New Media Zero reports that Lars Becker, one of the co-founders of Flytxt and probably most high-profile, is departing for pastures new. Flytext were one of the first companies into mobile marketing in the UK, were instrumental in setting up of the Mobile Marketing Association and handled some big campaigns for the likes of Cadbury and Coca-Cola.
Lars’ departure comes at an unhappy time for Flytxt. Rumour has it that investors played a hand in his departure and of other redundancies last month.
However, I fear that the pain is not over yet, as I don’t believe that the business model makes sense. For all you mobile marketers out there, here’s my take on the sector. I’ll use Flytxt as an example, but it applies to quite a few others too. Nothing personal, chaps.
When Flytxt started out, they believed that they could be a specialist Mobile Marketing Agency. This would allow them to do two types of business:
1. Work direct with clients who wanted to do mobile marketing.
2. Work with agencies of clients, as technical enablers of campaigns.
However, the two roles are in conflict. Agencies don’t want to work with a company who may go direct to the client, for a start.
But, if you go direct to a client, you need the marketing skills to create a campaign in the first place – marketing skills are always under-estimated by non-marketers. How often do you hear supposedly bright people coming up with deep thoughts like “Marketing is just common sense innit?”.
Well, my friends, so is nuclear physics and brain surgery. Once you have the learning, you can apply your common sense.
And it’s more than just marketing nous. You need to know how a client expects to work with an agency. Again, this is a learned experience.
But the final problem with the direct approach is that back then (even now!) clients don’t have a “mobile marketing” budget. They have a sales promotion budget, an advertising budget, a direct marketing budget or possibly a “digital/interactive” one. So unless you can show them (as an agency would show them) how a brilliant sales promotion campaign is going to fulfil their marketing objectives (incidentally using mobile marketing) you haven’t got a budget to work with.
Or, at best, the client agrees to write some tests into next fiscal year’s budget. But you’ve still got to live while you wait for that.
So, you go back to the “Direct clients? No, we won’t work with them, Mr Agency Principal”.
But the trouble is with working with agencies, is that they are very happy to use your ideas. But when it comes to implementation, 9 out of 10 account managers actually buy on cost. This is the height of irony as the same account managers would spit blood if their clients did that to them nicked their ideas and got someone to implement them on the cheap.
So you suddenly find yourself in a business with the high account servicing cost (like an agency) but with commodity-style wafer thin margins. Because that’s what you’ve become, a technical enabling commodity.
O, you have really great meetings as you go around educating the marketing industry. But it doesn’t lead to enough, profitable business to really thrive.
So, Buckley, if you’re so smart, what would you do? I’d get out like Mr Becker 
Seriously, a business like this has to focus on where they can add value. It’s not in commoditised technology as someone will always do it cheaper and frankly, probably better.
So it’s back to an agency style model, I’m afraid. So
1. Bring in some serious creative talent who understands the mobile space and as importantly, marketing generally.
2. And some account handling talent to front the business when you go after direct client business. Agency experience essential.
3. Go after existing sales promotion and direct marketing briefs, probably, but not necessarily involving mobile marketing solutions in your response. But the response MUST be great marketing, first and foremost.
If only it was that easy.
I like the Flytxt chaps and I think they have a lot of talent. But I also think they’ve got the wrong business model and Lars leaving won’t change that.
But, hey, they lasted a lot longer than ZagMe, which started at about the same time, so what do I know?
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