Tapping the Scale of Social Networking

MySpace, Facebook, LinkedIn… the list of social networks seems as deep as the long tail of digital music. Social networks are everywhere and have been the darling of digital marketing over the last couple years. But why do digital marketers want their piece of the social pie? A few simple words… achievement of scale.

 

Why do national and international marketers still rely on television for the vast majority of their marketing dollars when everyone knows that TV audiences are shrinking, significant numbers of people are viewing additional media while watching TV so they are distracted and many people completely skip commercials using their DVRs? Marketers are looking for scale… the most bang for the marketing buck. The theory is that the more marketers bombard vast numbers of people with a compelling message, a good percentage of those people have to be paying attention. Then, a percentage of those people paying attention will take action and investigate the product or service. Then, an even smaller number will make the decision to purchase. By starting with such a large market (up to tens of millions of people depending on where the TV spot is running), marketers can quickly move the sales needle even if the medium is less effective now than it was even a year ago. So, how does this relate to social networks? Social networks are getting eyeballs in vast numbers, which is why popular networks like MySpace and Facebook have tremendously high book values. Marketers want numbers, and in theory, social networks can deliver those numbers.

 

From business-to-business networks like ITtoolbox (and its 1.3 million members) to professional networks like LinkedIn to networks of mommy bloggers, social networks are everywhere and consumers, professionals and businesses are using them. Not only are marketers taking advantage by advertising on networks like MySpace and creating applications for Facebook, such as Visa creating the Visa Business network for small businesses on Facebook, but they are also creating their own networks. For example, brands such as Luvs diapers are engaging consumers by allowing them (mothers of young children in the case of Luvs) to share their views on controversial parenting topics. The theory being that the more engaged your consumers are in conversation (with your brand as the backdrop), the more positive their view of your brand.

 

Even mobile consumers are getting involved in social networking. Based on multiple sources and its own analysis, eMarketer predicts that more than 800 million people will use their mobile phones to access social networks by 2012.

 

So, consumers are using social networks. So, what? Well, marketers have realized that if they can tap into networks, maybe they can harness the power of word-of-mouth in the digital space. Advertising programs on the likes of MySpace and Facebook haven’t been overly successful cash generators for the networks, however marketers are trying to find any way they can to gain access to the large amount of eyeballs on these sites. The successful marketers have figured out a way to use the networks themselves rather than relying on traditional digital mediums such as banner ads. One good example of a marketer harnessing a popular network was Toyota’s use of YouTube. Toyota posted “consumer” videos of people driving the Corolla. These “consumer” videos were actually shot by professionals using hand-held cameras to make it appear as if they were actual consumer videos, but it worked. A significant number of consumers mentioned the videos when they went to dealerships to test-drive the Corolla. Toyota tapped the network with videos compelling enough to pass along to friends and family… the digital world’s version of word-of-mouth marketing.

 

Social networks are used by millions and millions of people, offering the potential digital scale that marketers are craving. Banner ads can offer scale as well, but tapping (or even creating) a vast social network can lead to pass-along the likes of word-of-mouth, as well as high brand affinity and increased purchase intent. Many of you reading this article are a member of a social network. Whether it’s LinkedIn, Facebook or some other professional, business-to-business or purely social network, the number of members continues to grow at a furious pace. Are you tapping into social networks to grow your brand? Most likely the leader in your market is.

B2B Information Technology

Properly harnessing Information Technology in today’s economy can give your company a significant number of benefits, but only if it is implemented properly. IT can increase business process complexity as easily as it can improve business process if it’s implemented improperly.

 

Over the last decade, IT has offered up a vast array of business-enabling tools, including: websites, ecommerce, web conferencing, CRM systems, accounting systems, phone systems and other forms of communication.

 

The act of buying a piece of technology will not make any positive difference to your business. It’s what you do with the technology that determines if it will give you a significant competitive advantage. If you are purchasing a new system to mask a business management problem, you are not likely to see any return on your investment as IT should be viewed as an enabler not in itself a differentiator for your business. The key is how you implement the technology.

 

Questions to ask yourself if you are considering an IT purchase:

 

·          What are my objectives?

·          What will allow me to meet my objectives?

·          How will I know when I've got it? (measurement)

·          What steps must I take to make it happen?

·          Where do I invest at what level to manage risk?

 

Potential Benefits of IT:

 

·          Increase efficiency of internal company processes, such as customer service and accounting.

·          Improve decision making throughout the organization.

·          Increase timely communication with customers.

·          Increase accuracy of new business estimates by using comparable historical data.

·          Identifying market needs more effectively by understanding specific customer requirements.

·          Cross-selling of other products by highlighting and suggesting alternatives or enhancements.

·          Effective targeted marketing communications aimed specifically at customer needs.

·          Increased value from your existing customers and reduced cost associated with supporting and servicing them, increasing your overall efficiency and reducing total cost of sales.

 

When implementing new IT systems, be sure to follow these rules:

 

·          Make sure you put together a plan before making a purchase that outlines the benefits of the new technology. Without a written plan, your employees will not connect their performance to the technology, they will not measure the impact of the new system on performance and they will not change their behavior to make it work.

·          All of your various IT systems must “talk” to each other in an integrated, easy-to-use system. For example, your accounting software must talk to your CRM system, as well as your marketing dashboard. Without all of these systems synced, you will not have every piece of pertinent information at your fingertips.

·          Be aware of the groups in your company that are against the process/organizational redesign. If they are not addressed openly and sold on the benefits of the change, they could be the link that makes the new process/system fail.

·          Your IT system must provide fast, clear, actionable information. If your system reports information that is not already in an actionable format, it is useless in today’s fast-moving business environment.

The Strength of Online Moms

Moms are a force to be reckoned with online. From product ratings and reviews to social networking to spreading messages in word-of-mouth viral style, moms are an important group that marketers should take advantage of. According to three separate studies conducted over the last year (by Pew Internet & American Life Project, the National Telecommunications & Information Administration and Experian Consumer Research), about 86% to 87% of parents are online. Experian found that the figure rose to 94% among women who expected to have their first or second child in the next year.

In addition to the high Internet penetration of moms, eMarketer reports that the number of US adult female Internet users with children is about 34.2 millions. Nielsen Online (32.4 million) and comScore Media Matrix (30.1 million) also reported similarly high numbers. eMarketer also found that nearly 44% of all adult females who go online are mothers.

Whether online or off, new and expected moms are talking about products to friends, family and colleagues. According to BSM Media, 64% of moms asked other mothers for advice before they purchased a new product and 63% of mothers considered other moms the most credible experts when they had questions. Keller Fay Group and BabyCenter.com, in a 2008 study that compared women in the general public to new and expectant mothers, found that each week, women in the general public have 83 total conversations about products and 59 of those conversations mention a specific brand. For new and expectant mothers, those numbers rise dramatically to 109 total conversations and 70 brand-specific mentions, leaving the door wide-open for brand-related word-of-mouth pass-along. In fact, the same study found that 70% of pregnant and new moms trusted what they heard from other moms and more than 50% said they tended to pass that information along to others. Further supporting mom word-of-mouth, NPD Group found that nearly three-quarters of the mothers surveyed received product information via word of mouth or online, and SheSpeaks found that 87% of female Internet users will mention a favored product in conversation, 67% will call others to let them know about the product and 64% will forward an e-mail link to others.

Marketers are beginning to realize the power that moms are wielding online. A small cross-section of the power of online women can be seen in the popularity of “mommy” blogs (blogs written by and for mothers and expected mothers) and entire women-focused blog networks such as BlogHer. Just a few years ago, women had to rely on their own moms, other mothers, books and offline groups to find and share motherly information, now those women are doing these things online – tracking down parenting advice, researching products, joining groups alongside other mothers and sharing their experiences with other new and expecting moms. From online ad campaigns that stretch across mommy blog networks to BlogHer sampling programs, marketers want to get their products in front of moms and mothers-to-be. With the propensity of moms to seek out and then share information, marketers want to get their products in the hands of would-be users and clearly broadcast their brand messages. To do this, marketers are using tools that encourage trial and information sharing, including: product sampling, couponing, blog tags, portable content that can easily be picked up and shared across the Web (including the use of tools such as ShareThis), brand blogs, testimonials from real moms and even connecting directly with bloggers to secure product reviews, which can be very powerful when a blogger has a strong following or belongs to a network of bloggers and posts a positive review. Like marketing to any other group, negative word-of-mouth is a risk that marketers must face when approaching moms online – you must be credible, respectful and above all must have a product that has a perceived benefit in order to effectively use these tools.

New and expectant moms make up a perfect group for baby- and mom-related marketers. This group is the epitome of a target market – large size, large spending power, shared interests, strong desire for information and the desire to share product experiences with others. From women’s social networking sites to mom-friendly products, marketers are taking advantage of the power of moms and expected moms. If you have a product or service that is aimed at moms or expected moms, you are missing a tremendous opportunity if you are not taking advantage of the online tools that are available to you. When in doubt, go ask your mom if you can go online and play.

Online User Reviews

If you spend any significant amount of time on the Web, you’ve probably used it to research products and more than likely ended up buying something either online or in-store that you researched online. One tool that continues to skyrocket in popularity due to its very high credibility level is user-generated reviews. Consumers view user reviews as a more and more critical piece of information in the purchase decision making process, and they are actively seeking them out. However, if you are on the other side of the table and are running an e-commerce website or offer any sort of link-to-buy function on your site, you most likely do not offer user-generated reviews. The primary issue is that user reviews by nature put the user in control of the message and take it out of the hands of marketers. This is exactly why user reviews are so popular and is also the reason that they make marketers very nervous.

A recent study by Deloitte showed that 62% of US Internet users read product reviews written by other consumers. And not only do a majority of US Internet users read user reviews, but as eMarketer reports, consumer-generated reviews are viewed as either somewhat or very credible by 99% of US Internet users. Deloitte also conducted a separate study that showed 42% of US online shoppers thought that featuring consumer reviews on websites increased consumer trust in the sites and presumably the products on the site.

Not only are a majority of people reading user reviews and nearly all users believe they are credible, but a report from JupiterResearch showed that in a study of online social network users, consumers were three times more likely to trust user opinions than advertising when making a purchase decision. The Deloitte study also showed that more than 80% of users who read consumer reviews were influenced by those user reviews.

In addition to enhancing credibility, building trust and influencing purchase, user-generated reviews can also:

• Improve search results because reviews add a greater volume of site content and are updated frequently
• Become syndicated content
• Provide feedback to the company on the cause of negative reviews

With all of these benefits, you would think it would be an easy decision to offer online user reviews. However, more than 66% of US e-commerce sites do not offer consumer-generated reviews, according to an August 2007 study by Vovici. Many times, marketers are not willing to give up control of the messages on their site in fear of negative reviews. But according to a Bazaarvoice trend analysis, product and service user reviews are very positive, with an average rating of 4.3 out of 5. In the study, Bazaarvoice found that of those people who had contributed one or more online reviews, 36% were positive every time, 51% were positive most times, only 1% were negative most times and only 1% were negative every time. An eMarketer study backs up the fact that the vast majority of consumers are not looking to seek revenge on a retailer when developing reviews. In fact, in the study, 9 out of 10 reviewers posted reviews to help others make better buying decisions and close to 80% posted reviews to reward a company for a good buying experience. Other studies have shown that even when reviews are negative it's not necessarily a bad thing. Actually, allowing the posting of negative reviews increases credibility and increases purchase intent as it shows that bad reviews are not being filtered out and that the reviews are legitimate.

Even with the potential for negative posts, consumer-generated product and service reviews should be a product or service website “best practice”, “must-have”, “price to play” and any other cliché you want to use. The potential upside far outweighs the risk marketers take when they allow consumers to post opinions. While the overall percentage of sites offering online reviews is still low at around one third of sites, online retailers are slowly beginning to accept these risks. Nearly one-quarter of the businesses included in Internet Retailer's "Holiday Sales Expectations" study conducted prior to the holiday 2007 season said they had added customer reviews for the holiday season. This percentage was third on the list of additions behind only order tracking and faster checkout.

The marketing world has changed over the last five to ten years and will continue to change at a very rapid pace. One of those important changes is the level of control consumers are demanding from marketers. Consumers want 100% transparency in product and service quality and pricing and will use that information to their advantage whenever possible. One of those advantages consumers are seeking is the first-hand knowledge gleaned from real-life users of products and services in the form of user-generated reviews. Consumers are actively seeking out user reviews when researching products and services, and multiple studies have shown the benefits to both the consumer and the marketer. The question is, are you willing to give up some control to win a new customer?

Behavioral Targeting

Behavioral targeting is defined as the serving up of online advertising messages based on what pages the user has previously visited and/or what the user has previously searched for over a specified period of time. By tracking a user’s Web history, behavioral targeting allows publishers to serve up ads that are more relevant to the user by allowing publishers to change ad creative on the fly for different users. And, the future for behavioral targeting looks bright. According to an eMarketer report in the second half of 2007, spending for Internet advertising with a behavioral targeting component will increase from $575 million in 2007 to $1 billion in 2008.

Behavioral targeting can take place within an individual site or across a network of sites. If a publisher, Yahoo! for example, knows that a user visited a number of Y! Health pages of the site, they can then serve up health-related ads when the user hits any other page of the site whether that page is health-related or not. Since the user has shown a propensity to view health content, Yahoo! can track that user and serve up ads that may be of interest to that particular user based on previous page view history. This same method can work across a network of sites as well. For example, a user may visit several pages of FoxSports.com, then visit an automobile page of MSN.com and then check his email on Hotmail.com. In this instance, MSN would be able to theorize what type of ads the user would be interested in. So when he hits his Hotmail inbox page, he may see an ad for a new sports car, whereas another user with a different Web browsing history would see a completely different ad. According to a Forrester report on consumer attitudes toward advertising from November 2006, there are three main sources of advertising irritation to consumers: ads are too numerous, disruptive and irrelevant. Behavioral targeting was created to help answer these complaints, as well as command premium ad placement fees by serving up fewer, more relevant ads.

While different types of online targeting have been around for years, many people do not understand the differences – even between the two most common targeting methods, behavioral and contextual targeting. The difference is that behavioral targeting serves up ads based on previous search or browsing behavior while contextual targeting serves up ads based on the current content of a Web page. For example, Google AdSense ads are a form of contextual targeting, as is the serving up of a 2009 Honda Civic ad on a used Honda search results page of Cars.com. To lessen confusion, it is easiest to distinguish these two forms of advertising in this way:

Behavioral targeting – serves up ads based on a user’s search or browsing history
Contextual targeting – serves up ads based on current content the user is viewing

While publishers like the fact that behavioral targeting makes inventory more valuable and marketers are embracing this form of marketing for its effectiveness, consumer groups are not fond of publishers tracking users across the Web. In fact, some groups are calling for a national do-not-track list similar to the famous national do-not-call list to help curb this sort of tracking. Also, some groups are calling for sites to instantaneously disclose what a site intends to track. In an effort to head off these consumer group complaints, some of the larger publishers are putting increased emphasis on how, what and when they track. For example, AOL announced on October 31 that it will initiate a major campaign to educate the public that it only tracks non-personally identifiable information. AOL also announced that the company will offer a permission-based opt-in to behavioral tracking, which is something consumer groups have been calling for.

One company pushing the envelope of behavioral targeting is NebuAd. The company announced at the ad:tech New York Conference in November that their new behavioral targeting system generates a greater percentage of ad conversions and higher ROI than any other behavioral system. According to the company’s CEO Robert Dykes, NebuAd receives analytical information about which ads work best, and in turn, the higher ad effectiveness increases the value of inventory above and beyond what other behavioral systems offer. The driving force behind NebuAd’s system is that their hardware tracks at the ISP level rather than the site or network level. By using ISPs, it enables NebuAd to track a user’s movement across the entire Web rather than just a specific site or a network of sites. To protect consumer privacy, NebuAd uses one-way hashes to anonymize user identities. NebuAd takes the approximately 70 percent of ads that are currently untargeted and targets them by observing Web searches, Web pages accessed, and the ads consumers click on. It then creates and updates anonymous consumer profiles to better focus ads. The company charges advertisers and shares a percentage of those revenues with publishers and ISPs. It is too early to tell how effective NebuAd’s system is or what the consumer group reaction will be, but there are already copycat systems being announced, and as everyone knows, imitation is the sincerest form of flattery.

Behavioral targeting has many benefits, including increased ad effectiveness, increased value of ad inventory and even an increase in ad relevance for the consumer. These benefits have caused explosive growth in the marketing dollars allocated to behavioral targeting, which shows no signs of slowing down in the near future. However, consumer groups see behavioral targeting as a violation of privacy and are doing everything they can to limit the depth of tracking. Publishers have responded by trying to make their tracking methods more transparent, as well as beginning to create voluntary tracking opt-ins. No matter which side wins the battle of public opinion, one thing is certain: behavioral tracking systems will continue to evolve by increasing the depth and breadth of information collected in an effort to optimize ad trafficking while at the same time addressing consumer concerns before legislation forces it.

Relationship-building, Email Style

In a July 2007 The McKinsey Quarterly study, email marketing spending scored the lowest projected increase in a list of popular online marketing tactics and finished with the highest projected decrease in spending over the next three years. While it’s true that, on a whole, online marketers are planning to pull back on email spending, consumers are still signing up to receive newsletters, promotional emails and new product and service announcements at a steady rate. Long story short, no matter what online marketers say, consumers are still asking for relationships with the brands they love and email is still a big part of that relationship.

Over the recent past, consumer patience with non-solicited email (spam) has fallen to an all-time low, there has been a steady increase in the adoption of more efficient information delivery methods such as RSS, and there has been a continued rise in the use of spam blockers. One would think that these forces would indeed put negative pressure on overall email use and spending by marketers. However, Penton Media Custom Research reports that of the online marketing tactics used by US marketers in February and March 2007, email marketing and email newsletters were used more often than any other tactic including banner ads, blogs, viral campaigns, search engine optimization and podcasts.

Adding to what Penton found, we recently conducted an online survey for a consumer packaged goods client where over 95% of the more than 800 respondents said that they prefer email communication as the primary means of brand communication, above RSS, text/mobile messaging and five other online marketing tactics. Beyond just preferring this method of information delivery, more than 90% said they prefer email communication more often than just once a month. Consumers are looking for relevant, targeted, personalized content from their favorite brands and beyond tolerating email communication, they are asking for it.

Consumers are asking for relationships from their preferred companies and are looking to build relationships with their favorite brands. According to Silverpop, retail marketers understand that building a relationship with consumers is important and leads to long-term sales. As such, retail marketers are making it easier to opt in and out of campaigns, and they are learning to ask customers for more than just e-mail addresses to help craft personalized messages. eMarketer states that in 2007, nearly six out of 10 companies will send their e-mail recipients to pre-populated Web forms if they want to opt-out, up from 30% who did so in 2005, making it easier to end communications on the consumer’s terms. In addition, nearly two-thirds of e-mail opt-out links in 2007 led to a page for registrants to make changes to their preferences. In 2005, only 12% of e-mail marketers did so. Not only does ease of opt-out help build a trusting relationship but taking consumers to a preference page instead of a simple opt-out may convince consumers that the company has something else of interest, even if they no longer want a particular communication.

Not only is it important to communicate with consumers when and how they want, but it is important to build trust from the beginning, by starting the conversation when a consumer asks for it. eMarketer reports that Mike Weston, managing director of Silverpop EMEA, believes effective e-mail marketing tends to resemble polite conversation. "There are rules of conversation," Mr. Weston said. "Companies that fail to respond when someone gives them an e-mail address are doing the equivalent of ignoring them face to face in a store."
If consumer desires aren’t enough to convince you to continue the use of email communication, listen to online marketers who reported to MarketingSherpa in March that more than one-half of US marketers stated that e-mail marketing produced the second best ROI of any marketing tactic. Only search engine optimization was more highly regarded for ROI. Yet, eMarketer predicts that US e-mail marketing spending will reach $1.65 billion in 2011, up from $1.5 billion in 2007, so the annual growth rate will slow from 5.6% in 2006 to 1.5% in 2011. Consumers are asking for relationships with brands and the ROI payouts are there, so why is email spending predicted to decline? Researchers believe that while the number of emails sent will actually continue to increase steadily, efficiencies in email delivery will offset those larger increases in number of emails sent by reducing costs. As such, email spending will increase at a slower rate than the rate at which the number of emails sent will increase.

Many people believe that email marketing is dead or is in the process of a slow death. However, consumers are still asking for brand relationships that are buoyed by email communication. I would highly recommend against using email as your only means of communication with consumers, but it should not be ignored in the face of negative publicity. In addition, the ROI payouts have been proven, so it shouldn’t be too difficult to sell your CMO on the tactic either.