual corporate buyers, but what about larger sales? That's where proponents of channel marketing and the direct sales team argue sales agent involvement is necessary for closing enterprise deals. Critics of the channel say reseller sales reps are just order takers that undercut pricing and reduce the company's gross profit margin. Channel defenders argue that the trusted adviser of a good reseller has the ear of technology buyers and can extend the publisher's/manufacturer's reach, assisting the vendor accelerate sales. Does this sound like Republicans and Democrats arguing about public policy?

Below are some questions that arise. What are your thoughts?

* Is it appropriate to keep spending marketing dollars on internet campaigns to the point of negative returns (because the real sales resulting are greater than that measured since some customers purchase off-line)?

* How do you effectively enforce minimum advertised pricing by resellers? How do you enforce MAP pricing if you use distributors? Should resellers' sales prices be higher than the manufacturer's on-line price?

* Is it effective for a manufacturer to state it has the lowest on-line price to encourage customers to purchase direct from its website?

* If you have effective on-line sales, should resellers even be allowed to sell your product on-line? Should customers only be allowed to purchase on-line direct from the manufacturer/publisher?

* What is an appropriate balance between e-marketing and channel marketing?

* If you believe resellers are order takers, what's the lowest acceptable margin you can offer?

* If you believe resellers help you sell your product, what's an appropriate margin to provide to encourage them to sell your product?

* How do you measure the effectiveness of your channel marketing expenditures?

* How do you determine the indirect impact of a manufacturer's e-marketing activities on channel sales?

Of course the first response to all of those questions is, "It depends." In my opinion the internet marketing team, the direct sales team and the channel sales team working together have important roles to play. How does your organization balance the roles and the allocation of marketing resources between the three?

CES Roundup

The 2010 CES exposition has come to an end. The show will be remembered for a plethora of 3D displays, e-readers, pocket projectors, apps, phones more powerful than computers, and more.

Entering the main hall you walk right into an impressive LED HDTV flat panel display from LG. All the household name electronics companies are showing them, and then some, including Chinese manufacturers you've never heard of with displays that aren't that bad (when compared to what was commercially available 5 years ago). But from what I saw, Samsung stole the show with a display so thin (try to find it in photo at left) you can hardly see it when looking at it from the side. Sleek as the edge of a sword.

A perfect storm in technological developments, the popularity of the movie Avatar and the need for manufactures to "keep up the Joneses" has lead many companies to develop 3D displays. A SONY representative said the cost will be similar to what you would pay for a non-3D set. Expect to see these on the market in time for World Cup soccer matches this summer -- if not sooner -- as broadcasters are announcing a line up of 3D programming. At SONY's booth I viewed FIFA soccer matches in 3D, which were impressive. I also looked at a PlayStation baseball game in which, as a batter, you feel you're up at the plate at Yankee stadium. (Samsung even showed a 3D display which did not require wearing those funky glasses.) So, if you thought you had just purchased your last TV, think again.

I came of age during the last century with ambitions of leaving my descendants a library of great books. I suppose the analogy would be a music aficionado who loves vinyl records. I've finally been won over to the concept of e-readers. And for newspapers (which I do not include in my great books collections) an e-reader with a large screen makes perfectly good sense. The most innovative e-reader device I saw at CES is made by Plastic Logic and called QUE. The device (and screen) is made from plastic. There is no glass cover. It's thin. It's lite, with a larger display than the Kindle. The larger display allows for more natural reading of newspaper content and to manage (and save) all kinds of documents.

SONY Electronics unveiled a personal, touchscreen wireless device for accessing information at various points throughout the home called dash(TM). According to SONY Product Manager Katie O'Brien, the San Diego based product team is especially proud of the dash as SONY's U.S. side took the initiative to develop it. You could have one in the bedroom to function as a clock and provide realtime weather and traffic information; one in the kitchen for accessing recipes; one in the living room to access fun sites like Twitter and Facebook. Why not just use a computer? Because, according to the SONY representative in the booth, there are times when you want to access information quickly without booting up a computer, and when you're in "relax" mode, not "computer" work mode. Dash provides wireless networking and free access to Sony's Bravia Internet Video streaming platform, which supplies YouTube, Pandora personalized online radio, Blip.tv and Crackle's mix of online originals and videos from the Sony Pictures vault. There are a 1,000 apps available for it and more on the way. The device is priced at $199 and should be available in April.

I was impressed with the improved stabilization technologies SONY showed for its hand held recorders. As a sometimes winemaking blogger who uses old-fashioned, hand held video to demonstrate winemaking and horticulture techniques in the vineyard, the SONY cameras would eliminate much of the jerkiness.

The most impressive demonstration I saw was during Qualcomm CEO Dr. Paul Jacobs' keynote address when cardiologist Dr. Eric Topol, chief medical officer of the West Wireless Health Institute, used a mobile phone to transmit ultrasound views of his beating heart live on stage. The advances in diagnostic and monitoring capabilities of personal medical care devices are impressive. The new devices will allowing monitoring of vital signs from remote locations resulting in improved delivery of medical services, improved health and saved lives (not to mention potential cost savings). Dr. Jacobs also shared the stage with Lenovo's CEO who demonstrated a new class of smartbook computer based on Qualcomm's chip technology named Snapdragon (giving "Intel inside" a run for their money). Qualcomm has staked out a position as the leader in mobile wireless connectivity for 3G networks, with design expertise in modems that provide better power management and better wireless performance with carrier signals. The company is now scoring design wins with traditional computer manufacturers such as Lenovo, HP and others. All of this innovation will lead to better mobile experiences for consumers.

After Nokia's CEO Olli-Pekka Kallasvuo had insulted iPhone users at its recent annual shareholders' meeting, I was about ready to write Nokia off as a company doomed to follow the route of Motorola and lose its dominant position in handsets. Now, I'm not so sure. The Nokia keynote for me was the most surprising (and inspiring), as Kallasvuo shared the stage with the company's chief anthropologist, Jan Chipchase, a cultural ambassador who has more frequent-flyer miles than the CEO studying consumer behavior in remote villages in Africa, India and Asia. He's also a great photographer. Here are sample questions pondered by Jan and his team: How is it in homes without electricity people charge their mobile phones? How do people who can't read and write navigate mobile phone menus? How can a matron managing a one-room house in an Indian slum save money with beggars constantly coming to the door? Nokia's and Jan's approach exhibited a certain degree of humility -- what moral right does Nokia have to intrude in peoples' lives to conduct this research, they ask. I think Nokia is asking the right questions and the company is involved in activities to improve lives, such as providing e-mail accounts to 5-million people last year who previously had no access to e-mail, and mobile banking services to billions of people without access to bank accounts. Although Nokia has largely failed to make a significant impact in the U.S. market, we must remember that the U.S. represents just a small percentage of world population.

Now that all major electronics manufactures are producing intelligent, network capable devices, how is the average person supposed to get everything working together and controlled? Control4 has a vision of the networked home with all devices controlled from one remote, one switch or even your phone and is on its way to developing an ecosystem of partners to realize that vision.

This is the 3rd CES show for Microvision, which continues to generate excitement with its $500 pico projector not much bigger than an iPhone. The projector is the world's first to incorporate laser technology and specifically a green laser developed by Corning Incorporated which allows for true, saturated colors, uniform image and an image that is always in focus even as you move the projector closer then farther from wall or screen. According to Microvision staff, the projector is now shipping in Australia and Spain. "We could have sold 100,000 of them at the show," said Director of Communications Matt Nichols, but the company has been confronting serious supply constraints on key components (Corning is having some troubles delivering the green laser in mass quantity). How useful is a 10-lumen projector? One of the company's fans I met at CES told me that if he was stuck at an airport and wanted to watch the big game he'd much rather see it projected on the wall than on his phone's tiny screen. As a technology company, Microvision has opportunities to embed its unique technology into numerous devices including mobile phones, computers, e-readers, game players etc. By itself, the projector continues to generate considerable buzz and received a "Last Gadget Standing" award at the annual CES gadget shootout by that name as selected by an online audience. Having Dr. Evil of Austin Powers fame in the booth also drew attention. (Rumor has it that Dr. Evil is looking to turn the laser based device into a weapon.) I suppose a market for the 10-lumen projectors is those 300,000 developers in China writing software apps for Nokia phones. Microvision could sell a projector to each one to demonstrate their software directly from the mobile phone.

Of course, on the other side of the projector front Texas Instruments, inventor of DLP projection technology, is not standing still. Samsung seems to have leaped ahead of Microvision by demonstrating a mobile phone integrated with a DLP projector. And, Samsung's Korean-based rival LG also unveiled its prototype version of a projector phone incorporating TI's DLP technology.

Optoma -- a traditional projector manufacturer -- showed a projector slightly larger than Microvision's, LG's and Samsung's (though still micro enough for most applications) based on a brighter DLP engine that outputs 50-lumens, a bit more practical for presentations, while neighboring 3M showed an upgraded version of its LED projector that's now ramped up to a whopping 15 lumens. (Folks, 15 lumens is not very bright. Either you need to show it in a dark room, or, you need to have a small image size -- granted th at the small image is going to be somewhat larger than your mobile phon e display.)

BlackBerry is taking a different approach, developing a device called the BlackBerry Presenter that allows users to connect wirelessly to a bright, conference room projector to make Powerpoint presentations on the go. This would seem to be a more practical direction for business and education use.

While looking for hidden gems in the China Pavilion I stumbled across APPO showing a micro projector they claimed was 100 lumens. The product, however, is in need of serious industrial design and lacks the cool factor shown by other manufacturers. As one of the original projector guys, these minuscule wannabees bring back memories of lugging around the world's first VGA projector in 1992 that output 100 lumens and weighed 35 lbs. I lost a gallon of sweat each day carrying "The Luminator" through Tokyo train stations during hot summer months demonstrating it to partners and customers. Life is good when your projector fits in your pocket. Is also your phone. And your vacuum cleaner.