Marketers who want to Improve ROI Need to Better Align Ad Budgets with Consumer Media Habits

There’s no doubt that traditional advertising tactics will continue to be a critical part of the mix for many marketers for years to come. That said, whether this practice is based on the efficacy of these tactics (and by that I mean old standbys such as TV, radio, direct mail, etc, but also some of the more aggressive forms of banner ads such as pop-ups and page takeovers), or the fact that the interruptive based advertising model has become so habitual among marketers that it is self perpetuating, is subject to debate.

But what I find ironic is that despite the incredible growth of the Social Web and the dramatic increases in the amount of time consumers spend with digital media, a significant share of ad dollars are still being devoted to traditional formats. Of course, there is plenty proof that these traditional formats are effective at getting messages out. What we don’t know is how effective they are (if at all) at influencing people - but that’s a topic for another post.

The problem is that people do not appreciate the intrusive nature of these traditional tactics and will do anything they can to avoid them. Whether it be putting their name on a do not call registry, adding ad filtering technology to their browser or using a DVR to record TV programming as a way to avoid ads during playback.

People, instead, want control over the content and information they consume. And they want it from sources they can trust; hence the growth of the Social Web.

The good news is that marketers finally appear to be catching on. Earlier this month Forrester published their 2009 – 2014 US Interactive Marketing Forecast. The report predicts that interactive marketing will represent 21% of all marketing spend in 2014 (up from 12% in 2009), which nets out to a CAGR of 17%.

Why? Because they have learned that interactive marketing tactics are incredibly efficient and effective. For example, when Forrester asked over 200 marketers to rank the effectiveness of various marketing tactics over the next three years interactive tactics such as social media and online video topped the list.

What is shocking, though, is that despite this gradual shift of budgets to the digital channel there will still be a significant disparity between the percentage of ad budgets directed to digital (7% in 2009), and the percentage of media time people spend with digital media (34% in 2009). Apparently old habits, even those with significant financial implications, die hard. With that said, I’m going to go watch last night’s Daily Show on my DVR - sans commercials.

McKinsey’s Lesson for Marketers – Focus Less on Push and More on Pull

For years marketers have used the metaphor of the “funnel” to explain the process consumers go through when making purchase decisions. The theory being that consumers begin their journey towards purchasing a product at the top of a funnel where they have several, if not more, brands on their short list.

As they proceed down the funnel, so the theory goes, consumers become more familiar with the features and benefits of each brand. Ultimately, the funnel narrows and those brands deemed less desirable are rationally and deliberately eliminated by consumers save for the one that best meets their needs and requirements. At least, so the theory goes.

For better or worse, this framework has been at the core of many a marketing plan for a good part of the last half century. The result - marketing plans that almost exclusively focus on pushing messages (or offers, discounts, etc) at consumers at each stage of the funnel with the intent of moving them towards a purchase.

The Consumer Decision Making Process in the Digital Age
Not surprisingly, many have questioned the validity of this model on grounds that it’s overly simplistic, too rational, or that it fails to account for the increasing media fragmentation of the digital era. Now, a new study and report from McKinsey validates these skeptics.

The report, “The Consumer Decision Journey,” issued earlier this week was the output of a study McKinsey fielded that examined the purchase decisions of nearly 20,000 consumers across five industries: automotive, auto insurance, cellular carriers, personal computers and skin care. The key finding: the Internet, the rise of consumerism and a marketplace marked by an increasing array of product options have made push based marketing less relevant and, in many instances, less effective.

http://www.mckinseyquarterly.com/The_consumer_decision_journey_2373

The study partially discredits the funnel metaphor and makes the case for a consumer decision making process that is less linear and more bi-directional where the consumer has increasing control over where, when and how they engage with a brand.

But what I find really interesting about the study was the finding that, incredibly, two-thirds of purchase influences during what McKinsey calls the active-evaluation phase involve consumer-driven activities such as Internet reviews and word-of-mouth recommendations from friends and family.

Two-Thirds of Purchase Influences are Driven by Consumer-Driven Activities

In the Digital Age Consumer Outreach to Marketers is More Important

If anything, the study confirms the urgent need for brands to invest less in push-based advertising campaigns, and more in pull-based experiences that deliver relevant and informative brand-to-consumer interactions where decisions are being made.

The obvious places to start would be by delivering more engaging and usable Web and point-of-sale experiences. It’s also clear that leveraging the word-of-mouth power of the social Web should also be at the top of the list.

While there is clearly a continuing place for push-based marketing, an over emphasis on these types of tactics will not only prove ineffective, they might also indicate that a brand is out of touch with its consumers. In an industry where perception is reality what can be worse?

Who says Twitter doesn't have a business model?

Is it possible Twitter may have finally stumbled into a way to monetize its business? Well, maybe.

According to Reuters, over the past two years Twitter reportedly helped Dell sell over $3MM in products to its Twitter followers who were directed to Dell e-commerce sites from posts they placed on Twitter. Dell, apparently, posts on Twitter several times a week and offers up coupons and promotions to its followers (all 600,000+ of them).

While $3MM for a company the size of Dell isn’t exactly a groundswell, it’s something. And although Twitter is not charging Dell for these referrals it hasn’t ruled it out as something they might consider in the future.

Maybe this is the beginning of a vertical application strategy for Twitter where developers using the Twitter API build apps for companies to hawk their wares in a way that generates Twitter fees (e.g., either on a licensing or per transaction basis).

Another strategy that has been kicked around has Twitter monetizing itself by selling its platform as a tool to track public sentiment about a brand (a product, service, politician, or what have you) or other topics of interest to researchers. The problem, at least as I see it, is that the very free nature of Twitter seems at odds with this approach.

Finally, others have suggested that Twitter be used as a vehicle for delivering targeted ad messages to its users. Whether these would be served up in the context of tweets (which seems problematic) or in custom applications built using their API (which seems more promising) is anyone’s guess.

Whatever the approach, the enormous number of people who use Twitter and the passion in which they monitor their messages makes it an incredibly value platform. Now all it needs is a strategy.

Forrester’s Lofty Vision for the Social Web

Wondering what social networking will look like a few years hence, or how it will impact your business or brand? Then look no further than the recently published Forrester Research report: “The Future of the Social Web.”

The report, penned by social media guru Jeremiah Owyang and team, provides an ambitious vision for the social Web and lays out a roadmap for its evolution starting with the birth of the commercial Internet in the mid-90s.

http://www.forrester.com/Research/Document/Excerpt/0,7211,46970,00.html

After reading the report I’m convinced that if even half of what Forrester predicts is true, it portends dramatic changes for both how people will experience the Web in the near future and how they will choose to engage (or not) with brands online.

According to Forrester, the social Web has grown (and will continue to grow) through five “eras” of evolution:

1. The era of social relationships – starting in the mid-1990s this era involved basic community sites like AOL and social tools such as forums, discussion boards, blogs, etc.
2. The era of social functionality – the period in which we currently reside where our social experiences are moving beyond just “friending” to include richer sharing experiences and interactive applications (like Facebook apps), but with the inherent limitation that peoples’ social experiences are, for the most part, limited to the sites they are visiting at any given time.
3. The era of social colonization – starting later this year as a result of the growing adoption of universal authentication technologies like OpenID, individuals will be able to surf the Web without leaving their preferred social networking platform in a way that will allow them to bring their network along for the ride.
4. The era of social context – starting sometime next year as these new authentication technologies become universally adopted, sites will begin to recognize people’s personal identities and their social networks. This will enable much more robust and personalized social experiences and will result in the social Web becoming the core of most people’s Web experience.
5. The era of social commerce - here’s when, at least according to Forrester, things will get interesting. As a result of the increasing personalization that social destinations will offer, people will be more willing to share personal information with sites in exchange for more valuable and relevant experiences. The result – a self-fulfilling virtuous cycle that will further expand the influence and scope of the social Web as it becomes more meaningful and useful.

Implications for Brands and the Traditional Advertising Model
This evolution will have deep and lasting effects on brand management and advertising as we know it. Already, numerous studies show that advertising is not considered credible and that the opinions of friends and peers are far more important in terms of informing and influencing consumer attitudes towards companies and brands.

By putting even more power in the hands of consumers in terms of when, and under what circumstances, they chose to have brand interactions, it’s hard to see how this trend won’t continue the declining credibility of advertising. Brands, in response, will be forced to shift their focus to building and managing online communities and advocates as a way to get their message out and build equity with consumers.

For brand and advertising managers the message is clear – start thinking now about how you’re going to cultivate these communities and advocates in the future because it’s nearer than you think.

NYT's Dowd Does Battle with Twitter

The irreverent and sarcastic New York Time's op-ed columnist Maureen Dowd wrote a hilarious piece in today's Times about an interview she had with the inventors of Twitter to find out, to paraphrase Dowd, if they are as annoying as their invention.

Here are a few of the more comical exchanges between Dowd and Biz Stone, one of the co-founders of Twitter:

DOWD: Did you know you were designing a toy for bored celebrities and high-school girls?
BIZ: We definitely didn’t design it for that. If they want to use it for that, it’s great.

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DOWD: If you were out with a girl and she started twittering about it in the middle, would that be a deal-breaker or a turn-on?

BIZ (dryly): In the middle of what?

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DOWD: I would rather be tied up to stakes in the Kalahari Desert, have honey poured over me and red ants eat out my eyes than open a Twitter account. Is there anything you can say to change my mind?

BIZ: Well, when you do find yourself in that position, you’re gonna want Twitter. You might want to type out the message “Help.”

Seems like Dowd has some issues to resolve with new technology - here's a link to the full column:

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Pizza Hut "Twintern" Program - Who Says There are No Good Jobs Out There?

Who says there aren’t good jobs out there for college students? For instance, Pizza Hut is looking for a college student for their paid summer “twintership” program. According to the job description on careerbuilder.com, the “twinintern” will be responsible for:

• Spreading the Pizza Hut message by collecting and sharing insights and experiences while working for Pizza Hut through social and interactive media: Blogs, Twitter, Facebook, YouTube, New and emerging media
• Monitoring social media for pop culture news, off-the-wall stories or anything else quirky and fun that he or she thinks would be of interest to loyal Pizza Hut fans
• Monitoring social media for any negative Pizza Hut brand mentions
• Chronicling their experiences through video and posting to selected media

Key requirement – study closely last week’s Domino Pizza gross-out You Tube video calamity and get ready to play defense.

This Time it’s Volvo’s Turn to Experiment with Social Media

Major consumer brands are starting to explore ways to integrate social media into their advertising campaigns - last month it was Skittles, and this month it was Volvo.

In Volvo’s case they promoted their new XC60 crossover SUV with a one day only YouTube page takeover to coordinate with the New York Auto Show. To spice things up, the takeover included a live feed of XC60 Twitter updates from the auto show.

This is the first time YouTube ran such a prominent ad on its homepage. This is no doubt part of Google’s (YouTube’s owner) effort to generate more revenue from YouTube which, it has been widely reported, has been a serious drain on Google’s profitability.

While it’s too early to tell what kind of impact Volvo’s gambit will have on XC60 sales, to me this is a great way to raise awareness and create a dialogue with consumers.

It’s almost a certainty that more marketers will follow suit in the coming months with their own social media experiments. As with anything else, there will be fits and starts but it’s only a matter of time before social technologies become commercialized as a platform for highly targeted online advertising.

Look to Web 2.0 Tools for the Next Evolution in Employee Productivity

Some companies are finally realizing that Web 2.0 is more than just friends re-connecting on Facebook or people Tweeting that their plane just touched down. One day, and it’s coming sooner than you think, Web 2.0 apps (wikis, blogs, podcasts, etc) will also be used by many organizations to improve worker morale, collaboration and productivity.

In fact quite a few innovative companies have been using Web 2.0 tools for several years now for those very purposes. As much was confirmed from a recent survey fielded by McKinsey of 50+ companies. Analysis of the survey can be found on their Quarterly magazine Web site.

http://www.mckinseyquarterly.com/Six_ways_to_make_Web_20_work_2294

Most of the surveyed companies are still figuring out how to integrate Web 2.0 into their organizations. This is to be expected with any disruptive technology. A few adventurous innovators get the ball rolling; they in turn influence the early adopters who validate the innovators and so on. Eventually, the new technologies and the myriad applications they hatch become widely adopted. Thus goes the technology adoption lifecycle.

To me what makes the report so useful was the identification of two factors that can make or break a corporate Web 2.0 initiative (the report actually identifies six factors but I think these two are the most important):

1. The best Web 2.0 initiatives originate with users, not management - for anyone who has designed a Web site this makes complete sense. It’s hard for even the best designer to know what users want without an in depth understanding of their needs. In the context of Web 2.0, it appears this input best comes in the form of the types of grass roots apps front-line employees develop on their own
2. "What’s in the workflow is what gets used” – the survey revealed that employees will not adopt new tools if they are outside of the work processes they are used to using and will view these tools as increasing, not decreasing, their workload

These findings validate Forrester’s highly practical POST approach to planning social technology programs which I highly recommend:

Most companies still don’t know what to do with this new Web 2.0 phenomenon. As a result, they either do nothing out of fear of doing it wrong, or they plan big, management led initiatives that have little chance of success. Hopefully McKinsey’s report will help companies avoid both scenarios.

Personally, I can’t wait for the day when I don’t have to wade through endless emails and convoluted shared network folders to get my work done.

Skittles.com’s Social Media Experiment - Generating Buzz But Not Without Risks

If you haven’t seen it already check out the new Skittles.com homepage - it’s a bold experiment in how to integrate social media into a brand site.

What’s so unique about the page is that the experience is almost completely based on social media content from other sources. User generated messages, videos and other content are pulled to the site from various social media sources such as Facebook, YouTube, etc.

The only “traditional” element on the page is an expandable navigation bar that, among other things, takes visitors to various social media sites based on whether they want to see pictures (Flickr) or chat (Twitter) about Skittles, etc.

http://www.skittles.com/default.htm

Of course this type of strategy is not without its risks. And it certainly places a lot of control over how people will experience the brand into the hands of the unruly masses. But what a way to generate buzz and engagement.

The New Velocity

For years managers worried about the velocity of their business. The measurement of how quickly they could get their products developed, distributed, sold and consumed. The theory being that the faster the rate of velocity the more efficient and profitable their business. In other words, you turn over more widgets in a year you generate more revenue. You develop and sell 25% more units than last year with the same assets you’re conceivably 25% more profitable, and so on.

Today, with the growth of social technologies managers now need to worry about a new type of velocity – the speed in which consumer sentiment towards their brands might change (whether for better or worse). Social networking tools like Facebook, Digg and Twitter have given people the means to instantaneously and virtually gather to discuss, share their views and spread potentially damaging messages or content about a brand. People, in many ways, are in control.

It goes without saying that this new velocity makes it harder to manage brand perception and reputation. There are many cases of how people in a matter of hours have used Web 2.0 technologies to wreak significant havoc on brands that have been around for decades. One of the best examples being the You Tube video of the Comcast technician sleeping on a customer’s couch while on a service call. Or the legions of parents who this past November joined forces on Twitter to rail against a TV ad for children’s Motrin (the spot was promptly pulled by parent company Johnson & Johnson).

The result is a real-time, mass consumer feedback loop. The impact is greater transparency and accountability for both corporations and brands. To be successful in this new environment it’s not enough that companies develop, distribute and market new products quickly to achieve optimum velocity. What also matters is how openly they engage with their consumers, how well they listen to them and how quickly they respond to their concerns.

Brands that neglect to use social technologies to build bridges to their consumers and monitor their brand health do so at their own risk. In a time of increasing commodization and decreasing differentiation this could be among the best strategies brands have for a competitive advantage.

Designing a corporate social media program? Plan carefully to avoid mishaps and unnecessary brand risk

It’s not news that many brands are using social media as a way to build brand preference, drive sales or increase customer satisfaction. In many ways social media is becoming table stakes for any brand that wants to generate awareness or stay engaged with today’s Web savvy consumer. These consumers expect it from companies they transact with and, in many instances, will reward them by being more loyal or even advocating on their behalf.

Social media programs, however, aren’t always successful. An October 2008 Gartner report predicts that 50% of future social media initiatives among the Fortune 1000 will be classified as failures. And social media programs do not come without brand risks. Two notable examples of brands that got into a social media storm include Dell Computer Corps’ infamous “Dell Hell,” and Wal-Mart’s fake “Wal-Marting Across America” blog. And, no surprise, the deeper the engagement enabled by social medias the greater the potential for brand risk.

Key issues to consider when planning a social media program
Despite the risks and high failure rates many organizations are still forging ahead with social media. If your company or client is one of those organizations consider the following factors first:

1. Be clear on your business objectives – some examples:

• Improving brand perception
• Increasing customer satisfaction or loyalty
• Creating a place where people can discuss product features or exchange best practices
• Reducing service costs
• Developing a dialogue with your customers
• An early stage warning system for bad customer experiences
• Monitoring social data to gauge sentiment

2. Identify the social media tactics that are best equipped to meet those objectives:

• Managed communities, polls or moderated comments
• Support forums
• Blogs
• User reviews and other user-generated content
• Wikis

3. Develop a plan on how to respond to any unforeseen brand backlash perpetrated by disaffected consumers:

• Disgruntled customers
• Customer complaints
• Negative reviews
• Pranksters

Corporate social media programs can be a powerful tool to build brand equity and increase sales. But they need to be approached in a sensible and planned manner.

Start small with low risk programs such as managed communities or polls. Then listen, learn and adjust. As your audience grows it might make sense to move on to higher engagement tactics such as user reviews, forums, wikis or other user-generated content.

And don’t forget that most social communities don’t just form by chance. In most instances a social media program will not on its own address low levels of brand awareness or Web site traffic. But it certainly can help in those areas if it’s part of a well thought out plan and provides value exchange to your intended audiences.