Start-Ups ReportTHE ENGAUGE 2011

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GetGlueSocial Check-ins for Couch Potatoes:What’s the stickiest mix of rewards?A conversation with CEO Alex Iskold.

BlueCavaBehavioral Registry Tracks Devices, not People: Does your iPhone have a bad reputation?A conversation with CMO Dean Harris.

FigmentThe Social Network for Literary Teens: Can Figment redefine the book market?A conversation with CEO and Co-founder Jacob Lewis.

Crimson HexagonSophisticated Tools for Social Intelligence:Can machines translate consumer sentiment?A conversation with CEO Scott Centurino.

PlacePunchBreaking Down Location-Based Service Silos: Can’t decide between Foursquare and Facebook Places?A conversation with CEO and Co-founder Adam Steinberg.

Excerpted from The Engauge 2011 Digital Outlook. Download at www.engauge.com/2011-digital-outlook.

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GetGlue

Described as the “single most useful social networking tool” by Wired, GetGlue.com allows fans to check-in to TV shows, movies, music and books. You can even check-in to a bottle of beer. In other words: location-based marketing for couch potatoes.

The 700,000 members of GetGlue.com earn rewards, post reviews and find out what’s generating buzz—and what’s jumped the shark—in their social networks. GetGlue.com also generates suggestions for what to watch, and provides links to like-minded “taste neighbors” who share your preferences. The company has attracted a number of media partners, including FOX, Hachette, HBO, Penguin and Sony Pictures.

What’s the stickiest mix of rewards?

A conversation with CEO Alex Iskold.www.getglue.com

Social Check-ins for Couch Potatoes

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GetGlue

Q: It’s been said that GetGlue.com is like Foursquare or Gowalla for entertainment, but with one major differentiator—a really nice feedback loop. What does that mean? How does it work?

A: GetGlue.com includes not only the ability to check in, but also lets people build a taste profile and receive recommendations for new entertainment that they may enjoy. Think of GetGlue as an amplifier or a router of entertainment through the existing social plumbing. When a person checks in or earns a sticker, that message goes to Facebook and Twitter and reaches their friends and followers. Last night was the Dexter finale, and within two minutes, there were literally 1,000 check-ins on GetGlue, reaching nearly a million people on Facebook and Twitter in one shot. That’s a powerful mechanism.

Q: Which is more important—game mechanics or good recommendations?

A: That’s a great question. If the user input consists of a check-in or a “like” then the question becomes: how many delights and rewards can we provide in exchange for that single action? Seeing your friends and what they’re doing is a form of reward. Receiving recommendations, and official stickers from brands, and the discount attached to those stickers—there’s a spectrum of rewards that we provide. There’s not a single thing that appeals to everybody. Recommendations can be a tricky thing. People don’t want to be overwhelmed with suggestions.

Q: Where, when and how will social TV—with its exploding array of mobile apps—meet interactive TV? Do platforms like GetGlue.com belong on Google TV?

A: Why can’t we just wire social into TV sets? Let’s say we’re watching a TV show together and there’s a button that brings up “friends.” Well, is it my friends or your friends? Are we going to be signing in and out? It feels incredibly awkward.

“GetGlue.com includes not only the ability to check in, but also lets people build a taste profile and receive recommendations...”

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GetGlue

Q: Which is why the social TV space exists as apps on iPhones, Androids and iPads. The so-called “second screen” lends itself very well to providing customizable experiences for people to interact with the content they’re consuming.

A: Set-top boxes will eventually be collaborating with second-screen devices to authenticate check-ins. Over the next year we’ll be seeing more integration.

Q: Are media companies and brands looking beyond the check-in for deeper engagement in social TV?

A: Last weekend, a VP of Bravo TV flat-out stated in an article in Mashable that the network has seen a 10% lift in ratings from social media. That’s huge. And all of the major brands we’ve partnered with are delighted with the numbers they’re seeing.

For advertisers, the equation that’s about to be executed is incredibly interesting. Everybody who checks into an episode gets a sticker; that sticker has a discount attached to it, and those rewards can be tracked and measured. You can find out how many people actually went and transacted.

Q: You’re facing competition from Apple Ping, Miso, Philo and a range of new start-ups. What’s coming next for contextual networks in 2011?

A: If there is no competition, then there is no market. Our biggest play will be to have our partners embed our check-in technology—and our reward and redemption engine—to become ubiquitous across every major entertainment channel. But to cross the chasm, we’ll have to execute flawlessly.

“Set-top boxes will eventually be collaborating with second-screen devices to authenticate check-ins.”

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Crimson Hexagon

With technology developed at Harvard’s Institute for Quantitative Social Science, Crimson Hexagon provides social media analysis and real-time reputation monitoring for agencies, brands and media outlets. They’ve developed sophisticated capabilities beyond first-generation “buzz” tools to isolate meaningful signals amid the background noise, helping marketers learn how consumers really feel about brands and competitors.

Crimson Hexagon consistently seeks to find and refine robust ROI-based metrics for social campaigns. Founded in 2007, they recognized years ago that what’s easiest to measure in social networks doesn’t always correlate to what contributes most to brand equity or the bottom line. As CEO Scott Centurino points out, it’s essential to grab the most relevant numbers from the datastream, and let the rest flow past.

The company name alludes to a 1941 short story by Jorge Luis Borges, The Library of Babel, in which the crimson hexagon is a hidden room with a magical book that serves as a translation key for all the books in an infinite library. The Cambridge-based company’s algorithms perform a similar function—compiling, crunching and clarifying sentiments that would otherwise remain indecipherable and lost in the digital babel of social media.

A conversation with CEO Scott Centurino.

www.crimsonhexagon.com

(Disclosure note: Engauge partners with Crimson Hexagon to provide analytics services to its clients.)

Can machines translate consumer sentiment?

Sophisticated Tools for Social Intelligence

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Crimson Hexagon

Q: What metrics should brands be watching in social media?

A: Brands should be focusing on the metrics that map to their existing consumer-focused metrics outside of social media. Not all consumer metrics will have a direct match, but with the right tool(s) it is possible to get to a wide and nuanced range of insights. For example, Crimson Hexagon has customers looking at measures of purchase intent, consumer-driven promotion activity and wants/needs identification. Of course, brands will often still start with mention volume and basic tonality of sentiment, but we caution our customers to make sure that they are analyzing only (and all of) the relevant volume for their analysis.

Q: What is the future of digital analytics in 2011? And beyond?

A: In 2011, we see brands demanding a move beyond mention-counting and simple sentiment to more sophisticated and contextually relevant analysis. We like to refer to this as the move to Social Intelligence. Conversational volume and tone are a good start, but getting to the why behind them is how real business value is achieved from analyzing social media. Beyond sentiment drivers, measuring motivation and intention creates the opportunity for the use of social media as a leading indicator of business performance. Social media analysis providers will also increasingly promote their growing geographic and demographic capabilities.

“We see brands demanding a move beyond mention-counting and simple sentiment to more sophisticated and contextually relevant analysis.”

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Crimson Hexagon

Q: Is it possible to automate social media monitoring—and, if not, why not?

A: Purely automated social media monitoring is possible, but real analysis requires human-directed automation solutions to produce usable data and insight. No technology can “proactively” automate human judgment, and without that judgment in the mix, one should be extremely cautious about how one uses such purely automated solutions. However, a solution that does allow the human element in the analysis while still providing robust automation can deliver on the promise of Social Intelligence and be used to guide strategic decision making, both in the social channel and, more importantly, outside it.

Q: What does social media mean for the future of consumer research?

A: Social media is already becoming an important data source for consumer research, based on the incredible advantage that comes from having raw data already available for analysis on a moment’s notice. This allows for faster, more efficient research that can be performed iteratively. The unsolicited nature of this data also makes it increasingly attractive to those looking to uncover real consumer insights. Forward-thinking brands and agencies already use Social Intelligence to produce accurate, more immediate results than traditional research. As the state of the art of social research advances, we fully expect to see increasingly creative combinations of social and traditional research drive consumer research to a whole new level.

“We fully expect to see increasingly creative combinations of social and traditional research drive consumer research to a whole new level.”

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BlueCava

BlueCava captures the unique digital fingerprints of Internet-connected devices. The service can keep tabs on your iPhone, Xbox and Google TV, then triangulate among them to provide relevant and sequential messaging. Their goal is to identify nearly 1 billion devices—around 10% of the world total—within the next year.

Online device-identification measures are difficult to detect and disable, even for the most tech-obsessed consumers. Because the sniffing occurs at both the browser and hardware levels, there’s no single browser-based security setting, like disabling cookies, that can easily circumvent surveillance across the expanding network of BlueCava-enabled sites and online ads. Yet the company allows device-owners to opt-out of being tracked from site to site—and claims it’s the first in the industry to do so.

The roots of the technology can be traced to anti-piracy efforts in the music business. Today it’s being primarily used in two ways: improving ad-targeting and fighting online fraud.

A conversation with CMO Dean Harris.www.bluecava.com

Does your iPhone have a bad reputation?

Behavioral Registry Tracks Devices not People

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BlueCava

Q: Why track—and target—machines instead of people?

A: Look at the amount of device proliferation. There are 10 billion devices versus 7 billion people. This can be a useful way for companies to look at things.

Q: Most Internet-connected devices have their own unique identities—serial numbers, SIM cards and so forth. But how can a device have a reputation?

A: We’re providing what is, in effect, a universal identifier that helps brands target better. One of the former ways brands did this online was through the use of cookies. But cookies get stale, they crumble. They expire and can be deleted. Our fingerprint is persistent. If a device is used repeatedly to commit fraud, that’s important. On the other hand, if a device makes a number of legitimate online purchases, then an e-commerce site might want to provide a premium service.

Q: BlueCava scrubs names, physical addresses and email addresses from the data. Doesn’t that defeat the purpose? Is my iPhone really more important than me?

A: We do take out the PII—the personally identifiable information. We’re not tying your iPhone to you. What’s important is how the device behaves. Businesses can then decide whether to do business with that device or not.

The term in the data world is “householding.” Data companies sell household data, but

it’s not always relevant, and it’s often quite static. We can help. We can talk about the interconnectivity of devices within the household and how those devices link to other devices.

“We can talk about the interconnectivity of devices within the household and how those devices link to other devices.”

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BlueCava

Q: What’s the upshot for marketers and brands?

A: In the world of online ads, billions and billions of impressions are being bought and sold. But advertisers and marketers are not always getting what they pay for. We can tell whether a machine is acting like a bot, or acting like a human.

We have a client that spends several hundred thousand dollars per month on Google

AdWords. They’re paying around $25 per lead. Every day, their competitor clicks their ads 1,000 times, just to give them grief. We were able to show that, in fact, those clicks were coming from the same computer in their competitor’s headquarters. Our client could then go back to Google and prove they weren’t legitimate clicks, so they shouldn’t be paying for them.

Q: Can concerned consumers take effective countermeasures to prevent their devices from being fingerprinted?

A: They can’t opt-out of having their device identified. But we do have an opt-out policy for tracking. Being tracked means having your device identified as you move from one site to another. We’re proud of our privacy policy. It’s honest and transparent.

Q: What’s the likely impact of Do Not Track?

A: If you take the analogy of the Do Not Call list, marketers can’t determine to call or not call a number unless they know the phone number. We think BlueCava can provide a similar service in the online world. You can’t track, or not track, a device unless you know its identity. There’s been no universal way of doing that until now.

“In the world of online ads, billions and billions of impressions are being bought and sold. But advertisers and marketers are not always getting what they pay for.”

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PlacePunch

Can’t decide between Foursquare and Facebook Places?

Breaking DownLocation-Based Service Silos

PlacePunch enables brands to think bigger—with a broader perspective and better analytics—when building their own location-based loyalty programs.

Launched in September, PlacePunch provides online tools for managing and integrat-ing location-based marketing programs across multiple platforms and venues. The suite brings together Foursquare, Facebook Places and similar services under a unified dash-board, freeing marketers from the constraints of exclusively focusing on one channel at a time. PlacePunch also coordinates personalized brand messaging via Twitter, email and online couponing.

A conversation with CEO and Co-founder Adam Steinberg.

www.placepunch.com

(Disclosure note: Jeff Hilimire, chief digital officer at Engauge, invested in PlacePunch

through a start-up incubator.)

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PlacePunch

Q: How does it work?

A: We enable our clients to create branded location-based loyalty programs where customers can earn rewards and points for check-ins. Marketers can use any service they want; we’ll handle the tracking, the signups, the messaging, the redemptions and deliver the rewards. We help them manage their programs and measure the results.

Q: How difficult is it to integrate and manage multiple location-based platforms without using tools like PlacePunch?

A: A customer might check-in once at a restaurant running a Foursquare promo, for example, and receive a free appetizer. But that’s just a starting point.

We help brands run multiple segmented campaigns. We can integrate analytics,

messaging and rewards across platforms and let brands know where their customers are coming from—for example,10% on Gowalla, 60% on Foursquare and so forth.

If you’re a brand, there’s a great deal you can learn about your customers through check-ins. Not only whether they visit your stores, but what else they like to do. You can build preference sets, better visions of your ideal customers. You can use messaging to interact with them at the right time and at the right place.

“We help brands run multiple segmented campaigns. We can integrate analytics, messaging and rewards across multiple platforms…”

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PlacePunch

Q: The latest version of Gowalla’s location-sharing app allows users to check-in to other location networks. Will the others soon follow suit?

A: Several others, like Loopt, have also integrated with Facebook. They’re saying, basically, “Facebook has hundreds of millions of users. Let me just tap into that user base.” They’re focusing on providing added-value services beyond the check-in. Gowalla, for example, has great city guides. They’ve got a great application. But they’re ceding ownership of their customers to Foursquare and Facebook, and that’s a dangerous play on the consumer side.

Q: Are check-ins a more reliable indicator of ROI than other commonly used social and digital measures such as the quantity of brand followers, likes and friends?

A: It depends on the nature of the business. For retailers or restaurants, bringing in additional consumers is often directly related to bringing in additional dollars. For a CPG brand, on the other hand, location-based check-ins may not be as valuable, but it’ll be interesting to watch what happens with product check-ins. We don’t really know yet what their value will be.

Q: What’s ahead in 2011? When will location-based services go mainstream?

A: I think we’re approaching a major tipping point. By the end of 2011, half of all U.S. consumers will own a smartphone. iPhones can now be purchased for $50. I read recently that 30 million people have used Facebook Places. Foursquare is adding 150,000 new members per week. Things will continue to progress very quickly [in location-based marketing] in 2011.

“I think we’re approaching a major tipping point. By the end of 2011, half of all U.S. consumers will own a smartphone. iPhones can now be purchased for $50. I read recently that 30 million people have used Facebook Places.”

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Figment

Can Figment redefine the book market?

The Social Networkfor Literary Teens

Within five days of going live in December, Figment.com drew 10,000 registered users. The social network for the literary teen allows for sharing, reading and reviewing of original works across all genres, from fiction to memoir.

Founded by two veterans of The New Yorker, Figment is an attempt to translate for American audiences the Japanese pop-culture phenomenon of the cell phone novel—a breakout category of romance and fantasy fiction written by young women on their mobiles and initially appearing on media-sharing sites. More than a million titles have been published, some even catapulted to the top ranks of Japanese literary bestsellers. “The first literary genre to emerge from the cellular age,” is how Figment co-founder Dana Goodyear dubbed the movement.

Before launching the site, Ms. Goodyear and Jacob Lewis, the site’s co-founder, spent several months visiting schools, libraries and literary organizations across the country to speak with teenagers, recruiting them to participate in a beta version.

A conversation with CEO and Co-founder Jacob Lewis.

www.figment.com

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Figment

Q: You attracted 10,000 members in the first five days. What’s the appeal?

A: It’s an inviting space as a reader, not just as a writer. There are books on the shelf that you might want to read—a story by your friend or a novel that just came out from a major publisher. Putting those in the same place is important, because kids today don’t draw a line between their own creativity and the stuff they find in a bookstore.

Q: Do teens have fundamentally different expectations about reading and writing?

A: When I was 17, I wrote a letter to Philip Roth. He didn’t write back. Not surprising, really. Back then there was no expectation that a well-known author would respond to readers. That’s not true now. There’s been a fundamental shift. When kids today interact with the authors they love, they expect a response. They demand a response. Reading isn’t a passive experience for them; it’s a social one. People want to participate. They’re writing things, reading things, sharing things. We think that experience could redefine the marketplace for books.

Q: What’s the response from publishers?

A: As bookstores die and content goes digital, publishers are trying to find new ways to market themselves. Publishers are very wary about eBooks. But there’s a deeper and more fundamental problem with publishing, about the way content is created and shared. It’s not being done with the full participation of readers and authors together. We think publishers will be able to discover heuristic information about how people are reading, which could help them make decisions about what to publish in the future. These really are the future readers and they’re a group that publishers have never had access to. Publishing has a very bad hit rate. They lose out on 70% of their books. I think we could have an impact on their performance.

“As bookstores die and content goes digital, publishers are trying to find new ways to market themselves.”

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Figment

Q: What about advertising?

A: Right now, we offer an integrated marketing platform for publishers to market individual titles to users of the site. There are no banner ads, but we can facilitate ads within the pages of the book excerpts—interstitial disruptive ads that appear on the pages. So far, we have deals with eight to ten publishers. We’re also very interested in looking into brand marketing. We believe that brands that truly want to understand the millennial generation will come because of the activity level on the site.

Q: What did you learn from talking to teenagers during the six-month closed beta stage?

A: We were holding our breath for six months—spending time and money to watch and learn from these kids. But we would have failed without it. A lot of the things we built, initially, were not very useful. We’d built a lot of clichéd social networking tools—letting visitors “friend” somebody, creating a “wall” for comments. You learn very quickly you’re never going to replace Facebook.

“We believe that brands that truly want to understand the millennial generation will come because of the activity level on the site.”

About EngaugeOne of the nation’s largest independent agencies, Engauge leverages creativity and technology to develop transformational ideas that connect brands and people. Engauge guides a growing roster of clients on the path to realizing the power of digital channels by focusing on driving results and sustainable growth for brands. The agency’s client roster includes Nationwide Insurance, DAD’S Pet Care, The Home Depot, Best Buy For Business, Chick-fil-A, Brown-Forman, Food Lion, Van Gogh Vodka, NGK Spark Plugs, Perkins, IHG, UPS, Logitech and more. Engauge, which has offices in Atlanta, Austin, Columbus, Orlando and Pittsburgh, is a portfolio company of Halyard Capital.

For more information, contact:Patti ZieglerChief Marketing Officer614.573.1472pziegler@engauge.com

Engauge375 North Front StreetSuite 400Columbus OH 43215engauge.com

This report is an excerpt from The Engauge 2011 Digital Outlook.

Download the full report at www.engauge.com/2011-digital-outlook.

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