What One Spotify Ad Can Teach Us About Competition

Your competition includes more than the companies that provide the same product or service as you do. Understanding the full space of competitors will help you to know and lead your product at a whole new level.
Photo by Andrea Piacquadio from Pexels

Those of you who don’t yet have a Spotify premium subscription may have run into the following ad:

Thanks for listening to Spotify.
No really, you could’ve listened to the radio.

You could’ve spun some vinyl.
You could’ve played a cassette tape.
You could’ve listened to an 8-track tape

(if you knew what an 8-track tape looked like).
But you listen to Spotify.

Thanks for that,
and you still have hundreds of more playlists to enjoy.

In this (sarcastic?) ad, Spotify conveniently mentions a list of competitors. The list is not random of course. Out of everything mentioned, radio seems to be the only real alternative. All the rest are obviously irrelevant, with the 8-track tape going back to as early as the 1960’s. 

With this ad, Spotify tries to tell us that this is how you listen to music these days, there is simply no real alternative. While I personally find it too smug (because truth to be told there are alternatives, and I’m sure Spotify is well aware of them), there are a number of lessons we can learn from this ad as product leaders when it comes to competition.

Your Competition Is Any Alternative Your Customers Have

If I ask you to list your competitors, you will most likely name companies who provide products or services that are similar to yours. However, your competition is usually much broader than that. Since your product starts with the problem you want to solve, anything and anyone who can solve this problem for your potential customers is, in fact, your competitor. 

Here are a few examples:

When I worked at eBay, our natural competitors were of course Amazon, Alibaba, and potentially Walmart. But in C2C selling (Consumer to Consumer, meaning mostly used stuff that one wants to casually sell, not a full-blown business) we had another competitor.

Stop for a minute to see if you know who. Think about it: if you want to sell your old car, where would you go? You’re right if Craig’s List or Yad2 (in Israel) came to mind. Classifieds are another type of competitor for C2C selling. But nowadays that’s not even the largest competition. Where most of you would publish your garage sale?

You’re right. Facebook.

Now if you think about eBay’s competition, Facebook wouldn’t fit in naturally. But if you think about the use case and customers’ alternatives, it would.

Make sure to always think about your competitors from this perspective, or you will miss important companies that should be on your radar.

On top of that, not only other companies create competition. Every time you are selling to developers (or a large enough tech company), you should consider in-house development as a primary competitor. The closer you are to your customers’ core business, there is a higher chance that they have already tried to solve the problem themselves. Even if they haven’t done so already, if they think it is not too complex, they will want to give it a shot themselves. Unfortunately, it doesn’t mean they will say it upfront, and many times you will find out that this is the decision only after you have invested a lot of time and effort in POCs. So pay close attention to this one from the get-go to reduce this risk.

Another type of alternative is simply doing nothing. The problem exists, but the customers don’t handle it. It is relevant mostly for cybersecurity and other types of products that sell some type of insurance, but you can find it in many other categories. If you run into this a lot, it means the problem you are solving is not a good enough problem.

How You Talk About It Matters

Spotify’s ad aims to position Spotify as the only modern alternative. Of course, comparing them to the list of chosen alternatives makes Spotify shine. The nice thing about it (for them), is that even if you understand exactly what’s happening here, it still works. Without getting too much into psychology or marketing, this is a strong image that is hard to get out of your head.

But let’s talk about something closer to the core of product management that can impact how you are perceived – and that is your value proposition, and specifically how you measure it. 

If your value proposition is too narrow, or too far from your customers’ bottom line, it might not be strong enough. But the more you add to it, the larger your competitor list becomes.

Here is an example: let’s say that you are offering 360-degree images and fancy videos of products, and you are selling to eCommerce companies. If you measure your success as user engagement around the product image and video, it might be too narrow for anyone to care about. Depending on how much you want to charge your customers, this is most likely not going to be a strong enough success metric to make the deal. So you want to measure it as close as possible to what your customers care about most, and that’s of course sales or conversion rates.

But what happens once you define conversion rate as your success metric? You immediately positioned yourself up against any other solution which can improve the conversion rate. For example, personalization, faster checkout, improved search, higher site speed, and many others. The higher you need to go in the organization to get the budget approved, the more likely you are to meet any of these other alternatives on your buyer’s desk for them to prioritize.

You need to find the balance that works best for you and remembers that numbers are not the only thing that matters. They are very important, but a clear and sharp value proposition is much more important, even when you measure success (and of course in helping you to get to this stage).

When You Don’t Have Competition

Many companies like to explain to me why they don’t have any real competition. It’s very natural to think of ourselves this way – we worked so hard on truly innovating in our industry, we came up with something truly unique, and no-one does exactly that. 

It’s tempting to think that it’s because you are doing something amazing, but if you truly have no competition that’s a very bad sign. It means that no-one finds the problem you are solving important enough, or business worthy. 

You might think that this problem is just too hard to solve, and your innovation is the only thing that actually makes it possible. Before you go with that conclusion, conduct proper research on what others have tried and why they haven’t succeeded, and see if your conclusion still holds. 

Odds are that it won’t, simply because most companies don’t succeed based on innovation. They succeed based on market need, and if the need exists, some solution would have most likely been out there already.

Unlike what one might think, having competition is actually a good thing. It validates the market need, and it helps develop the discussion around the space you are in. Oddly enough, you benefit from your competition’s marketing efforts as well.

I encourage you to go and compile the full list of your competitors – whether they exist as other companies or are simply workarounds your customers are applying. You will understand your product much better after that.

My free e-book “Speed-Up the Journey to Product-Market Fit” — an executive’s guide to strategic product management is waiting for you

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