Nokia Will Need Marketing Savvy -- and Spend -- to Crack U.S. Market

Microsoft Partnership and New Marketing Chief Could Help Finnish Mobile-Phone Maker Gain Ground on Apple, Android

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Nokia is so far behind in smartphones that its new CEO equated the world's largest mobile-phone maker to a man trapped on a burning oil rig, staring down into the freezing ocean.

Nokia is on this precipitous ledge because of many missteps across the globe, but its fumbles in the U.S. top the list. The Espoo, Finland-based company has been largely absent, with little ad spending among the U.S and London ad agencies captaining its work. Meanwhile, the U.S.'s appetite for smartphones has propelled growth for Nokia's most formidable foes: iPhone and Android.

"The reality is that Nokia is almost completely irrelevant in North America; when it comes to smartphones, they are irrelevant," said Charles Golvin, mobile analyst for Forrester Research. Despite steady declines, Nokia is still the world's leader in mobile handsets, having sold nearly 30% of all mobile devices in the world last year, according to Gartner. In the U.S., Nokia is the No. 5 mobile manufacturer, with only 7% share in December, according to ComScore. It isn't even among the top five smartphones.

Jerri Devard
Jerri Devard

But with two North Americans in key leadership positions -- its first non-Finnish CEO, Stephen Elop, and new chief marketer Jerri DeVard -- it looks like Nokia is finally beginning to focus across the Atlantic.

Nokia spent $278.9 million in worldwide measured media in 2009, but less than 5% was in the U.S., according to the Ad Age Datacenter. That might change under Ms. DeVard, who has spent her 25 years in marketing in the U.S. Only about six weeks into the job, she has not yet made changes to Nokia's agency roster. Wieden & Kennedy, London, is Nokia's lead creative agency, and the London offices of JWT, Wunderman, digital agency R/GA and Euro RSCG handle Nokia business. Publicis Groupe's Fallon won Nokia business in 2010. It was the first Nokia creative assignment not given to Wieden since the agency won the account in 2007.

In that leaked oil-rig memo, Mr. Elop, a Canadian, was forecasting the company's icy plunge into a new deal with Microsoft, where he worked before Nokia. He expounded on Microsoft's leadership in software and services as benefits of the deal, but to catch up to Apple and Android, he is also going to need a smart and sizable marketing plan -- and that's another place Microsoft will come in handy.

Microsoft has already thrown serious ad budgets behind Windows Phone in a launch campaign from CP&B. The marketer is a top 50 ad spender in the U.S. with more than $1 billion in measured media in 2009, according to Ad Age's Datacenter.

Overcoming the Nokia brand black-hole in the U.S. will be the task of Ms. DeVard, an American, who was likely brought in for her expertise in this market. She's up against a category that has been driven by big-budget advertising: Apple successfully launched its iPhone in 2007 with the now-iconic "App for That" ads, while Verizon's massive push for Droid, its own brand of Android devices, was largely responsible for putting the Google platform on the map.

At Verizon, Ms. DeVard was responsible for the "Realize" campaign, which was distinctly American. It focused on how small-business owners could use Verizon phone and internet services to achieve the American dream. No stranger to a company in transition, she launched efforts to convert customers from dial-up internet to broadband.

Ms. DeVard, who also spent time at Citigroup and Pillsbury, has flown under the radar since she resigned as senior VP-brand management and marketing communications at Verizon Communications in 2007, though she worked with Microsoft under her own shingle after leaving Verizon. Nokia did not comment or make Ms. DeVard available for this story.

Even if Microsoft does lend its substantial marketing muscle and knowledge of its home turf to Nokia, the route to convert U.S. smartphone consumers remains exceptionally steep. In a recent survey of U.S. households, Forrester found that people who own Nokia products are generally older, lower-income, spend less on mobile services and are less likely to use the internet on their phones. "That's highly damning, because that's not the future of the industry," said Forrester's Mr. Golvin.

Neither Nokia nor Microsoft has been able to stand up to mighty Apple or match Android's explosive growth just yet, but together, they're betting Nokia's scale and Microsoft's foothold in the U.S. can bring another formidable competitor into the smartphone rout.

Nokia has steadily seen global market share slip away in recent years, largely because it's failed to offer high-end phones on par with iPhone and Android devices. On the low-end, Nokia has also faced steep competition from cheap, fast Chinese manufacturers in emerging markets. Meanwhile, Microsoft was extremely late to launch its smartphone software Windows Phone, which launched with warm reviews, but without the gangbuster sales seen by Apple or Verizon's Droid. While those platforms rocket ahead, Microsoft is at the bottom of the heap with 4% global smartphone market share in 2010, according to Gartner.

Despite its steady bleed, Nokia remains a very attractive partner for Microsoft. The partnership means instant scale for Microsoft, and Nokia gets software that could potentially differentiate it from the pack, as rival handset makers Samsung, LG and HTC have largely chosen Android.

"The burning platform, upon which the man found himself, caused the man to shift his behavior, and take a bold and brave step into an uncertain future," wrote Mr. Elop to end his memo. "But he was able to tell his story."

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