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Social Marketing and Commerce. Marketing and E-Commerce subject at the International Master in Industrial Management. Guest speaker: Francisco Hernández Marcos Universidad Politécnica de Madrid Politecnico di Milano Kungliga Tekniska högskolan
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Francisco Hernández Marcos fran.me
Madrid, 23rd January 2012
Social Marketing and Commerce Marketing and E-Commerce International Master in Industrial Management
About me SHAMELESS SELF-PROMOTION
Education:
Universidad Politécnica de Madrid, UNED, London
Business School, University of Chicago
Firms I worked for full-time:
Abengoa, McKinsey&Co, ABN AMRO, Real Madrid C.F.
Entrepreneurship: Crisalia
Consulting requests (Social Media & Internet):
Full profile:
linkedin.com/in/franciscohm
Summary of session 1
¶ E-Commerce, E-Business… difficult to define and classify. Do not waste much time in figure-out where your model fits.
¶ 17-year history but still growing strong, now specially in emerging markets (broadband penetration, purchasing power), but maybe on mobile channels soon.
¶ E-Commerce is an intrinsically social activity. It evolved to the social space even before the social media phenomenon started.
¶ Generic types of business models on the web.
¶ Technology not a problem anymore; success is many times driven by innovative business models, sometimes easily copycatted if one does not protect oneself.
¶ 6 dimensions to social E-Commerce success.
¶ Takes time to refine an innovative business model. Test and error based on analytics is the best way to refine a model. Be patient, imaginative, and analytical.
¶ Long tail concept
¶ Freemium concept
¶ “Piggyback” concept
Session 1 presentation
REMINDER
Summary of session 2
Online advertising
Affiliate programs
Referral marketing
Email marketing
SEO
Content marketing
Online public relations
Social marketing
Fake marketing
Session 2 presentation
REMINDER
Agenda
Web 2.0
Social media advertising
Building an effective online community
E-Commerce in Social Networks
The first online social network…
Photo: http://www.flickr.com/photos/ajc1/3367295141/
Social networking service: “online service, platform, or site that focuses on building
and reflecting of social networks or social relations
among people, who, for example, share interests
and/or activities” (Wikipedia)
…and the first social graph
Social graph: “the global mapping of
everybody and how they're related”
(Wikipedia)
“Web 2.0 is the network as platform, spanning all connected devices; Web 2.0 applications are those that make the most of the intrinsic advantages of that platform: delivering software as a continually-updated service that gets better the more people use it, consuming and remixing data from multiple sources, including individual users, while providing their own data and services in a form that allows remixing by others, creating network effects through an "architecture of participation," and going beyond the page metaphor of Web 1.0 to deliver rich user experiences.”
Tim O’Reilly (October 2005)
Source: O’Reilly Radar: http://radar.oreilly.com/2005/10/web-20-compact-definition.html
Definition of web 2.0
Evolution towards web 2.0
“Catalog” (www)
“Search” (Google)
“Social” “Web 2.0” (Facebook)
Some important social networking websites
Facebook #1 international social networking website
Friends networking + Brand communities
>800 mill. active users Grew concentrically: Ivy
league universities -> universities -> high schools -> open
Open Graph Facebook connect + API Social gaming Great content
segmentation tools Social advertising Moving fast towards
Mobile
Most popular Facebook pages
Source: Page Data http://pagedata.appdata.com/pages/leaderboard
Most popular Facebook apps
Source: App Data http://www.appdata.com/leaderboard/apps
Tencent - QZone China’s largest social networking service(s)
>450 mill. Users Part of Tencent Holdings, a
diversified Chinese Internet company which became popular thanks to QQ messenger.
Unlike Microsoft, Tencent was able to turn a messenger tool into a successful, real social networking website.
Tencent is the third (after Google and Amazon) largest Internet company in the World by Market capitalization (USD 42 bill.)
Revenues: ~3 bill. /yr (less than 15% from advertising)
Twitter #1 Microblogging site
It is more a microblogging tool rather than a social networking site.
>300 mill. users Works better for 1-to-
many communication
Google Plus Latest SNS by the Google factory
>90 mill. users Great usability and systems. Great Circles and Hangouts
features. Deeply integrated with other
Google services However: there is already a
predominant social networking site and it is hard for people to spend time in changing to another social networking site. People tend to use one service, and is reluctant to change unless there is a huge difference between services, which is not the case.
Sina Weibo #1 social microblogging website in China
Launched in 2009 >250 mill. Users Huge engagement, 32nd
website in the World by traffic (Alexa)
Celebrity accounts Moving to mobile geolocated
services.
Mixi #1 social networking website in Japan
~25 mill. Users 30% from mobile Revenues: mostly
advertisement
Gree The most profitable social company in Japan
Yoshikazu Tanaka
Founded in 2004 by Yoshikazu Tanaka Gaming Social Networking website, and
specially mobile. 98% users from mobile. Most of revenue coming from virtual
goods.
CyWorld #1 Social Networking website in South Korea
~20 mill. Users. Owned by SK main telecom company. Pioneers in virtual currency: Dotori. ~80% revenues from virtual goods. Failed to enter in the US and Europe.
World map of Social Networks June 2011
Source: vincos.it
The World is Facebokising. Specially relevant latest countries: Arabic world, India and Mexico
Facebook stats Country ranking by users
Note: Change refers to the last 6 months
Source: Social Bakers
• The USA is clearly the country with the highest number of Facebook users.
• Chile, USA, Canada, Australia and Sweden are the countries with more Facebook penetration on their populations.
• Very interesting Facebook’s growth in India, Brazil (threat to Orkut?), Germany, Japan (Mixi?), and South Korea (CyWorld?).
Women rule on Social Networks Subtitle
Source: comScore, Inside Facebook
Some studies indicate that women are able to socialize better in social networks like
Facebook. Women are able to maintain more relationships
online, interact more, and when they share a content, it is on
average more popular than if the content was shared by a man.
Web 2.0 is not only Social Networks…
Social Networks Social Microblogging
Blogs
Social News Aggregators
Social… shopping, video, photos, gaming, mobile, newspapers,
aggregators…
Blog Networks Weblogs SL
Source: http://www.weblogssl.com/2011/12/01-trafico-del-mes-de-octubre-de-2011
Founded in 2005. Leader Blog Network in
Spanish Worldwide, and also leader in Europe any language.
86 mill. pageviews/month 21 mill. unique users/month Business model: create blog
communities around an interest, and monetize by advertising.
EXAMPLE
Traditional, offline Social Networks EXAMPLE
Agenda
Web 2.0
Social media advertising
Building an effective online community
E-Commerce in Social Networks
Facebook ads format
o Picture o Text o Social
Create a Facebook Ad: Segmenting
o Facebook allows to find your target group based on demographics and interest.
o Example: 1,860 women liking Real Madrid C.F, engaged, living less than 50 miles from Madrid and speaking Spanish.
EXAMPLE
Create a Facebook Ad: Ad auction
o Similar auction system like Google’s, but one can choose CPM or CPC (in our notation PPI or PPC)
EXAMPLE
Contextual Vs Social Advertising
Focus on “Keywords”. Unknown user. Active user: He know what he wants because he is searching for it or mentioning it in his emails. “one time” user. PPI RECOMMENDED FOR: •“Direct response” from customers who have explicitly expressed a need (“Close the sale, message in the right moment, at the right time.”).
Focus on “Target Segment”. Known user: We know who he is and what he likes. Passive user. “continuously contacted/relationship” user. PPI/PPC RECOMEMNED FOR: •“Direct response” from customers who have NOT explicitly expressed a need (“Activate a subjacent need.”). •“First contact” with potential customers of slow-selling products (“Establish a productive relationship.”). •“Brand image” campaigns.
Agenda
Web 2.0
Social media advertising
Building an effective online community
E-Commerce in Social Networks
From a person to the online community
People Community Online community
Common interest Online
•An online community is a group of people that interact and communicate online around a topic of interest. Internet allows those interactions to be real-time, effective, and free (as in free speech).
•Due to members being scattered around the world, most of those communities would not be possible if online means did not exist. Many of those communities go directly to being an online community without being previously an offline community.
•More and more communities are shifting online, with or without the brand’s leadership.
Three Forms of Community Affiliation
Source: “Getting Brand Communities Right”, Harvard Business Review, April 2009
Examples
Description
“Pools” “Web” “Hub”
• People have strong associations with a shared activity or goal, or shared values, and loose associations with one another.
• Apple entusiaths. • Political party
members.
• People have strong one-to-one relationships with others who have similar or complementary needs.
• Facebook. • Cancer patiens and
relatives.
• People have strong connections to a central figure and weaker associations with one another.
• Oprah Winfrey. • Hannah Montana.
Key elements for an online community to work well: members identification, self-expression, interaction, and incentives.
Community member roles
Full description: http://www.fullcirc.com/community/memberroles.htm
•Core participants
•Readers/Lurkers
•Dominators
•Linkers, weavers and pollinators
•Flamers
•Actors and Characters
•Energy Creatures
•Defenders
•Needlers
•Newbies or NewBees
•PollyAnnas
•Spammers
• "Black and White" Folks
• "Shades of Grey" Folks
•Untouchable Elders
Figure out your community roles
EXAMPLE
Do we need a [great] brand to create a [great] online community?
Failure
Online community
Brand
Success
Strong
Weak or non-existent
No
Common interest
Do we need brand’s leadership to create a great online community?
Source: PageData.com y AllFacebook.com
No
Facebook engagement ranking 14 Nov 2011
Facebook fans ranking 27 Nov 2011
Motivated leaders
The importance of the community over the brand
Brand Company
History
Community
•A community exists with or without a proactive management from the brand.
•Proactive community management has some advantages for the brand: information, conflict management, revenues, etc. The brand has to be smart when carrying out proactive management.
•Success examples: Apple, Harley Davidson, MySQL, Starbucks, Coca-Cola, etc.
•Examples of failure: Nestlé Kit-Kat
Miths and realities about managing communities
Source: “Getting Brand Communities Right”, Harvard Business Review, April 2009.
1. A brand community is a marketing Strategy.
2. A brand community exists to serve the business.
3. Build the brand, and the community will follow
4. Brand communities should be lovefests for faithful brand advocates.
5. Opinion leaders build strong communities.
6. Online social networks are the key to a community strategy.
7. Successful brand communities are tightly managed and controlled.
Myth
1. A brand community is a business strategy.
2. A brand community exists to serve the people in it.
3. Engineer the community, and the brand will be strong.
4. Smart companies embrace the conflicts that make communities thrive.
5. Communities are strongest when everyone plays a role.
6. Online networks are just one tool, not a community strategy.
7. Of and by the people, communities defy managerial control.
Reality
SUMMARY
“Robust communities are built not on brand reputation but on a deep
understanding of members’ lives.”
The most important learning about managing [online] communities
Source: “Getting Brand Communities Right”, Harvard Business Review, April 2009.
• ….
• …..
• ….
• ….
• ….
• ….
• ….
• ….
• ….
SHORT TERM
MEDIUM TERM
LONG TERM
Priorities when developing the community
More Fans
More
Engagement
Revenues + keep fans and
engagement
Agenda
Web 2.0
Social media advertising
Building an effective online community
E-Commerce in Social Networks
Customers trust each other, not the brand!
Source: Your Users Trust Each Other, Not You: Why and How to Implement Ratings and Reviews, by Molecular Inc.
76% of American consumers believe companies don’t tell the truth in advertising -Yankelovich (2005) 60% have a much more negative opinion of marketing & advertising than a few years ago - Yankelovich (2004) 78% say consumer recommendations are the most credible form of advertising - Nielsen (2007) 83% say online evaluations and reviews influence their purchasing decisions - Opinion Research Corporation (2008) 84% trust user reviews more than critics’ reviews - MarketingSherpa (2007) Trust in “person like me” tripled to 68% from 2004-2006 – biggest influencer to consumers - Edelman Trust Barometer (2006, 2007)
Definition of Social Commerce
Source: Wikipedia, Syzygy
“a subset of electronic commerce that involves using social media, online media that supports social interaction and user contributions, to assist in the online buying and selling of products and services.”
We will focus on E-Commerce within Social Networks (or
deeply integrated to them).
Two types :
• Social Media on E-Commerce Platforms: “Helping people connect where they buy”.
• E-Commerce on social media platforms: “Helping connected people to buy where they connect”.
What are CMOs (Chief Marketing Officers) worried for the next few years?
Source: Customer Data, Social Media Top Marketing Priorities for CMOs Worldwide, eMarketer.com
What Booz & Co thinks social commerce is going to be worth in 5 years
Source: Booz & Co.
Marketing 3.0
Marketing 2.0
•Client-Oriented
Marketing 1.0
•Product-oriented
Marketing 3.0
•Human (society)-oriented
Kotler, Kartajaya & Setiawan
•Long term (Vs short term) •Transformation (Vs Philanthropy) •Horizontal Marketing (Vs Vertical MKT) •Participation / Globalization / Creativity
BONUS CONCEPT
F-Commerce
Source: Wikipedia, Janice Diner, F-Commerce Ecosphere Visual
“Facebook commerce, f-commerce, and f-comm refer to the buying and selling of goods or services through Facebook, either through Facebook directly or through the Facebook Open Graph.”
“Experts forecast that F-commerce transactions on Facebook will overcome Amazon’s annual sales ($34 Billion) over the next 5 years.”
First purchase within Facebook: July 8th, 2009 on facebook.com/1800flowers
Key points about Social-Commerce on social media platforms • Still in its infancy. Almost inexistent as of today. Mostly focused on the pre-selling stage: people
talk about and discover products through social media, ads on social media, etc.
• Most cases take advantage of the huge traffic that some social media platforms have, but do not leverage on social integration to offer better, customized products and services. Leveraging on social integration is better than merely sucking traffic because it adds value to the customer. The customer can find it very interesting to shop in a place where he/she has products he/she and his/her friends really like. Remember shopping can/should be a pleasant experience!
• Referral marketing through social networks seems to be an obvious way to take advantage of someone’s social graph when doing E-Commerce. Concept of “Horizontal Marketing”.
• Spotify integrated on Facebook is a good example of social commerce: you see what your friends are listening to, which is probably what you would like. Also, a friend listening to a song and you seeing it is a form of referral marketing.
• Brands need to lose their fear to let people talk about them, and to invest in personalized, smart social apps to tackle the full potential of Social-Commerce.
How would it be a social-commerce strategy in your company?
Agenda
Web 2.0
Social media advertising
Building an effective online community
E-Commerce in Social Networks
Today’s main takeaways
¶ Web 2.0 is not only Social Networking websites. There are other categories like social blogging, microblogging, video, gaming, etc. But Social Networks gave full sense to web 2.0 across all possible Internet services.
¶ Facebook is Worldwide leader in usage and technology. The World is still leaning towards Facebook in many countries where it is not yet the leading SNS. Only China and Russia seem to stay away from Facebook’s rule, the second one due to its blocking.
¶ Asian countries, specially China, are specially interesting case studies. To some extent they pioneered the social web (virtual networks, gaming, virtual goods, etc.), but failed to internationalize.
¶ Women are more relevant social nodes in an SNS than men. Always take it into account while designing a social media strategy.
¶ SNS is indeed yet another human activity (social networking) translated to the Internet.
¶ Social media advertising is intrinsically different from other type of ads like contextual advertising. They complement each other rather than compete. They should be used for different goals.
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Today’s main takeaways
¶ Building an effective online brand community is an important business tool for many companies. However it is a very difficult one to achieve.
¶ It is a frequent mistake to believe that having a good brand makes it easier to have a good online community.
¶ In order to build your own successful online community it is important to understand in depth your underlying community: how your members affiliate, what are their key roles within the community, how do they benefit from being a member, etc.
¶ Online communities take time: first hire fans, then engage them (almost immediately after hiring them), and finally try to monetize them in the least possible frictional way.
¶ Customers trust each other more than a brand, so big expectations are put on Social-Commerce (E-Commerce within SNS).
¶ Social-Commerce is very related to the Marketing 3.0 concept proposed by Kotler, Kartajaya and Setiawan.
¶ Facebook already has a set of tools to allow Social Commerce in its platform. Possibilities are infinite!
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Thanks! Francisco Hernández Marcos fran.me @franciscohm