Innovate 1st Interview Part 3 – Social Media Myths and Truths

January 10, 2011

I was recently interviewed by Innovate 1st for an upcoming edition of Innovate eZine’s “Conversations on the Cutting Edge” series. Following are excerpts from the interview, which was conducted by Doug Berger, Managing Director, The INNOVATE Company.

To read the full interview series, start with my earlier blog post: “Challenges in Advertising & Media Effectiveness.” 

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Social Media Myths & Truths

Doug:        Let’s shift gears to social and digital media.  Why don’t you start with some basic facts and then move into some of the wide-spread fallacies.

Randall:     Globally, in 2007, there were about 210 million people using social media.  Today, it’s over 500 million people.  The time per person spent between 2007 and 2009 has gone up about 82 percent.

So more people are doing it, and they’re doing it a lot more.  Secondly, it is big everywhere.  When you look around the world at the percentage of people using social media, globally it’s 73 percent as of last year, from a low of 59 percent in Germany up to a high of 84 percent in Brazil, with the U.S. at the global average of 73 percent.

It started skewing a bit younger, but as the penetration of social media has grown, it’s become almost a truly representational population.

Social Media Myths & Truths

Doug:        What are the trends around social media in terms of brand building?

Randall:     We all know that a recommendation from a friend, or a family member, or an acquaintance is the most powerful form of marketing there is.  That is the underlying phenomena of social media.   Engaging people to ultimately have them speak positively on your behalf is the real opportunity of social media.

Let me just give you one example of this.  Nielsen (Disclosure: I work at Nielsen) has a partnership with Facebook, where they measure ad effectiveness on Facebook. They have looked at a basic ad for Virgin Atlantic and we can see the recall for the ad.  Facebook can serve up that same exact Virgin ad, except below its ad it says, “The following friends or people in your network are also fans of Virgin.”  These ads score much higher than just the regular ad without the social context.

Virgin Atlantic: Facebook Fan Page

One of the developments that advertisers need to be focused on are ways to leverage social context that validates having people seriously think about using or buying your brand.

A lot of our clients are moving to a media model that we like to call POEM – Paid, Owned, Earned Media.  Paid media is the traditional advertising.  Owned media is your own website, or you own your own content on a website.  Earned media is how consumers are talking about your brand.

This POEM framework is an interesting one to think about for reaching consumers.  Now advertisers can look at people who viewed an ad; the percentage who went online and searched for my brand; the percentage who went onto my Facebook page; the percentage who went to my corporate website.  You can measure all of that.  You can start to understand the interaction of paid and earned media in a way that hasn’t been possible before.

POEM Framework: Paid, Owned, Earned Media

Doug:        In the world of social media, there are myths that companies are acting on, but based on your statistics don’t have validity.  What are turning out to be some of the places where social media is not delivering marketing effectiveness?

Randall:     Social media is part of earned media messaging that’s carried out voluntarily by consumers on behalf of the brand. That voluntary messaging can be positive or negative.

The biggest myth is in viral marketing.  There is a belief that you can do a viral video and achieve much of what you would achieve, for example, with TV advertising at a fraction of the cost.

The reality is, first of all, that there are a rare few videos that ever go viral enough and get enough voluntary messaging by consumers to come anywhere close to the reach you can achieve on TV.  It really has to be earned through consumers giving you great ratings because your brand really worked; the product or service is a great one.

Old Spice & Viral Marketing

I remember a time when my wife and I went on vacation.  We came back to the Philadelphia Airport and her Lexus wouldn’t start.  I called customer service and I expected that they would send a tow truck. Instead, they walked me through a five-step process to get the car started and it all worked out.

That’s a fantastic example of where I could then go online and talk about my great experience with Lexus.  That is what advertisers need to be focused on … how do you drive voluntary positive messaging by consumers on behalf of your brand?

People have gotten hung up on going after something really cool and creative and different and having it go viral, as opposed to focusing on the real activities that build advocacy for your brand.

Doug:        What else have you found people to be really interested in?

Randall:     Let me come back to cross platform measurement.  You know that the cross platform exposure is driving much greater effectiveness among the people who see your ad in more places, and yet the media planning hasn’t caught up.

The media plans are still constructed in a way that drive more reach across each media instead of driving more overlap.  This area is going to get more attention.

Next:   Marketing in the B2B space

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Guest Post: Rude Awakening— Only 15% of Word of Mouth Marketing Campaigns Show Positive Results

October 18, 2010

This post is part of a continuing series of guest posts and was originally posted on MENG BLEND. Christopher S. Rollyson is founder of CSRA, Inc., Architect of The Social Network Roadmap(sm) & Managing Editor at the Global Human Capital Journal.

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Word of mouth marketing is seen by many marketers as the economic engine of social business (or media) because people recommend products and services to each other: all marketers have to do is give them the right information to share and make it easy for them to recommend things, right? Wrong.

Rude Awakening— Only 15% of Word of Mouth Marketing Campaigns Show Positive Results

Or, in popular parlance, “It’s complicated.”

Here, I’ll identify some of the flawed concepts that underlie word of mouth marketing (WOMM), so you can avoid being part of its 85% casualty rate. I’ll show in general how you can tweak the idea and succeed with social business initiatives more often.

Word of Mouth Marketing Is Flawed

At Alterian’s user conference, Don Peppers shared this arresting statistic in his keynote:  only 15% of WOMM initiatives show positive ROI. Shocking—at least until you start thinking about it. Loosely speaking, WOM (sans “marketing”) happens when a trusted and relatively unbiased “friend” shares her experience with a product/service with someone close to her. “Someone like me” who isn’t tainted by sales commissions or quarterly revenue targets.

Marketing, on the other hand, is generally about creating need or driving sales. Do you see the problem?

In this context, WOM and marketing are mutually exclusive: the latter’s purpose is to serve the company by moving product; the former serves the person first. It’s a conflict of interest, and it will rarely work. Ever.

93% of Word of Mouth Is Offline

In a second data point, Keller Fay Group’s latest TalkTrack study revealed that the overwhelming majority of WOM (as defined by them) takes place offline and face to face (via e-consultancy and @stefanw), not online through social business. This is not surprising when you stop to think about what traditional WOM is, largely a conversation between family or close friends. Tight ties. However, neither of these references dives into WOM or WOMM deeply enough to understand why and how they can work or not.

WOM among Loose Ties

Digital communications significantly reduce the cost of many kinds of interaction, so WOM among loose ties will continue to grow. However, marketers should recognize that loose ties and tight ties have important differences because the motivations and level of trust are different.

Loose ties are not just inferior tight ties; people form loose ties for many reasons, but the online many-to-many environment enables people to manage their reputations and influence by leveraging the network effect. Tight tie relationships are limited in number, multidimensional and high investment.

How Marketers Can Succeed with Word of Mouth

Having led marketing for several firms, I can appreciate why marketers would love the concept of word of mouth marketing. Given that they are in conflict, it’s important to focus on WOM while avoiding WOMM. I’ll wager that the majority of the 85% of failures result from not understanding and honoring their differences. The good news is, WOM drives sales—when companies honor and nurture it. Here’s how:

  • First—and this is a leap of faith—accept that WOM serves the customer, not you. Trust that, if you don’t interfere, positive results will often result. There is no halfway here, intent and honesty are WOM’s key differentiators. Don Peppers shared Staples’ “Speak Easy” fiasco as a warning (“sponsored” tweets and bloggers are other traps). All companies say that they put the customer first, but many aren’t being honest with themselves or their customers.
  • Second, the company must put itself first to be congruent with itself as a business. It shouldn’t try to do WOM. But the company, acting in its self-interest, can support WOM. Marketers must safeguard these boundaries if they want to succeed because they form the foundation of trust among the three principal actors: company, friend and customer.
  • Third, accept that your products and services are not a great fit for most people. In a pervasive transparent network, the market will figure out what works and what doesn’t. Don’t try to “make markets” by convincing people to buy unless you have a valid value proposition for them. Focus on serving people for whom you have a superior value proposition. This is the key to thriving in a transparent environment.
  • Fourth, trust customers’ friends to engage with WOM—for their own motivations. Remember, they are there to serve their friend, not to move your product. WOM is their role, not yours. Campaigns like Staples’ fail because marketers don’t understand their role and unknowingly turn WOM into shilling. Sorry.

Remember Miracle on 34th Street? It was breakthrough to send customers to other stores when they had a better value proposition for the customer. It increased WOM because it surprised people and exceeded expectations. But it was Kris Kringle (a “friend”) who started it based on his personal integrity. Later Macy’s turned it into a tactic, but Kris never did.

Accepting WOM transparency is difficult because it requires significant culture change. Firms that don’t accept this new reality will fight and lose. The market will expose them in the end.

On the other hand, those that take this road will be more successful because they will be aligned with customers and their friends. Moreover, focusing on valid value propositions and customers will tend to lead the company to innovate more successfully.

Do you agree? Disagree? Please share your thoughts and insights in the comments…

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Christopher S. Rollyson has been a marketing and technology pioneer for over twenty years. As a consultant and marketing executive, he has had a leading role in launching such game-changers as: Java with Sun Microsystems, e-business strategy with PricewaterhouseCoopers Management Consulting Services, and SOA, Web services and architecture solutions with nVISIA and IBM. He can be found on Twitter as @CSRollyson.

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Is Free Media Good for Your Brand?

September 20, 2010

In a recent global consumer survey, 8 of 10 consumers told Nielsen that they would stop using a website if it begins charging for content (disclosure: I work at Nielsen). Most consumers believe they can get the content they want for free—so why pay? Is free content good for Marketers—or not?  

Is Free Media Good for Your Brand?

 

Will All Digital Content be Free?  

The death knell for paid media content is everywhere– web-based content and services are moving toward “free.” Chris Anderson wrote about it eloquently in his book “Free,” arguing that consumers have become conditioned to free stuff, and that the future of the web is free, free and more free. 

Of course, consumers expect “free” content based on linear TV, which was free of everything except commercials long before the web arrived. 

Yet, cable TV has made in-roads into the traditional “free” TV space, consumers pay for content on iTunes, and the last time I checked, people were still going to see movies. So, while free is in our future, and there’s certainly a lot of it on-line (including this blog), whether all digital content will be free is  uncertain. 

Free vs. Paid Content: Uncertainty for TV & Digital

 

 What Consumers Really Want   

Let’s go back to the Nielsen study above. What consumers were really saying is that they don’t want to pay for a site because they can get the same content for free elsewhere. Consumers have and will continue to pay for content under one of two conditions:  

  • If they have to. That is, they can only get the content from a web site or distribution channel that charges for it—and not for free somewhere else.
  • If the quality is worth it and there’s no good substitute. If I can only watch the NY Giants for a fee, and I’m a big fan, there’s no other option.

And let’s not forget the other 20%. That is, 20% of the surveyed people were willing to pay to access a web site. So, even in today’s digital world where much quality content isn’t walled off in a paid “garden,” 1 in 5 people are still willing to pay for it.  

  

Too Much Content — An Economic Issue 

The challenge is this: the web has democratized content creation, and this in turn has created massively more content, which has driven down ad prices. And, with lower ad prices, advertising alone won’t support some web sites. These sites don’t have a viable business model without charging for content. 

Content quality and distribution will differentiate free versus paid models. Higher quality content, or content with limited distribution, will generate revenue thru consumer fees. Lower quality content and/or content that is distributed broad-scale will be free. 

3 Trends Marketers Should Watch For 

1.  The digital media eco-system will continue to fragment. This means that web sites will increasingly fragment into free, paid and hybrid models. This is already happening. Some sites, like Yahoo News, are completely free. Others, such as Angie’s List, make you pay. And still others, like Consumer Reports, will charge for some, but not all, content.  

Paid Content: Angie's List

 

This fragmentation will make media planning more complex and challenging. Ad inventories—particularly on the paid side—will change and this will impact media costs. Building broad reach quickly via digital will continue to be a challenge, but targeting opportunities will increase. 

2.  Advertising performance will differ by model. As the quality gap widens, advertisers will need to understand how quality of content, and consumers willingness to pay for it, impacts ad effectiveness. Does higher quality paid for content increase consumer engagement and ad performance? Does the increased ad clutter associated with free models reduce ad performance? These are important questions that Marketers will need to answer. 

3.  Advertising forms will continue to evolve. At one extreme, paid for content may have no traditional advertising at all, but may increasingly rely on product placements and hybrid ads that appear to be part of the show. The line between advertising and content will continue to blur. On the other extreme will be free content that continues to have a relatively high traditional advertising load. Viewers will be less attentive due to commercial pod interruptions, ads will compete with other ads, and ad breakthrough will be more challenged.  

Traditional TV Advertising: Continuing to Evolve

 

Paid or Free – Too Soon To Call  

Whether digital content moves inexorably toward free or paid, or some combination of the two (most likely in my opinion), Marketers will need to be increasingly adept at advertising models that work best in each environment. 

Every B-School grad learns the 80/20 rule. The question is how it applies to the paid/free media model world. Will the 20% of consumers who are willing to pay for content deliver 80% of the impact to advertisers? Or vice versa? The only thing that’s certain is this:  you can check back here soon to learn more – for free. 

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