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Whitepaper by Jay Samit, CEO SVnetwork

OCTOBER 2010

When Marshall McLuhan observed “the medium is the message” in 1964, he could not have possibly envisioned today’s social media environment instantly and seamlessly connecting over 500 million Facebook users, 65 million daily tweets, 126 million bloggers, and over 150 million smartphones.1 Each day, television, radio, and print advertising is becoming less and less effective, but the vast majority of brand advertising dollars are still overwhelmingly concentrated in media where consumers are spending less than 25% of their time.2 Of the $123 billion spent on brand advertising in the U.S. past year, less than 5% of these dollars were spent online.3 Even then, much of this spending is not based on actual ad performance but is instead backed by fictitious or misleading reach, frequency or impression data. SVnetwork revolutionizes brand advertising with a pay-for-performance model that gives brands meaningful ROI for their online ad spending. Online advertising budgets are also missing out on the conversation – literally. The social media revolution is about the billions of conversations, Tweets, postings, and feeds created daily by users for their extended social network. Yet, less than 3% of online media dollars actually target this burgeoning world of consumer-generated content.4

                                                                                                               1 Facebook (2010), TechCrunch (2010), BlogPulse (2009), Nielsen (2009) 2 The Nielsen Company. (2010). Three Screen Report. Vol. 8, Q1. 3 IEG (2009). 4 IAB (2009). “User-Generated Content, Fad or Real?” IAB Research Insights.

PERFORMANCE BRAND ADVERTISING The Audience is the Message

 

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Social media engagement advertising removes the middleman and inserts a brand’s message directly into the center of the purchase funnel, improving a brand or product’s consideration during the period when consumers are gathering opinions and listening to word of mouth. Friends provide endorsement, which in turn influences purchase intent. Brand loyalists are born from these social interactions. MEASURING EFFECTIVE ENGAGEMENT According to the IAB’s Social Media Committee, the value of social media is best measured by the frequency or depth of the engagement with consumers.5 Effective engagement can be measured across three axes: share of voice, amount of engagement, and virality. Given the online digital footprint, these three axes can directly affect impact on purchase intent. Share of voice is the amount of time a consumer actually engages with an advertiser’s message. Unlike a banner ad that goes by in the blink of an eye, or a television spot shuffled over on the DVR, a social media engagement can range from a few seconds to several minutes. SVnetwork’s holiday campaign for iTunes saw the average user spending 3 minutes and 25 seconds engaging with the brand and preparing content to share with friends. Visa’s Winter Olympics campaign, which empowered consumers to choose which Olympic athlete’s video they preferred to watch during the engagement, averaged 99 seconds of video viewing. The engagement garnered over 150,000 new Facebook fans for Visa in only one month.                                                                                                                5 IAB (2009). “Social Media Ad Metrics Definitions.” IAB’s User-Generated Content & Social Media Committee.

Friends provide endorsement, which in turn influences purchase intent. Brand loyalists are born from these social interactions.  

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As Hansen and Christensen showed in their 2005 study, Emotion, Advertising and Consumer Choice, the intensiveness of share of voice has a direct correlation to market share. Across millions of engagements and dozens of advertising campaigns, consumers on the SVnetwork spend an average of 40 seconds interacting with a brand. Because of the long duration of time spent interacting with the brand, share of voice has a direct impact on consumers’ intent to purchase. Brands on the SVnetwork realize 9 times the impact on intent to purchase goods or services from advertisers across many industries including entertainment, automotive, food and beverage, consumer packaged goods, healthcare, travel, technology, and electronics. Amount of engagement focuses on the participatory nature of social media engagement advertising. In Cult of Analytics, Steve Jackson advises marketers to pay attention to click depth and the duration of stay when measuring engagement.6 Asking users to answer a question, especially one that elicits a personal-emotional response, is a way to keep the consumer engaged with the product. Walt Disney Pictures’ engagement for Toy Story 3 maximized consumers’ connection to the experience by asking them, “What was your favorite toy as a kid?” Users spent an average of 115 seconds with the engagement.

Regardless of whether the consumer is interacting on a computer or on a mobile device, the greater the interactivity, the greater the completion rate of the advertising engagement.                                                                                                                6 Jackson, S. (2009). Cult of Analytics: Driving Online Marketing Strategies Using Web Analytics. Burlington, MA: Butterworth-Heinemann.

Consumers on the SVnetwork spend an average of 40 seconds interacting with a brand.

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In a case study of Colgate’s “Spin the Wisp” engagement on the SVnetwork, the average consumer played the game 7.3 times. In 2010, consumers completed 88% of the user-initiated engagements across the SVnetwork, further proving the power of user-initiated interaction in converting share of voice into engagement interaction. Virality is the measurement of how many consumers share the brand engagement across the social media landscape. Getting consumers to become brand ambassadors has always been the Holy Grail for marketers, and tools such as Twitter and Facebook Connect have made it easier than ever to share movie trailers, digital coupons, and advertorials across extensive networks. Matching the right creative message to key social influencers is the key to promoting virality. “If you know what moves people,” Ashton Kutcher writes, “you can engage the human algorithm to immerse viewers and trigger meaningful interaction and vibrations across the social graph.” Virality is more than just reach; it is reach within the user-generated content of brand ambassadors. The August 2010 issue of Forbes listed the “Best-Ever Social Media Campaigns” of all time – from the Internet buzz around The Blair Witch Project to the YouTube video sensation “Will it Blend?” Forbes looked at how brand messaging has gone viral in social media. Singled-out among the best social media campaigns of all time was SVnetwork’s engagement for Microsoft Bing on FarmVille.

Virality is more than just reach; it is reach within the user-generated content of brand ambassadors.

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Virality in social media carries unprecedented marketing value because it is based on friends’ recommendations. For example, more people completed the Bing engagement than the original potential audience because the engagement went viral throughout the social gaming community. Bing, which had a 119% completion rate for its engagement, measured the value of the virality with a follow-up study. Microsoft’s data showed 70% of Bing’s newly-generated Facebook fans went on to visit the search engine in the month following the initial engagement, and these fans were 2.2 times more likely to actually use Bing than the pre-existing fans. CONSUMER ATTENTION & APPOINTMENT ADVERTISING The net result of increased share of voice, user-initiated engagement, and virality is a huge lift in consumer intent to purchase. SVnetwork clients conducted 5 studies in 2009-2010 to determine the average increase in intent to purchase. While the industry standard for social media is a 2% lift in intent to purchase, the campaigns analyzed by SVnetwork clients showed lifts ranging from 5% to 36%. By averaging 17.8% lift across all campaigns, the SVnetwork engagements proved to be 9 times more effective than the industry average for increasing a consumer’s intent to purchase. The secret of marketing to today’s social media consumer is to create a “mutually beneficial engagement” in which both parties willingly interact in a way that fulfills their needs.7 Incentivized engagements adhere to this model of reciprocity, and they get social media users to pay attention. Branded engagements deliver entertaining and meaningful content to users in a relevant and engaging way on the Web. Advertising has always been based on trading brief attention to a brand message in exchange for some kind of content, whether that content is found on television, in print, online, or elsewhere. If you convey to consumers that they will get something they desire in exchange for engaging with a marketing message, the tradeoff will be welcomed.

                                                                                                               7 Solis, B. (2010). Engage: The Complete Guide for Brands and Businesses to Build, Cultivate, and Measure Success in the New Web. Hoboken, NJ: John Wiley & Sons, Inc.

“Our campaign on the SVnetwork was nine times more effective than traditional online media in increasing intent to view. By any measure, SVnetwork is a real value for our advertising dollars.” --Michael Burns, Vice Chairman Lionsgate Films

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However, virtually all television, radio, print, and Internet advertising is disruptive. Non-interactive media are by their very nature required to interrupt the consumer and insert the marketer’s message. Television shows are interrupted by commercials (much to the annoyance of viewers) while magazine articles get lost in the clutter of pages upon pages of print ads. Sometimes when an agency develops a campaign with great creativity the intrusion can be mollified and even overcome. The message, then, is no longer a disruption, but rather a welcomed and valuable engagement. By putting consumers in charge of when, where, and with which brand they would like to interact, incentivized engagements become appointment advertising. In Permission Marketing, Seth Godin postulates that permission marketing “encourages consumers to participate in a long-term, interactive marketing campaign in which they are rewarded in some way for paying attention to increasingly relevant messages.”8 By self-selecting social media engagements from the SVnetwork, consumers have a greater likelihood of spending time with the message, completing the engagement, and sharing the advertisement with their social community across Facebook and Twitter. While all advertising is incentive-based, consumers on the SVnetwork choose the brands they want to engage with in order to access the content they desire. By giving consumers the opportunity to self-select the marketing messages they prefer to

                                                                                                               8 Godin, S. (1999). Permission Marketing. New York: Simon & Schuster.

The message is no longer a disruption, but rather a welcomed and valuable engagement.

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interact with, SVnetwork’s brand engagements increase relevance, targeting, and purchase intent to a level that other ad formats simply cannot match. By tapping into individuals’ motivations, engagements on the SVnetwork provide meaningful value-exchanges at a scale unrivaled by any other ad platform. Alternative advertising methods in digital media cannot deliver the personalization or level of engagement that performance brand advertising delivers. Marketers now have the opportunity to omit the words “impression” and “target” from their strategies and instead describe performance with words like “engagement,” “time spent,” and “user-initiated.” Performance brand advertising adds real people, not impressions, to the conversation between brands and the audiences they serve. HOW INCENTIVIZED ENGAGEMENT WORKS In Digital Engagement, Harden and Heyman wrote that managing engagement in digital media is about harnessing the “participatory power of millions of Internet users to profit your business.“9 Publishers within the SVnetwork have identified the passions that drive hundreds of millions of consumers to their sites each month, and incentivized engagements harness the power of these passions to provide consumers with instant gratification. Examples of consumers in the SVnetwork include:

• Zynga’s 80 million FarmVille players who complete engagements for virtual farm cash to further the development of their virtual agribusinesses.

• The 30 million monthly users of the Facebook Causes app who want to make a positive impact for the charities they are passionate about simply by completing a brand engagement

• IMVU’s 3D community of 50 million registered users complete engagements to outfit their avatars with stylings from the site’s catalog of over 4 million virtual goods.

In the same way that advertisers have paid for the television and radio programming that consumers have enjoyed for decades, incentivized engagements are a way for brands to connect with consumers’ personal passions. The self-selecting nature of the interaction makes for a much more personal, one-on-one relationship between the brand and the consumer. Case studies of engagements on the SVnetwork by Visa, Kraft, Nestle, Sony, Microsoft, Apple, Toyota, Procter & Gamble,

                                                                                                               9 Harden, L. and Heyman, B. (2009). Digital Engagement: Internet Marketing that Captures Customers and Builds Brand Loyalty. New York, NY: Amacom.

Incentivized engagements are a way for brands to connect with consumers’ personal passions.

SVnetwork’s brand engagements increase relevance, targeting, and purchase intent.

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Macy’s, L’Oreal and others show the tremendous power of social media engagement to drive consumer behavior. Depending on the strategic needs of the marketer, engagements can cost-effectively drive a wide range of actions across millions of consumers. Disney, wanting to time the buzz on a new release to the film’s opening, was able to get 46% of engagement participants to click through to a movie’s Facebook page. Procter & Gamble, wishing to start a social discourse on energy use, was able to get over 500,000 consumers to watch “Future Friendly” videos on the issue.

Other brand advertisers on the network have used engagements to generate consumer reviews, compare product campaigns, upload photos, and create user-generated videos. On average, 20%-40% of consumers responding to SVnetwork engagements share the brand message to an average of 160 people in their personal network. With the average Facebook user creating 90 pieces of content each month,10 getting a marketer’s message into the user-generated content on the Web is the only way to rise above the clutter and noise of banners. How loud is the noise? Facebook generally has a lower click through rate (CTR) for advertisements than most major websites. Banner advertisements have generally received one-fifth the number of clicks on Facebook compared to the Web as a whole according to a Businessweek study.11

                                                                                                               10 Facebook (2010). “Statisics.” http://www.facebook.com/press/info.php?statistics 11 Businessweek (2007). “So Many Ads, So Few Clicks.”

Getting a marketer’s message into the user-generated content is the only way to rise about the clutter and noise of banners.

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THE FUTURE OF SOCIAL MEDIA ENGAGEMENT With entertainment companies, newspapers, magazine publishers, sports leagues, and Internet sites all searching for new ways to monetize the content they create and advertisers looking for a more cost-effective way to reach their customers, social media engagement is gaining in popularity as a method of filling the void caused by the changing media consumption habits of consumers. The millions of hyper-connected consumers who participate with engagements on the SVnetwork share the brand messages with tens of millions more consumers. The movement of big brand media dollars has begun. In August 2010, Ford chose to unveil their 2011 Explorer on Facebook and generated a 200% bigger return than most Super Bowl ads at a fraction of the cost. Typically, car companies see their share of shoppers rise about 14% after a Super Bowl spot, but following the Explorer launch, Ford's share of SUV shoppers jumped a whopping 52%.12 In 2010, over one hundred of the largest brand advertisers launched campaigns incorporating incentivized social media engagements on the SVnetwork. Within 2 ½ months of initiating a campaign, 50% of advertisers choose to repeat the campaigns. Additional repeat usage continues outside of this 2 ½ month period, with many advertisers’ campaign cycles exceeding 2 months.

In study after study, the SVnetwork has proven to drive 4 times the media value and 9 times the impact on intent-to-purchase of banner or display advertising. “As technology advances, it reverses the characteristics of every situation again and again,” wrote McLuhan. “The age of automation is going to be the age of 'do it yourself.'“ Social media engagement is the “do it yourself” medium for the 21st century global marketer. Engagement advertising gives brands a unique way of interacting with individuals and the content they publish.

                                                                                                               12 SocialCarNews (2010). “Ford’s Bet on Facebook: Did It Pay Off?”  

The movement of big brand media dollars has begun.

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Jay Samit is CEO of SVnetwork, the Web’s largest performance brand advertising network and technology platform.

Reaching over 80 million unique consumers every month, the SVnetwork provides the most effective way for brands to reach, engage, and spread messages through a targeted audience of hyper-connected consumers in social media. In study after study, the SVnetwork has proven to drive 4 times the media value and 9 times the impact on intent-to-purchase than banner or display advertising. SVnetwork recognizes that in social media, individuals hold the key to generating attention and brand influence. The SVnetwork’s pay-for-performance advertising model maximizes share-of-voice by giving brands a unique way of interacting with individuals and the content they publish. Within the SVnetwork is SocialVibe, the leading social media utility that empowers individuals to make a positive, measurable impact for the charity of their choice by completing branded activities online. SVnetwork is backed by Redpoint Ventures, Jafco Ventures, and Pinnacle Ventures and is headquartered in Los Angeles, CA.