marketing a platform company

Needed: Deep wells of users and partners to drive the “network effect.”

If you hang around the geekier edges of the tech marketing world, you’ve heard a lot in the past few years about APIs, or application programming interfaces. APIs are what developers use to develop applications or services for an operating system like Windows (in the old days) or for a cloud service like Amazon (in these cloud-enabled days.)

Some have gone so far to claim we are in an “API economy” and that if you don’t have an API to encourage developers to link to your applications, data or other services you’re not competitive. Think that’s an overstatement? Consider a company as down to earth as the discount drug chain Walgreens. It offers  APIs that allow mobile apps to transmit photos for printing at its stores, for mobile app users to share health and wellness information in exchange for shopping rewards or to schedule appointments at its Healthcare Clinics.

Beyond APIs. Platforms

At last week’s  MIT Sloan CIO Symposium in Cambridge, MIT Professor Marshall Van Alstyne

claimed that companies that use tools such as APIs to become a  “platform” achieve massively greater market share, revenue and profits than those that sell only products.

He defines a platform as an “open architecture combined with a governance model that provides a useful function or service, and provides access to third parties.” Apple is a “platform” company in that it provides a set of operating systems and online services (such the App Store) on which others can build profitable goods and services, or sell products (though iTunes.) The “governance architecture” includes Apple’s famously strict rules for the look, feel and behavior of the applications it allows into its app store or that run on its iOS operating system.

Apple also happens to have a highly profitable hardware business. A purer platform example might be Google, whose “platforms” include its search engine and map service, which third parties can tap through APIs for everything from Web priced comparison to mobile shopping to the Uber  ride-sharing service.

Products have features, says Van Alstyne, while platforms have communities, “and the better platform and ecosystem wins every time” because it builds the largest “network effect” in which each new user increases the value of the service for all others. Building an ecosystem of outside developers, business partners and users demands a  focus on those outside of the enterprise, he says, if only because there are so many more potential partners and customers outside than inside.

Marketing Your Platform

So how can you, as a marketer, pivot from selling stuff to promoting a platform?

  1. Reach beyond a target set of potential “qualified” customers to a much wider audience of users who get more benefit the more information they share with others. A security “platform” company might serve as a clearinghouse for information about the latest threats and best practices for hardening systems against them. In software development, online repositories such as GitHub gain market share and revenue with each new developer who uses their tools for collaboration, code review and other functions.
  2. Even if you’re selling a technical product, make your value proposition as easy to understand as Google (instant easy search) or Uber (easy and inexpensive rides). The more you find yourself using product-centric jargon like “abstracting network services” or “transforming business intelligence” the more you sound like a widget company than a platform.
  3. Cultivate developers with APIs that are easy to access and give them the robust technical support to make them usable. This “productization” of APIs (as I blogged about for CA Technologies last year) requires thinking about everything from meeting regulatory requirements to marketing plans for APIs to calculating their ROI.
  4. Do not, as Van Alstyne says, “monetize everything” but give away enough value to drive the volumes of outside partners and end users you need to create a true platform. Google Search is the ultimate example: Free to the end user, which drives the volumes of searches Google needs to profitably sell ads against them and refine further search results.

Of course, not every technology company needs or can be a “platform company.” I also know this scratches the surface of what it takes to market platforms. Let me know what I’ve missed and what’s worked for you.

Author: Bob Scheier
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I'm a veteran IT trade press reporter and editor with a passion for clear writing that explains how technology can help businesses. To learn more about my content marketing services, email bob@scheierassociates.com or call me at 508 725-7258.

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