Marketing | Social Media University, Global (SMUG)

Frost & Sullivan Keynote: Siisi Adu-Gyamfi

Siisi’s keynote on finding a balance between growth and profitability was interesting. He’s with Textron. One of his opening points was about the futility of businesses continually squeezing suppliers for lower costs. For example, if GM squeezes its suppliers too much, they can’t be profitable and will no longer be a supplier. Instead, you need to think creatively about value creation.

In this model of seeking new business, you create a Reference Value based on the price your competitors are currently charging for their product or service. Then you think creatively of alternatives that can meet the customer need differently. Add the economic value of positive differentiators, where you are creating extra value. Subtract the value of negative differentiators, where your offering doesn’t quite provide what the competitor does. If you do it right, you’ll create a Total Economic Value (TEV) for your potential customer that’s higher than the Reference Value, and can charge a price that splits the difference.

Siisi used the example of Snap-to-Connect hydraulic connectors, which are an alternative to threaded connectors. Instead of taking 60 seconds to connect, they take 3 seconds. Multiplying that 57-second difference by $50/hour times 160,000 connections, the savings per connection is $.87, for a product that costs $.50. Not hard to see why sales have gone to $100 million over the last eight years.

Kevin Hoffberg, who is moderating the blogging panel on which I’ll be serving tomorrow, has detailed notes here. He’s also leading our next session, a Peer Counsel roundtable.

Facebook Focus Groups: Prologue

I’ve written previously about how Facebook can be used disruptively to provide souped-up pictorial directories for churches and other organizations, how it can serve as an on-line booster club (complete with video and photo highlights and links to newspaper coverage) for high school and youth sports teams, and other “off label” uses of Facebook and Twitter. It doesn’t take a lot of thought to see how it also could challenge sites like classmates.com or reunions.com, particularly as people of the Stayin’ Alive generation (who have stayed alive) move into Facebook.

Facebook has some market research features that are part of its paid offerings, but there’s another way companies or organizations could conduct qualitative research among current or potential customers or members. These could be either short-term focus groups, or ongoing customer panels.

In my next few posts I’ll take a step-by-step approach to creating these groups in Facebook. I’m attending the Frost & Sullivan Sales & Marketing conference in Litchfield Park, Ariz. over the next few days. I’ll be part of a panel on blogging, and blogging about what I learn there, but I think these qualitative research methods using Facebook that I’ll be describing could be an immensely practical and cost-effective way to interact with current or prospective customers or members.

Target Misses on Facebook Page

The Minneapolis Star Tribune reported yesterday on another big-brand misstep in social media, as a firm hired by Target to manage its Facebook page and its “Rounders” program asked its compensated advocates to conceal their identity when interacting on Target’s Facebook group. As Jackie Crosby wrote:

The hubbub began in early October after Siman received a Rounders newsletter as Target was launching a new Facebook page. Like many companies now setting up sites on Facebook and MySpace, Target hoped to get people talking about new products, get feedback and continue to find ways to promote its hip image.

“Your Mission: Try not to let on in the Facebook group that you are a Rounder,” the newsletter read.

“We love your enthusiasm for the Rounders, and I know it can be hard not to want to sing it from the mountaintops [and in the shower, and on the bus]. However, we want to get other members of the Facebook group excited about Target, too! And we don’t want the Rounders program to steal the show from the real star here: Target and Target’s rockin’ Facebook group. So keep it like a secret!”

Target’s vendor, a New York firm called Drillteam, obviously botched this on several levels. It’s bad enough to fail to remind people who are receiving inducements that they should be transparent about it. But to actively encourage your compensated advocates to “keep it like a secret!” and then, as Crosby reports, to wipe incriminating comments off your Facebook page, is extremely bad form.

Target is a generally highly regarded corporate citizen. They ran into a serious problem, though, when their marketers (or at least the vendor they hired) didn’t trust in the good will they had already built.

Social media can be a great way to show the good will you’ve developed, and to grow that good will when you have people who think highly of you sharing their opinions in public. It’s a good idea to provide a place, as Target did through its Facebook group, where that sharing can happen.

Offering inducements for positive comments was a big mistake. As is often the case, the coverup was worse than the original crime. Organizations getting involved in social media need to be absolutely transparent about it. Their first priority should be creating a great customer experience. Then if they create a social media outpost, whether through Facebook or a blog, they should trust that the good work they do serving customers on a daily basis will be reflected in the conversation that ensues.

Attempts at manipulation, and especially aims to disguise that chicanery, will almost always backfire. If Target knew what drillTEAM was doing on this project, then Michael Rubin is right when he says “this is much worse than a faux pas.” And it is an interesting double standard when compared with Wal-Mart.

Andy Sernovitz has further guidance on how marketers can stay out of this trouble, and Kaye Sweetser has the full story; it was her student that broke the story.

In this case it was about six weeks from the time this appeared in on Professor Sweetser’s blog until it made the Star Tribune, but this is another example of how badly done social media eventually will have mass media repercussions.

Technorati: Target, Facebook, drillTEAM, flog, social media, Rounders, marketing

Facebook Demographics Don’t Matter

In what may become a series of posts related to “things about Facebook that don’t matter” (which started with advertising click-through rates), here’s a link to a blog post (via TechCrunch) that outlines interesting demographics of Facebook users, including the fact that nearly two-thirds are women. In one sense that’s important to know, because for some decisions (e.g. health care) women are the primary decision makers.

But in another sense it doesn’t really matter what Facebook’s overall demographic breakdown is, as long as there is a significant number of people that might be interested in your product, service or organization.

So even if, for the sake of overstated argument, 90 percent of Facebook users were under 30 (they aren’t, but just bear with me), Facebook can still be a good place to reach an older group.

Why? Because Facebook is not primarily a mass medium. It’s a personal, conversational medium.

So, for example, if AARP wants to reach “U.S. Americans” over age 50 to become members, it would currently find over 377,000 people fitting those criteria in Facebook. Unlike mass media, in which you pay for the entire audience, AARP could advertise just to those who could qualify for its programs. And with the pay-per-click advertising model, the costs would be low. You’re not only not paying for the other 50+ million users who don’t fit your demographic; you’re also not paying unless those who are in your demographic click the ad.

Would Facebook be the cornerstone of an AARP membership marketing strategy? Certainly not. But it could be one element. And as Facebook membership continues to grow across all demographics, it can be a good way for all kinds of organizations to engage with and create a relevant community.

Technorati: Facebook, demographics, AARP, advertising, marketing, PPC

Facebook Ads Click-Through Rates Don’t Matter

Nick at allfacebook.com raises some interesting issues about the poor click-through rates for Facebook’s new advertising system. I subscribe to Nick’s blog and had meant to write about this, but appreciate Jeremiah Owyang making Nick’s post part of his weekly digest so it brought it to mind again.

I’m not sure why a low click-though rate on Facebook ads should matter to advertisers, if they are only paying for the clicks.

For instance, I ran a brief campaign in a major metropolitan area and was able to target to a specific age group and communities. For less than $20 I got more than 137,000 impressions and 39 clicks, or a click-through rate of about .03 percent.

But why does that low rate matter? Could I have bought even one 30-second radio ad in a top-ten market for under $20. Not a chance, unless it was a low-power obscure station with 1,000 listeners.

How about a newspaper classified ad? Not likely to get much for a pair of Hamiltons in newsprint, either. I certainly wouldn’t have been able to include a picture.

It’s doubtful I could get a single ad on any TV station, even in a bottom-10 market, for that price.

And if your potential “customers” are not concentrated in a geographic area, obviously national mass media are prohibitively expensive.

For radio and TV there also would be creative costs for ad production, whereas Facebook ads are do-it-yourself.

Which is why I think the advertising that will be successful on Facebook will be more like eBay and less like NBC. It won’t be the huge brands dumping their tens of millions of dollars into buying push advertising. It will be mom-and-pop shops targeting ads to people most likely to need their products and services. And it will be about two-way dialogue, not pushing out messages to amass eyeball counts.

Low click-throughs may not be great news in the short term for Facebook, though, because it only gets paid when someone clicks. But the Facebook management is walking a tightrope in trying to avoid the garishness of the MySpace experience for its users. This leads them to disapprove some ads for the simple offense of one capitalized word in the text.

The new Social Ads system is only a couple of weeks old. I think it’s too early to tell whether big corporations will find ways to use Facebook effectively. They’ll need to invest more in people (staff) to engage with the community and listen to customers, and spend less on just pumping out the mass-media messages.

But for smaller businesses, non-profits and others that haven’t had opportunities for widespread advertising reach based on demographics, I believe Facebook will be a great medium. For organizations that have loyal members or customers, it will be an excellent way to spread word-of-mouth as people become Fans.

And like Craigslist and monster.com, Facebook’s ad platform is one more serious challenge to newspapers as we have known them.

Technorati: Facebook, advertising, classified, radio, TV, newspaper, craigslist, social ads, monster.com, eBay