New Data Reveals Apple's Flawed iPhone 5 Marketing Strategy

Over the past nine months, according to information that analytics firm Networked Insights provided exclusively to Fast Company, Millennial and teen iPhone purchase intent dropped sharply. Has Apple lost its cool?

After years of launching some of the most talked-about smartphones, tablets, and laptops of all time, perhaps Apple’s management team thought it could afford to not listen to its customers.

In April, for the first time in 10 years, Apple reported shrinking profits and declining shipments of the iPhone. In a conference call with investors, CEO Tim Cook made a frank admission to those who were disappointed in the company’s financial performance. "We know we didn’t meet everyone’s expectations," he said. In fact, the expectations Apple needs to meet include not only analysts and shareholders, but also the consumers who put Apple back on top in the first place. What’s surprising is that these consumers, like consumers across all product categories, are voicing their concerns loudly and clearly.

As competitors begin to gain traction at its expense, Apple’s failure to tap into what’s being said through social insights and develop a data-driven marketing strategy is becoming an object lesson for businesses everywhere. Consider this a cautionary tale.

When Apple launched the iPhone 5, there were loud cheers from the company’s live event in California. Offstage, however, the conversation was broader and more sophisticated. Across the social web as the unveiling took place, socially active influentials were homing in specifically on the features that mattered to them most. Social analysis painted a clear picture of the key elements that would be driving consumer purchase decisions for Apple and its competitors. Conversation about features like screen size, battery life, and connection speed all spiked immediately on the social web.

The evolution of marketing decisions

Contrast this with the traditional approaches to marketing that have been commonplace. There used to be only two ways key decisions about product design and marketing were made. There was the Steve Jobs model, where a highly influential leader imposed his taste on the public at large. These kinds of organizations are rarely successful and sustainable even less frequently. The ongoing criticisms of Tim Cook’s leadership make this clear.

Then there is the focus group model, in which companies invested considerable time and expense tapping into consumer opinions using dated research and divorced from the way their target customers behave in the real world. Surveys suffer from the same shortcoming.

Data-driven marketing, on the other hand, is both more directional and valuable. It’s directional because the comments made on social media are genuine, offered voluntarily without incentives and more valuable as products hit the shelves, not months afterward. They are large in sample size, providing scale and relevancy. They are more personal because they allow companies to develop a more intimate relationship with customers, responding directly to feedback and creating greater transparency around their efforts to solve problems and create value.

Social insights feed an "always-on marketing" strategy, in which conversations on Twitter, Facebook, and many other sources continue to inform decision-marketing long after the launch party has ended.

Back to Apple. Analyzing the data painted a clear picture of Apple’s teetering grasp of the smartphone market.

From September to today, the number of conversations on social channels about iPhones has declined for two of the company’s target audiences: Baby Boomers and Generation Xers.

Looking at two other lucrative consumer audiences—Millennials and teens—shows a similar pattern. Despite a spike in conversations around last Christmas, iPhone conversations have been consistently declining since the iPhone 5 launch in October.

The number of conversations through the social web only tell one aspect of the story, however. A more telling aspect can be seen by looking at purchase intent among the key Millennials and teens demographics.

Purchase intent for these consumers, despite an expected spike around Christmas 2012, has suffered a sharp decline in the last nine months.

What data-driven marketing will mean

The power of socially driven data goes way beyond listening—the aspect that has received the most attention and adoption. The data is equally valuable for audience targeting, content strategy development, purchase funnel analysis, and even media selection. Listening merely provides validation of what has happened. The true value that data offers is predictive.

The capabilities to gather insights from social data outlined above simply weren’t available five years ago. They mean taking the guesswork out of important elements of marketing strategy. They also mean marketers will not only need to better understand the difference between simple measurement versus analytics, but how to identify the right enterprise platform that will truly serve their needs. The rise of data-driven marketing will also require a cultural shift that transcends the gut instinct style of creative decisions that drove campaigns in the past and cultivating a greater appreciation of data at all levels of an organization.

Finally, real-time marketing will require real-time flexibility and a willingness to change tactics as the consumer insights become clearer. Keeping up a conversation requires both listening and responding. Brands that use analytics to assist with the former must be prepared to foster an agile approach to participating in the dialogue that’s taking place online.

"A lot of times, people don’t know what they want until you show it to them," Steve Jobs famously said. But once you show them, they may begin to know more about what else they want, and thanks to companies like Apple, many of them now carry mobile devices that help them express those opinions with unprecedented ease and at previously unimaginable scale.

The good news is that marketers can also aggregate and synthesize those opinions in ways that will help them determine in advance the best course of action. Apple may never again employ someone like Steve Jobs who can chart a course to its next phase of innovation, but it and every other company will always have a source equally knowledgeable and important: its customers.

Dan Neely is founder and CEO of Networked Insights, a social media analytics company. Follow him on Twitter at @dneely40.

[Image: Flickr user Subflux]

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  • CitizenWhy

    Ha ha, I don't own a cell phone, never mind an iPhone but from what i read on the web early I talked two people into holding off and doing better research on why so many don't like the iPhone 5. They never bought one.

    I have a MacBook Air and I really like it. I downloaded Kindle free, with better features than the Kindles you have to pay for.

  • Disclosure

    @FastCompany there needs to be a disclosure in here that Samsung is one of Networked Insights biggest customers. 

  • Galaxy

    They still make a great phone and one that is needed for guys with small hands.  

  • awakeinwa

    indeed, we're social @2013 already. Yet such rank amateur writing. Especially for a so-called social medialite. 

  • BenGleck

    "To a hammer, every problem looks like a nail." Thank you, Marketing C. Hammer. 
    Apple's problem isn't marketing. It's product, fostered by the hit in creativity the company has taken since the demise of Jobs. The question is: how long will that hit last?
    Your third paragraph: baloney. That's the predictable natural progression and outcome of the onslaught of multiple brands and models vs. one, not a "marketing object lesson." 
    Fourth and fifth paragraphs: This "there are only two ways" dualistic view exists only in a cartoon universe. In reality things are infinitely more nuanced. 
    Paragraphs 8-9: Apple's "teetering grasp" doesn't begin to describe the phones in my offspring's college circle, virtually every member of which has an iPhone 5. (The rest lament their tight-fisted parents.) Statistics trump anecdotes, but the multiple samples I've taken says your descriptions are at biased at best—if not deluded. 
    Paragraph 13: "But once you show them, they may begin to know more about what else they want, and thanks to companies like Apple, many of them now carry mobile devices that help them express those opinions with unprecedented ease and at previously unimaginable scale." And there we have the smoking gun. This isn't really about marketing after all. It's about the author's bias in favor of Android phones, cleverly couched in ambiguous terms. 
    Here's an angle you apparently hadn't considered: Many, many users are in the situation I'm in, having purchased an iPhone 4S and therefore not really in a position to get an iPhone 5. We're waiting for the iPhone 5S (or whatever it'll be called) to be released. So naturally we aren't too excited about the 5. Besides the financial side, we're interested in seeing what effect Jony Ive might have on the software side, and its integration with the hardware. We're not too surprised this is all cloaked in secrecy, at a level higher than ever before (kudos to Mr. Cook on that). 
    Personally, I tried once again recently (as of a couple of weeks ago) to add more Google influence in my computing and smartphone life, and once again it made a time-wasting mess of it. So if you think people like me are just itching to "go Android"...think again. I'm willing to be openminded, to listen, to be honest and unbiased, and to give things a chance, but above all else I have to produce. In the end, that's what keeps me in the Apple camp. Wish I could say the same things about the author of this article.

  • Matthew Brown

    Now that Steve Jobs is gone, Apple will start to be have like every other publicly traded company. Employees are a disposable commodity to be exploited, then discarded. Customers are suckers to take to the cleaners. All that matters is to put on a dog and pony show for shareholders and prospective investors while lining your pockets. They'll be joining the race to the bottom and manufacturing garbage to sell at Wal-Mart in no time.

  • kgelner

    The writers of Fast Company have gone "Native" as it were, right into Apple Hater camp - only an Apple Hater camp would claim iPhone shipments are down, when they were in fact up dramatically from the year before.  It's only the market-share that slipped slightly - for the world as a whole only though, because in the U.S. the iPhone again took the lead.

    Yes, only an Apple Hater could turn what from any other company would be labeled a hot product, and proclaim it a dud - meanwhile propping up the cheap Galaxy S4 as the new hotness, when it sold an order of magnitude less units than the iPhone in a MONTH compared to the iPhone opening weekend.

    That's the last time I'm lured over to Fast Company, which appears to accept complete fabrications now.

  • tmaoc

    Fast Company has jumped the shark a year ago. The editors clearly are not paying attention to what they are letting run anymore.

  • tmaoc

    This article is total rubbish with ill-logic just to get a consulting company some press. If this was submitted for a college marketing class Neely would probably get an "F". The data does not reveal Apple had/has a flawed iPhone 5 marketing strategy. To make that point you have to compare charts to other launches and you have to show there is a strong correlation to the "chatter" and sales. What ever happened to regression analysis?

  • Mike Harmanos

    It would have been helpful to have green and blue lines in these charts about the Samsung Galaxy S4 just to see the trend line there. 

    I am in agreement with Mr. Cheyfitz below - analytics is little understood and the demand from C-levels is "Give me the data for what's going to win."  That, sadly, is a journey down the rabbit hole for most organizations.

  • Ad Angerous Thing

    These charts are not only useless, but entirely misleading. 

    The charts begin shortly after a new iPhone was introduced, and end during the down period right before a new iPhone is introduced (and after its major competitor was just introduced and hyped).

    They also show zero year over year data, so any implied trends are completely irrelevant.

  • Larry McManis

    Interesting article. I agree with the importance of leveraging this
    channel of information in the development of strategy but there is no
    evidence Apple is not already aware of this. You've left out any
    reference to insights. So conversations are declining. So what? Is
    that unusual? Should Apple do something about it? What action should they take?
    I suspect the challenges at Apple don't have much to do with lack of information such as the info you present in your article. The challenges are typical to all businesses: how do I create even greater value for my customers and, in turn, for my business.

  • GeneralmotorsGravytrain

    I love reading these articles about what Apple is doing wrong.  Every time Apple's share price goes down, it like Apple has really blown it and lost it all.  There are so many other companies struggling with market share but I guess they don't really count.  There are so many things Apple could do if it wanted to or needed to in order to create social buzz.  Apple could always be putting out rumors of new products or whatever.  Do some media blitz, if necessary.  I don't think Apple needs tricks and gimmicks to stay popular.  It just needs to offer good products, good customer service and some interesting advertising.  Apple has about $140+ billion in the bank and that can cover a multitude of sins for quite a while.

  • tedcranmore

    Sorry, while I like the general idea in your article, your mentioning
    of Apple and the data provided is clearly weak and has a 'snake oil
    salesman' feel to it.

    First, any mention of a negative Apple headline is great for 'hit
    whoring' during the last couple of quarters during the decline of
    Apple stock (as were positive Apple articles during the stock's rapid
    rise to 700).

    But my main point, is that your make conclusions about trends without
    pointing out the obvious elephant in the room -- PRODUCT CYCLE!
    Pre-release and release quarters, vs the quarters that follow that
    contain new products from other companies are key. I would expect
    we've seen exactly the same trend with other iPhone releases. If that
    is true, your headline and your conclusion in 100% rubbish. Strangely
    (or simply because it would kill your thesis), you did not present the
    same data across previous iPhone release cycles. If you had, and
    showed the iPhone 5 was clearly different, you'd have a winning
    article. Without that, you get the 'snake oil' credits.

  • tedcranmore

    Fanboy? Really? By pointing out a gaping hole in his thesis this gets me an name implying I’m the one blindly following a ‘team’ without looking at facts or data? I’m suggesting the author is the one ignoring key data and therefore it is he that deserves a similar label if anyone. 

    I would have made the same argument if he was showing similar graphs for the Samsung Galaxy - product cycles and seasonality (Holiday quarter here, Chinese New Year there) are key to understanding any data presentation about smartphones.

    Perhaps I should also have been clearer, not only does his ‘gaping hole presentation’ invalidate any conclusion he makes about iPhone 5, he loses creditability about what he really want to get across, the usefulness of social analytics. He states

    Data-driven marketing, on the other hand, is both more directional and valuable.

    However, he instead makes a clear example of how these analytics can be totally misused. While misuse here doesn’t imply it will always be misused, he certainly puts that worry front and center, which I think it the real problem. Using ‘snake oil’ techniques to sell a legitimate product, undermines that product immensely. 

  • kgelner

    Is he really a "fanboi" for pointing out that people buy more at Christmas than after?  Are you really so blinded by rage against Apple you cannot admit even that simple truth, and proclaim it a lie just because "Apple"?