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Our goal was to test the effectiveness of social media marketing tactics in driving value for an online retailer
• Based on cutting-edge research on the science of social networks, Social Influence Marketing aims to help companies use social influence to spread messages through networks to drive product purchase or consideration
The concept
• A well-defined learning agenda will enable us to rapidly prototype, test, and iterate our service offering
• We have a customer, Hex Goods, which will allow us to analyze marketing tests to determine the optimal channel, language, and tactics needed to drive desired behaviors
The goal
• Regular updates on test plan, execution, and learnings • Final slide deck synthesizing our learning agenda, our findings, and
ultimate recommendations The output
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The mystery-heuristic-algorithm framework guided our learning agenda
• Is social media an effective marketing channel?
• How do we identify influentials within a network?
• How does a network’s structure affect our ability to spread a message?
• How do messages in a social network drive purchase or consideration within a targeted demographic?
Mystery
Heuristics
Algorithm
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Our customer:
Hex Goods is an online boutique that features new and unique products from independent designers. Hex Goods launched in November 2011 with a collection of products for Christmas, followed by a Valetine’s Day collection in January/February 2012. By taking the concept of a small local design boutique and adding the elements of good online retailers (free shipping, a generous return policy, and a satisfaction guarantee), we hope to build a brand in a traditionally fragmented market.
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Social media is a great marketing tool if used effectively; however it requires a real investment of time and energy to bear success
• Social media allows for n-th degree targeting
• Low barriers enable broad seeding of messages
• Key is finding entry points into relevant networks for the target market
Social media has powerful targeting
capabilities
• Startups are natural echo-chambers
• Expand network diversity by: o Adding team
members with diverse networks
o Earning publicity o Just ‘getting out
there’
Network diversity is critical
• Endorsement by community members lends social proof
• Target based on behavioral demographics, not just traditional demographics
• Communicate through appropriate social channels for maximum effectiveness
Social proof and relevance are key to engage communities
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Embed analytics to enable rapid learning from testing campaigns and understand how marketing efforts are influencing the network system
Target high-impact network variables, drivers, and feedback loops for marketing efforts
Create a network systems map to identify factors and loops that positively and negatively influence key business metrics
Define the key metric or metrics that drive economic outcomes for your business
Social media marketing manual for an entrepreneur
Test, measure, and
iterate
Design testing
campaigns
Build systems map
Define metrics
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3
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Establish proper metrics for the SIM campaign 1
Guidelines
1. Easy to measure
2. Links to broader business goals in a measurable way (eg, awareness, profit)
3. Useful with small sample sizes
4. Likely to be driven directly by marketing campaign
Potential metrics
Easy to measure
Links to bus goals
Useful for small samples
Driven by marketing
Purchases ü ü ü
Newsletter sign-ups ü ü Referrals
ü ü ü Return Visits
ü ü Engaged Visits
ü ü ü ü Visits
ü ü ü ü
Example of metric selection process for our client
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Create a network systems map to identify factors and loops that positively and negatively influence key business metrics
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2
Guidelines
1. Develop systems map focused on optimizing your key metric
2. Determine the key secondary metrics
3. Determine other key variables that you can influence
4. Determine the relationship between variables
5. Identify the key feedback loops that exist
6. Identify among the loops, which has the greatest impact on the key metric
Examples from our map
1. Focus on engaged visitors
2. Return visitors, newsletter sign-ups, purchases, attractiveness, awareness, referrals, etc
3. Advertising, value proposition, uniqueness, incentives, etc
4. Incentives drive referrals, referrals drive publicity
5. Engaged visitors-referrals- awareness-new visitors- engaged visitors
6. Referral loop, purchase loop, incentive loop, etc
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Example network systems map from our client
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Feedback Loops to focus on: • Referral loop • Investment loop • Awareness loop • Publicity loop Not focused on: • Return loop
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Design campaigns: Target high-impact network variables, drivers, and feedback loops for marketing efforts
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Guidelines
1. Determine the top priority loops and drivers relevant to your key metric
2. Determine the appropriate channels based on
• Relevance
• Budget constraints
• Impact on systems map
3. Design pilot campaign
4. Iterate campaigns based on results
Our campaigns
• Facebook campaign
• Google AdWords
• Blogs
• Referral program
A
B
C
D
E
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Test measure iterate: Embed analytics to enable rapid learning from testing campaigns and understand how marketing efforts are influencing the network system
10 Adapted from http://www.startuplessonslearned.com/ & Eric Ries talks
Ideas
Develop
Learn
Data
Build
Measure Measure faster
Learn faster Build faster
Split tests Customer interviews Customer development Root cause analysis Robust advisory board Hypothesis based testing Simulation testing
Focus on MVP Outsource Iteration
Free & open source software Stage-‐gates
Split tests Measure what matters Customer-‐back KPIs Tie results to profitability
Focus on analytics Real time analysis Active marketing Quantify results
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Example from Hex Goods 4
• Hypothesis-based testing: All testing campaigns were grounded in a detailed hypothesis about outcomes
• Simulation testing: Built robust network systems map to understand which potential drivers could have the highest impact on our target metrics
• Measure what matters: Chose profitability-connected metrics from the onset • Quantify results: Google Analytics allowed us to track connect source of
visitor to site activity • Split tests: Horse-raced facebook campaigns to determine effectiveness
• Iteration: Tested four different marketing campaigns (AdWords, facebook1, facebook2, Z-ferral)
• Free & open-source software: Used Google Analytics to track visitor behavior; Venisim for network maps; Gephi & NodeXL for twitter analysis
Learn faster
Measure
Build faster
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Campaign Details
Description Feedback loops meant to drive Effectiveness
Facebook A
3 targeted facebook ad campaigns
Referral loop, Publicity loop, Awareness loop Investment loop
Google AdWords
BCampaigns focused on gifting and product-specific searches Awareness loop
Blogs C
Targeted design blogs to write stories about Hex Goods Publicity Loop
Twitter D Targeted twitter analysis to
determine optimum communities to follow and promote to
Publicity Loop, Awareness Loop, Referral Loop
Referral E
Developed affiliate program to incentivize referrals
Referral Loop, Publicity Loop
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Blogs
Source Campaign
Geography
Targeted connections
Oh, the Lovely Things
Nest Eagle Rock
Inventables
Cost per visitor ($)
Cost per engaged visitor
Bounce rate (%)
Marketing ROI
0.38
0.86
0.61
0.45
1.02
1.11
0.15
0.08
1.64
0.45
1.60
1.79
9
93
93
36
25
43
45
48
83
83
83
60
0.28
5.66
12.68
0.67
0.71
1.36
1.96
0.15
9.68
2.65
9.42
4.46
Campaigns that were both relevant and had an element of “social proof” were most effective in driving engaged traffic
Untargeted connections
LA in the Bay
MBA Social
Wall posts
Google AdWords
Headband
Kindle Fire
Affiliate program Zferral
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Facebook ads were one of the highest return options, but only when we used the social graph
▪ Geography: Targeted standard Facebook ads to 10 zipcodes that represented our target market
▪ Connections: “Sponsored stories” presented to people who are friends with someone who “likes” Hex Goods
▪ Targeted connections: “Sponsored stories” presented to people who are friends with someone who “likes” Hex Goods, and also falls in our target demographic
Campaigns Learnings
▪ Geography campaign performed poorly; click-through rates were low, CPC was high, and the target population was very small
▪ Connections campaign performed very well; most clicks and connections came from friends of friends
▪ Targeted connections performed okay; limiting to target demographic put viewers outside of the friend circle
▪ Facebook campaigns drive additional value through “likes” that open up a marketing channel (wall posts are a very low cost channel)
A
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Geography campaign results
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A
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Connections and targeted connections campaign results
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A
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Google AdWords performed poorly, and led to particularly high bounce rates, making them an expensive advertising option
▪ Gift campaign: Hex Goods general advertisement to people searching for gift-related keywords
▪ Product-specific campaigns: Product-specific advertisements to people searching for keywords related to those products
Campaigns Learnings
▪ CPC on Google AdWords is driven by the competition; who else is bidding, and how much can they afford to pay?
▪ Winning on Google AdWords means having the highest customer LTV and therefore the highest bid price
▪ Therefore, Google AdWords is an ineffective tool for cash-poor start-ups who don’t have customer histories and therefore little understanding of customer LTV
▪ In addition, bounce rates from Google AdWords are extremely high
B
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AdWords campaign results
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B
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Blogs were an effective marketing campaign, especially when they were targeted to the right audience
▪ Oh, the Lovely Things: Featured on a design blog that frequently features products from Etsy designers
▪ LA in the Bay: Featured on a general women’s lifestyle blog from LA; contest offering a free Hex Goods product
▪ MBA Social: MBA lifestyle blog
▪ Nest Eagle Rock: Personal blog of one of my designers
▪ Inventables: Blog for a local Chicago start-up
Campaigns Learnings
▪ Blogs and publicity outperform advertising by a significant margin
▪ Relevance is extremely important in driving traffic; design blogs dramatically outperformed other blogs
▪ Because the cost of publicity is mostly time, blogs are a great resource for time-rich, cash-poor start-ups
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Blog campaign results
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C
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Pinterest is a great way to be seen, but did not drive significant referral traffic
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140 pins
C
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A twitter network analysis is helpful in determining which users to invest in establishing relationships with
▪ Analyzed three key influentials on twitter with a direct reach of over 920k design-interested individuals
▪ Evaluated network structure to find brokers and ‘gate keepers’ that would impact target’s f-ratio*
▪ Assessed network makeup to better understand the communities our targeted influential follows
Analyses Learnings
▪ Twitter analysis helps determine which of the potentially influential users to target ▪ Just counting followers is
insufficient – followers must also be a relevant demographic
▪ For targets with a very low f-ratio*, attempt to establish relationships with its follows that have a high ratio ▪ A high ratio indicates that the
individual is more likely to reciprocate your follow request
*: F-ratio is a measure of “following-ratio” or ‘approachability’, defined as following relations divided by follower relationships
D
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The importance of the f-ratio
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Understanding the f-ratio
The f-ratio is defined as a twitter user's number of following relationships divided by the number of follower relationships and is an estimate of a twitter user's likelihood to reciprocally follow you. Furthermore, an f-ratio reveals the type of twitter user the individual is:
• A high f-ratio (1:many) indicates that the individual uses twitter to broadcast information, as such are very influential. These users tend to be celebrities, companies, and established brands.
• A low f-ratio (many:1) indicates that this user is primarily a consumer of information. Many individual, passive, and unengaged users fall into this category.
• A neutral f-ratio (1:1) indicates that this user may regularly engage in a dialogue with the community. These users are often respected bloggers, marketers, and smaller brands.
Summary of our analysis
Twitter user Description f-ratio Follower relevance @designmilk Popular modern design blog .0014 Low
@thecoolhunter Trendspotting blog .003 Low
@dwell Modern home goods and interior design magazine and blog
.0018 High
@dwell employees Employees of dwell corporation .34 High
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designmilk’s relationships are primarily one-way and lie outside of our target demographic
# of followers: 470k f-ratio: .0014
Companies & institutes
Interior design
Broad design, design blogs, product design
D
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thecoolhunter’s had a diverse network and a high f-ratio; however, its network lacked communities of the target demographic
# of followers: 172k f-ratio: .003
Celebs & bloggers
Ad & marketing agencies
Music
Style & fashion
Architecture & design News, travel, info
D
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dwell’s network had a small communities of our target demographic and a large community of current and former dwell employees
# of followers: 355k f-ratio: .0018
Interior design
Architecture Employees
Museums & institutes
Blogs/websites
D
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dwell’s employees represent an ideal entry point to dwell’s network; they were often re-tweeted by dwell and had an average f-ratio of .34:1
Employee community of dwell’s network
D
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Referral program through Z-ferral was not as effective as we had hoped for driving incentivized referrals
Ambassador Program: • Developed an incentivized referral
program that required sign-ups by existing visitors
• Utilized zferral embedded software to award 10% “cash reward” for any purchase driven by referrals
Hello-bar: • Implemented simple “hello bar” on
the top of the site to inform visitors about the referral program
Facebook mini-campaign • Attempted to drive ambassadors
based on personal facebook connections and hexgoods fans
Campaigns Learnings
▪ Referral program needs significant volume to find appropriate ambassadors
▪ Rewards may need to be driven from metrics other than purchases, especially in a start-up environment
▪ Referral needs marketing on its own. It is not driven much by organic growth
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How to incentivize sharing amongst groups?
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Why would people recommend?
1. Available outlet (fbook, twitter, gmail)
2. Engage on this outlet
3. Satisfied customer, or interested customer
4. Incentivized to share within the network
5. Know someone who would like the product or service
6. Think its relevant for your community
7. Think something is cool
Guidelines for referral program
1. Determine appropriate reward/ incentive system • Prizes • Discounts • Points • Cash rewards
2. Determine reward structure, including whether to award for 2nd order referrals (eg, pyramid structure)
3. Choose appropriate program
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We chose to use Zferral as our affiliate platform, but there are many options available
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Our initial campaign choice
Campaign 1 2 3 4 1st order commission
5% 10% 15% 10%
2ND order commission
0 5% 0% 0%
Options for an affiliate program
Zferral • Referral software, easy to integrate
with ecommerce sites • Based on a monthly subscription
plus 3% commission • Cash rewards and other options
available Buzz Referral • Referral software • Based on monthly subscription • Referrals, social promo codes, and
sweepstakes/contests NextBee • Referral and customer loyalty
program Vouchfor! Extole.com Qualityunit.com ReferralCandy
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Example Referral Program page
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Hello Bar
Landing Page
Tracking page
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Executive Summary for Social Influence Marketing
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Goals: ▪ Based on cutting-edge research done on the science of social networks, Social Influence
Marketing (SIM) aims to help companies use social influence to spread messages through networks to drive product purchase or consideration
▪ We have established a customer, Hex Goods, which allowed us to analyze marketing tests to determine the optimal channel, language, and tactics needed to drive desired behaviors
Outcome ▪ The team ran 7 different marketing campaigns across 5 channels: Facebook, Google Adwords,
Blogs, Twitter, and a referral program ▪ Each marketing campaign was tracked for effectiveness and revised where necessary ▪ The team determined three key takeaways from our work:
– Social media marketing channels have powerful targeting capabilities – Network diversity is critical to spread messages, especially for a start-up – Social proof and relevance are very important to engage the target audience and community
Handbook for Social Influence Marketing ▪ The team recommends the approach to effectively run a social influence marketing campaign
– Define the key metric or metrics that drive economic outcomes for your business – Create a network systems map to identify factors and loops that influence key metrics – Design testing campaigns to target high-impact network variables, drivers, and feedbacks – Test, measure and iterate using embedded analytics to enable rapid learning from testing
campaigns and understand how marketing efforts are influencing the network system
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