FreshNetworks Blog

There is a concept in macroeconomics called ‘perfect information‘. In brief (and apologies for missing many details of the theory and debate for a non-specialist audience), this would say that if all consumers know all things, about all products, at all times, then they will choose the best one for them. Taken to its conclusion, this theory would say that the best products would get the highest sales; and conversely the worst products would get no sales. The best products would survive, because they are the best.

Traditionally, in any purchase, the consumer does not have perfect information at all. Buying a TV, for example, there was no way that they can know all things about all products. Their selection was immediately reduced to the ones a particular store had chosen to stock (so they were not even exposed to all products), they got most of their information from either what the manufacturer or the salesperson chooses to highlight (and so they were in control of the information that is known) and, critically, they did not know about future products that might be just about to come out. The power in this sales relationship lies with the manufacturer and the salesperson, and not the consumer.

Of course, there have been many ways that this ‘information asymmetry‘ can be rebalanced. Organisations such as Which? in the UK have long published detailed reviews and analyses of products. As competition in the market grows, consumers have access to more stores in their towns and online that stock more products for them to compare against. But they are still limited by the products they are able to find (and then buy) and in most cases by the information the manufacturers and salespeople choose to release about their product.

Social media has changed this, or at least many would say has the potential to change this. Reviews, the ability to find other people with a product, and the ability to share images, videos and discussions have flooded the market with information from consumers and for consumers. The manufacturers and salespeople have lost some of their advantage and the information asymmetry is yet again rebalanced a little.

But, will all this extra information flooding the market lead to consumers knowing about all products that exist, knowing all information about these, and having this information to hand when they want it? Will social media lead to perfect information in the consumer market?

It is tempting to claim that it will do. Tempting to claim that social media is bringing a revolution in consumer information that will put consumers on an equal footing with manufacturers, salespeople (and marketers). Tempting to claim that social media will lead to only the best products surviving in the market. But this is unlikely to be the case.

What is happening is actually confusing the picture even more than it was before. In the traditional example above, it was clear that the manufacturer and salesperson had more information than the consumer, and everybody knew that. Social media has not led to perfect information, but rather has made things less clear.

Now the consumer does have more information, that is clear and is evidenced in their changing purchasing behaviour. It is marked in some markets (notably hotels with the likes of Tripadvisor) than others, but this extra information is coming and is changing markets. However, this information is not perfect – the consumer still does not know everything about every product – social media is creating two bigger issues with this information:

1. Access to information. The real challenge with all this extra information in the market is the ability for consumers to search for, sort through and find the information they want. As more and more information is out there, tools and organisations that facilitate this will become more important and more valuable.
2. Information accuracy. The problem with many reviews and other information in social media is that there is no way that we can 100% assure its accuracy. Often this doesn’t matter – we use it to help inform a decision and use our best judgement to decide on the accuracy. But perfect information relies on the information we have about a product being accurate. As has been seen (again with many Tripadvisor reviews), this cannot be relied upon.

So social media is certainly flooding the market with information. It is definitely rebalancing the information asymmetry between the manufactures / salespeople and the consumer. And it is evidently changing consumer behaviour and making brands change and behave differently too.

But is social media leading to perfect information? No. It is muddying the waters. Perhaps the biggest danger (or advantage – depending on the point of view you are looking at this from) is that social media is leading consumers to think they have all the information and are making the best choices of the best products because of this. When in reality they may be getting closer to this state, but they are not there yet and will probably never get there.

Image courtesy of Shoot

There was a time (not too long ago) when brands were learning the value of considering how customers are behaving online – learning from them, listening to what they are saying and engaging with them. Now we have reached a stage where this kind of benefit and learning is commonplace. In different ways and for different reasons, brands are listening to, learning from and engaging with people online. And they are getting huge benefits from this.

But with these changes and benefits comes a word of caution – just because it is often easier to find, identify and engage with people online we shouldn’t forget the offline. In fact the real benefit comes from when these two work together.

Social tools allow us to find people, sites and conversations that are influential – on a particular topic or with a particular audience. They allow us to get a more nuanced view about things (people might be influential on a very specific issue only, or for a limited time). And to some extent the automate this process. We can debate the concept of ‘influence’ and the way tools from Kred to PeerIndex and Klout measure it another time (and there is a debate to be had). But what is clear to anybody is that when it comes to the influence somebody has over others the lines between the offline and the online worlds are not just blurred, they overlap.

Let’s look at just two stories (based on work we have done with clients at FreshNetworks) that show the importance of offline to your social media influencer programmes.

1. The critical friend online; influencer offline

We had a community of influencers – a private space where these key customers were being talked to and asked their opinions on new products and services, potential changes to these and about the brand. A small tight-knit community of people chosen specifically on their propensity to recommend or influence others to buy from the brand.

In this mix was one customer who was usually only ever critical – they would be negative about ideas, critical of developments and were not evidently engaging in conversations about the brand externally. We thought this person might have made it into the group by mistake – they were not acting as we expected an influencer or brand advocate to act. It was when we brought these influencers together for an offline event that it became clear what was happening.

This influencer was acting as a critical friend online – they were in fact a huge brand advocate and were critical for this very reason (there is some good academic work on this behaviour). But offline their behaviour was very different. From what they were learning online they had converted people across the town they lived in to our client’s services and were even continuing to support them after they had purchased the product – providing support and advice on upgrades and other things to buy.

So this influencer was not exhibiting the behaviours we expected to see online. But by treating them as an influencer and engaging them online we were seeing huge offline impact.

2. How offline events power online influencer

Many influencer engagement programmes rely on engaging people online so that they carry out an action online. Brands talk to them via their blog or Twitter; from time-to-time they might email or call them so they can speak to them directly. But all these communications are one-to-one and don’t really help us bond or get to know each other.

The value of getting your influencers together offline can help to really kick-start their online activity. In one case we had a group of professionals who we knew had the right connections and were leaders in their own fields online but that were not sharing and talking as much as we might expect. One evening in a pub they could all get to changed that. We talked, exchanged ideas, got to know each other as people. We didn’t sell to them, or use nay gimmicks. We just got to know them, and they us. And when they left that evening their behaviour online changed.

That one evening in the pub had helped us to understand them more and helped them to understand us. Not only did just have the connections and respect online, they also had a real bond with us and would grow into useful influencers for the client online.

In the UK, the Conservative Party and the Labour Party have been the main political rivals since the start of the 20th Century. Today they are vying to capture the hearts and minds of voters on Facebook. But how well are they doing? Here’s a nonpartisan analysis of what these two parties are doing using this social network, and what we can learn from them.

We used the  Engagement Analytics tool by Socialbakers to compare both pages. Audience size for the parties is relatively even, but the Conservatives have certainly taken a lead here.

However, at FreshNetworks we believe that the real indicator of success of a Facebook page isn’t its audience size but the level of engagement. More on that later…

1. Content strategies

Neither the Conservatives nor Labour seem to have developed the type of content strategy that we would always recommend for our clients.

In fact, it appears that both pages seem to be almost purely focussed on sharing links to blog posts and articles on their respective websites. We find that a rich mixture of content, including photos and albums, as well as short, punchy status updates and questions are great for engaging audiences. Our experience is that links shared direct to the newsfeed are often the least engaging of all Facebook post types.

2. Post frequency

Probably the biggest difference between the parties in how they use Facebook is the frequency at which they post content, and as far as we’re concerned, neither is getting quite right.

We’d say that it’s Labour who have got it most wrong however, as they are almost certainly over-sharing. Take a look at the graph above – now, we think there’s nothing wrong with posting every day if the message is right, but 11 posts in one day? Even the most ardent fan of your brand (or in this case political supporter) is going to suffer from at least mild fatigue at all those updates. In total over the three month period we monitored, Labour posted 284 times – an average of three posts a day, seven days a week.

At the other end of the spectrum, is the Conservative party who definitely seem to have a ‘less is more’ attitude to sharing content with their Facebook fans – never posting more than once in a day, and often with several days between posts. Over the same three month period they posted just 10 times.

With a proper content plan to support their social media strategies, we think both parties could probably do with meeting somewhere in the middle on post frequencies. It’s all about putting out the right content, at the right time of day for your audience, without over-sharing, but whilst maintaining an ongoing flow of conversation with your audience.

3. Engagement

So what about the all-important engagement rate?

A simple social graph

The social graph is not a new thing. The concept has been spoken about since at least the 1960s and is simply a way of representing (drawing) all the connections between people. Imagine a small island community of three people with no links to the outside world; you could represent this community as a social graph – showing all three connected to each other. As well as people we might add on other things – places, events, animals – and so use a social graph to show the connections between all of these objects rather than just between people.

The concept of the social graph is not a new thing, and it is not unique to social media. But what social networks do provide is a systematised way of storing these objects and these connections. Facebook is currently the largest social graph in the world but any social network builds a social graph based on what you tell them about yourself, who you connect to and the actions you do.

An example of Facebook, the biggest social graph

Facebook, for example, knows who you are friends with (and who they are friends with). It knows when you and a friend are connected by an event (that you both attend) or by a photo (that you are both in), or by a film (that you both ‘Like’), or by some music (that you have both listened to on Spotify). It then stores this data in a systemised way and so has structured data on you, your life and the way all of the things around you connect. Think of it as a mass of data that can be used to help to define an individual. And Facebook gives brands access to this through their ‘Open Graph’ API.

Benefits for Facebook

For Facebook the benefits of building and storing these social graphs is obvious – the more they know about an individual, the more they can tailor and personalise their experience and the more useful Facebook becomes to them. They can use this data to monetise the network – mainly by selling targeted advertising. They currently earn almost $1.20 a year from every individual Facebook member, and the more data they collect the better then can personalise the experience and the more they can earn. Finally, the quicker they build an individual’s social graph, and the more information they capture in it, the bigger the barrier they build to others being able to come in and compete with them.

Benefits for Facebook members

For the individual members of Facebook there are benefits too. Whilst personalisation can be difficult to get right, there is no doubt that a personlised experience can be much more useful to an individual than a more generic one. It helps you suggest things that they might actually want to read, things you might actually be interested in, and even show you adverts for things you might actually want to buy. The more data you share with Facebook, the better they can personalise your experience and more useful you will find it. Of course, you need to remember to be informed about what you choose to share and why.

Benefits for brands

It is probably fair to say that brands so far have not taken the most advantage of the social graph. Partly this is because many are still experimenting with social media and many think of it just as a way to engage and build their own communities and networks, rather than exploring the pure data benefits that they can get. But applied correctly, brands can use this data to provide a better targeted and more personalised service, and even to help shape products themselves. Whether you are Amazon, using Facebook’s social graph to help you choose products for your friends’ birthdays, or KLM using Facebook and LinkedIn social graphs to help you choose who to sit next to on the plane, there are opportunities across sectors and audience types. In fact the biggest barrier to brands using the social graph effectively is their own creativity and ability to explore how the data they can get from social graphs (including Facebook) can help your business. And the biggest opportunity is to explore ways that data from these social graphs can be combined with a brands own proprietary data to build a bespoke data set that can let you develop products and personalise services for customers.

All brands should be exploring and understanding the different social graphs out there (including Facebook’s) and the data that these can offer. Social media is much more than just a means of communicating to and engaging with people. In fact the possibilities that this kind of data offers can often be much more interesting.

A recent report has revealed that the majority of premium brands are failing to keep up-to-date with the opportunities presented by mobile marketing.

The latest L2 Prestige Mobile IQ report suggests that use of effective mobile marketing practices is currently surprisingly low amongst top brands.

The report looked at mobile applications, mobile sites, mobile marketing (including SMS) and overall innovation and integration, ranking brands included in the study on their Mobile IQ score.

L2 argues that over the next few years, the businesses which will thrive are those willing to engage with mobile marketing techniques. Brands need to develop and optimize powerful mobile commerce sites which are accessible from a range of devices.

According to Forrester’s report in 2011, m-commerce sales are set to quintuple over the next five years, resulting in $31 billion worth of sales by 2016.

However, despite this forecast, a shocking 16% of the brands in the L2 report are yet to produce any kind of mobile app or website. In fact, almost half of the brands studied were ranked as ‘feeble’, meaning that their investment in mobile to date is little if any.

The brands at the top are offering engaging mobile apps, fully optimized m-commerce sites and flashes of creative genius.

Here are the top 10:

These brands have managed to create some really effective mobile offerings which are often fully integrated into their rest of their offline marketing campaigns.

And those languishing at the bottom:

How are these brands letting themselves down with mobile?

The main reason these brands appear to be lagging behind is because they fail to utilise the unique platforms that m-commerce, iPhone and iPad apps offer.

1. Failures in M-commerce

Those languishing at the bottom of the list are there because they don’t capture the quality of their websites in their mobile experience. Generally, across every category measured, mobile sites consistently failed to replicate the features found on their main sites such as video and product search. Another significant issue they face is that they are directly hindering m-commerce by hosting websites in Adobe flash – which iOS does not support.

2. User experience problems on the iPhone

As the report suggests, the majority of the 70% of brands which have iPhone apps appear to consistently fail to make sure that the user experience is really excellent. Less than a third of these apps use the iPhone’s GPS software, 17% of apps utilise the notification system and even fewer use the phone’s camera and gyroscope capabilities.

L2 quotes ABI Research which reports that the iTunes Store ranking algorithm will begin taking into account qualitative information such as user reviews and frequency of usage. As such, there is little point having a promotional app with little functionality in order to simply maintain appearances. Brands need to invest in mobile apps which are valuable to the consumer and which garner great customer feedback.

What’s next?

• Brands need to invest in m-commerce now to take advantage of the increase in mobile usage.
• They need to create a seamless customer experience across a number of devices.
• Mobile apps need to provide real value and utilise the unique functionality of mobile devices.

By 2015, it is predicted that more users will access the Internet wirelessly via a mobile device than from a wired Ethernet connection. As consumers move their purchasing power from computer to mobile, brands cannot afford to be prudish about innovation in mobile marketing.