I interviewed Don Albert on Tuesday, 28 November 2006, over lunch at eBay’s cafeteria. Albert is Skype’s general manager for the United States and Canada, what Skype calls North America. This transcript is roughly edited. Jennifer Caukin, Skype’s North America public relations director sat in. – Phil Wolff
The day before our talk, Skype started reorganizing, moving marketing functions to their London headquarters under chief marketing officer Henry Gomez.
Skype Journal: With marketing more centralized in London and engineering in Tallinn, what’s here?
Don Albert: So Henry and the rest of the executive team thought it was really important to have a team on the ground. Because this market requires some special attention. Skype is not as well known or as well penetrated here as it is in Europe or Asia. We have a few marketing folks and a few business development folks here. I think our total team is probably ten or eleven people now. We have a couple of PR folks that you’ll be getting to know, and someone that does promotions within North America.
We’re also looking not so much at unique product for North America but at packaging, pricing, things like that, that might make sense for this market. I report to Henry and we have been working closely with the marketing functions over there and will continue to do so. We’re not totally self sufficient here; there aren’t enough of us to do everything.
Have you worked with Henry before?
A little bit.
Will the free SkypeOut continue in North America? Do you know yet?
We’re getting pretty close to finalizing that and we’ll probably be coming back to you in about two weeks.
How are you thinking about that decision?
The first thing is the program did everything that we wanted it to do. We saw a nice ramp up in new user acquisition in the U.S. and it stuck at the higher level, which was great. And we’ve seen a big surge in SkypeOut calling, so more people are trying SkypeOut, which is a good thing.
Jennifer Caukin: The calls on SkypeOut are beyond just North America; a lot them internationally too. Because people kind of adopt using it for their local and domestic calls going beyond as well.
Don Albert: Our revenue is back up above where it was pre-promotion, even though we’re giving away all the U.S. and Canada calls. So we have got so many more users now that our international revenue has more than made up for what we gave upon the U.S. and Canada revenue. We viewed the promotion as a marketing expense; obviously it required investment on our part, paying all the termination fees. And the amount of calling in the U.S. and Canada went up 10X so those fees, especially as we get bigger, can get fairly significant.
Our Canadians all want to know about SkypeIn. What is Skype doing to get SkypeIn in Canada?
The issues really are regulatory in nature. Chris Libertelli, working out of our Washington office, is the right guy to talk to about that.
From where you sit, what business is Skype in?
I would say generically we’re in the communications business. We try when we talk about our business both to consumers and to the press, to not define Skype as just cheap voice phone calls. I think you know the product very well and you can see how we’re really trying to create a whole new way to communicate. Cheap voice calls are one benefit of using IP but there are many other benefits that we’re working hard to get consumers excited about it, to communicate differently.
Jennifer Caukin: If I can just add, when you think of Skype it’s expansive as well. It’s cross platform. It’s also across many different devices. So when we think about Skype for voice or video or SMS or for conference calling – all these different ways to communicate – but also across many different platforms too.
So what do you see about building Skype’s awareness in North America? Beyond this promotion, I know you’ve been doing some advertising experiments. Do you think you’re getting budget this next year?
Don Albert: We’ll be getting some budget from our friend Henry, who obviously understands the importance and challenges of this market. But you still won’t see big broadcast TV commercials from us. We will continue to invest in promotions. You saw “Skype Days of Summer” which worked really well for us in terms of introducing specific expat communities to the value of Skype calls to their home countries or countries where they have friends and family. So we’ll continue to invest in things like that. And use those promotions combined with guerilla marketing aimed at specific communities to generate word of mouth among those communities. It worked very well for us so far.
Another area where we’re going to try to get a lot better, especially here in North America, is working with our hardware partners. We’ve got some terrific partners that share our interest in growing the base here in North America. They have retail footprints, they have marketing budgets. How we can work more effectively with them to convey the Skype value proposition at point of sale, for example, or in their own marketing activities.
Do you have a co-op advertising program?
We’re looking at some limited co-funding of specific marketing opportunities with them. For instance I don’t know if you saw a college promotion we ran on Facebook. Last month we did that in conjunction with Sony Mylo, where we chipped in.
The social networks, the Facebooks, the MySpaces; what is your strategy for working with folks, getting Skype adopted in those hives of intense communication?
So we think they should all want to integrate Skype fully. And it would be of great benefit to their communities. We have or are having discussions with many of them. Some of them are owned by folks that have competing communications products, but I think we see tremendous opportunity and tremendous utility for their users. And those discussions continue. It makes a ton of sense to us.
Are you managing it as a business development and distribution alliance?
I think the way we view those deals is how can we help each other grow, how can we add value to their existing users, how can we help them attract new users from among the Skype community and vice versa.
Skype awareness is still pretty low among the general North America public. The economics that are driving adoption in the U.S. are really different than what drives Skype adoption everywhere else in the world. What are you doing to improve brand awareness in the U.S. in 2007?
I think you hit part of the nail on the head when you said the economics driving adoption are different here. So one of the things we’re doing is targeting our limited marketed resources against target segments where the Skype value proposition is clearest, where they really can see some value. So for example mobile business professionals, small businesses, people with friends and family abroad who do a lot of international calling, even though they may have a cell phone plan and a landline plan, they still get why they need Skype. So that’s still on the cost side.
I think the bigger challenge for us is to move away from being low cost voice calls. How do we continue to innovate and build features that make people want Skype because of the features, not because of the cheap voice calls? How do we make video calling, for example, something everyone wants to have? Or really convenient conference calling for small business?
So more focus on product and service benefits, because over time everyone will offer cheap phone.
You talked about small and mobile business users as people who would appreciate the value proposition. There’s a strong move in the IT world to bring social media products into the enterprise. So there are lots of blogging and wiki products for the enterprise. Do you have any strategies or plans positioning Skype as a player in that space? Is enterprise part of the 2007 roadmap?
I think up to this point it’s just been a matter of focus. The company in the first few years really was focused on the consumer market and to some extent the small business market. We kind of found ourselves brought in to the enterprise by people that just loved the product, took it in, installed it on their work PCs. As a result we got a lot of incoming queries from IT managers who wanted more control. We’re addressing that to some degree with the 3.0 release where there is more control, the IT manager can centrally configure and we will be MSI installer compliant so that they can configure clients and turn certain things off. In terms of future enterprise roadmap, I’ll steer you back to Scot Davidson in London.
Getting everyone to upgrade is a problem. What percentage of Skype users are using earlier releases vs. 3.0?
I don’t know.
Jennifer Caukin: I know there’s messaging within the latest release of the client.
DA: We just for the first time did a “recommended upgrade” to 2.5. As far as I know that’s the first time we’ve done that.
How will you extract the synergy between Skype and its sister companies – in 25 words or less?
What eBay saw in Skype was not just something that could help the eBay business grow but a great business unto itself. A high growth, high potential business, independent of the synergies.
I think there are a lot of folks in various divisions of the company thinking about the intersection of communications and commerce and how our companies can work together to realize the potential there. If you think of the offline world, let alone the online world that eBay operates in, how important a telephone is to connecting buyers and sellers, and how much money is spent there on things like yellow page advertising or print classified advertising that car dealers run to get new leads or realtors.
I think, at a high level, the intersection of commerce and communications is where the synergy could lie. How do we realize that? How can Skype help accelerate eBay’s and PayPal’s business as they exist today; and what new business might eBay get into as a result of having Skype?
On the acceleration piece, one thing we announced back at eBay Live in June was that we were testing allowing sellers to put SkypeMe buttons on listings. It’s going well. We’re not releasing numbers but the high level conclusion was where the SkypeMe button is used, conversion rates increased from control groups or even from the same sellers’ different items that didn’t use the Skype button. So that was encouraging for us.
Obviously eBay was treading somewhat carefully because of concerns that putting buyers and sellers in touch over the phone would increase grey market, that people would just consummate the transaction offline. I don’t think that concern was borne out. Encouraging early results led to an expansion in the number of categories where the sellers can do that. Some countries, like China, make it available in every category. Here in the U.S., the SkypeMe button is available in categories that represent forty percent of eBay’s overall gross merchandise sales.
So that’s one thing. Letting buyers and sellers actually talk to each other; it intuitively, and the data bears it out, it makes sense and will help close deals in certain categories, in particular high consideration/cost categories.
In terms of new businesses, we’re working with eBay on click-to-call advertising which could lead to entirely new categories within eBay with a totally different model than the transaction based business model of today. More of a pay-per-lead model.
Who is the executive responsible for making the Skype-in-eBay part successful?
Ultimately it’s the executive team reporting to Meg [Whitman]. So John Donahoe, running marketplaces, and Niklas [Zennström] and Alex [Kazim].
So it’s not like there’s an internal champion.
There are different people within different groups. So there are product people working on things like the SkypeMe button and like click-to-call advertising, so it’s a little bit dispersed, but they all roll up to John Donohoe who runs the marketplace business unit.
Jyve is a model where people can be using Skype as a way to sell services as opposed to selling atoms. Voice, video, documents, various intangibles. eBay has all the strengths for bringing people together and making a nice environment. Is eBay working on enabling this now or is Skype?
It’s one of the areas we’re looking closely at.
Do you have support for third party software developers as part of your purview? Are you doing things to recruit people from the Microsoft developer ecosystem to come to the Skype ecosystem?
It’s out of London. Paul Amery directing it. To this point there hasn’t been a resource on the ground here. It’s something that Henry and I have talked about. I think it would be a really smart move to have someone here doing that. So that’s one of the things I’ll talk to Paul when he visits and see if we can swing that.
But we are really excited about some of the new things in 3.0 that support the developer community.
Like the Do More tab, where we can actually feature some of the great work right on the client, instead of hoping that people make it to the web site and browse through the extras gallery.
Partly we’re responding to the developers but we think it’s a great benefit to our users, who aren’t getting the full benefit out of Skype until they try some of the cool stuff developers are doing.
Have you been discussing interoperability with other instant messaging and VoIM players?
Text and presence interoperability were announced as part of the Google deal. We’ll continue to look at opportunities if they make sense in the context of a larger partnership or if our community asks for it. My understanding is we haven’t been hearing a lot from our community that would push us in that direction.
Is The Venice Project part of Skype?
No, it’s a separate company.
Do you know why?
You’ll have to ask someone else. (laughs) A different company, a different mission.
What is the state of the RadioShack distribution alliance? I travel a lot and so I always walk into radio shacks and see the merchandising for Skype. When I first looked a year ago, there were gift packs everywhere and the occasional third party Skype product. Since then it’s been rather thin. How is that relationship going?
I would have to say that, aside from the launch, where we saw some good interest and some penetration within their stores, they’ve had some difficulty assuring broad coverage across their store network with a broad assortment of Skype product.
Is that because they weren’t getting the turns they needed or couldn’t get their hands on inventory?
They had a lot of [personnel] turnover at RadioShack since we did the deal. Even their CEO turned over during that time period. They weren’t as focused on actually rolling it out right from the beginning. It wasn’t that they rolled it out and they were disappointed; the rollout wasn’t as effective as we would have liked.
What is your plan for Christmas for Skype in North America?
We’re very pr focused, guerilla marketing focused.
Jen: We’re just kicking off what we’re calling “Talk Turkey.” It’s a partnership with Food Network. If you go to the Food Network right now, they are promoting Skype. Emeril Lagasse and Bobby Flay are both participating. They are going to be doing some Skype video calling and helping people with their kitchen. We thought it was a fun way to reach consumers, people love being around the kitchen with their families, cooking, tied in to the holidays.
DA: We wanted to highlight video calling around the holidays.
Jen: There’s a foundation called The Young Storytellers Foundation. The cast members of The O.C., and other celebrities like Rob Lowe, and Jamie Lynn DiScala from the Sopranos are all doing Skype video calls too.
DA: Follow up on free US and Canada calling will be happening through the holiday period.
Jen: We did a big push on hardware. As you can imagine, the hardware devices are such great holiday gift giving ideas. That’s a big push for us too. Especially as we get people to think about using Skype to stay in touch over the holidays, the benefit of video calling, stuff like that.
How is the North American market different from the other Skype regions, like Europe?
DA: We’re starting at a different place. Skype is just so well known and so well penetrated over there. Existing communications behavior is different here. The different kinds of calling plans and how often people call internationally, are all different here. The biggest thing is just where we are. We are a couple of years behind here in North America where Skype is in Asia and Europe in awareness and adoption.
From all the charts I’ve seen, Skype growth is pretty linear which either means people aren’t telling as many of their friends, so it’s not growing virally, or the churn rate is matching the growth and adoption rate.
Are you looking at total registered users?
I’m looking at registered users and number of people online.
The registered user number has actually accelerated. We added 18 million users in Q2 and 23 million in Q3. That would suggest that globally growth accelerated between Q2 and Q3. Here in North America, while the growth is somewhat linear and steady here, it’s at a higher level than it was pre-promotion. We were down here on our nice linear line, did the promotion, jumped up to this line, and we’re linear but we’re at a much higher level than we were last April.
Is there anything Skype can do to make adoption more viral? Or is it just endurance, letting it continue to reach enough people until you hit a tipping point?
I think it all starts with the product and how we talk about the product. Personally I think Skype adoption will be more viral if people are using it because they love the product and they just have to talk about it.
Among the marketing things we’re going to focus on this year are making it much easier – even incentivizing them in some way through sweepstakes and things like that – to tell their friends. We took our first shot at that in the college promotion we did where we actually rewarded college students for taking various Skype actions. Like when you sign up you get a sweepstakes entry, when you invited five friends you get free voicemail for some time period. We were happy with it, with the limited marketing dollars we put against it. We had 35 thousand refer-a-friend emails went out from college students to their friends. For that one little group, I mean again we weren’t buying banners ads all over the place; we just basically promoted it to our own installed base and on Facebook. We’re pretty happy with it. So we’ll be looking at other ways to get people to be talking to their friends.
We haven’t been great about talking to our installed base. A lot of our users haven’t given us email addresses. And we haven’t had messaging opportunities within the client. That is changing, and we don’t want to abuse that in a commercial way, but we want to use that to help people get the most out of their Skype experience. If we see that they have had a particular problem, we can recommend a solution. If we see that they have been active Skype users for a while and they’ve never tried a video call, we can suggest that.
Do you have an education strategy, getting Skype into schools?
DA: We’ve been talking about that, particularly in the wake of the San Jose state ban. At the moment we’re working on a white paper to help educate administration IT managers what Skype is, how it works, how they might use it.
Jen: Kurt [Sauer] is speaking at an Educause event for IT people in education soon.
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