Holmes Report 05 Jun 2012 // 11:00PM GMT
David Nicholas has a big job on his hands. The telecoms PR veteran was named communications director for Telefónica Digital last year, accompanying the launch of a unit that hopes to transform the fortunes of Spanish telecoms giant Telefónica.
Dubbed the “most explicit effort yet by a mobile phone company to participate in the digital goldrush,” Telefónica Digital brings together all of the company’s online and digital ventures under one division, in an attempt to re-orient the company’s growth strategy around digital innovation at a time when its core services - voice and text - have become completely commoditised.
Telefónica Digital includes a number of products and services that are not always associated with traditional telecoms companies: ehealth, financial services, mobile advertising, security and cloud computing. Key businesses include LatAm internet TV company Terra, Spanish social network Tuenti and UK mobile brand giffgaff, while high-profile new launches have included apps that cover everything from mobile wallets to photo-sharing to voice-over-IP.
At the same time, Telefónica Digital is hoping to make a much bigger splash in Silicon Valley, where it houses its venture capital and tech incubation businesses. Nicholas, meanwhile, is charged with ensuring that Telefónica Digital behaves like the savvy, digital player it hopes to become, despite a name that remains irretrievably linked to traditional telecommunications.
The launch of the unit represents a major shift for Telefónica, so one of Nicholas’ first tasks upon assuming his new role was to go looking for new agency partners, eventually ending up with Bite Communications and Access. In the interview below, Nicholas explains the challenge ahead of him, discusses how Telefónica Digital could potentially transform global perceptions of its massive Spanish parent, and outlines some very ambitious targets.
What is the thinking behind the launch of Telefónica Digital?
The world has become dramatically more digital. Digital has changed the way that all businesses do business, and digital comms is the bedrock of all consumer interaction now. People are completely addicted to their devices. Historically, telco companies owned the whole end-to-end user experience. They connected you, and if you wanted services they provided those as well. The App Store completely uncoupled that. That’s only going to become more the case. A whole new group of competitors has emerged. It could be something like WhatsApp. Pricing models have also changed - data is the thing that has value.
As traditional telcos we haven’t been very good at reacting to that change. As a large company with many shareholders, we have an obligation to them and there’s a huge pressure to deliver financial results. If you’re running an operating business you’re expected to deliver financial performance. The main idea of Telefónica Digital is take out all of the future-looking aspects of the business in terms of the digital services, product innovation, potential disruptive offerings - that focus will enable us to be much more clearer in our thinking. It gives us very much a licence to think in a non-traditional way and be much quicker to market.
How do you make sure Telefónica Digital is not viewed too much like Telefónica?
That’s the dilemma or fascination of the job. On the one hand we are part of Telefónica and it’s very important we are seen to be part of Telefónica. The number one job that we have is to change the perception of Telefónica as a whole. On the other hand, we do want to be seen to be behaving differently from the old perception of Telefónica. How do we show people we are different? It starts with what the business is doing, and then communicate the hell out of that, to provide the evidence to a sceptical audience. Other telcos have tried to do similar things in the past, tried to reinvent themselves, and it hasn’t really worked. You might say, what is different about us?
One of the key things is a completely different philosophy and this runs through our comms. Its about being very open, where telcos have traditionally been very closed. These days, control freakery doesn’t work. Culturally, that’s what’s different about us. We have to work really closely with all of the people in the Telefónica Digital business from the outset to feed in comms aspects into any business decision. Show us the proof points that the business is behaving in a different way. We are looking to surprise people - to do something that is not expected.
A big part of your strategy is a much higher profile in Silicon Valley. How do you address that challenge?
It’s one of the reasons why we took the approach of having a specialist boutique agency in the Valley. In our existing markets, its very much around changing perceptions. In the Valley, we have a very low level of awareness. Our issue is building our credibility in the Valley, and awareness. Why would you as an exciting young internet company want Telefónica’s money? It’s not just Telefónica’s money, its access to Telefónica’s technical expertise. Also, we have a huge customer base worldwide, so in terms of potential market we can help. We certainly see ourselves as a different sort of investor to someone who’s looking to buy, make a return and sell out.
Comms is absolutely central to the success of the whole offer really. It’s about fundamentally changing the perception of how we are as a business. At the other end it’s about building awareness and credibility. We can do what we like as a business - but we need to communicate that effectively. That’s our number one goal - to change perceptions.
During your agency pitch, did you learn anything about Telefónica Digital from a comms standpoint?
It certainly helped focus our minds on what the challenges are. We sit inside the business and we have our blinkers on occasionally. We gave specific challenges to the various agencies. The stuff they came back with really opened our eyes. There’s some hidden gems that we hadn’t twigged about. It forced us to dig quite deep. One agency in particular, at the first meeting we had a real grilling - we came away almost uncomfortable, but good on them, really. The real benefit you can get from an agency is that different perspective - it’s a perspective we’ll never have being inside the business.
What does success look like for this project, in comms terms?
There are various different levels and as always we try and measure them. The ultimate measure of success is about the perception of the company. The bluntest measure of how the company is perceived as a plc is the share price. Telefónica is not valued as a growth business. It’s valued as a utility. We believe that’s wrong - we believe we have significant growth prospects. Ultimately, if we can convince all of our stakeholders of that, that will be reflected in the fact that the company has been re-rated as a growth company rather than a company that is seen as a utility.