Syncapse hosted an event title How Social Media Marketing is Driving Business Results on the Friday of Internet Week NY. The event, whose format included a panel discussion and an interview, focused on the development and monetization emerging social media trends. Opening comments were provided by Adam Ostrow, the Editor-in-Chief of Mashable, and then the audience was introduced to a panel of speakers who were to discuss the recent and future evolution of Facebook.
Panel – The Future of Facebook
Michael Learmonth, a digital media reporter at Advertising Age, moderated a panel of marketing executive:
- Matthew Ramella, Senior Manager of Media, Sponsorship, and Digital Marketing at Anheuser-Busch InBev Canada
- David Armano, Senior VP at Edelman Digital
- Patrick McLean, Executive Director of Verizon Interactive
- Marisa Thalberg, VP of Global Digital Marketing at the Estee Lauder Companies
Much hype was made of people who called for users to quit Facebook over privacy changes, but there was little effect on the service’s membership figures. While the media and social media professionals focused on the issue, the majority of users didn’t seem to think much about it. When it comes down to it, concerns about privacy are directly related to personal comfort levels, so it makes perfect sense that some would react more strongly than others. While the trust of some users was impacted by the privacy flap, there was a greater impact on online privacy as a whole, thanks to media reports and tips from family and friends on how to protect one’s account.
How to regulate and enforce privacy concerns was discussed. If anything, successful government regulation should offer easy points for a government that needs a win. However, for the social media marketing industry to remain effective, self-regulation is a preferable route. If the industry is over-regulated, then it will lose its effectiveness. Marketers especially should play an important role in asking important questions about privacy, as they need to push the envelope in order to continue collecting the behavioral information that they require. They should take advantage of changing views on internet content among younger (under 35) adults who expect targeted content and are willing to trade some privacy for this focus on themselves. They essentially barter their privacy for access; the privacy they lose is offset by the value they receive.
Another issue discussed about Facebook (one that only exacerbates the privacy issue) was its monolithic size. It has redefined online engagement. While users will express concerns about over-sharing (on Twitter) and location sharing (on Foursquare), they’re happy to discuss the minutia of their activities on Facebook. While Facebook is part of a larger internet eco-system, it’s doing an incredibly effective job of creating its own web and its own rules based on the social graphs of its users. It continues to expand from its closed web into the open one, connecting to other sites and sharing information about friends’ preferences and purchases. While businesses may have concerns about having the environment in which they interact with their customers defined by Facebook, a panel member noted that “you can’t bet against 400 million people”.
Understanding how to engage with fans or followers is critical for a business that plays in the Facebook ecosystem. Companies should not chase fans just for fans’ sake. Verizon Interactive, for example, values it’s FiOS community with 25,000 active fans more than it does its larger group of nearly a million fans who don’t interact with the page or brand. It’s easy to click a “Like” button. It’s making a statement and exercising what one panelist called “slacktivism”. Users will interact when they are engaged, something that requires brands to have a long-term strategy that builds and maintains this interest.
ROI for Facebook fans is not yet totally understood, but it’s thought to be similar to that of e-mail marketing. Both offer an audience with whom you can build, tap, and motivate. One major difference, of course, is that it is in an environment that is separate from your branded site. You can no longer silo your efforts and engage these fans. This doesn’t mean just changing where you advertise. Just as users will often ignore web site ads, few consumers can recall compelling Facebook ads. They look to receive marketing communication as content, which, in Facebook’s case, comes through their news feed. By leverage proper interaction with fans, a brand can deliver its message to where the target audience is already looking. Fans are already aware of the brands they follow, but they want to know what’s new, and, just like e-mail customers, they expect special deals.
An impending addition change to Facebook’s service is the addition of location-reporting. While some users claim to be reticent to have more information about them available, they’re likely to passively share their location already (by posting, for example, that they are going to a specific event with other friends.) According to the panel, location is as big as the open graph, so it’s difficult to speculate on how successful it will be. In terms of marketing jargon, it’s the ultimate long tail: it provides marketers an opportunity to target people not just based on what they are doing, but where they are doing it (and what’s around them.) Marketers would have to find a way to add value to check-ins so that mainstream users would opt into the system.
Facebook is becoming more and more important to the marketing mix of brands, but marketers must still learn to leverage organic content (communities, support to customers) instead of solely relying on paid ads and promotions. Several members of the panel felt that Facebook has to do a better job of providing marketers with tools to measure and tracker their followers. The problem with companies pushing Facebook to improve its B2B strategies, however, is that Facebook is often more important to the brands that use it than vice versa. This creates what some see as a sense of entitlement on the part of Facebook as brands become dependent on the channel for so much of their marketing mixes. This challenges marketers to continue to innovate. Companies like Verizon have created harmonious relationships with Facebook by building a product-based partnership.
Facebook isn’t the only player in the social media industry, so focusing solely on it can create a myopic view of social media strategy. However, due to its size and level of engagement with its users, it’s a critical tool for marketers. One benefit of the size and power of Facebook is that it creates a standard around which social media marketers can develop their plans. Facebook is redefining the way that people act and interact online, so it is also changing how businesses reach out to their online customers. If companies can successful integrated Facebook into their CRM solutions, they’ll be able to use its features to their advantage. After all, at the root of it, social media metrics are only successes if they convert into financial metrics (sales, subscriptions, etc.)
If you “Like” this product, then you should check this out . . .
A New Perspective on the Value of Fans
Following the panel, Michael Scissons, the President and CEO of Syncapse, presented the findings of a new white paper, The Value of a Facebook Fan. Because there isn’t a direct and easy correlation between sale and data like Facebook traffic, numbers of fans, or rate of tweets, a number of metrics had to be explored to how the value of a fan is different from a non-fan.
Syncapse and its research partner looked at the difference (i.e., the δ in statistics for the two groups) in six areas:
- Product spending – do fans spend more?
- Loyalty – are fans more loyal?
- Recommenders – are fans more likely to recommend?
- Brand affinity – do fans identify more readily?
- Earned media value – how efficiency is reach?
- Acquisition cost – what does it cost to add a fan?
In examining 4000 users and how they interacted with 20 of the top brands on Facebook, Syncapse found the following:
- Facebook fans spend an additional $71.84/year on a brand’s products
- Fans are 28% more likely to continue to use the brand
- Fans are 41% more likely to recommend a fanned product to a friend
- 81% of fans report connection/empathy with a brand, vs. 39% for non-fans
- The average value of a fan: $136.68, consisting of the following:
- $71.84 Spend
- $43.71 Loyalty
- $13.57 Recommendations
- $6.79 Earned media value
- $0.47 Cost offset for acquisition
More details can be found in the full report, available on the Syncapse site.
How marketers who are serious about valuing their efforts to the CFO should be thinking about measurement
Following the white paper presentation, Adam Ostow returned to the stage to interview Brian Wallace, the VP of Digital Marketing and Media at Research in Motion. When asked what RIM was measuring, Brian said that they were measuring everything. The issue becomes what you should be measuring, and what the value of the metrics is to the company. Social media marketers are interested in a number of online metrics, but their bosses are often interested in only one key metric: how many items they sell.
The Blackberry phones sold by RIM are expensive, high-consideration products. For items such as this, sales decisions are often driven by word of mouth. Information comes from friends or from third party reviews online. Therefore, in order to drive sales, RIM must ensure that it delights its current users and that the sources that shoppers are most likely to find online are positive ones.
Until recently, the social media strategy at RIM was built around increasing the number of fans, but there was no greater justification to it. The question remained: what do you do with fans once you’ve added them? RIM had a conundrum on its hands when deciding how to interact with their fans.
RIM developed a basic set of metrics, all revolving around word of mouth:
- How many more people are talking about Blackberry?
- How favorable is the talk?
- How many recommendations are they receiving?
Even the sentiment metrics were only considered successful if they were based on recommendations. Instead of adding more inactive fans, they sought fewer, more active fans (i.e., quality over quantity.) One way to engage customers online in an expensive and scalable manner was to provide social media-based technical support. Customers were pleased (and often surprised) to see their complaints and questions answered. Moreover, other fans saw this delight as a recommendation, so the customer service activity offered media value to the company.
While they were a tech company offline, they essentially had to become a media company online to engage their customers in a digital space. Because paid media companies were slow to adjust to changing metrics, RIM began producing their own media and going to creators to redistribute it in exchange for paid media. Digital spend over the last two years has increased dramatically, from 2% to 50%. Management of the social community, however, has proven to be headcount intensive. If you’re interested in moving to Ontario, RIM is hiring! Their practice is to find effective community managers in other areas of the online ecosystem and scale their activities up to a worldwide scope.
Just as social media is effective at creating value for the company; it also has the potential to destroy value if used improperly. RIM has traditionally had a very conservative PR and legal team, so their social media communications are usually highly scrutinized. When this process began, their governance policies were overwhelmed, so the policies were relaxed as comfort levels around channels like Twitter increased. If the social media personnel do not receive a direction not to post something within a preset time, it is considered to be approved. Social media managers ensure that PR understands how to use social communications channels, but they still drive the message in order to ensure its authenticity. Of course, they have a system in place to retract and/or correct media that is released erroneously.
To ensure that the traffic that consumers were finding was positive, RIM developed a community that connects to (and complements) Facebook, as well as open web search engines. Because the individuals who join the community are typically rabid Blackberry fans, the postings skew very high in sentiment. This provides positive recommendations that usually appear higher in search results than potentially damaging third party reviews.
Like any other brand working in the space, RIM has to ensure that its social media content is continually refreshed. Fans who are not repeatedly engaged have a diminishing return. If they do not interact with a Facebook presence, for example, they will begin to see fewer references to the brand in their news feed, which is likely to create a vicious cycle of disengagement.
All of the managers who spoke at the event agreed that social media strategy is still a young art, and it is certain to evolve as the channels through which it is implements changes and evolves. This was the last event (well, the last non-party event) that I attended during Internet Week, and I think it provide a nice resolution to story on how to use the new tools that have been developed for marketers.