November 16, 2010

What's Holding Social Media Back? Speed, sensibilities and value for money are becoming the success criteria and/or the gating factors for launching social media campaigns. Consider this real-life example. Last spring, a client wanted to jump on a pop culture craze to promote one of his marquee products. He reasoned that this promotional item would not only capture the moment but also incent Moms and kids to buy his well-known product. He would offer these of-the-moment items along with a discount coupon during a 4-week back-to-school window during August and September in return for “Like” clicks on Facebook or to reward new followers on Twitter. An appropriate supply of items cost about $10,000. Developing landing pages and a dedicated Facebook tab would double that cost and fulfillment would add another $20,000 to the budget. He planned to promote the offer by alerting his 1MM Facebook friends and by pinging his 2 million-name e-mail house list and to supplement the effort by buying ads on Facebook worth another $25,000. All in the promotion would cost $70,000. He forecast a response based on his previous promotional campaigns that included 8.1 million gross impressions and 125,579 click-thrus that would potentially add 84,000 new fans for his brand. But it was tough to turn these numbers into a compelling business case. Anxious about the business value of a “like” and responsible for demonstrating ROI, the client balked. A new global Facebook Brands Survey from DDB Opinionway , based on answers from 1600 Facebook users, suggests that 47% of fans regularly buy from the brands they follow and another 37% buy occasionally. Thirty-six percent of fan responders say that they want to buy more from the brands they follow. This self-reported data can be spun either way – almost half of fans are customers or less than half of fans are regular customers. If he had to buy the earned impressions at his usual ad rates the cost would be $56,700. Spending $70,000 to earn back $56,700 was a loser. If he valued potential new friends using the widely reported figure of $3 per friend, his yield would be $252,000 or a 3.6:1 return. But he doubted this value and was uncertain about how many of his friends were actually paying customers or likely to become paying customers. He never made the move. But his experience suggests five useful lessons: Decide if your campaign should yield a direct response or contribute to creating a brand impression from the outset. This decision will drive the terns of measurement, help you determine urgency and prioritize your spending. If you want to capture the moment or ride the wave of a popular idea; move fast. By the time he worked this out in his head, he missed his window of opportunity. Try to figure out the overlap between friends and customers. Understanding this relationship will cue you about what to say, what to offer and what to spend in social media. Make your own valuation. Use average response rates and average purchase amounts to calculate the potential value of a fan or a friend. It will be a swag that is unique to your brand, but the number can guide you in terms of the time, effort and money invested in social media activities. Start with the hypothesis that friends are potential if not existing customers. Ask yourself what are you willing to invest to either add new friends or convert existing ones into customers.
Typecasting Twitter As social media become routine in consumers’ lives, marketers are eager to understand how and why different social networks are perceived and how they are used. Twitter, the 140 character service, part news ticker, part party line and part message forwarding service, confounds many clients because of its skyrocketing awareness, intense, often time sensitive usage patterns and the novelty of brevity. Twitter calls itself “an information network,” an identifier amplified by Ben Paar’s sense that it has a news media feel. Brian Solis focuses on its fluid nature and constant morphing by observing, “On Twitter, we form contextual (and incidental) networks characterized by week and strong ties spanning online and offline experiences.” Twitter has come out of nowhere and, in roughly five years, has achieved an 87 percent awareness in the United States. With 180 million unique visitors a month the potential is vast but a small minority of tweeters accounts for most of the 90 million tweets per day. Twitter has 17 million active users, approximately seven percent of the US online population. Sixty-four percent of these users are adults 35 or older, 51 percent follow at least one brand or company and almost one in four access the service by mobile phone. Yet Twitter works like talk radio. A few people drive the conversation but the vast majority of “lurkers” watch and listen to the on-going conversation, but don’t participate. Thirty four percent of registered users have never tweeted. Another 73% have tweeted ten times or less. Twenty five percent of registered users have no followers. There is a huge voyeuristic curiosity at play. Lots of people don’t want to miss what’s happening on Twitter. The new (September 2010) design changes make it easier and simpler to add or embed links, video, audio, maps, pictures or other elements that flesh out or add dimensions to the story. According to Social Twist, Twitter posts draw a click-through-rate (CTR) of 19.04 percent, almost one in five, which is astounding in terms of interest and interaction and eight times greater than the CTR on Facebook. Twenty nine percent, one in every three tweets yields some kind of reaction – comments, re-tweets or clicks. Ten percent prompt a reply to the original tweet. These are direct marketing nirvana numbers. The hashtag convention (#subject) makes it easy to find and participate in any conversation. Hashtags are early warning radar blips for marketers monitoring conversations, scouting trends and policing brand reputations. Ongoing broad public conversations on a national or lobal scale are the unique and differentiating aspect of Twitter and enable us to characterize a handful of unique uses for this channel. From what I can see, the seven dominant uses of Twitter are: Customer Service. Twitter enables real time praise and complaints as well as a channel to address and respond to either. Best Buy’s Twelpforce has mobilized 2300 employees to respond to 19,500 customer service queries in the past year. Other brands are engaging and monitoring the flow of positive and negative opinion about their products or services, operational performance, personnel and credit, shipping, return and merchandizing policies. Early Warning Radar. Brands routinely track, monitor, count and characterize the conversations about them and their products on Twitter. This enables them to assess social sentiment, establish benchmark attitudes, follow viral transmissions and measure market or message penetration. It is common for brands to assess the impact or resonance of TV commercials or important promotions by looking to see if and how much Twitter patter they generate. Direct Sales. Dell pioneered direct sales on Twitter and holds all the bragging rights. With 80 different Twitter handles pitching a full line of products and services, they have opened up an unexpected and growing revenue stream. Coupon & Deal Distributor. A third of registered Twitter users signed up to get deals and discounts. Brands are regularly experimenting with distributing coupons and discount codes on Twitter. Other brands are offering sneak previews of new products and services, limited time and exclusive access to new stuff or priority access and pricing to Twitter savvy customers. Every brand is trying to understand how many of its Twitter followers are actual or potential buyers and several brands are testing offers and incentives to convert followers into buyers or convert one-time buyers into repeat VIP customers. Breaking News Ticker. Twitter is a news source, a barometer of reactions to breaking news and a distribution channel. 19 percent of all tweets are about breaking news. With 600 tweets per second, Twitter is...

Danny Flamberg

I am a veteran marketing consultant working with leading and emerging brands

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