Current Issues in Marketing Strategy

Telstra broadband has been discussing the potential for the Australian broadband to be free or heavily subsidised by internal targeted advertising. The strategy would allow them to heavily target user demographics and hence offer advertisers enormous reach to specific target clients. The plan has been compared to Googles free gmail strategy for attracting market share, but will it work?

The strategy worked wonders for Google when they launched g-mail, attracting customers by giving them something for nothing, which gave them enough loyal users at their disposal to create some real channel power in the online community. As their dominence has continued, the competition for online space has heated up and Google are able to charge more and more.

The real pitfall of the pricing strategy is the cost of setting it up. For those who don't know much about Australia, or Australians that have been living on Mars for the last 20 years, Telstra owns most of the telecommunication infrastructure. Despite this, the country is so big that it is nearly impossible to offer full service to everyone. Unlike Google who only needed a few new servers and a couple of tech staff, the advertising revenue would need to be enormous to pay for the extra infrastructure required.

Another problem they face is that Google will soon be rolling out a demographic targeting software (as they have in the USA) that will facilitate users advertising in the same way, so Telstra will be facing stiff competition when it comes to price setting.

Finally, a positive point, that targeted advertising is a good thing...yes, I know that every non-marketer out there is fuming at the thought, but it works the same way as a Christmas gift. When someone knows you, they give you something you want, so as an extension of this, when you are looking for a new car, then ads catering to this need are a good thing.