Twitter Endorsements

I just finished this ReadWriteWeb article on  new pending “shout out” feature from Twitter.  It looks like this new feature will be offered by the platform to allow peers to verify, or endorse, other accounts as being relevant or meaningful in one category or another.   I believe this is a step in the right direction from Twitter and will make the platform more social than it currently is.  A quote from the RWW article by Marshall Kirkpatrick states:

A “shout out” or endorsement would make a good compliment to friends, followers and lists on Twitter.  Endorsements offered in 140 characters or less could become a meaningful form of social capital online.

One of the issues I have using Twitter is that I’m unable to use it for much beyond search.  I most likely follow too many people, or companies, but every time I read my Twitter stream I just feel like I get a lot of noise from a few people in my community, and not much else that’s particularly relevant.

I believe that if there were an easier way to connect me with the content and influencers that I wanted to follow, I might have a better experience.  One way would be to use my friends as a recommendation channel.  If friends of mine endorse others whom they follow, I believe I would be included to follow them as well.   My current follow process is very haphazard, but  I believe being able to search for verified accounts,  or find accounts that have been endorsed by my friends, would be a great addition that I would use often.

Another great point that this article brings  up is the uselessness of the “followers” number.  This number is easily gamed and does not translate to additional influence in the channel.  I have yet to see an “influence” rating application that I thought was useful, so maybe endorsements from friends is the way to go.

We Lost Our Gold

And now for something completely different. A few friends have discovered and pointed out a new social media campaign that I think is really well done . We Lost Our Gold features Muppets, New York City, and $10,000 cash.  I’ll be very interested to see the video view metrics on this campaign, as well as  trending topics, buzz, and other performance indicators when this closes out.  In the meantime, I’m really enjoying the creative execution.  Like most simple campaigns, this is simple, the content does the talking and, of course, there’s some type of  incentive for the viewer.  Enjoy.

Ideas Vs. Execution

I’m not sure this thought necessitates a post, but here it is.

I get ideas pitched to me all of the time.

Some of the ideas I hear are really good.  I think some people look for problems to solve, and I think that’s a great way to approach situations.  Others look at where they can extract value,  and their ideas generally reflect that approach.  Neither of these approaches are “wrong”, per se,  but I tend to like ideas that solve problems because they typically create net positive value in the world.

But what I like more than good ideas are examples of good execution.  The pool of people whom I know that can actually execute are consistently more interesting to be around because they actually make things.  I’ve come to a conclusion that there are people who think, people who execute and, rarely,  people who do both.  I will always look to do business with people who have a proven track record of execution over people who generate ideas, but not much more.

Driving Value In Social Media

My friend Tim Freestone reminded me of something recently that is so fundamental and simple, yet often forgotten in the world of community building and social media marketing.  He said “If you can drive value you can write your own checks”. Tim works in direct marketing for B2B clients and has a very clear path to revenue contribution.  It’s measurable.  It’s obvious.  You either generate transactions or you don’t.   In Tim’s world, value is measured by a clear increase in revenue that is greater than the cost of the marketing services he offers.  Tim generates value.

Social media, depending on how you define it, works differently.  Marketers often analyze what they’ve invested in social media and don’t see lift in revenue, or they may see a lift in revenue but it’s impossible to correlate with their social media efforts.  Social media tends to look ineffective when measured directly against revenue growth (this is very similar to the Public Relations industry issue- but that’s a different post.  For this post, I’m talking about social networks and blogger outreach).

Today I want to play with the equation up top.  ROI is calculated by measuring what you made, subtracting what you’ve invested, and then dividing that sum by what you’ve invested (expressed as a percentage).   So, if you spend $1, and you make $2, then your ROI will be [(2-1)/1= 1]  = 1.00 = 100%.

I believe social media generates a lot of value for brands, but I believe it shows up in strange places on a financial statement.  Here are a few examples of why it’s difficult to measure:

Most of social’s revenue contribution is credited to other channels

A lot of consumers who engage with brands in social do not take a revenue-driving action directly from Facebook, or blog, or any other social network.  Some do, but a lot don’t.   Most of them consume some type of content, maybe interact, and then go about their day.  In the digital space, it’s often insightful to look for correlations between increases in direct traffic and search volume against social media efforts (try this and let me know what you find).
Just because a consumer doesn’t click out of a Facebook status update does not mean that they haven’t been impacted.  On the contrary, getting “into the stream” is far more effective than being on the periphery (in a digital ad).  Marketers who think of streams as ads are often missing the point, or not looking closely enough at their digital presence.

Most of the value in social media comes from cost savings and increased customer lifetime value

If you are a consumer brand and someone has an axe to grind, you really need to be in social media.  Consumers are fickle and tend to drag brands into a very public conversation when they feel wronged.  On the other side, people use social platforms to evangelize brands and you’ll probably want to be around for that, too.

Creating a platform for customer engagement decreases customer service costs (as less people lodge complaints through other channels), but more importantly decreases the cost of having to acquire new customers (to replace the ones you lose by not being respondent).  These metrics go into the “what you made” section of the ROI equation, but they don’t directly affect revenue growth, they affect profit by lowering operating costs.  New customer acquisition costs are usually the highest marketing expense a company has.  I can’t understand why more brands don’t measure the customers they keep.

Increasing intangible asset value isn’t necessarily a revenue driver…

By extension of the point above, maintaining brand awareness, increasing customer lifetime value and increasing brand affinity also show up in intangible assets (brand value). This isn’t something that marketers with short and mid-term goals look at, but it’s definitely something CEOs want to look at.  Again, contribution from social media to brand value is difficult to measure, but it’s certainly one of the biggest pieces of value offered.

Social media can increase lifetime customer value, decrease your customer service costs, and make a significant long-term contribution to revenue through the viral nature of word-of-mouth marketing.   But I think marketers need to stop looking at their social media efforts with the same microscope that they measure their SEM campaigns- it just doesn’t make sense.

Facebook Fans are worth $136.38 per year

A new study was just released by Syncapse, a Canadian social media agency, that tries to calculate an annualized dollar value for a Facebook Fan,  and has landed on $136.38 per year.  Gigaom posted a great, quick writeup summarizing how this value was derived, and the folks at Syncapse have posted an easy to download PDF,  so I’m not going to regurgitate on this post what you can read elsewhere.  I think that the agency did a wonderful job performing their research and making their arguments, and because I think that the number number is a bit silly, especially as an annualized value.

There’s No Causality

The report hits the nail on the head by identifying that a Fan base is a self-segmented group of highly valuable customers.  That is absolutely true.  What is also true is that the majority of value accredited to these fans is based on the fact that Facebook Fans surveyed spend over $71/year more than their non-fan counterparts.  Well,  that’s great–  but it doesn’t imply causality. These consumers aren’t necessarily spending more because they are fans.  From a behavioral standpoint, I believe brand evangelists will tend to flock to communities where they can wear the badge of being part of the brand.  I’m a little less sure of the causality going the other direction.

Earned Media Is Still the Best Metric

Assuming this is true (the core fans flock to pages),  it presents a fantastic opportunity for brands to engage a core group of their ambassadors and get brand messaging distributed organically.  A more meaningful metric that Syncapse discusses in their report is the earned media value measurement.  The idea that Facebook Fan (being a brand evangelist) is likely to share content and spread brand messaging seems more valuable to me than stating that a fan spends more than a non-fan.  This word-of-mouth recommendation system is still the number one reason for any brand to exist in social media.  Organic fan and customer growth cannot be accomplished with media placements and Facebook Pages are a proof of concept that supports this idea.

According to Syncapse,  68% of Facebook Fans indicate they are very likely to recommend a product.  This is incredible news for brands that want to spread value through connections with their customer base.  The issue that most brands (and agencies) are suffering under with this new medium is that it does not scale to the levels of purchased media (Chris Brogan has good things to say about this).  My personal take is that,  often in traditional media you can reach scale of impressions while generating very few connections.  Social media (ideally) starts with connections and grows from there.  It’s a different approach, but highly valuable if leveraged efectively.

Tablets and the Publishing Revolution

Yesterday I attended a panel discussion about tablets at Time Warner.  The panelists included  Terry McDonnell, editor of the Sports Illustrated Group.

Time was hyping up it’s new tablet applications and, I have to admit,  it was really exciting to see print veterans talk about the limitless possibilities of delivering a new experience on these new devices (Mr. McDonnell calls them appliances).

First, there are the obvious benefits of creating more in-depth experiences for a magazine reader.  But the conversation really starts to become interesting when the discussion of ads and ad rates come up.  New Time magazine issues will have only six (maybe eight) ad spots in their tablet editions, but the experience in these ads will be extremely rich experiences.  The company showed a few ads yesterday and they really were incredible proof-of-concept videos (one for Gatorade and one for Mustang).  The rates for these ads were hinted at being as high as print advertisements.  The jury is still out on whether advertisers will help sustain these rates,  but that’s great news for creators of in-depth content.

By creating a new experience that can only be had on tablets, the print industry is going to drive demand for the devices and find solid new ground to generate revenue.  This is exactly the opposite of how the music industry acted in the face of MP3 players (and we all know how that turned out).

An older video example of the Sports Illustrated application is below (Time hasn’t released the videos it showed yesterday).  Time’s applications were designed and developed by the Wonderfactory.

Display Ad Spending vs. Search

The story of the week has largely been about the growth of online ad spending.  While this seems like a well-trodden, tired conversation,  it got a pretty nice boost this week from Fred Wilson (which was inspired by a presentation posted in The Atlantic here).  In an earlier post I wrote I talked about the semantic web and Facebook’s bold venture into becoming the servers that will deliver relevant advertising based on what we like (here).  I want to continue down this road and talk about content sites and advertising.

Over the past several years,  “clicky” sites have beat out the “sticky” ones because of the economics of intent-driven, performance-based media (Chris Dixon explains this far better than I can).   Content has taken a back seat to sites like Google, which generate a lot of visitors who spend very little time on the site before clicking out to purchase (or to consume content).   This type of behavior generates a lot of revenue, is highly measurable and marketers like it because they can calculate a direct ROI (spend $100 on performance-based media like Google Pay-Per-Click, generate $150 in net income from the refers and you’re just made money) .

This development has been great for growth in the online economy; it has fueled innovation and brought transparency and validity to the space when it needed it.  But, while SEM is a highly efficient means of advertising, it’s a terrible way to create brand equity.  I believe that display will get a shot in the arm from companies like Facebook, who will be able to generate relevant, targeted ads to consumers. I think this will be a good thing for the web because it will likely drive demand for more rich, content-heavy experiences online.  Display advertising (I’m not necessarily talking about IAB ad unit banners) works best in places where a user stays on a page for a while and consumes content (I have no proof of this, but I like associating brands with experiences and I believe that most people feel the same way).

Of course, the real win for online display advertising will be when someone figures out a way to really measure engagement.  The way the system currently works, people see ads everywhere, but when they decide to buy they go to Google, search the keyword and click on a sponsored or organic link.  It’s unfair to credit Google with 100% of any given sale;  a user might have read a review on a blog, viewed a few display ads, or even (say it ain’t so) read an ad in a newspaper.  Right now all of the credit for the sale goes to Google  when in reality the credit should be shared across  the marketing funnel.  Engagement marketing is an important part of the equation and is often ignored by marketers at the risk of brand dilution.  As the web becomes a more personal experience for us all,  I think we’re going to see growth in the engagemnt side of things again.

Part II: Facebook and Open Graph API

I’ve had a few insightful conversations over the past week on the Open Graph topic (I did a post on the changes, you can find it here.  I also recommend checking out this ReadWriteWeb article by Alex Iskold on the topic).  I’ve had a little more time to explore the subject, so the purpose of this post is to continue the conversation.

The stickiest topic has been about why Facebook would encourage an increase in off-platform activity by pushing to get  Like buttons on non-Facebook sites.  At first glance, it seems that an increase in these semantic bookmarks across the web might discourage marketers from establishing brand pages, applications and custom tabs on the Facebook Platform.  If brands can push content into Facebook users’ streams without having to develop extensive branded experiences inside Facebook, then they will be less likely to buy media from Facebook.  Yes, the value of community will still be important and Facebook Pages will still have value. But invariably brands want to be in users streams and they can easily accomplish this without a Page if Like button use is adopted.

So, there will be less need to buy Facebook media, unless Facebook starts serving ads outside of the platform, which it can easily do with the information it’s collecting:

If Facebook continues to collect user preference data from across the web, it’s ability to target you anywhere (as long as you are logged into Facebook) with relevant information on products and services that you will “Like” becomes a fairly simple process.  This presents a fairly elegant solution for Facebook, which is struggling (I believe) with the challenge of serving users advertisements when they’re ready to buy.  Right now, Facebook serves ads inside Facebook; and users typically aren’t interested in clicking out to make purchases elsewhere on the web (while click-through rates from the stream may be higher,  Facebook media historically doesn’t perform this function well).  If Facebook starts negotiating for inventory outside of its platform, the game changes significantly.

Facebook and the Open Graph API

I’ve wanted to write out my thoughts on the new announcements that Facebook made at their F8 conference; specifically the Open Graph API and how this will affect everyone involved with the platform.   I’ve been waiting to write this until I felt comfortable with the changes, and had the opportunity to build a few social media plans with them in mind.  I haven’t read many other people’s thoughts on this yet so, the following is the closest I can get to my unfiltered comments.

To me (and I think everyone), the most  important change that Facebook has made is to its social plug-ins (you can check them out here to be clear on what they are).  Some of these are new,  some of them are not new but are easier to install on an off-Facebook site (in this post I’m really just talking about the new “Like” feature).  These are all part of the Open Graph API that Facebook is pitching, under the presumption that people really want to connect and discuss the content that they are consuming in other places on the web. I don’t believe that position is far from the truth,  but I do think that there’s a limit to the amount of information that people really want to share with everyone all of the time.

What is undeniable is that this is a big strategic move on the part of Facebook, which continues to evolve into something less like a standalone world, and more like a collection of tubes that are ubiquitous across the web.  Here’s my breakdown of how this change affects major stakeholders:

Non-Facebook Publishers: I think this is mostly a good thing for most publishers. The “Recommend” feature that’s on improves the experience on the site.  The “Like” feature can drive Facebook users back to consume on-site content that a reader’s friends “Like”.  These are good things for publishers who drive revenue by selling display advertising.  Are there risks?  I suppose this can take over other forms of sharing, and can become limiting to publishers who would prefer to have direct contact with their readers through actions like email sharing.  Also, any reader preference data shared through Open Graph is (I believe) stored on Facebook’s servers,  which is valuable consumer information that publishers may have to purchase from Facebook in the future.

Facebook Users: The Open Graph adds data to a user’s social graph on Facebook.  Users who “Like” content across the web can now send that preference data back to Facebook and express to their network that they  interacted with content and thought it was cool– the content can become an extension of someone’s personality (the way Pearl Jam’s Ten was an extension of my personality in junior high).  This social graph information is becoming content of its own and people like consuming it.

A dynamic social graph means that there’s always a reason to come back to Facebook to find out more about people: how they have changed, what they like, content recommendations, etc.  We can now get a more complete picture of a Facebook connection, and most users will think that’s a good thing.  The downside/risk is that users may not be interested in sharing all of their off-Facebook preferences and habits.  And, assuming Facebook users actually want to share this information, it’s possible that people’s streams will have a lower signal-to-noise ratio in the future– which can be bad for UX.

Marketers: Because Open Graph gives marketers better ways to integrate the platform on their sites, it possibly gives them less reason to develop immersive experiences on the Page and Tab structure inside Facebook.  These plugins might cannibalize Facebook’s biggest revenue generator, the “cost-per-fan” .  To get an idea of the difference in approach, check out this great example of an in-Facebook campaign; the Microsoft Kin campaign.  A great example of marketers using the Facebook Plugins is on the Levi’s website.

See the top red circle in the top image?  That is really well-integrated social bookmarking.  The result of a user clicking on a like tells my Facebook community that I like Levi’s.  The bookmark  allows me to comment, it gives specific data and the posting links directly back to the website, where my friends can like, or click out to purchase the product.

See the bottom red circle in the top image?  That’s how I can Become a Fan of the Levi’s Facebook Page.  Connecting to the Levi’s Facebook Page might get me a special discount, or some special content, but that’s really not clear to me from this button.  As a marketer, I would much rather have a user “Like” a product than “Become a Fan”.  What this will mean for “cost-per-fan” media in the future is anyone’s guess; I think it’s certain that these changes will affect development and marketing budgets from brands in the future.

The Mis-Application of Innovation

With all of the recent discussion about civil charges being brought by the SEC against Goldman Sachs, I got into a discussion with some friends about innovation, technology development and its abuse by people who either don’t understand the technology they are using, know but do not care about the risks involved, or knowingly behave unethically in an effort to leverage short-term gains.  After reading a blog post by Bill Taylor on the subject, I thought I’d chime in from a technology standpoint (although Bill does a much better job than I do at explaining my own thoughts on the subject–  you should definitely read his post).

Bill points out two blatant misuses of recent innovations developed by really smart people and abused by the financial services industry:  collateralized debt obligations and micro-lending.  These are both somewhat complicated technologies, and I think it’s safe to say that the U.S. housing market collapse was pretty clear evidence that the technology was egregiously abused.  The micro-lending conversation is perhaps a bit more ambiguous (it could be posited that the rejection of certain micro-lending offers are a natural piece of the economic puzzle, and will soon drive rates back down).  My position in the conversation my friends and I were having , which I still maintain, is that blaming technology is pointless and mis-guided.

People innovate.  It’s a natural thing for humans to do and should never be discouraged.   The idea that the innovation is the culprit is a dangerous position to take when situations like this arise because innovation is absolutely a net positive endeavor. Technological gains are part of what has made the U.S. economy surge in the past century, and it will unquestionably be the source of our economic growth in the future.  We live longer, happier lives as a result of technological innovation.

I think problems start to arise because of a lack of transparency and asymmetric information problems.   As Americans, we consume too much health care, we take out lousy mortgages and loans and we tend to make foolish financial decisions  as consumers.  American consumerism is generally an impulsive phenomenon–   or, we know we’re making bad decisions, but everyone around us is making them to so we fall in line with the behavior.  The solution to bad decision-making is more education and greater transparency. The solution is not to halt efforts to innovate from fear that innovation will be abused.