Social Marketing and Commerce

Francisco Hernández Marcos fran.me

Madrid, 23rd January 2012

Social Marketing and Commerce Marketing and E-Commerce International Master in Industrial Management

About me SHAMELESS SELF-PROMOTION

Education:

Universidad Politécnica de Madrid, UNED, London

Business School, University of Chicago

Firms I worked for full-time:

Abengoa, McKinsey&Co, ABN AMRO, Real Madrid C.F.

Entrepreneurship: Crisalia

Consulting requests (Social Media & Internet):

[email protected]

Full profile:

linkedin.com/in/franciscohm

Summary of session 1

¶ E-Commerce, E-Business… difficult to define and classify. Do not waste much time in figure-out where your model fits.

¶ 17-year history but still growing strong, now specially in emerging markets (broadband penetration, purchasing power), but maybe on mobile channels soon.

¶ E-Commerce is an intrinsically social activity. It evolved to the social space even before the social media phenomenon started.

¶ Generic types of business models on the web.

¶ Technology not a problem anymore; success is many times driven by innovative business models, sometimes easily copycatted if one does not protect oneself.

¶ 6 dimensions to social E-Commerce success.

¶ Takes time to refine an innovative business model. Test and error based on analytics is the best way to refine a model. Be patient, imaginative, and analytical.

¶ Long tail concept

¶ Freemium concept

¶ “Piggyback” concept

Session 1 presentation

REMINDER

Summary of session 2

Online advertising

Affiliate programs

Referral marketing

Email marketing

SEO

Content marketing

Online public relations

Social marketing

Fake marketing

Session 2 presentation

REMINDER

Agenda

Web 2.0

Social media advertising

Building an effective online community

E-Commerce in Social Networks

The first online social network…

Photo: http://www.flickr.com/photos/ajc1/3367295141/

Social networking service: “online service, platform, or site that focuses on building

and reflecting of social networks or social relations

among people, who, for example, share interests

and/or activities” (Wikipedia)

…and the first social graph

Social graph: “the global mapping of

everybody and how they're related”

(Wikipedia)

“Web 2.0 is the network as platform, spanning all connected devices; Web 2.0 applications are those that make the most of the intrinsic advantages of that platform: delivering software as a continually-updated service that gets better the more people use it, consuming and remixing data from multiple sources, including individual users, while providing their own data and services in a form that allows remixing by others, creating network effects through an "architecture of participation," and going beyond the page metaphor of Web 1.0 to deliver rich user experiences.”

Tim O’Reilly (October 2005)

Source: O’Reilly Radar: http://radar.oreilly.com/2005/10/web-20-compact-definition.html

Definition of web 2.0

Evolution towards web 2.0

“Catalog” (www)

“Search” (Google)

“Social” “Web 2.0” (Facebook)

Some important social networking websites

Facebook #1 international social networking website

Friends networking + Brand communities

>800 mill. active users Grew concentrically: Ivy

league universities -> universities -> high schools -> open

Open Graph Facebook connect + API Social gaming Great content

segmentation tools Social advertising Moving fast towards

Mobile

Most popular Facebook pages

Source: Page Data http://pagedata.appdata.com/pages/leaderboard

Most popular Facebook apps

Source: App Data http://www.appdata.com/leaderboard/apps

Tencent - QZone China’s largest social networking service(s)

>450 mill. Users Part of Tencent Holdings, a

diversified Chinese Internet company which became popular thanks to QQ messenger.

Unlike Microsoft, Tencent was able to turn a messenger tool into a successful, real social networking website.

Tencent is the third (after Google and Amazon) largest Internet company in the World by Market capitalization (USD 42 bill.)

Revenues: ~3 bill. /yr (less than 15% from advertising)

Twitter #1 Microblogging site

It is more a microblogging tool rather than a social networking site.

>300 mill. users Works better for 1-to-

many communication

Google Plus Latest SNS by the Google factory

>90 mill. users Great usability and systems. Great Circles and Hangouts

features. Deeply integrated with other

Google services However: there is already a

predominant social networking site and it is hard for people to spend time in changing to another social networking site. People tend to use one service, and is reluctant to change unless there is a huge difference between services, which is not the case.

Sina Weibo #1 social microblogging website in China

Launched in 2009 >250 mill. Users Huge engagement, 32nd

website in the World by traffic (Alexa)

Celebrity accounts Moving to mobile geolocated

services.

Mixi #1 social networking website in Japan

~25 mill. Users 30% from mobile Revenues: mostly

advertisement

Gree The most profitable social company in Japan

Yoshikazu Tanaka

Founded in 2004 by Yoshikazu Tanaka Gaming Social Networking website, and

specially mobile. 98% users from mobile. Most of revenue coming from virtual

goods.

CyWorld #1 Social Networking website in South Korea

~20 mill. Users. Owned by SK main telecom company. Pioneers in virtual currency: Dotori. ~80% revenues from virtual goods. Failed to enter in the US and Europe.

World map of Social Networks June 2009

Source: vincos.it

World map of Social Networks June 2011

Source: vincos.it

The World is Facebokising. Specially relevant latest countries: Arabic world, India and Mexico

Facebook stats Country ranking by users

Note: Change refers to the last 6 months

Source: Social Bakers

• The USA is clearly the country with the highest number of Facebook users.

• Chile, USA, Canada, Australia and Sweden are the countries with more Facebook penetration on their populations.

• Very interesting Facebook’s growth in India, Brazil (threat to Orkut?), Germany, Japan (Mixi?), and South Korea (CyWorld?).

Women rule on Social Networks Subtitle

Source: comScore, Inside Facebook

Some studies indicate that women are able to socialize better in social networks like

Facebook. Women are able to maintain more relationships

online, interact more, and when they share a content, it is on

average more popular than if the content was shared by a man.

Web 2.0 is not only Social Networks…

Social Networks Social Microblogging

Blogs

Social News Aggregators

Social… shopping, video, photos, gaming, mobile, newspapers,

aggregators…

Blog Networks Weblogs SL

Source: http://www.weblogssl.com/2011/12/01-trafico-del-mes-de-octubre-de-2011

Founded in 2005. Leader Blog Network in

Spanish Worldwide, and also leader in Europe any language.

86 mill. pageviews/month 21 mill. unique users/month Business model: create blog

communities around an interest, and monetize by advertising.

EXAMPLE

Traditional, offline Social Networks EXAMPLE

Agenda

Web 2.0

Social media advertising

Building an effective online community

E-Commerce in Social Networks

Facebook ads format

o Picture o Text o Social

Create a Facebook Ad: Segmenting

o Facebook allows to find your target group based on demographics and interest.

o Example: 1,860 women liking Real Madrid C.F, engaged, living less than 50 miles from Madrid and speaking Spanish.

EXAMPLE

Create a Facebook Ad: Ad auction

o Similar auction system like Google’s, but one can choose CPM or CPC (in our notation PPI or PPC)

EXAMPLE

Contextual Vs Social Advertising

Focus on “Keywords”. Unknown user. Active user: He know what he wants because he is searching for it or mentioning it in his emails. “one time” user. PPI RECOMMENDED FOR: •“Direct response” from customers who have explicitly expressed a need (“Close the sale, message in the right moment, at the right time.”).

Focus on “Target Segment”. Known user: We know who he is and what he likes. Passive user. “continuously contacted/relationship” user. PPI/PPC RECOMEMNED FOR: •“Direct response” from customers who have NOT explicitly expressed a need (“Activate a subjacent need.”). •“First contact” with potential customers of slow-selling products (“Establish a productive relationship.”). •“Brand image” campaigns.

Agenda

Web 2.0

Social media advertising

Building an effective online community

E-Commerce in Social Networks

From a person to the online community

People Community Online community

Common interest Online

•An online community is a group of people that interact and communicate online around a topic of interest. Internet allows those interactions to be real-time, effective, and free (as in free speech).

•Due to members being scattered around the world, most of those communities would not be possible if online means did not exist. Many of those communities go directly to being an online community without being previously an offline community.

•More and more communities are shifting online, with or without the brand’s leadership.

Three Forms of Community Affiliation

Source: “Getting Brand Communities Right”, Harvard Business Review, April 2009

Examples

Description

“Pools” “Web” “Hub”

• People have strong associations with a shared activity or goal, or shared values, and loose associations with one another.

• Apple entusiaths. • Political party

members.

• People have strong one-to-one relationships with others who have similar or complementary needs.

• Facebook. • Cancer patiens and

relatives.

• People have strong connections to a central figure and weaker associations with one another.

• Oprah Winfrey. • Hannah Montana.

Key elements for an online community to work well: members identification, self-expression, interaction, and incentives.

Community member roles

Full description: http://www.fullcirc.com/community/memberroles.htm

•Core participants

•Readers/Lurkers

•Dominators

•Linkers, weavers and pollinators

•Flamers

•Actors and Characters

•Energy Creatures

•Defenders

•Needlers

•Newbies or NewBees

•PollyAnnas

•Spammers

• "Black and White" Folks

• "Shades of Grey" Folks

•Untouchable Elders

Figure out your community roles

EXAMPLE

Do we need a [great] brand to create a [great] online community?

Failure

Online community

Brand

Success

Strong

Weak or non-existent

No

Common interest

Do we need brand’s leadership to create a great online community?

Source: PageData.com y AllFacebook.com

No

Facebook engagement ranking 14 Nov 2011

Facebook fans ranking 27 Nov 2011

Motivated leaders

The importance of the community over the brand

Brand Company

History

Community

•A community exists with or without a proactive management from the brand.

•Proactive community management has some advantages for the brand: information, conflict management, revenues, etc. The brand has to be smart when carrying out proactive management.

•Success examples: Apple, Harley Davidson, MySQL, Starbucks, Coca-Cola, etc.

•Examples of failure: Nestlé Kit-Kat

Miths and realities about managing communities

Source: “Getting Brand Communities Right”, Harvard Business Review, April 2009.

1. A brand community is a marketing Strategy.

2. A brand community exists to serve the business.

3. Build the brand, and the community will follow

4. Brand communities should be lovefests for faithful brand advocates.

5. Opinion leaders build strong communities.

6. Online social networks are the key to a community strategy.

7. Successful brand communities are tightly managed and controlled.

Myth

1. A brand community is a business strategy.

2. A brand community exists to serve the people in it.

3. Engineer the community, and the brand will be strong.

4. Smart companies embrace the conflicts that make communities thrive.

5. Communities are strongest when everyone plays a role.

6. Online networks are just one tool, not a community strategy.

7. Of and by the people, communities defy managerial control.

Reality

SUMMARY

“Robust communities are built not on brand reputation but on a deep

understanding of members’ lives.”

The most important learning about managing [online] communities

Source: “Getting Brand Communities Right”, Harvard Business Review, April 2009.

• ….

• …..

• ….

• ….

• ….

• ….

• ….

• ….

• ….

SHORT TERM

MEDIUM TERM

LONG TERM

Priorities when developing the community

More Fans

More

Engagement

Revenues + keep fans and

engagement

Agenda

Web 2.0

Social media advertising

Building an effective online community

E-Commerce in Social Networks

Customers trust each other, not the brand!

Source: Your Users Trust Each Other, Not You: Why and How to Implement Ratings and Reviews, by Molecular Inc.

76% of American consumers believe companies don’t tell the truth in advertising -Yankelovich (2005) 60% have a much more negative opinion of marketing & advertising than a few years ago - Yankelovich (2004) 78% say consumer recommendations are the most credible form of advertising - Nielsen (2007) 83% say online evaluations and reviews influence their purchasing decisions - Opinion Research Corporation (2008) 84% trust user reviews more than critics’ reviews - MarketingSherpa (2007) Trust in “person like me” tripled to 68% from 2004-2006 – biggest influencer to consumers - Edelman Trust Barometer (2006, 2007)

Definition of Social Commerce

Source: Wikipedia, Syzygy

“a subset of electronic commerce that involves using social media, online media that supports social interaction and user contributions, to assist in the online buying and selling of products and services.”

We will focus on E-Commerce within Social Networks (or

deeply integrated to them).

Two types :

• Social Media on E-Commerce Platforms: “Helping people connect where they buy”.

• E-Commerce on social media platforms: “Helping connected people to buy where they connect”.

What are CMOs (Chief Marketing Officers) worried for the next few years?

Source: Customer Data, Social Media Top Marketing Priorities for CMOs Worldwide, eMarketer.com

What Booz & Co thinks social commerce is going to be worth in 5 years

Source: Booz & Co.

Marketing 3.0

Marketing 2.0

•Client-Oriented

Marketing 1.0

•Product-oriented

Marketing 3.0

•Human (society)-oriented

Kotler, Kartajaya & Setiawan

•Long term (Vs short term) •Transformation (Vs Philanthropy) •Horizontal Marketing (Vs Vertical MKT) •Participation / Globalization / Creativity

BONUS CONCEPT

F-Commerce

Source: Wikipedia, Janice Diner, F-Commerce Ecosphere Visual

“Facebook commerce, f-commerce, and f-comm refer to the buying and selling of goods or services through Facebook, either through Facebook directly or through the Facebook Open Graph.”

“Experts forecast that F-commerce transactions on Facebook will overcome Amazon’s annual sales ($34 Billion) over the next 5 years.”

First purchase within Facebook: July 8th, 2009 on facebook.com/1800flowers

Key points about Social-Commerce on social media platforms • Still in its infancy. Almost inexistent as of today. Mostly focused on the pre-selling stage: people

talk about and discover products through social media, ads on social media, etc.

• Most cases take advantage of the huge traffic that some social media platforms have, but do not leverage on social integration to offer better, customized products and services. Leveraging on social integration is better than merely sucking traffic because it adds value to the customer. The customer can find it very interesting to shop in a place where he/she has products he/she and his/her friends really like. Remember shopping can/should be a pleasant experience!

• Referral marketing through social networks seems to be an obvious way to take advantage of someone’s social graph when doing E-Commerce. Concept of “Horizontal Marketing”.

• Spotify integrated on Facebook is a good example of social commerce: you see what your friends are listening to, which is probably what you would like. Also, a friend listening to a song and you seeing it is a form of referral marketing.

• Brands need to lose their fear to let people talk about them, and to invest in personalized, smart social apps to tackle the full potential of Social-Commerce.

How would it be a social-commerce strategy in your company?

Agenda

Web 2.0

Social media advertising

Building an effective online community

E-Commerce in Social Networks

Today’s main takeaways

¶ Web 2.0 is not only Social Networking websites. There are other categories like social blogging, microblogging, video, gaming, etc. But Social Networks gave full sense to web 2.0 across all possible Internet services.

¶ Facebook is Worldwide leader in usage and technology. The World is still leaning towards Facebook in many countries where it is not yet the leading SNS. Only China and Russia seem to stay away from Facebook’s rule, the second one due to its blocking.

¶ Asian countries, specially China, are specially interesting case studies. To some extent they pioneered the social web (virtual networks, gaming, virtual goods, etc.), but failed to internationalize.

¶ Women are more relevant social nodes in an SNS than men. Always take it into account while designing a social media strategy.

¶ SNS is indeed yet another human activity (social networking) translated to the Internet.

¶ Social media advertising is intrinsically different from other type of ads like contextual advertising. They complement each other rather than compete. They should be used for different goals.

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Today’s main takeaways

¶ Building an effective online brand community is an important business tool for many companies. However it is a very difficult one to achieve.

¶ It is a frequent mistake to believe that having a good brand makes it easier to have a good online community.

¶ In order to build your own successful online community it is important to understand in depth your underlying community: how your members affiliate, what are their key roles within the community, how do they benefit from being a member, etc.

¶ Online communities take time: first hire fans, then engage them (almost immediately after hiring them), and finally try to monetize them in the least possible frictional way.

¶ Customers trust each other more than a brand, so big expectations are put on Social-Commerce (E-Commerce within SNS).

¶ Social-Commerce is very related to the Marketing 3.0 concept proposed by Kotler, Kartajaya and Setiawan.

¶ Facebook already has a set of tools to allow Social Commerce in its platform. Possibilities are infinite!

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Thanks! Francisco Hernández Marcos fran.me @franciscohm