Social Marketing Delivers on the Promise of Direct Marketing

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RESOURCE INTERACTIVE

RESOURCE INTERACTIVE | ©2011 Point of View | Social

THINKABLE MOBILE

Social Marketing Delivers on the Promise of Direct Marketing

2011

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RESOURCE INTERACTIVE THINKABLE SOCIAL


Introduction: The Power of Social Connections

In their seminal 1993 book, The One-to-One Future, Don Peppers and Martha Rogers taught all marketers the holy grail of personalized, individual marketing. Their concept and definition were simple: Use relevant data to market the right product, price and promotion to the individual store and household level. Almost two decades later, with the rise of social, we may finally have the data to deliver on the intimacy of their 1:1 marketing vision.

Social media has evolved, and it holds far more power than even magazine covers and Hollywood movies have proclaimed. For brands, social’s impact is its ability to not only precisely target prospects and customers based on their social graph, but also to engage with them in their own realm. Social allows brands to facilitate and participate in conversations among enthusiasts, not merely push information at them from afar, as traditional direct marketing has often done. The depth of the personal information that people are willing to share will allow for intimate messages and calls to action.

Social is embraced by the masses for its ability to connect multiple layers of people who share a history, an idea, a passion, or a purpose. Acting like a central nervous system for human relationships, social networks have always enabled communications across myriad, intersecting

communities, yet still present individuals with an intimate sense of personal interactions. Today’s digital reality of social networks provides a means of tapping into this complex web of relationships. Savvy brands can become part of this centralized social nervous system, transforming it into a brand engagement engine.

Brands must be strategic about how they approach this potential gold mine of consumer relationships and data, however. Far from being a one-hit wonder of marketing, social is about building authentic, long-term relationships through relevant, compelling experiences that burrow into the lives and lifestyles of consumers. The open nature of today’s social landscape, which is fragmented and distributed across multiple networks, can make it fundamentally more challenging for brands to maintain control of the conversation.

Social marketing is the next step beyond direct marketing, where push is no longer the order of the day. In a reversal of the power flow, pull experiences now shape brands and inspire consumers to influence one another.

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But I was Promised 1:1 Marketing!

Despite the best of intentions, the promise of 1:1 marketing remains a far cry from its current reality. In part, that’s because the right tools weren’t available until recently. The original promise of 1:1 marketing was that brands would come to know us intimately enough to speak “our” language, to extend offers and create experiences that were almost eerily relevant to our needs.

The gold ring sought by brands attempting 1:1 marketing wasn’t just consumer loyalty: It was consumer fealty, a powerful allegiance forged when consumers feel the brand has a true stake in their lives, as would a trusted ally or a close friend. Think of the kind of passion fans have for their favorite sports teams or bands, and you begin to see what consumer fealty (versus loyalty) looks like.

We’re talking about passion, not mere consumerism. And 1:1 marketing was considered the path to glory.

The Current Reality Today’s brands are largely still using a spray-and-pray method to market their wares. They continue to spend heavily on broadcast 30-second TV spots, print coupon-filled circulars or mail glossy promotions. Then, they wait for consumers to arrive at their stores, where they subject

shoppers to more (and often generic) marketing and sales pitches. Old habits die hard, which is why marketing is still mostly about push. Because an individual consumer isn’t perceived as having an impact on sales beyond her own purchases, brands haven’t cared much about consumers’ shared passions or communities of like-minded friends and acquaintances.

US Major Media Ad Spending, by Media, 2009-2015

2009 2010 2011 2012 2013 2014 2015

TV

Directories*

Newspapers*

Outdoor

Internet

Magazines*

Radio**

Total

$53.8

$10.3

$24.8

$5.9

$22.7

$15.5

$14.3

$147.2

$59.0

$9.3

$22.8

$6.1

$25.8

$14.7

$15.3

$153.0

$60.5

$8.2

$21.4

$6.4

$28.5

$13.9

$15.7

$154.6

$64.5

$7.3

$20.7

$6.8

$32.6

$13.2

$16.4

$161.5

$65.0

$6.5

$20.2

$7.1

$36.0

$12.6

$16.7

$164.2

$67.0

$5.7

$20.0

$7.4

$40.5

$12.1

$17.1

$169.8

$68.0

$5.0

$19.8

$7.6

$44.5

$11.6

$17.2

$173.6

(In Billions)

Source: eMarketer, March 2011 *print only **excludes off-air radio & digital

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But I was Promised 1:1 Marketing!

The Changing Reality

We’re poised to break free of this old-school marketing model, moving instead into the sphere of the social graph as consumer connector. What’s changed? We’re witnessing a perfect storm of consumer behavior, social data collection and mobile (or “commerce is everywhere”) technology. The resulting fast-evolving social graph is a driving force in consumer profiling and shared experiences. Testing and learning is already happening. Facebook, for example, is working on real-time advertising based on real-time comments, plus additional work on ads targeting the status update.

Envisioned Future: Tax Time

Just imagine the power brands could have if these tests effectively bring together consumer data to deliver just what a consumer needs, just when she needs it. For instance, if a consumer updates her Facebook status that she’s working on her taxes and needs a hand, TurboTax® might immediately serve up an ad, including which of her friends has used and likes its products. The social graph brings relevant information to the consumer and helps brands identify consumers who are in need of their products.

Sidebar: The Value of a Fan

For all of the talk of fans and followers, one question continues to be asked is, “What is the monetary value of a fan?” In a presentation at the Advertising Age Digital Conference in April 2011, Coca-Cola presented that they found that a fan consumes two times more product than a non-fan, and that purchase intent of a fan is ten times higher than that of a non-fan. Also, after a specific activation (a campaign) on Facebook, Coca-Cola saw a 7% increase in consumption and a 10% increase of purchase intent of their fan base.

Additionally, one of our partners, Vitrue, is working to quantify the answer. What they’ve found so far is that, on average, a fan base of 1 million translates into at least $3.6 million in equivalent media over a year. Vitrue arrived at its $3.6 million figure by working off a $5 CPM, meaning a brand’s 1 million fans generate about $300,000 in media value each month. Using Vitrue’s calculation, Starbucks’ 6.5 million fan base -- acquired in part with several big ad buys -- is worth $23.4 million in media annually. (http://goo.gl/7czxi)

http://goo.gl/7czxi

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Through the Looking Glass to the Social Graph

For all the talk of the social graph, many folks still don’t know what to make of it (or how to define it). In its most literal sense, the social graph is a chart or illustration that represents our relationships and shared connections with others. It can be a Venn diagram, a star burst map, a bubble chart, a family tree, or any other relationship visualization.

But as personal profile and behavioral data began informing the social graph, the concept has expanded into a potentially valuable marketing tool, serving as the key not only to understanding individual consumers, but, more importantly, as the gateway to multitudes of other people with whom those consumers share similar passions, histories and habits.

The social graph is like the looking glass through which Alice stepped: It opens up a whole new realm of possibilities for brands seeking to access a consumer population they’ve never seen before–at least not in the context of their shared passions and relationships.

How the Social Graph is Growing While consumers are sharing their passions, interests and daily lives with each other on their social networks, they’re also passively sharing their personal information, preferences and click-stream with tracking systems such as cookies and other analytics tools. They also actively share profile and preferences information when they take surveys, sign up for new services or sites, or contribute to forums and review sites. Likewise, as they roam about or check into restaurants and shops while logged into geo-location services such as Facebook Places and Foursquare, their movements and preferences are tracked. And all the while, those old-school loyalty and affinity programs they joined years ago are still tracking their purchasing behaviors.

Every day, this data is added to each consumer’s social graph (and also connects them to others with similar profiles), creating an ever-more-precise portrait of individual consumer and interrelated group interests, tastes, purchases, behaviors and relationships.

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Layering for Social Warmth

Dimensional consumer data is requisite to realizing the possibilities of true 1:1 marketing. By layering classic social graph information from social network behavior with geo-location data and traditional demographic and purchasing information, brands can gain a clearer, deeper picture of consumers, their activities and their preferences. This also helps brands provide gateways for word-of-mouth and brand advocacy by enabling recommendations, reviews, “Like” buttons and user-generated or curated content on their sites, blogs, Facebook pages and other touch-points.

This evolution is starting to show promise. For example, Levi’s launched an online Friends Store that configures the digital shopping experience for its consumers based on what their friends in their Open Graph like. Every Levi’s web storefront is personalized based on the consumer’s Open Graph and can be different each time they enter based on what is happening within their friend-base. Brands like Levi’s now have the power to serve up a more customized offering when consumers enter their site (or eventually, store), based on consumer interactions with, and recommendations from, trusted friends.

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“When asked what sources ‘influence your decision to use or not use a particular company, brand or product, 71% claim reviews from family members or friends exert a

‘great deal’ or ‘fair amount’ of influence.”(Harris Interactive, June 2010)

Envisioned Future: Anything for the Pets

Now imagine what happens when the data from a consumer’s entire social graph and CRM data combine. For example, when a mom enters a PETCO location, she uses Shopkick to passively check in to the store. Based on the information from her PETCO Pals account and her social graph, she’s recognized as a top-tier spender with great influence and many friends. At that point, a promotion is pushed to her phone, offering her a special gift-with-purchase for her dogs if she spends at a certain level. The offer drives her to spend more and as she collects her free gifts and shares the rewards with her dogs, the news of her great deal spreads to other friends in her social network. This, in turn, puts more of her friends—and their pets—on the path to shop that day.

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The Future of Social Marketing

Social marketing has so many different facets and trajectories that it’s difficult to pinpoint exactly where its next direct hit will take place. But one pathway is clear: The social graph is poised to expand in depth and importance. Social is about to break the bounds of online experiences, cropping up wherever we go.

The Opportunity for Brands

We believe there is exponential power in the social graph, but no one is collecting and collating data at a broader level. This is where the opportunity lies, especially for savvy direct marketers. By gaining consumer permission to tap into the Facebook Open Graph as well as other social information, brands can start to build a broader picture of their consumers’ complete social profile. The challenge lies both in access and in how to mine and apply this new data, finding predictive variables to drive marketing communications toward increasingly discrete segments of consumers as brands draw ever closer to true 1:1 marketing.

» As the social graph becomes a richer, more dynamic and more portable tool (following users with logged-in devices wherever they go), brands will be able to instantly track consumers, mine their data on the fly, and present spot-on

experiences that cater to individual preferences, passions and purchasing habits. The social graph, in general, is going to influence most digital interactions (in a positive way, if the user allows it).

» Brands can start engaging in more direct relationship marketing as our web and digital experiences become more tailored to the social graph. Those experiences will be influenced by what we—and our networks—have viewed, liked and shared on the web. For example, imagine what happens when the site you’re viewing or the ad you’re looking at on your iPad version of Wired magazine is geo-aware and leverages your social graph to instantly push more relevant, personal content to your iPad. The result: the ad and content mix you see is tailored specifically to you and where you are at any given moment (both physically and socially). The experience for the consumer is completely personalized and highly relevant, while brands watch loyalty, along with their customer lifetime value, increase.

» The social graph will be the common element that connects the consumer to everything—it tells marketers what consumers like, what they buy, who they interact with and how to create meaningful personalized experiences. This, in turn, will lead to compressed decision cycles, which

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move consumers from decision to purchase much more quickly.

Your Social Shadow

» As we go forward, we believe the social experience as we know it today will also evolve. How important will that regular social experience, like the Facebook Wall, be when your social network is embedded everywhere? Will it have a single place, or will it be accessible and visible everywhere? Your social network may not need to have a home base as much as it currently does, because it will effectively be following consumers wherever they go.

» We believe there will also be continued atomization and distribution of a consumer’s social network. For example, Facebook is more of a state of mind than a real place at this point, as it’s integrated with so many locales. We already see pockets of this happening, when you go onto media sites like cnn.com and see what other articles your friends have read and shared.

» To capture data from, and effectively market to, these social shadows as they move through brand spaces, companies should use social plug-ins and customize experiences to take advantage of the expanding social

graph. More and more, the consumer IS her social network; wherever she goes, her community is along for the ride. Catch her attention, and you’ve got a lot of listeners.

Social Commerce on the Verge

Social commerce (aka s-commerce) is “everywhere commerce.” The advent of social as the next evolution of direct marketing will unlock new streams of direct revenue from consumers and enable brands to innovate on socially targeted products (including virtual ones) and brand experiences as never before.

Social commerce success will spring from brands presenting products and promotions as in-context “shoppable moments”—using a softer type of sales message—versus catalog-style listings on destination sites, etc. Examples of this trend already in play include French Connection’s

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consumers should see offerings and offers that relate to them personally bringing the best and most relevant products and services to the forefront.


“YouTique” YouTube Channel, which showcases sexy, soft-sell videos and chatty “what to wear” spots.

On Facebook, the Home Depot is successfully selling products in the News Stream using Resource Interactive’s unique DCP (Distributed Commerce Platform). This sophisticated platform has additional functionality which can leverage the user’s social graph and integrate Facebook’s social plugins to create the type of shared shopping experiences today’s connected consumers demand. The DCP is also the first social commerce platform to achieve superior security with PCI-level 1 compliance—the gold security standard. Other major brands that have used the platform for social commerce include The Limited, Pantene and Pampers.

Brands will achieve greater social commerce success by aligning their offerings as closely as possible to the interest pathways of their consumers—that will include verticalizing large sets of SKUs for easier discovery and browsing by shoppers online and off. One brand example to watch: Target’s new Target Style Facebook page.

Now that commerce has been effectively embedded into social, the next step is bringing social into commerce, with a truly customized experience. In the future,

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As brands wait for the future to arrive and work continues on how to capture, layer, implement and measure the abundance of information that can be reaped by the social graph, a few key strategies can be implemented today to get prepared for tomorrow.

01 Integrate social tools on your site: Your site is no longer just a final destination—it can also serve as a

hub to direct consumers to social touch-points where they can support and promote your brand. Add Facebook “Like” buttons (or a Facebook Connect log-in), link to your Twitter feed, point to your user forums, provide links for writing Yelp and Amazon reviews, and feature other social tools to allow fans of your brand to discuss and share your products and services with others.

02 Plan ahead: As the social graph evolves, it is becoming more portable, persistent and embedded in everyday

activities. As a result, consumers will reap the benefits of being recognized and catered to wherever they go. To match this momentum, capture connected consumers’ social graph data (enabled through the use of social plug-ins) to begin shaping more flexible, scalable and personalized consumer experiences. The more you know about your consumers now, the better you’ll be able to customize their future experiences.

03 Incentivize sharing and participation: Reward loyal brand fans and encourage the birth of new ones by

giving them perks, special offers, VIP events and prizes for social behaviors such as “liking” your Facebook page, writing a product review, or re-tweeting a hot deal. Try experimenting with credits, the new “social currency” that is rapidly replacing points as an acceptable tool for rewarding purchasing and loyalty behaviors. Facebook Credits were used by 16% of virtual goods buyers in 2010. Likewise, virtual items on Facebook, often in the form of virtual gifts, can represent a significant opportunity for brand marketers to connect with site visitors.

The results: According to a Facebook presentation at a BazaarVoice conference in April 2011, when American Eagle Outfitters added the “Like” button to their product pages, Facebook users spent 57% more than non-Facebook users. In that same presentation, it was reported that Ticketmaster generates an additional $5.30 per-shared-link when they add sharing functionality at the end of a transaction. Similarly, clients who implement Resource Interactive’s DCP: Facebook platform have seen between an 8% - 39% conversion rate depending on the campaign, and upwards of 80% fan growth once continuous campaigns have been implemented. While results in any of these situations vary, the important thing to note is that social commerce is still in its infancy and, as experiences improve and consumers expect their social information to follow them, we believe we will see a surge in social commerce.

What Can Brands Do Today?

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Final Thought

Andy KennemerVice President, Social Marketing and Media

Email: [email protected]

Phone: 614-621-2888

Disruptive social technology is on the fast track and the integration of the social graph is following close behind. The purchase of Radian6 by Salesforce in March 2011 is just one example of the consolidation and new technology that we believe we’ll see in the coming year as we approach the promise of 1:1 marketing. Thanks to social, data is richer, more plentiful and better tied to the individual, and the combination of behavioral data with social creates an incredible opportunity for brands to elevate direct marketing, but the world of social can be confusing and fraught with contradictory information about what to do and when to do it. And there are those brands that say they’ll wait to see how it all shakes out, but the risk isn’t in testing and learning and making it easy for consumers to integrate their social graph; the risk lies in not doing anything at all, because the changes that we’re talking about won’t be happening ten years down the road—they’ll be happening in the next two years.

Connect with AndyLet us help you prepare for today with tomorrow in mind.

Social Marketing Delivers on the Promise of Direct Marketing

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Transcript of Social Marketing Delivers on the Promise of Direct Marketing