CDNs Marketing Message Of "Cheaper Than Akamai" Not The Right Focus

Anyone who reads my blog knows that I have been saying for some time now that CDNs need to do a better job of delivering a clear, concise message to the market of who they are, what they offer and how they are different from other CDNs in the industry. With nearly 40 CDNs now in the space, it's never been more crucial for CDNs to stand apart from one another. Yet, with more new entrants, and more vendors all vying for much of the same business, few CDNs are really delivering any clear message at all. And don't take my word for it, ask customers. They still don't know the differences between vendors and in many cases, I don't think the vendors do either.

For starters, this whole sales/marketing pitch of "we're cheaper than Akamai" is pointless. Can someone please show me who isn't cheaper than Akamai? Enough already. If all it took was a CDN to say they are cheaper than Akamai to get business, then Akamai would be losing a lot of CDN business right now, which they aren't. So when nearly every CDN in the space is all saying the same thing, "we're cheaper than Akamai", how is that a marketing message? I hear so many CDNs lead with that and I get so many e-mails from CDNs highlighting that. Ok, great to mention to a customer, but when every other CDN is saying the same thing to that customer, how is that making you stand out? It's not. At this point, it would be unique if a CDN said we are more expensive than Akamai.

Why aren't CDNs leading with propositions that customers want to hear? I keep saying that customers are complaining that they want better reporting and better customer service, and while some CDNs do highlight that as part of their offering, they are still not leading with that as the message. I challenge every CDN, especially the new entrants over the past 12+ months to write down what their marketing message is. Then compare that to what you read on your competitors websites and in their press releases and don't be surprised when it's nearly identical or is extremely vague and uses all the same marketing buzz words. This is really easy, yet many companies are simply falling in with the crowd getting lost in buzz words and bad marketing speak.

For instance. Simply by operating a CDN you are NOT helping customers monetize content. CDNs keep saying they are helping customers monetize their content yet then when I ask them if they have any of the offerings that truly enable the monetization of content like transcoding, authentication, meta data management, syndication tools, custom APIs, analytics tied into advertising etc.... most of the CDNs don't offer any of these services as of yet. Simply delivering bits is not enabling monetization. Anyone can deliver bits. It's all of the other pieces of the content ecosystem that really drives the monetization of content. Some CDNs have a few of those pieces, but the majority of them don't.

Also, the marketing message that some CDNs are leading with calling themselves the third largest, or top-three CDN etc... is pointless. Who cares. Customers don't. You are not going to win business simply by saying that to a customer. And quite frankly, what is it based on? CDNetworks says they are a "top-three global CDN", with us all assuming that Akamai and Limelight are the number one and two. But Panther Express says they are the industry's third largest CDN and if we are basing this on revenue, then isn't Level 3 the third largest CDN considering they said they did $100 million in CDN revenue for Q1 of this year?  The bottom line, it does not matter who is number three or number four. None of that matters. Think about this. Do you want to be known as the number three CDN in the industry, or do you want to be known by customers as the number one CDN in the industry when it comes to customer service and reporting. It's a no brainer. We all know that in any industry, simply calling yourself a large player does not guarantee you success, long term viability or customers. Enron anyone? Size does not equal longevity.

When I started this blog it was to write about all things online video related and it seems all I have been doing is writing about CDNs for the past six months. I don't call out CDNs in any post to make them look bad and don't let my harsh criticisms of the CDN market suggest anything other than my love for wanting the CDN market to grow stronger and learn from its mistakes. We read a lot of great things about the CDN players but it's also important that as an industry, we don't allow ourselves to get to caught up in them and stay focused on what can be improved upon. Right now, I would say that the majority of CDN players really need to improve upon the story they tell of who they are, what they offer and how they are different from others in the market.

Comments

[Drew Robertson]

The collapse of print, radio and (soon) television advertising channels is causing enormous anxiety for large marketers. A CDN who can fashion an offering that solves the needs of a P&G or GM that disintermediates the slowpoke oldline networks and ad agencies will do very well. But those folks have a much larger and more complex set of reqmts. than the typical "content provider". But ultimately they pay the freight.

[ojmd]

Dan: As a buyer of CDN, I think you're sort of right. "Cheaper than Akamai" doesn't mean much any more. What I want is "rock bottom pricing with reliable delivery and decent customer service." CDNs saying that they're a top-5 vendor implies reliability. The idea that CDN's need differentiated marketing messages certainly sounds good, but the fact that none of them are doing it suggests that maybe there is little meaningful differentiation. For my business needs, CDN is a commodity like copier paper. I don't want garbage, but it's all good enough at a certain level.

[Jake]

Funny you mentioned LVLT - they didnt do 100M in CDN business; they did 100M in Content Markets; LVLT is focused on verticals, not technology; Their Content Markets revenue of 100$M includes IP revenues to AKAM, LLNW, CDNW and others; NO WAY in the world do they have 100M in CDN revenues;

As mentioned before, your view is way too narrow. Your view is VIDEO DELIVERY in the USA. As a global buyer of CDN services, i am looking at caching and streaming, not just in the US but also in Europe and APAC; If you look at a global scale, there really are only 2 companies being able to deliver, AKAM and CDNW; I have contacts and contracts with both.....

[Dan Rayburn]

Yes, we all know that Level 3 did not do $100 million in what we consider to be CDN revenue. But even if 20% of that is true CDN revenue, then they are on a serious run rate and growing faster than any other CDN.

And no, my view is not too narrow. No one says I have to cover or focus on every single kind of content delivered over the Internet. Nothing wrong with someone focusing on a specific kind of delivery, like video.

No, Akamai and CDNetworks are not the only two companies who can deliver streaming and static content globally. That may be your "opinion", which is fine, but that's not fact. The fact is that Limelight and Internap combined did over $90 million last year in CDN specific revenue for streaming and static content delivery. That data alone proves there are more than two players.

[reuben gaz]

Dan,

Welcome back, hope you haven't cut it too short.
Have I missed your App Acceleration Report (Part 2)?
I have an EE background in this field, but before commenting want to read the complete report.

[Jake]

Dan, let's see: INAP did as a whole, around $17M in CDN revenues and LLNW, as a whole did approx 100M$ in CDN revenues; let's assume that an equal amount to Akamai's revenues is coming from Int'l - that would be approx 4M for Internap and 25M for LLNW; the total for these 2 together for 'GLOBAl' would then still be only 29M, not 90M as you suggest. This is assuming that they have an equal amount of international revenue compared to AKAM that has over 75 POPs whereas INAP has only 4 and LLNW has only 4 outside the USA. Point is, these folks that have <10 POPs outside the USA are not in the same league as Akamai or CDNetworks that have 75 and 63 POPs respectively. It's a fact that out of the 40 CDNs in this market, very FEW players can truly be considered Global CDN's - the list is short: Akamai, 75 POPs, CDNetworks, 63 POPs, LLNW, 17 POPs, INAP 6 POPs, LVLT 15 POPs and maybe some local regional players.

With globalization of content and eyeballs, it's imperative that when you look for a CDN, you have to consider their global footprint. How else am i going to get my content into China or Japan or Korea and vice versa?

[Jake]

BTW, i didn't quite get your contradiction:

....then isn't Level 3 the third largest CDN considering they said they did $100 million in CDN revenue for Q1 of this year? ...

4 comments later you write:

...Yes, we all know that Level 3 did not do $100 million in what we consider to be CDN revenue....

Let's get the facts straight.

[Grins Fun]

This is quite funny - I noticed the same thing Jake - LVLT is really trying to play upon investor's ignorance. It would be something on their next CC to ask for clarity on how much of that is true CDN & how much is sales to Content providers / other CDN ISP Transit & colo, etc. I have a feeling that their CDN has not grown too much (they would had been ALL ABOUT giving that as "We grew this unit faster than our competition, etc" - they are a public company - you know... gotta stroke up the investor.

Maybe Dan can bring clarity?

[grinsandfun]

BTW - Look at Cogent - they rocked the IP world back in 2001 - did sell on price. Some business plans work this way - I still don't see the value & don't see why CCOI is giving Cogent almost a BILLION in market cap - when INAP is profitable and 1/2 the market cap... (but also limited in CDN sales :) )

If anyone can bring clarity - I'm more than happy to listen and read!

[Dan Rayburn]

Ok a bunch of questions were asked in various posts so I'll try to answer them one at a time.

- I asked Level 3 how much of the $100 million was strictly CDN related. And while I can't say what the number is, I can say that based on their Q1 number, they are on a run rate to be the number 3 provider this year, based on revenue. And it's not a fair argument to say their CDN business must not be growing fast or else they would have mentioned it more. Level 3 does not do a lot of PR in general and the CDN business right now is not even a drop in the bucket when compared to Level 3's core revenue. I know of contracts in the multi-million range that Level 3 has signed just for CDN services. Also, you say you can't use the $100 million number to compare against other CDNs, which I agree, but then again, what percentage of CDNetworks revenue came from CDN last year? They also provide co-location and hosting services that are not CDN related. So even CDNetworks did not do as much CDN based revenue last year as most people are quoting them on.

- ChinaCache has no footprint in the U.S. for delivery services. They have a presence in the U.S. strictly to sell to U.S. companies who need delivery in China. Again, they are doing no delivery at all in the U.S. if you want clarification on that, contact (david.ng@chinacache.com)

- You asked where my "global perspective" is. Have you seen my CDN list at cdnlist.com? I list ChinaCache, CDNetworks, Rawflow, Octoshape, Velocix - all of whom are based outside the U.S. - You say that there are "European CDN's that could make a considerable impact against the current #1's and #2's". Ok, who? List them. BT could make a play, but isn't yet. I am open to hearing who they are and adding them to the list, but you don't give any examples of what European or Asia based CDN is going to give Akamai or Limelight any competition, who aren't already on my list.

- "With globalization of content and eyeballs, it's imperative that when you look for a CDN, you have to consider their global footprint." No, that is not true everyone. For you, it may be. And for some, global is important. For many others, global is not required. What about a content owner who only has rights to distribute the content in the U.S.? Or a content owner who's seeing all of their traffic comes from the U.S. due to the nature of the content?

- I agree with you, that few CDNs are truly global. But originally you said only two were, now you are expanding it to say there are five, which is more accurate.

[shaun noll]

thanks dan, i check in on your blog everday, its extremely valuable to have someone attemtping to bring some clarity to the CDN market, thanks again

[grinsandfun]

Dan -

If you put the "grain of salt to Level 3's statement" & agreeing the 100 M per Q revenue # is valid - you are also now stating they are #2 & by far growing quicker than ANY OTHER CDN in the market.

In fact - the $100 MM is VERY close to what LimeLight did for the entire 2007.

One last note - I noticed the beginning's of deviation from what you initially have reported / blogged upon- you are starting to look deeper at the application acceleration from AKAM.... wanted to get clarity from you - when you talk about who is #1, #2, #3, etc - what are you basing this upon? Is it "streaming video" / caching / WAA or what?

I think it is becoming a bit clouded on how these metrics and exactly what you are positioning with your follower's what you are trying to detail - without understanding the under-working's of what & why you are posting on the providers - can you give clarity on this? (also noting that LLNW has colo and IP within it's revenue metrics- this really clouds the picture even more!!).

[Dan Rayburn]

Well for starters, lets make one thing clear. When you question why I am posting on providers remember that I have no vested interest in any of their stock. I don't own their stock and don't care about the market. I post under my own name. You own stock in some of these companies and you post under an alias. So I think it is pretty clear why I post about the providers, to educate the market. What vested interest you have in the providers, that's really the question.

Lets take the 25% number. If 25% of that $100 million a quarter is CDN related (video, caching, software downloads) and they do that each quarter this year, then they went from doing very little CDN revenue last year to $100 million this year. That's more growth than any of the other CDNs have seen in the same period of time. What other CDN is growing CDN specific revenue that fast? It would put them at the number three, behind Limelight, based on Limelight's projected 2008 revenue. More than 95% of Limelight's revenue comes from CDN, almost none comes from colo and IP anymore. They have made that public.

Does it matter? No, that's my whole point. But too many of the CDNs think it does and have to call themselves second largest, world's best, top-three etc.... if they are going to do that, then don't we have a right to know what metric they are using? And isn't it only fair if that metric is compared apples to apples amongst the other providers?

[Paul Jacobs]

Why would you say that LVLT would be the 3rd largest? Maybe both CDNW, AKAM and LLNW are signing multi million dollar deals as well - for a fact, i know that all three are..... so i am sure they are growing as well - re. your 25%: ALL CDN's have monthly recurring revenues - that is their business model; to grow from $15M to 100$M in REVENUES in one year is just not doable - no matter how well you sell, it aint going to happen. why? Becuase in order to hit a 100$M in revenues by EOY2008 they would need to hit 1.3M booking per month in NEW business - or approx 15M per month in Annual Contract Value - yeah - they got a bunch of sales critters, but most are still focused on IP Transport - as is the case with Internap. For CDNetworks, they did >64M$ in CDN revenues, that would position them, no matter how you measure it, to be right behind LLNW..... We chose for CDNetworks as a second vendor because of the fact that 1) public company 2) 63 CDN Nodes 3)Coverage in Asia like nobody else.... Very useful if you are going to stream the Olympics :) Anyways, I like your blog, Dan - always fun to read...

[Patrick]

I would have to disagree with Paul. I was a customer of CD Networks for 12 months, and in that time frame had terrible network performance and my customers complained about videos buffering way too long, even in Asia. Their pricing was expensive and I paid it as I thought they had better coverage in Asia, yet then the quality was poor. Went to Limelight after a year and had much better performance, even in Asia. I guess each customer is different experience, but mine was not positive.

[grinsandfun]

Patrick - I smell a sales pitch. In fact it stinks it is so thick.

Kinda ironic that the header of this blog is how one should not pitch based on price & CDNetworks being the "Akamai" of Asia & LLNW pitching (via "Patrick") based on "Price"...

IRONY!!! & goes back to what Dan is wanting everyone to get past - SALES GUYS ONLY SELLING ON THE ALMIGHTY $ - can't see the value of talking about the network, reporting, support mechanisms, flexibility & other business values.

When the sales folks get past selling on the cost - maybe we can bring back value to the CDN market - until this happens - it will be a commodity year on delivery. (And you wonder why AKAM is falling like a brick.)

[Dan Rayburn]

Hi Paul, we don't know how much revenue CD Networks did in CDN products as they don't break that revenue out, that I have ever seen.

But the reason you selected them is really the point. You didn't select them based on the fact of them calling themselves number three, you picked them due to features of their product offering, specific to you. That's what they and other CDNs should highlight, instead of focusing on very generic marketing terms.