FreshNetworks Blog

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Presentations from Facebook and MySpace at the Marketing 2.0 conference caused something of a stir – first of all for getting both on stage at the same time, and second as Damien Vincent from Facebook, having only just joined them from MySpace, seemed to momentarily forget who he was working for.

But the content of their presentations was interesting, if only to see how both organisations approach selling their marketing potential to brands. Of particular interest was a set of statistics shown by Olivier Hascot from MySpace, based on surveys in the UK. They found that:

• 40% of Brand Friends remembered the advertiser when shopping either online or on the high street
• 22% of Brand Friends said that they spend more money with the advertiser

These could be impressive statistics for MySpace and would no doubt interest any advertise looking to raise both brand awareness and customer spend in the current economic climate. But I’d like to understand a little bit more about them. I’d like to know if the suggested cause and effect (that being a Brand Friend on MySpace led to greater brand awareness and higher customer spend) is actually the case, or if something else is at play.

As acquisition statistics, these do look impressive. If, as a brand, I could get 40% higher brand awareness among non-customers, and 22% higher spend from new customers by being friends with them on MySpace, there would be no question that this would be a good idea. However, I suspect this is not what’s happening.

Consider a brand advocate or even just a regular purchaser of your brand’s products. I imagine that it is these people who are likely to befriend you on MySpace. It is also these people who are likely to both have your brand at the forefront of their mind when out shopping, and spend more with you as a result. So rather than these two outcomes being a result of a consumer being your Brand Friend on MySpace, it could be that all three outcomes (higher brand awareness, higher spend and being a friend) are a result of them being a regular customer or even a brand advocate.

If this is the case, then it could be that social networks, at least the Fans and Pages bits of them, are strategies for retention of existing customers rather than acquisition of new ones. Would you become a Friend or a Fan of Nutella if you didn’t like that particular chocolate spread? Probably not. You are much more likely to join them in this way if you are already a customer, and probably one that is willing to attach themselves (and their social network profile) to your brand.

So from this perspective, activities in social networks are probably best focused on customer retention. Letting your most loyal or enthusiastic customers become your friend so that you keep your brand at the forefront of their mind and they ultimately spend more with you.

Of course, there may be some brands where social networks are a perfect hunting ground for acquisition targets, but I would expect this to be restricted to more aspirational brands or products. Whilst I might not become a fan of Nutella if I wasn’t already a customer, there is a high chance I might become one of the new Peugeot 308 before I have actually bought one. But this is because I am willing to attach the aspiration towards this brand to my profile. This is probably unlikely with most products.

Read all of our posts based on the Marketing 2.0 Conference here.

Some more reading

• Social network advertising wasted on millennials (thisisherd.com)
• Managing Your Social Networking Efficiently in 2009 (revenews.com)
• ‘Unmarketing’ and giving your community control (thisisherd.com)
• How to Choose the Right Social Networks for your Business (pajamaprofessional.com)
• Chinese Social Networks ‘Virtually’ Out-Earn Facebook And MySpace: A Market Analysis (tsurch.com)

Our last two days on Web Mission 09 ended with a visit to Web2.0 Expo and a couple of great parties (or networking events as I prefer to call them when talking to my wife).

Web2.0 Expo was definitely quiter than I had imagined and the feedback from people who’d been before was that it failed to live up to previous years. Having said that, despite the recession they still managed to get 8,000 Web-heads along.

Some of the best talks included:

1. Content Strategy, What’s real, what’s relevant - a good reminder that content strategy is an important part of any site, from a blog to a fully-blown enterprise social network or community. By Kristina Halvorsen
2. Effective Twitter for Communication and Product integration – including how companies are incorporating Twitter into their products
3. Designing Social Websites, Christina Wodkte – a few tips on how to plan for and design an online comunity or social website
4. What Would the Community Manager do? – Anyone who helps educate around the importance of professional community management is good in my book.

On thursday night the Web Mission crew was lucky enough to be invited to Michael and Xochi Birch’s fantastic new house [founders of Bebo]. If you ever wondered what life’s like after you sell a company for $850M, then you should have been there. It was an amazing place with fantastic views over the bay.

It was a relatively small gathering, yet among a crowd that included Craigslist’s CEO Jim Buckmaster and other notable Valley entrepreneurs, I happened to bump into two FreshMinds One’s to Watch. In case you don’t know, our sister business runs a recruitment programme every year in the UK to uncover the country’s most proimising young talent. We interview thousands of graduates across 10 universities to identify a small list of Ones to Watch. Often they are picked out by their peers as being special because they have done something truely exceptional at university. So it is perhaps not by coincidence that two of them (who quite seperately moved to SF to launch start-ups) happened to be at the party.

For our final night on tour we were invited to the British Consule General’s house in San Francisco. This was yet another excellent opportunity to network organised by UK Trade and Investment. Attendees ranged from successful entrepreneurs (e.g. Max Levchin, founder of Slide) to VCs, press and Silicon Valley “connectors”. I think we all felt that we’d made a few more connections that will help propel our companies forward.

Conclusion and Thanks
The Web Mission was a fantastic way to get under the skin of Silicon Valley in a short-time, to make some very useful connections and to share experiences with other UK entrepreneurs. Thank you to everyone who was involved in making it happen. In particular:

• Oli Barratt
• James Lawn, Polecat
• Orrick, an excellent law firm for helping UK firms do business in America
• Dilhani Palehepitiya, Oracle
• UK Trade and Investment
• Susan Best, of Best PR
• Michael and Xochi Birch
• Alex van Someren

Cover of Mix Tape

As is the way with epiphanies, someone has probably got there first.

I drove home on Friday night, pondering the car stereo as everything clicked into place. I had no idea that someone had already had a very similar idea, expanded it into a book and got it in the shelves.

And a cooler someone too: Thurston Moore. Yes, that Thurston Moore, the one from Sonic Youth.

Anyway, his book, Mix Tape: The Art of Cassette Culture, deals with the aesthetics, the nostalgia, the life-affirming, self-indulgent nature and the optimistic kindness of pouring your musical taste into 60 minutes of delicate black tangley tape, and passing it on to someone special, hoping they understand that all your Smiths and Joy Division tracks mean you’re cool, interesting and in need of a little kiss, rather than terribly depressed and socially awkward…

But expanding on the cassette culture that Generation Y and Generation X grew up surrounded by, you start to see very clear patterns, parallels and even direct copying of the cassette approach in the current explosion of social media, mashups and distribution models.

I give you, C60 = web2.0.

Playlists

Where the mix-tape dominated the 80s and 90s teen experience, now you can demonstrate everything you need to display about yourself and your selection skills with your last.fm playlist. You can use iLike to broadcast your landscape of tastes and find new tastes, and you can use these playlists and tastes to navigate the swathes of potential new friends, and find whole new lists of playmates.

Or, just like tape enabled you to press play and record at exactly the right moment during the Top 40 countdown, now you have Spotify, where a little bit of effort (listening to some ads once every few songs) easily makes up for really handy access to a better back catalogue than yours.

DIY

With the advent of tape, came new possibilities for wannabes of all walks to showcase their stuff. From demos to bedroom-produced ‘radio shows’, the tape removed the financial barriers and opened up possibilities of reaching influencers (DJs, record execs, agents) with proof of talent (or not, as the case often was).

And now we have podcasts. We have blogs. We have online communities and social networks. We have online CVs and online ‘magazines’ that are produced at a fraction of the cost of old media production – even at a fraction of the cost of DIY Xeroxed fanzines.

And as with tape, sometimes the online DIY projects are for the sheer joy of themselves, of the doing, the making, the sharing, and not a platform for promotion at all – something once made possible by the low entry price of tape, and latterly by free open-source platforms and tools.

Creating for free and sharing gratis comes naturally to our generation, because this is how we have behaved musically for decades.

Distribution and copyright

As with VHS to the adult industry, the arrival of tape immediately democratised music distribution. And with the ability to replicate and share, came copyright fear and loathing. Those with the copyright, of course, were very nervous – downright angry in many cases – that a kid with a tape-to-tape stereo could make copies and distribute the originator’s work with no financial benefit ever reaching the original copyright holder – and the middlemen.

Fast forward 20 years, and you have a recording industry very late to the web party because it spent most of the early web days eye-bulgingly and vein-poppingly angry.

Control and opportunity

With tape before, and then with online file-sharing (starting with Shawn Fanning‘s Napster in 1999), those who previously held all the cards (licensees, controllers of hardware, controllers of radio waves etc) saw the challenges and panicked. And they got angry.

They didn’t want to relinquish control, and this anger clouded their vision so they didn’t see this expansion of distribution as an opportunity. They started to sue their customers. Yet here was a technical development that could turn fans into free sources of promotion; amateur bootleggers becoming ambassadors, spreading the word.

Since the latter half of the decade, we’ve started to see a tipping point in the music industry’s approach to online. It’s less of a curiosity, with the canniest players seeing iTunes and last.fm as they should be seen: a distribution network and a promotional platform that helps to push people into a state of discovery.

Thanks to the humble cassette, the general public was shown how to be generous, creative and innovative, expecting anything less in the digital age is trying to shove a cork in a bottle that’s already way out at sea.

It’s been a busy week at FreshNetworks, with Charlie on Web Mission 09 in San Francisco and me in Paris for the Marketing 2.0 Conference. A great chance to meet people and also to learn, and this week’s Required Reading for the team is one of the presentations given in Paris.

Wolfgang Lünenbürger-Reidenbach from Edelman presented about word-of-mouth and why it is important to brands. What I like most about this presentation is the emphasis that it places on word-of-mouth not being about technology. Too often, discussions on word-of-mouth revert to the mechanisms by which people hope this will be transmitted – by widgets, social networks or online communities.

Technology is, of course, important, but word-of-mouth is actually a social function. It’s about people trusting and respecting your brand so much that they are willing to put their reputation in line with it – recommending it to friends and peers. It’s about people doing your advertising for you and about helping you gain penetration in markets you could never reach effectively with traditional advertising. And perhaps most importantly, it’s about the outcome, not the process. Word-of-mouth is only useful when people act on what they hear.

Some more reading

• Branding in the age of social media (freshnetworks.com)
• Engage different consumers in different ways – why segmentation is key (freshnetworks.com)

Online communities are about engagement, between consumers and between them and the brand. They bring huge benefits for and brand or organisation, from rich insights through innovation and ideas to word of mouth and advocacy. The question we are often asked is why the consumers would take part. Why would they take part in your online community.

My presentation at the Marketing 2.0 conference in Paris earlier this week addressed this very issue and discussed different ways in which you can incentivise people to take part and which of these we have found to be most successful at FreshNetworks.

1. Pay people to take part

We’ve discussed incentives in online communities before and the simple truth is that if you are building an online community that is about long-term engagement and real dialogue then they don’t necessarily have the impact you want. Online communities are about social interactions and social dynamics. Once you pay people or incentivise them to take part (by giving them, for example, vouchers or entry into a prize draw for completing a minimum number of actions each month) you shift the member’s mindset from this social one into a market one. They make a judgement on what you are giving them and how much effort they are willing to expend for this. And the end result is typically that you don’t get the kind of involvement that you want. Some people may do slightly more, but these will be fairly transactional contributions. And you may even dissuade some people from doing as much as they would otherwise.

2. Feedback from the brand

There is a definite benefit in online communities to real feedback from the brand. You are not leading the online community but taking part in it alongside all of the other members. With this in mind you should take part and respond to people in your online community. Feedback is essential and an online community won’t work, won’t grow and won’t meet your objectives if you don’t take part. It should be seen as a normal part of community management, and the way that you reward people for their comments and contributions. They want to know you’re listening and responding so do this.

3. Using your brand’s expertise

Over and above the importance of listening and responding, there is a real power of using the expertise that is inside every organisation to give something back to your community members. All organisations are experts in something – you may be an insurance company that has a lot of information to help home-owners, or you may be a travel firm that has expertise in travel and making the most of your holiday. Whatever your brand and whatever your product you will have expertise that your customers can use. And there is real power in this. By putting yourself forward as experts you are giving people an insight into your brand and an opportunity to engage directly with you. By answering questions from community members, you are incentivising them within a social dynamic rather than giving them money and making their behaviours more transactional. And video brings all of this to life a lot more.

At the conference, I presented a video we have made to showcase how you can use expertise in a community, and you can see this here:

Social media in action – Using expertise in online communities

So our advice is simple. Don’t incentivise people with money or anything equivalent to this. Rather involve yourself in the community – give them feedback and leverage your internal expertise. It’s the best way to launch, grow and build a real online community.

Read all of our posts based on the Marketing 2.0 Conference here.

Some more reading

• What Socrates Can Teach You About Social Media (jessenewhart.com)
• The Business of Community Networking Conference (blogstring.com)
• The Community Golden Hammer (troysabin.com)