Posts Tagged ‘facebook’

April 13th, 2010

What is Social Media?

We’re often asked to define social media either directly (what is social media?) or indirectly (we need a social media strategy), so I thought I’d provide a list of the key platforms that make up what we call “social media”:

  1. Article directories that publish original user generated content (UGC).
  2. Blogs that feature original content and allow comment from users.
  3. Blog aggregators like Technorati that allow members to bookmark, tag, syndicate and recommend blog content to other people.
  4. File sharing sites with community and comment functions like YouTube and Flickr.
  5. Forums that allow users to post within a special interest community such as Crackberry.com for Blackberry users.
  6. Microblogging sites like Twitter and all associated sites like Tweetdeck that carry and syndicate content to their users.
  7. Review sites for products and services (like Travelocity) that carry user generated content (UGC) and reviews.
  8. Social bookmarking sites like Delicious and Digg that allow tagging and tag sharing so that other people can explore the same tags.
  9. Social networking sites like Facebook and LinkedIn that allow communities to manifest themselves online.
  10. Wikis - online encyclopedias that can be edited by anyone - like Wikipedia

It’s worth noting that there are two critical components in social media, the 2 C’s: Content and Community. These are the two sides of the social media coin.

On the one side, content lies at the very heart of social media. Content populates all the components above, all of which would cease to exist without content. In the case of social media, content is often user generated (User Generated Content or UGC) as opposed to being generated by a professional publishing house.  If you are thinking social media in any way, you must be thinking content; without content there is no social media.

Community is the other aspect of social media.  Communities gather around people of similar types (alumni, workplace, school, product users etc) or common interests (stamp collecting, trainspotting, FX trading) in the same way that “birds of a feather flock together” in many other aspects of social sciences. Communities are also important because they create a demand for content as members seek opinions or seek to make their own views known. Without communities there would be less of the subtle “friction” that causes many types of content to be generated and consumed.

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February 17th, 2009

Should twitter charge?

Twitter is talk of the town in UK marketing circles this week. But the discussion isn’t about the fun of using twitter or the reasons why people do or don’t use it, or when they use it, or how often or who with. No, it’s about whether or not twitter should charge brands for using its services.

You can’t blame twitter for trying,  they have bills to pay just like the rest of us - and like the rest of social media.  Despite their incredible growth, social media brands are caught in digital Catch-22;   they can get right into the highly prized personal space of individual consumers. But unfortunately, these high levels of personal involvement come at a price;  when consumers are facebook-ing, twitter-ing, myspace-ing or bebo-ing,  they are so highly involved in generating their own content that they are not very interested in advertise-ing. The display model is virtually impossible to crack in these environments - especially on a click/sales performance basis.

So if the social media channels can’t make display pay what other areas of potential revenue can they look at? There are two obvious alternatives. Data and subscriptions.

Some big and successful businesses have been built selling customer data and using data to generate customer sales leads. Social media sites can gather all sorts of data but there’s a hitch here.   Both formal privacy regulations and “online morals” (e.g. Facebook’s Beacon rebellion) make monetizing social media member data a difficult area.

The other route is subscription revenue, but asking for a subscription fee risks losing members and slowing growth. That’s a risk social media can’t take. I’d bet that every venture capital presentation they make starts with a great looking exponential growth chart because, for the time being at least,  growth is keeping the financiers happy.

So without revenue from traditional display, data sales or subscription revenues, how can social media companies make a living?  Brands I’m afraid are an obvious target for two reasons. First, they’ve got money and second, charging brands does not affect the growth of the user base.

All the pioneers of social media have got to do now is find a way of creating a trade between their social assets (us) and brands’ desire for close engagement. Social media stakeholders are going to be very focussed on answering this question because if they can’t, some aspects of social media will quickly move from being the talk of the town to being a thing of the past.

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February 15th, 2008

Scrabble, Scrabulous and Facebook

It has amazed me that Hasbro and Mattel have demanded the removal of Scrabulous, the online Scrabble application, from Facebook. Scrabulous was a social marketer’s dream; many agencies spend endless hours developing Facebook applications hoping to catch a big social media wave, but very few ever make it. The “stars” reach more than 500,000 active users. Scrabulous was one of that elite group; it reached over 650,000.

So, given that Scrabulous was effectively a social marketing campaign to die for, why did Hasbro and Mattel ban it? Their lawyers have argued copyright was being infringed. Executives at these leading toy companies probably felt that players playing Scrabulous would dent or damage sales of the original Scrabble board game. Let’s not forget that before all this happened, Scrabble was a tired brand. It was a fifties product owned by an over fifties audience. It needed a shot in the arm. I can just imagine the agency brainstorm convened to resurrect the brand. It might go something like this:

Q. What’s the business problem?
A. Sales are going down

Q. Why?
A. Scrabble is getting old. The players who bought it in the 60’s and 70’s are either dead or in retirement.

Q. What shall we do?
A. Let’s attract a new, younger audience and show them what fun Scrabble can be.

Q. How do we do that?
A. Well younger and educated audiences are piling into social networking sites like Facebook. Ideally we’d have an effective social marketing campaign on Facebook.

Playing the Facebook application would raise both awareness and consideration of the traditional board game amongst those consumers who’d either forgotten about it and even those who’d never heard of it. There’s a very good chance that with the game back on peoples’ radar screens and shopping lists, sales would have increased.

It’s worth observing that Scrabble has been the beneficiary of outstanding good fortune before. Launch sales back in the 1950’s were initially sluggish until the Chairman of Macy’s noticed that the store didn’t stock the game and placed a bulk order in 1952. Sales then took off. Scrabulous was a chance of similar magnitude. The Scrabulous Facebook application was one of the best free gifts ever given to a brand. After all, what other ways are there to reach that highly elusive younger and educated target audience free of charge and with such potent credibility? It could have been Scrabble’s second coming.

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November 7th, 2007

Can Facebook take adrevenue from Google?

So Facebook’s founder Mark Zuckerberg has declared that “The next 100 years start today, and it’s going to be different.” Well both points are certainly true when isolated from the immediate context of his comments. But are they true for the audiences he is specifically addressing?

By saying that the next 100 years start today, young Mr Z. must surely be waving a derogatory digit at Google. From Google’s perspective, the next 100 years began in autumn 1997 when Backrub was renamed and made available to Stanford students. Mr. Z. thinks he’s onto something bigger and better than Google. And maybe he is. But the reality is that nobody can say for sure. Why? Well that’s because Google’s adrevenue model is proven and Facebook’s is not.

To date, Google’s adrevenue has been generated from a direct response model; PPC effectively took us back to the old results-based payment per inquiry (PI) deals. Direct response advertisers like paying for sales results and not for simply being seen. These direct response advertisers like the way Google’s performance based model works for them so the money flows straight in. For Facebook to take a share of this direct response revenue, it must deliver results that are at least as good as those generated by Google.

But Facebook has an ace and this could be where the $15bn comes in. Because of the way it is used, and because of the type of people who use it, advertisers may see it as more than a purveyor of direct response sales performance. They may come to view it as a place to talk about brands in targeted ways to highly targeted groups of consumers. This means that it could be liberated from the rigid ROI metrics that rule direct response. And that in turn means that advertisers may be prepared to pay more per person reached on Facebook and and be more relaxed about how it delivers ROI. From a media owner perspective, that’s a good place to be when it comes to counting the ad revenue dollars. In other words, the next 100 years did begin in 1997 for direct response advertisers, but they may just be about to begin again for brand advertisers.

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October 26th, 2007

Is Facebook worth $15bn?

So Microsoft has paid $240m for 1.6% of Facebook which makes Facebook potentially worth $15bn. The question on almost everyone’s lips; is it really worth that much? Well when you look at everything Facebook potentially opens up, it may well be. Here’s why:

First, This deal potentially gives Microsoft a new advertising platform that will enable it to compete much more effectively with Google for ad revenue. Facebook merges the capability to collect individual level member data with the ability to show ads. So it’s like fully segmented direct marketing in an online display environment. Or put another way, it’s like Google Adwords with customer data as the driver of ads served rather than the keyword terms being searched. Microsoft has a 5% share of the paid for search market versus Google’s 75%. If Microsoft’s strategy is right, they may well significantly increase their share of online ad revenue.

Second, the marketers holding the ad revenue purse strings spend large chunks of their time trying to segment consumers into groups that are more or less likely to use a given product. It’s currently a rather inconclusive and imprecise science. But because Facebook is about both individual level data and shared interest groups, it opens up huge opportunities to understand much more about how consumer groups are demographically defined. The organisation that holds that type of information will hold an interesting competitive advantage.

Third, we’re not just talking about a traditional online display ad revenue model here; we’re talking about a totally new way of consuming certain types of communication. This land grab is also about the big games of web TV and telecommunication. Facebook may become the place where consumers go to access these services and that sort of portal has an almost incalculably high commercial value.

Whilst many critics have scoffed at this deal price, it may not be as high as it looks. Unless of course something new comes along and entices people away from Facebook just as quickly as they moved in.

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August 8th, 2007

Why marketers can’t let Facebook jitters put them off Web 2.0 / Web 3.0

This week marketers have discovered that sites like Facebook etc cover the whole socio-political spectrum, not just the fun, funny and socially acceptable bits. Let’s hope this doesn’t divert attention away from the significant opportunities that genuine Web 2.0 / 3.0 applications can offer marketers.

Marketing in the 21st century will be about search and find, that is pull rather than push. It will be about solving personal needs with customised solutions i.e. one to one rather than mass marketing. This is why Google is worth $160bn; it has cornered the search/pull side of this equation. Success for many brands will be defined by their ability to be found by consumers. Using a standard ad to sales ratio of 1:10 Google’s annual revenue of $10bn could put the value of the sales resulting from these searches at $100bn.

Many Web 2.0 techniques will be at the core of this new ’search and find’ marketing philosophy. Blogs are an excellent way to align brands to important content and generate good search returns. Forums likewise offer marketers the opportunity to be found whilst buyers attempt to research, build and refine customised solutions to specific needs.

Web 3.0 will develop this theme further. Web 3.0 will be about applications which use the information to construct solutions to consumer problems. Here’s an example: Today you have to look through holiday sites to build your itinerary based on the information you find. Web 3.0 applications will tell you what your itinerary should be, on your PC or your mobile, in a few seconds. You’ll like it so much, you’ll pass it on to your friends. It will spread virally because the effectiveness of the applications will be so appealing.

Advertising on social networks is a Web 1.0 technique in a Web 2.0 world. What’s happening with sites like Facebook is a slip on the stepping stone between the two. It may be the case that running ads on these networks is not a sustainable route for all advertisers. But we must not lose sight of the opportunity before us. Whilst Web 2.0 is about being found, Web 3.0 will offer opportunities for marketers to customise information, product and service delivery in ways that have never been seen before.

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