January 14th, 2009 by Nils Maier
After Thestrategyweb.com had explicitly published the survey’s results of Community Monitor 2008 for Brain-Injection consulting and the Cologne Business School, I would like to take a closer look on the presented profits models of each network. The survey’s results show a fresh a quite sober picture. Banners are still the prevalent marketing tools in social networks, but at the same time brand’s marketers appeared to be somehow completely ignorant of the fact, that those kinds of advertising are actually inefficient in the realms of social media. Myspace and Google have had their experience, e.g. the click rates of banner ads in Dickschiff social network is sinking continuously:
The ads’ so-called click-through rate plummeted from one in 100—a decent return by Web standards—in 2006 to one in 1,000 in 2007. “Users became more or less desensitized to the advertising,” says Seremet, a veteran of Take-Two Interactive (TTWO) and now president of video game publisher Green Screen. “You won’t make money on it.”
Google was quite unhappy about the development, considering that the internet empire based in Mountain View, California had promised different numbers, when it bought the sole commercialization rights in 2006 for the News Corp. network for almost $ 900.000.000 (article).
Trouble is, Google pays News Corp. for that right even when the ads don’t generate much, if any, revenue. “We have found that social-networking inventory is not monetizing as well as expected,” said Google Chief Financial Officer George Reyes…
This development is certainly not specifically for Myspace, but rather it applies to the whole networks. I agree and support the comment made by the authors of the survey:
“We assume one of the reasons is that the advertising industry needs time to adjust to new ways and possibilities of advertising in Web 2.0.”
Firstly, marketers must learn to actually listen in social media. Hence, after all the years of doing the talking, it’s now high time that they go into open dialog with the consumers. Invitational ads as banner can certainly be a medium to connect users or consumers to brand community etc. but the dialog with consumers should be the core focus.
Unfortunately, if it’s about profit models, then a central investigation object is missing in this analysis. Brand communities, Fan pages or sponsored groups should have been definitely subjected to the analysis. After all there are excellent examples, which accentuate, how important and meaningful these advertising forms are in social media. German version of MySpace is one of it and for me Jägermeister and Niveacamp of Beiersdorf stand out the most.
Even StudiVZ is successful with its sponsored group of Brands4Friends. This shows again how meaningful a brand community in social networks can be used as an oriented dialog marketing tool.
Well I do think that the survey lacks in the pivotal choice of investigation for profits models of social networks. Since the future of profits models lies for certain also in the area of brand communities.
Profits models like, e.g. Membership fees are certainly not for the big networks. It’s quite different for niche products like the business networks Xing or Linkedin. There, users are pretty concrete about their value added, which they expected from the usage of these networks and therefore willing to pay the fees. On the other hand the value added in Facebook&Co. is much more diffuse.
It’s quite interesting as well that 26% of the investigated networks do actually offer the integration of shops and this development has potentials, which yet to be fully exhausted. A good example from social media E-commerce is e.g. Brands4Friends and also edrugsearch.com. The American search engine for pharmaceuticals had huge success with the implementation of a community. It’s not of importance if at first the shopping and then the network or vice versa, since the outcomes would still be the same. Communities and E-Commerce can have a successful relationship and as former StudiVZ CEO- Markus Riecke said to this connection:
“Online Marketing is easy there, since user’s interests equal the offers”. Therefore shops can certainly be the profits driver for the big networks.
To sum it up: In my opinion the profits drivers lie in the future of social networks in the brands communities and in the alliance with E-Commerce. These two advertising forms are the closest as tools to generate an adequate successful marketing in social media, hence creating a profitable model for social networks. Overall, the future success of big communities would surely lie less in the area banner ads as well as membership’s fees.
January 14th, 2009 by Nils Maier
Defriending will surely be the big trend of 2009 in everyday use of social media. Burger King has anticipated this trend – dump 10 friends and get one free Whooper. Well I asked myself all the time, when I’m using LinkedIn, etc.: who is in god’s name with over 1000 business contacts on his/her a list could speak from “real” contacts or how one even should follow twitter stream, which follows more than 1000 streams? Perhaps it applies in social media, as well as in the world outside of social media: Less is more.
For Charlene Li, the downsizing of followers and Facebook “friends” is surely the trend for 2009:
“Having thousands of friends becomes “so 2008″ and defriending becomes the hot new trend, driven by overwhelming rivers of newsfeeds. The movement is rooted in a desire to have quality, not quantity, as people cocoon in the face of the economic crisis. Facebook apps will emulate Twitter Grader, allowing you to prioritize your friends based on their overall social ranking — and prune safely to ensure the highest quality friends“.
Even Peter Blackshaw – consumergeneratedmedia.com – also foresees quite similar development for year 2009:
“Many of us will feel compelled to join the social media equivalent of Weight Watchers, eager to trim the excess and rediscover a modicum of don’t-follow-everything discipline.”
In my opinion this development is certainly right. A social graph is only then a functional one, if one really communicates with his/her virtual contacts. This kind of communication is by far more than just the act of clicking the confirm button. Truthfully, I find it quite difficult to keep an eye of all the conversations happening in my Twitter streams, facebook, Linkedin, Myspace, etc. contacts, and then to actually be involved in a constructive dialog in the end. In the mean time a flood of information emerges, which are mostly irrelevant. Probably tools like TwitterGrader or Benedikt’s Twitterfriends are needed to accomplish an overdue network optimization. 2009 will be the time for all to join the social graph watcher movement and hence strengthening the networking.
December 10th, 2008 by Christoph Maeurer
Original article by David Nelles (translated by Nils Maier)
It’s a well known fact; Dell is pretty advanced in the adoption of Social Media in the areas of CRM and Marketing. The interview with Richard Binnheimer in Online Marketing Blog, actually punctuates my assessment about the U.S number one PC provider: Dell did get it!
I found the middle part of the interview quite interesting and educating. Binnheimer explained the reasons, which supported Dell’s decision to adopt Social Media.
“1. The Magnitude of Change: One billion people are now online — a figure that will double by 2011. In fact, every day 500,000 new users come online for the first time. Content is exploding. There was more content on YouTube in 2006 than on the Web in 2000. This represents a significant shift in what we think of as media, or put another way, what and how people get information. Taken together, we are experiencing changes to the dynamics of how we process information to form opinions.
News cycles can start from anywhere today. News and conversations are not just local/regional, they are global. Single blog posts can have as much power as major news stories. People are publishers, content providers and decision-makers. There are additional and new news cycles, and a proliferation of outlets for information. There is a rapid and continuing democratization of information.
This global information technology infrastructure enables individuals to connect and converse using all kinds of social media. They are forming new communities, their own communities, sharing information in ways they care about and make sense to them. These communities shape debates, impact perspectives and perceptions. The numbers and connectedness are of such a magnitude that public opinion and perceptions can be influenced and changed by “each other,” not controlled by others (and, I think this is a good thing, by the way).
2. The Value of Personal: I personally believe social media is contributing to a significant change that take us from what I call the “traditional, rational, objective, institutional” perspective to a more “subjective, emotive, personalized and human” perspective.
The move from “objective,” fact-based, third party reporting and commentary (traditional media/advertising/controlled messages/interruptions) to individual, “subjective,” and “crowd sourced” perceptions is very powerful. Perceptions are no longer just reality. They are real. The “new facts” are based on real interactions and experiences that people share with each other. Perceptions (“my real experience and my views) gain legitimacy and value and become a part of the larger community’s “facts.” For more on the importance (and inherent value) of perceptions in social media check these links.
If you are not persuaded by the trend data, directions and changes occurring, I would pose this question, rhetorically. I call it the customer question.
3. Connecting with Customers: Since when did any business not want to connect with its customers? Seriously, what is the issue here? Do we need to justify using today’s efficient, effective and readily available technology to spend 30 minutes or couple hours a day connecting with real customers?
No one has yet to explain to me why they should not use social media as a way to connect with their customers. We could leave this point hang and let it stand on its own. I think it speaks volumes.
However, lets flesh it out a bit. Connecting and communicating with customers is about more than merely meeting customers’ expectations today. Social media is an ideal tool to reach customers more quickly, efficiently, frequently and cost effectively.
Even more importantly than its efficiency and cost-effectiveness, social media is an ideal tool to listen, learn and engage in real conversations with customers. Does someone need to justify that?
Here is an example: If a conversation occurs in a Minneapolis Starbucks about the new Dell mini, I can’t hear it, nor be informed by it. On the other hand, if that same conversation starts in Minneapolis (or China) with a post on a blog, Twitter, Friendfeed, Facebook or wherever, not only can I listen and learn, I can act and join the conversation.
We can immediately take the information and do what we need to – fix something, thank the customer for positive feedback, correct misinformation, whatever might be relevant. It’s like having Dell customers from anywhere in the world walking the halls of our offices in Round Rock, TX. How cool is that? But the result is better than cool. The immediacy of online listening means we can continuously build a better business based on real time customer input.
One further thought, beyond listening and learning, I’d also highlight the benefits of engaging in online conversations using social media. If your customers are connecting with each other, why not join them? At a minimum you are forming a relationship, and more broadly, a community. There are all kinds of benefits to deeper and interactive relationships. One of my colleagues likes to say, “we used to host, prepare and serve the dinner party. Social media allows us to come to the party, join the conversation in a more relaxed manner and be part of it.”
The above three mentioned reasons, hit the bull right in the eye: the changes in media communications with consumers, immense value of authentic communications and eventually the direct contacts to consumers. Exactly these facts are the decisive pleadings for a solid place of Social Media in marketing mix.
Marketers in Germany should take these pleadings seriously into account. All three reasons do not only apply specifically for the U.S but rather this development applies as well here for Germany.
Change in media communications with consumers is less of a threat and more of “a not yet exhausted of possibilities”. It was never so easy to listen and to communicate with consumers in direct dialogs – cost efficient and less of divergence. Yet, one should not forget, that Dell had its Dell Hell experience before it got to this point of realization. If you want to read the whole interview, here is the link.
August 4th, 2008 by Nils Maier
Everyone knows the trouble caused by telephone or cable companies. Either you wait half a lifetime on hold on diverse telephone hotlines, be hopping mad about voice-operated service menus (Advice: Just start to sing and you will immediately be able to speak with a human conversational partner) or you wait far too long. Sometimes you also wait in vain for the technicians to arrive in order for them to clear your way into multi media communication at the long awaited date of your account activation. All too often, the telecommunication companies give their customers reason for not making too friendly statements about their offers and customer service. Not only German but also American customers could write a book about these problems. However, in case of the USA, there appears to be light at the end of the tunnel. What it is, exactly, that a telecommunication company understands by innovative complaint management, a posting by Michael Arrington illustrated earlier this year. The CEO of Techcrunch was astonished at the fast reply he received from the Comcast customer service after he had made some rather harsh statements about the communication giant on twitter. Indeed, Arrington does not seem to be the only one profiting from this social media complaint management. Social media monitoring has become an integral part of the CRM of Comcast. At this, Comcast does not only observe discussions about their products on the internet but also participates actively in these discussions. According to the responsible departments at Comcast, they actively contacted 1000 users during the last 5 months and tried to eliminate the cause of the complaints as fast as possible. An adequate example is depicted in a current NYT article. In his weblog, a student from Washington complains about the commercials shown in the program guide of Comcast cable’s program. 4 hours later he received an e-mail from Comcast which confirmed that his feedback would be considered when designing future services. This type of CRM solely has advantages for the company. The cable giant is thus able to react directly to criticism and, consequently, potential crises or reputation damages can be nipped in the bud. It is obvious that this social media strategy does not solely have advantages for the CRM. Certainly, such strategies have special relevance for the company communication and marketing departments. The market penetration of the internet of about 80% in the USA impressively emphasizes the relevance of this kind of strategy. Therefore, the steps taken by Comcast to observe and interact in user generated communication channels appear to be extremely logical. Comcast surely is far from being the only company which uses monitoring in the field of CRM. Comcast is one step ahead, though. For the cable giant, listening to customer dialogues on the internet is just one side of the coin. The other is the direct approach of critical aspects by CRM managers. Concerning the advantages of this dialogue, the responsible CRM manager of Comcast states:
“When you’re having a two-way conversation, you really get to clear the air,”
This step taken by Comcast will prove successful in future. After all, the use of online communication channels is no longer a temporary phenomenon. On the contrary, these channels increasingly become an integral part of the communication between consumers, clients and companies. With regard to this CRM strategy, Brian Solis says:
Conversations are taking place with or without you online each and every day. Now for the first time, companies have a direct connection to those public voices that are challenging your messages and mission to shape perception and/or learn from the experience to fix the very things that fueled the conversation in the first place. If you don’t respond, someone else will, most likely in the form of competition seizing the opportunity to convert your dispirited customers into new prospects.
Whether you want to believe it or not: In Germany there is also an increasing number of discussions about products, brands and services within user generated media. Observing the current growth rate one can state that it will not take long until the internet use in Germany will rise from 60% to 80%. The increasing success of online communities, weblogs and social networks in Germany is yet another indicator for the fact that the social media have become an integral and company relevant institution of communication in Germany, too. Gone are the days for providers in B2C when such social media strategies could be financed from fossil budgets. Thus, it is time for every company to get prepared for a direct dialogue with its customers within the social media.
July 31st, 2008 by Nils Maier
Quite interesting and revealing statistics concerning the scopes of the U.S. election strategies 2.0 have been published. According to Pew/internet, approx. 46% of the over 18-year-olds actively use the internet for their political decision-making. As per survey conducted by the government of the United States of America, this adds up to over 50 million U.S. citizens. Here, two activities are especially prominent: 35% of the Americans have watched election speeches via YouTube and 10% are actively participating in social networks in order to form their political commitment.
However, it is a misapprehension to believe that the emphasis placed on online election campaigns was initiated by Barack Obama and his team. Election campaigns in 2004 already showed a clear tendency in political decision-making towards a manifestation of online channels. In autumn 2004, approx. 34% of all Americans were already gathering political information via online communication channels. After all, Facebook was still in the fledgling stages at that time and YouTube was not yet online. These types of media eventually seem to have supported this development.
The major American parties appear to have understood the social development concerning the media usage of their target group and voters. According to Pew/internet over 80% of the Americans are already online. Therefore, a possible conclusion would be that Americans include more and more offers, such as YouTube, MySpace and Flickr, into their personal media mix as a new means of communication and source of information. For this the U.S. election planners must be prepared. So far, they have put it into practice quite successfully. Furthermore, the social media activities of individual candidates obtain an immense international scope. This, surely, is also a reason for the current “Obama Hype” in Germany.
July 29th, 2008 by Nils Maier
On Monday morning I came across a highly interesting article in the Financial Times. The title of this article was Peace for Pixels. The article introduced a start-up from the Silicon Wadi. The company provides its clients an operating system which is not tied to a specific Mac or PC but can be used worldwide via browser and with any internet access. For the user, this service is free of charge and it enables him to access his self-made browser desktop from every web-enabled computer. The domain name g.ho.st also is the motto, at which g.ho.st is short for Global Hosting System. By means of the Palestinian browser desktop, it is possible for the user to administer his emails or have access to his previously filed Word documents, for example. The number of offers, which can be integrated into the g.ho.st desktop, increases from day to day. In order to guarantee a secure and comfortable access for the user, g.ho.st resorts to Amazon as web hoster. Below, the CEO of g.ho.st, Zvi Schreiber, provides a bit more insight into the idea behind the web-based operating system:
In addition to the highly promising technical idea behind g.ho.st, the way the Palestinian start-up works is also worth mentioning. Beside commercial success, Schreiber’s concept when founding this company was to encourage peaceful dialogue in the Middle East. The start-up is supposed to serve as a role model for international understanding in Palestine. G.ho.st has two pillars in this region. One office is located in the Israeli city Modi’in, the other in Palestinian Ramallah. Although the two towns are geographically only a one hour’s drive apart, the distance which is the origin of conflicts between Palestine and Israel is not conquerable without further ado. Nevertheless, in order to facilitate an effective cooperation a continuous video hook-up connecting the two offices has been arranged, for example.
Zvi Schreiber demonstrates the fact that the conflict between the Palestinians and the Israeli can also be peacefully solved by cooperating. In its own special way, the project g.ho.st illustrates the positive and highly innovative synergies which can result from such ideas.
June 10th, 2008 by Fiana de Guzman
The whole world of media, communications and advertising are going to be turned upside down, said Microsoft’s CEO Steve Ballmer in an interview with The Washington Post on how he expects the media to change in the next 10 years. In this respect, he addresses interesting ideas and problems everyone might have already thought about themselves.
Ballmer starts off stating, that at some point in the future, there will be no media consumption that is not delivered over an IP network. Interestingly enough, he even expects magazines and newspapers to be only available in electronic form leaving their original paper form behind. A change that sounds quite sci-fi – at least to me – and is hardly going to happen in the near future, but rather in the next 20 years or so.
Another very important aspect Ballmer addresses is the one of ‘Social Interaction.’ He argues that, in order to make TV more interactive, it would have to be delivered over an IP network:
I mean, it’s sort of funny today. My son will stay up all night basically playing Xbox Live with friends that are in various parts of the world, and yet I can’t sit there in front of the TV and have the same kind of a social interaction around my favorite basketball game or golf match. It’s just because one of these things is delivered over an IP network and the other is not. . . .
Furthermore, Ballmer predicts the existence of far more producers of content than there are today – a phenomenon that can already be observed in the online world. He underlines this thought by bringing up his favorite case: Why can’t I sit in front of my television and watch the Country Day [his old High School] basketball game when I know darn well it’s being video-recorded at all times?
To the question whether internet content will be available for free, with ad support, in contrast to fees and subscriptions, Ballmer reveals that he already watches his favorite TV program “LOST” on the internet instead of buying it on iTunes even though he has to put up ads. He therefore thinks that subscriptions will be the exception in the future.
Why? Because it’s free. . . . I have to admit that I’m annoyed by the four 20 seconds [of ads], but not annoyed enough to pay a buck . . . I think at the end of the day most people say, “Heck, if I can get something that’s pretty good that’s ad-funded and the ads don’t kill me, I’ll take that over the thing I gotta pay for.”
True, isn’t?!
May 15th, 2008 by Nils Maier
Social networks enjoy increasing popularity with internet users. There is hardly a better way to take care of one’s personal circle of friends or business network. But which communities enjoy a good reputation with their German and English users and which do not? Which networks within the eight surveyed linguistic areas is talked about most frequently on the web? Which opportunities do network operators provide for marketers to use these platforms for advertising purposes?
The international social network study illustrates: within the channels of communication in German user generated media, SchülerVZ receives the worst image values according to the evaluations. In English-speaking areas, xanga.com achieves only bad image values whereas the international buzz is focussed on Facebook, Myspace and LinkedIn. In German-speaking areas, StudiVZ achieves the first place in the buzz index ranking. Concerning marketing strategies, traditional banners are still the prevailing choice for marketing within the social networks. Widgets are up and coming. The appeal of these small web applications lies in their immensely far range of coverage and they are increasingly provided by networks.
„The results of this study illustrate the prominent role of social networks within the environment of user generated media. No matter if within the EU, North or South America – In the future, social networking will more and more become one of the established social channels of communication. This is the specific reason why the appeal of networks will become particularly stronger for marketing departments. Although the first large-scale behaviour-targeting attempts of various network operators had to be classified as failures, the general marketing qualification of social networks should not be questioned. Take widgets, for example. These small programs are just one of the possible methods which lead to successful marketing.
But although they have many tempting possibilities in social networks, advertisers should not lose contact with the users. The key for successful marketing of social media offers lies in the direct and outspoken communication with the users…” says David Nelles, Company Spokesman of ethority GmbH & Co. KG.
For more than 10 years, ethority GmbH & Co. KG is successful at the market being experts in semantic web analyses and online marketing. ethority’s expertise includes market research and online marketing as well as the analysis, initiation and realisation of word of mouth campaigns in Germany. Here, ethority is not confined to the German-speaking market but is able to serve all international markets by means of their multi-lingual approach.
May 13th, 2008 by Nils Maier
Within the channels of user generated media, family holidays are the most frequently mentioned issue. Users in weblogs like to discuss the topic of winter holidays, whereas a vacation in the snow does not enjoy great popularity in online communities. Here, users prefer to talk about cruises, while this topic cannot be found under the bloggers’ top 5 ways of travelling. Moreover, and in contrast to active online community members, bloggers rather choose to have conversations about package tours. Concerning the ways to travel, bloggers and online community members seem to agree on adventure and city travels. In both channels of communication, they are the most frequently discussed.
Top Ways to Travel – Online Communities:
Cruises
Last Minute
Adventure Vacations
City Trips
Family Holidays
Top Ways to Travel – Weblogs:
Package Tours
Adventure Vacations
City Trips
Winter Holidays
Family Holidays
Users in weblogs and online communities also agree on the way of booking travels. At this, statements for booking offline have the lion’s share of the topics. About 2/3 of the statements on both channels are allotted to the traditional booking method. This confirms the results of the recent AGOF study. Consumers like to obtain detailed advice in the user generated channels but prefer to book offline in a travel agency.
Booking Methods – Online Communities:
Internet
Travel Agency
Booking Methods – Weblogs:
Internet
Travel Agency
The here described booking behaviour indicates the path that marketers have to take in the future. The increasing consumer focus on information concerning products or travels in online domains sets new benchmarks for a successful marketing mix. No matter if it is a large-scale print campaign or an elaborate TV spot – traditional forms of advertisement impress consumers to a lesser and lesser extend. Therefore, it is essential to meet the consumer where he increasingly searches for information. More and more often, customers use portals such as Holidaycheck, TripAdvisor or Opodien in order to obtain information about their potential travel destinations and holiday accommodations before booking. In any case, marketers of the tourism industry should be prepared for this tendency, especially in consideration of the current number of internet users. By now, according to the latest survey of Bitkom, already 63% of the Germans roam the internet.
May 13th, 2008 by Nils Maier
Regarding travels outside Europe, the US and Asia are clearly the main topics in weblogs and online communities. This resulted from the quantitative analysis of consumer comments in the current study. For the intense buzz in the United States, surely the decisive factor is the favourable dollar exchange rate because of which the US has become something like a shopper’s paradise.
In online communities, the African continent ranks third as a potential travel destination, whereas it ranks fifth concerning the overall buzz in weblogs. Bloggers show a greater interest in American Oceania and South America.
This quantitative netnographic study was based on 6500 user opinions in weblogs and online communities concerning the topic of Social Networks. The categorized and evaluated comments originate from ca. 1000 blogs and 400 online communities which have been located with the assistance of the gridmaster technology. Within the scope of this process, the respective channels of communication, topics and the tonality of the comments have been recorded.
The ethority study illustrates the importance of the channels of communication within web 2.0 for the tourism industry. Online communities and weblogs are increasingly used by consumers as relevant sources of information. Furthermore, recommendations, which are exchanged in these channels of communication, exert direct influence on booking decisions. The studies conducted by the American market research institute eMarketer, in collaboration with Deloitte (2007), are able to document this influence by means of their data.
