Archive for April 5, 2011

At Ad Age’s Digital Conference, Converse, Lexus, Dell and Best Buy Reveal Digital Strategies

For all the bluster around how digital marketing will disrupt traditional advertising, some marketers have already started to shift more media dollars toward social sites.

Rob Tannenbaum
Converse Chief Marketing Officer Geoff Cottrill (middle) at Ad Age’s Digital Conference.

At Ad Age’s Digital Conference today, Converse Chief Marketing Officer Geoff Cottrill said the footwear maker is spending less than 10% of its marketing dollars on traditional media with the other 90% going toward emerging media.

“Social media is unavoidable,” he said, pointing out that on platforms such as Facebook, a brand manager no longer controls the conversation around the brand’s image. “When you realize you can contribute to the conversation, the better off you’ll be,” he explained. While that strategy of standing back may be a risk, it stands as the best tactic in an arena where authenticity is the underlying conceit.

Luxury car maker Lexus is also concentrating more of its media efforts toward digital plays. While TV is a key ad strategy for Lexus, it’s “less than 50% of our media spend,” CMO Dave Nordstrom said. “Most of the rest is on some form of emerging media.” He pointed out Lexus’ sponsorships on YouTube and work on its iPad apps. “We’ve got to go many different ways,” he said. “Consumers are consuming media in many different ways, you have to give it to them in bits and bytes the way they’re used to consuming it.”

Still, other major companies see more direct sales potential in social media. Dell CMO Karen Quintos talked about the the challenges chief information officers face when it comes to procuring products and that they often turn to social networks for help. “Ninety percent of CIOs today are making their purchase decisions through social media,” she said. Dell is looking to build that kind of socially driven recommendations into their product descriptions.

Rob Tannenbaum
Dell CMO Karen Quintos (right) and Best Buy’s Drew Panayiotou at Ad Age’s Digital Conference.

“Working professionals would love to have a company aggregating all the thought leadership about procurement,” Ms. Quintos said, throwing out a possible venture for entrepreneurs.

All of these new efforts and shifts into digital media buying underscore what Best Buy’s head of North American marketing, Drew Panayiotu, sees as a fundamental question around how companies are having to remake themselves. “Very soon now, you’re either going to make a product, or you’re going to be a media company,” he said. Best Buy’s Super Bowl ad featured an array of marketing ploys: pop sensation and Twitter mainstay Justin Bieber tweeted to his followers right after he appeared in the TV commercial, which Mr. Panayiotu cited as an example of how retailers can display their media expertise. “At the end of the day we think there’s going to be an amazing amount of new business models that will transform companies into media companies.”

By: Edmund Lee

A new report by Forrester Research and another by the World Federation of Advertisers and research firm Millward Brown proclaim that Facebook will not play a signficant role in the future of ecommerce. As evidence, the reports cite companies who have tried and failed to generate new sales through Facebook, explaining that “eBusiness professionals in retail collectively report little direct or indirect benefit from Facebook”.

The social network is sharing some data to make the opposite case, providing us with a list of internal and external statistics indicating major increases in traffic, engagement and direct sales for retailers that have deeply integrated with Facebook. For instance, Ticketmaster reports that each share of one of its events to Facebook earns it $5.30 in direct sales.

We’ll get into some of Facebook’s stats below. But first, it is true that e-commerce on Facebook has been a long-heralded yet slow-to-materialize market segment. We remember some industry pundits proclaiming that 2009 would be the year of social shopping — it wasn’t.

However, starting last year, we’ve also seen a steady increase in the number of ecommerce storefronts on Facebook and social plugin integrations on third-party websites, as we detailed in our piece “The Year in Facebook-Powered Shopping“. We discussed how 86% of US retailers had created a Facebook Page by 2010, and that it was the year these brands began experimenting with directly monetizing their audiences. We’ve also heard anecdotal reports from ecommerce startups working on the platform suggesting more sales than before, despite it being natural for experiments by companies unfamiliar with a platform to fail.

Tools to facilitate sales and referrals on Facebook or through Facebook-integrated sites are rapidly proliferating. Page tab applications such as Payvment, 8thBridge, Beetailer, and Zibaba allow users to add items to a shopping cart and then checkout either directly from Facebook or on a merchant’s website, or even browse products from multiple stores at once in a shopping mall format. Meanwhile, major players including Amazon, eBay, and PayPal have begun integrating with Facebook to power recommendation engines and sharing of products.

It may take more time for users to grow accustomed to shopping through Facebook, but early signs indicate that the site’s ability to transmit product recommendations between friends and bring brands within a few clicks of a huge audience will make the site an important part of any ecommerce strategy.

Facebook’s stats today highlight the potential. As of January 2011, Facebook traffic to Amazon grew 328% year-over-year while Google referral traffic dropped 2% in the same period, according to a JP Morgan report. This indicates social’s increasing important relative to search, even though Google is still the market leader. Visitors to clothing retailer American Eagle’s ecommerce site who were referred from Facebook spent 58% more than those referred from elsewhere, and children’s clothing retailer Tea Collection increased its daily revenue by ten times when it added the Like button to sale merchandise. Ticket seller Eventbrite said that each share to Facebook of one of its events generated $2.52 in ticket sales.

Its true that there’s little publicly-available absolute data about dollars earned through Facebook storefronts and integrations, but analysts should expect the shift in user spend away from brick-and-mortar and web 1.0 stores to take a few years, similar to the initial shift of spend to ecommerce. Users may have come to expect an asocial shopping experience on brand sites and web marketplaces, but that is changing — according to other reports. A 2009 Econsultancy study indicated 90% of online consumers trust recommendations from friends, while a late 2010 Marketing Pilgrim report showed that “one in three consumers recently followed-through with a purchasing recommendation made via social media.”

With friends readily available to provide purchase suggestions, easy ways to make or initiate these purchases from brand Pages, and users acclimating to a social shopping experience, we think we’re still at the early stages of social ecommerce, not at the end.

Source: Inside Facebook written by Josh Constine

Nine in 10 marketers (92%) use the Facebook social network as a marketing tool, according to a new survey from SocialMedia Examiner. Data from “2011 Social Media Marketing Report” indicates Facebook is the most popular social network among marketers by a wide margin.

Twitter, LinkedIn Also Popular

The second-most-popular social network among marketers, Twitter, has an 84% adoption rate, meaning Facebook is almost 10% more popular than its closest competitor as a marketing tool. The professional networking site LinkedIn comes in third with 71% marketer adoption. Rather than a specific network, blogs follow with 68% usage, and YouTube/other video sites are used by 56% of marketers.

There is a substantial dropoff of more than 50% between the marketer adoption rates of YouTube/other video sites and their closest competitor, social bookmarking/news sites, used by only 26% of marketers. MySpace comes in last with only 6% adoption as a marketing tool.

7 in 10 Marketers Want to Learn More about Facebook

In addition to being the social network used most frequently by marketers, Facebook is also the social network the highest percentage of marketers (70%) want to learn more about. There are some discrepancies between this list and the list of most popular social networks, as blogs closely follow with 69% of marketers wanting to learn more.

Social bookmarking/news sites and Twitter tie for third with 59% of marketers wanting to learn more, and 55% want to learn more about both LinkedIn and YouTube/other video sites. About 67% more marketers want to learn more about MySpace (10%) than are currently using it.

9 in 10 Marketers Use Social Media

Ninety-three percent of marketers use social media to market their businesses, according to other survey findings. Data from “2011 Social Media Marketing Report” also indicates a significant 90% of marketers said that social media is important to their businesses.

About the Data: In January 2011, SocialMedia Examiner posted a survey link on Twitter, which was reposted on other social media networks including Facebook and LinkedIn. SocialMedia Examiner also emailed a list of 50,000 marketers. After 10 days, the survey was closed with 3,342 participants.

The common perception that older consumers do not use social media has been turned on its ear by new research from retail and technology experts and authors, Bernie Brennan and Lori Schafer, on the increasing use of social media by older age groups and the opportunities this presents for retailers.

The duo, who co-authored the book, “Branded: How Retailers Engage Consumers With Social Media And Mobility,” said buyers ages 52 and older are up to five times more engaged with social media than they were even two years ago. Not reaching out to them via social media is a mistake many retailers make.

“When you look at their buying power, it is less,” said Brennan, “but their sheer numbers are more. The older population will grow 11 percent in the next couple years.”

Retailers can reach them through Facebook, which Brennan said is 70 percent of social media, and YouTube, which skews to an older demographic. (Apparently those videos of laughing babies appeal to Baby Boomers.) “They go on to connect to friends and families,” said Brennan, a former chairman of the National Retail Federation now based in Florida.

There’s a method to targeting these older consumers through social media. Simply bombarding them with coupons and special offers doesn’t engage them. Brennan said retailers needs to cement a relationship with these consumers and then try to sell them. “They’re a lot more loyal than younger customers,” he advised.

Brennan said one huge advantage to social media is its investment is so much less than a print, TV or radio marketing campaign because retailers don’t have to spend money to reach 100 percent of a market when its target is only 5 percent of the people in it.

“These are not expensive ways to advertise. Local newspapers are not effective,” Brennan said.

Social media also allows for localized, personalized content. He cited how Macy’s revamped its social media efforts to better reflect the consumers of stores it had bought (like Filene’s) instead of a one-size-fits-all approach.

Want to hear another surprising aspect of older consumers and Facebook?

They’re the ones playing games on the site. “A big part of Facebook is games,” Brennan said. “The average age of game players is 48. These aren’t kid games. It’s a whole different paradigm. If the average age is 48, you have a whole bunch of people over 48.”

Home care agency owner opens store

Cinsations, a new retail store, has opened at 1010 Main St., East Hartford.

Cinsations carries shoes, pocketbooks, and fashion jewelry and all items in the store are under $100. Gift cards are also available.

Cindy Bullah, owner and operator of Cinsations is also the owner of Reliable Angels, a homemaker companion agency also based in East Hartford. Bullah is a 34-year old entrepreneur who resides in East Hartford and attends Goodwin College.

Currently, the store has no set hours but starting April 25 it will be open from 10 a.m. to 8 p.m., Mondays through Saturdays.

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Wayback Burgers opens eighth CT restaurant

On March 16, Jake’s Wayback Burgers celebrated the grand opening of its Meriden location, which marks the 27th location for the burger joint and 10th franchise sold. Jake’s Wayback Burgers is in eight states with eight locations in Connecticut. Five more locations will be opening in-state by the end of the year.

Jake’s Wayback Burgers serves burgers that are hand-pattied from never-frozen ground beef and grilled to order. The restaurant offers rich, thick milkshakes made by hand as well as marinated grilled chicken sandwiches, garden burgers, turkey burgers, and house-made chips.

The Jake’s Wayback Burgers of Meriden franchisees are Bobby and Anne-Christine Vrakas. Their store is located at 893 East Main St., Meriden.

• • •

Retailers look to tablets

Apple’s iPad has become an effective sales tool for on-the-road salespeople who cannot be burdened with constantly updating paper product catalogues. They can wirelessly download product updates to show new information to customers.

According to an article in the Chicago Tribune, the same may soon be true for all types of retailers, from supermarkets to mattress stores to luxury jewelers.

“Everybody has something in development,” said Ken Nisch, chairman of JGA, a retail design firm in Southfield, Mich. “This is not going to be a novelty. It’s going to be a sea change in how retailers transact and interact with customers.”

The article also explained that retailers are using iPads as mobile catalogs so sales clerks and shoppers can browse inventory not available on store shelves. They are fastening the tablets to counters so shoppers can design their own products. They are arming sales associates with the electronic clipboards to gathering customer data. And they are testing the device’s potential as a portable cash register. Pretty much anything that can be done on an iPhone can be done on an iPad.

By Keith Griffin

Research Findings: While traditional agencies clinch up to $162,000 per client from beginner, experimental and formalized companies, yet when corporations become advanced, boutiques earn an average of $238,000 per brand. Expect traditional agencies to glean new skills or start M&A, and expect boutiques who have vision to stand the test of time.

Social Media Boutiques are Emerging to Threaten Traditional Agencies
It’s been a long time coming since we’ve seen major disruptive in the agency space. 10-15 years ago we saw the rise of internet agencies, digital agencies, and web marketing boutiques, and then a fast consolidation during the downturn. Now, we’re seeing the rise of social media boutiques, and we have telling data that shows they are threatening the budgets of traditional digital agencies in a particular type of client. This is a massively growing space, at Altimeter we were tracking the many agencies on a wiki, but stopped updating it due to overflow of submissions.

Above Buyer Data: 2011 Budgets: Social Media Boutiques Overtake Traditional Agencies Among Advanced Buyers

Immature Brands Naturally Rely on Traditional Agencies
In the novice through mature level brands, the traditional agencies are the first go-to. Corporations rely on them, as they have existing relationships and have purchase orders set in place. Yet we know (see engagement DB and our Facebook marketing research) that most corporations are not even engaging with their customers –they are doing it wrong. They often rely on traditional agencies for education (often a loss leader) research and strategy and implementation.

[Traditional agencies clinch revenues from immature and formalized clients, yet have often invested unpaid hours in education, research and strategy and are unable to specialize to meet the specific needs in social business]

After Traditional Agencies Have Laid Groundwork Boutiques Swoop In, Clinching Revenues
Once corporations realize that social business is not about short term campaigns, they give $ to boutique agencies. The data from the buyers indicates there’s a significant jump in spending on boutique social media firms when the buyer is advanced and sophicaiated in social business. They know their traditional agency lacks flexibility or doesn’t have a business model for social engagement and relies on them. This is a great opportunity for the boutique agencies, who let the traditional agency do education, set plans in place, experience a few failures letting boutiques swoop in.

[Boutiques lack ability to monetize in immature corporations, but when companies reach maturity they clinch an average of $238,000 per brand and push traditional agencies budgets in social to a mere $87,000]

In my LeWeb keynote, I stand by my convictions not to hire social media “Ninjas, Gurus, and Samurai” and received audience applause. Instead, I offered, corporations should hire business program managers, in other words, people that put business goals first –tools and technologies second. This also applies in selecting your boutique agency

Why Social Media Boutiques Differentiate, and Win Deals From Advanced Buyers
Social Media Boutiques are taking the budgets away from Traditional Agencies as corporations become mature. Corporations know they need these specialists for the following reason

• Offer a specialized skillset in new media and social business that traditional agencies may not offer
• Often offer change management within the corporations –traditional agencies have a reputation for layering social media on top of existing campaigns.
• Rather than be ‘campaign’ focused, instead are more long term focused such as building a community with customers for the long term.
• Are ready to roll up sleeves to assist with deeper customer engagement –not just deploy traditional advertising (one of the top spends in social business)
• Are more agile within smaller teams and can quickly maneuver as the technology space changes over time.
• Fundamentally are geared to measure differently around engagement, and what it means –not just top line and bottom line measurements

Yet Social Media Boutiques Limited by Size –and Must Partner
Despite their strengths, Social Meida Boutiques have weakenesses. They are often unable to scale as engagement is difficult to roll out to all product units and around the globe, are quickly finding that traditional agencies are catching up by training staff (see how Edelman has an internal black belt education program) and often lack the ability to achieve an integrated marketing approach

Industry Analyst Perspective: What the Future Beholds

• Traditional agencies will adopt these skills, or be forced to contend with options.
• Expect the traditional agencies to generate revenues outside of engagement in brand monitoring, education, measurement, and leading an integrated approach
• Traditional incumbants will acquire these young startups. Expect this data to be cascaded to the upper echelons of traditional corporations who know they need to quickly get a strategy on M&A activity (see today’s Dachis news)
• A handful of these agencies will grow into the next digital agency. Not wanting to sell and enjoy the fruits of their hardwork, many of these agencies will stay
• Brands will rely on traditional for education –boutiques often can’t afford to this unless it’s a loss leader for a sale.
• While specialization and competition is good, buyers will demand that their agencies work together. The previous HR block marketing team rallied 5 agencies together to work on a single social media effort, for a holistic customer experience
• We’re already seeing a few traditional agencies like Edelman (in the lead, in my opinion with Rubel, Armano, Carfi, Brito), Oglivy (Bell, Rohit) build strong internal teams on social business using blogs, thought leadership, and hire social media practitioners.