Wrong Place, Wrong Time

100 days ago Facebook’s IPO fiasco stunned Wall Street and at least some of the world.  We have learned that the IPO price was inflated because Wall Street needed a big winner and some combination of Facebook executives, underwriters and analysts overvalued the stock.  It appears that the overvaluation was complicated by the NASDAQ mishandling of the IPO (NYT).  What is not talked about as frequently, however, were all of the blogs and articles that questioned Facebook’s valuation prior to the IPO.  For example, Steve Henn and Zoe Chace devoted a week of broadcasts (the week leading up to the IPO) exploring Facebook’s value.  One great statistic they provided on May 15, 2012 was the price-to-earnings ratio of Facebook: “At current levels, it would take Facebook 100 years to generate enough profits to pay for itself.”  They then translated that ratio into advertising dollars: “Facebook will need to attract 10 percent of all advertising dollars spent on the planet ‘across all media – print, billboards, radio, television, Internet.’”  It is amazing to think that anyone believed that Facebook by itself could attract this amount of world-wide spending.  Yet, investors were legitimately attracted to Facebook as the marketing platform of the future.  Were those people crazy?  Maybe not.

Rather than dwelling on what has happened, what do we see if we focus on what will happen?  Does Facebook’s failed IPO provide an indicator of the future of social media?  I think that the answer is ‘yes,’ and that the direction it points is in fact to an increase in the use of social media through next generation social media platforms that build on Facebook, Twitter, and Linked In successes.  Earlier this month Bill Lee wrote a purposefully provocative article for the Harvard Business Review Blog entitled “Marketing is Dead”:  “Many people in traditional marketing roles and organizations may not realize they’re operating in a dead paradigm.  But they are.”  Lee justifies this assertion by pointing to studies that indicate that consumers define their own pre-buying research rather than follow marketing cues, and other studies that demonstrate corporate fatigue with paying for marketing campaigns that cannot show clear ROI.  He also cites Facebook’s IPO as an example of a last gasp of traditional marketing.  Lee suggests that companies should realign their efforts, focusing on “community marketing” and Word-of-Mouth efforts through social media.  Peer-to-peer marketing efforts, he asserts, are the ones that may succeed in the future.

Lee’s article is interesting in that it appears to contradict itself:  on the one hand, it calls Facebook a diversion, and, on the other hand, holds out social media as the platform of the future.  In fact, Lee is simply demonstrating the ironic issue with Facebook that helps to explain the problematic IPO.  Think back to the Henn/Chace statistic.  Investors fully expect that 10% of all advertising will and can be controlled by social media.  The problem is that Facebook was the wrong tool at the wrong time.  Traditional marketing structures continue to compete with and coexist with social media.  Social media, likewise, is in its infancy.  Facebook is too big, undifferentiated and unwieldy for business use.  It is too unreliable as a corporation to build much consumer trust.  Finally, it is simply not technologically advanced enough to fully inhabit mobile devices.  As social media communities grow, segment, differentiate themselves, and demand better service from corporations, social media will eclipse traditional media.  The “social capital” that Lee discusses will accumulate around individuals and communities in the social network, and businesses will fully shift their newly reformed marketing efforts to those locations, too.

Resources:

CNBC Market Alert – Facebook IPO Blame Game.  Retrieved from http://video.cnbc.com/gallery/?video=3000111062

Henn, S. & Chace, Z.  (2012, May 15).  Is Facebook Worth $100 Billion?  NPR Planet Money, Retrieved from http://www.npr.org/blogs/money/2012/05/15/152736516/is-facebook-worth-100-billion

Lee, B. (2012, August 9).  Marketing is Dead.  HBR Blog Network, http://blogs.hbr.org/cs/2012/08/marketing_is_dead.html

Rooney, B. (2012, August 21).  Facebook:  A Desperate Need to Be ‘Liked.’  Huff Post Tech, Retrieved from http://www.huffingtonpost.com/brian-rooney/facebook-stock-price-mobile-app_b_1811548.html

Rusli, E.  (2012, August 22).  Citigroup Assails Nasdaq Over Flawed Facebook I.P.O.  DealB%k, New York Times, Retrieved from http://dealbook.nytimes.com/2012/08/22/citigroup-blasts-nasdaq-over-facebook-i-p-o/

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Super Mario Teaches a New Generation

Imagine the scenario – your child is devoted to his Nintendo DS XL.  He is allowed 1 hour per day to play it, and Legos Star Wars and Mario Kart are in constant rotation.  One afternoon he is allowed to recharge it himself, and in a moment of frustration, forces the connection and bends all of the pins.  There is no way to straighten them, there is no way to fix the unit.  What does a loving parent who believes in teaching the consequences of ones actions do?

First we explained to our 7-year old that he had to be more careful and would be responsible for helping to pay for repairs.  Then we went out to the internet to find solutions.  Ultimately, the blog and tech consensus was to send the device back to Nintendo.  Which we did.  Two weeks later it came back, fixed, no charge!  Nintendo actually enclosed a letter tailor-made for parents of young children that explained that this was the ONLY time the company would perform such a service.  Next time . . . .  I love Nintendo.

Nintendo’s snail mail customer service, however, is not duplicated by its online services.  This seems odd for a company devoted to plugged-in customers.  First of all, Nintendo needs to have a parents’ site available.  Clearly they understand that at least part of their audience is under 10 (or acts like someone under 10 years old).  Why not create a dedicated parent’s site?  How about a parents’ Twitter feed that would allow us to be up to date on releases and issues that arise?  Why do we have to be nagged by our children – companies should reach out to us and give us the good information we can use to decide on the best birthday and holiday gifts.  Currently I go to Amazon.com to read reviews.  However, given Nintendo’s market share, I would like to know how they could empower us, parents, to partner with them to offer better information to the pocketbooks that pay for the games.

Nintendo – please create a parent site.  Give us information and help us create the conscientious consumers that your form letter indicates is important to you as a company.Help us Nintendo

Nintendo – Please allow us to have easy access to releases and new versions in a forum for parents.  MyNintendoNews on Twitter is not tailored enough.

Nintendo FacebookNintendo – Facebook would be a great place for a parents’ page.  Let us interact, comment, and help you create a friendly marketing environment for our children.  We know they love it – we just want to know more about it.

Parents want to be involved in their children’s lives, and the old model of advertising sugar cereals and junk food on Saturday morning during Scooby Doo and the Laugh Olympics doesn’t work in the age of computers and social media.  DeadMau5 ensures that Super Mario will remain in my child’s lexicon for at least another 10 years.  Nintendo – help us help our children understand the responsiblity that comes with expensive game units and negotiating techno!

Sources:

Laugh Olympics Intro.  You Tube.  http://www.youtube.com/watch?v=EC4l-P20V-Q

Nintendo.  Homepage. http://www.nintendo.com/?country=US&lang=en

Nintendo.  New Super Mario Bros Walkthrough, Part 1.  You Tube, http://www.youtube.com/watch?v=srpkwSB8SnY&feature=player_detailpage

Schulman, J. (2011, March 29).  A day with deadmau5:  LEDs, Super Mario, and techno.  Engadget, http://www.engadget.com/2011/03/29/a-day-with-deadmau5-leds-super-mario-and-techno/

Scooby Doo Introduction.  You Tube.  http://www.youtube.com/watch?v=0_C2HJvtRDY

“It can’t be just ROI. It’s relevancy!”

Never have truer words been written about the shifting sands of marketing in the second decade of the 21st century.  As Mark Schaefer points out in a recent blog, companies need to understand that innovating within the social media sphere is simply part of doing business these days.  Furthermore, a website alone won’t cut it:  “68 percent of the Fortune 100 companies had a year-over-year decline in their website page views” because people want the relevant information parsed out and provided as needed (Schaefer).  Who wants to read a website when a twitter posting has the information required?

For mid-sized businesses, however, websites offer safety and ease of administration.  The also offer a marketing team a centralized location for coherent messaging.  One marketing person can monitor web traffic, add content through administrator panels, and send out emailed newsletters with embedded weblinks on a regular basis.  However, building out the website into a hub for Facebook, Twitter, and Linked In becomes a full-time social media job, particularly when “listening” to the echoes and responses is added to the responsibility list.

As mid-sized firms, such as financial services, law firms, banks, and insurance companies look to the daunting world of social media, they should take heart that they are getting involved in a maturing industry.  No longer will they need to wade into the weeds alone – there are many third-party and consulting firms that offer management tools that help to format and place content across the social media stratum.  Layla Revis, VP at Ogilvy describes six of these tools that she feels will gain adoption in 2012:  Buddy Media, Vitrue, Context Optional, Involver, Shoutlet, and Sprout Publisher.  The great thing about the management software she describes is that it packages the posting abilities with analytic tools that help assess the impact that postings are making.  These tools allow businesses to use their resources wisely to become relevant.  By investing in a dedicated social media team to listen and produce content, businesses can ensure their own future through monitoring their efforts.  As Schaefer points out in his blog, longevity depends on engaging in social media.  Customers and clients expect to find their goods and services on their phones, GPS devices, and by 2014, in their eye-glasses.

Sources:

Manjoo, F. (2012).  You Will Want Google Goggles.  Technology Review.  http://www.technologyreview.com/review/428212/you-will-want-google-goggles/

Revis, L. (2012, July 6).  The Best Social Media Management Tools for 2012.  The Huffington Post Blog.  http://www.huffingtonpost.com/layla-revis/social-media-management_b_1648177.html

Schaefer, M. (2012, July 12).  It’s not just ROI.  It’s Relevance!  Business Grow.com @markwschaefer.  http://www.businessesgrow.com/2012/07/12/its-not-just-roi-its-relevance/

Theme Park Magic – Branding Experiences on Twitter

We just returned from a three-day trip to Disney World.  We were there to celebrate my father’s 80th birthday and had three generations of our family on the same rides I went on as a child – It’s a Small World, Pirates of the Caribbean, and Peter Pan.  On the first day we all wore t-shirts in celebration of my father’s birthday.  It was amazing the number of people who stopped us to say “Happy Birthday” or “Where’s the birthday boy” or who congratulated my father on making it so far and looking so fit.  While some of those people were Disney employees, the vast majority were other visitors to the parks.  Disney World is a place where people actively engage and interact with their environment.  They come to the park expecting a hands-on experience, and expecting to be in touch with the people, characters, rides, and other visitors.

This same spirit of interaction is evident in Disney’s Twitter strategy.  Look at only the official Disney presence on Twitter:

Handle Description Followers
@WaltDisneyWorld The official Twitter feed for the Walt Disney World   Resort 338,187
@Disneyland The official Twitter feed for the Disneyland Resort-covering   Disneyland Park, Disney California Adventure Park, Downtown Disney and   Disneyland Resort Hotels 215,476
@DisneyCruise The official Twitter feed for Disney Cruise Line 69,971
@DisneyParks The official Twitter feed for Disney Parks & Resorts-covering   Disneyland Resort, Walt Disney World, Disney Cruise Line and properties   worldwide 251,989
@DisneySports The official Twitter feed for sports across all   Disney Parks 19,196

 

This list does not even include more specific Disney handles such as @runDisney, or fan threads such as @DisneyWorldMom.

Compare Disney’s Twitter profile to Universal Studios:

Handle Description Followers
@UORnews Official Twitter for Universal Orlando Resort 32,586
@UniStudios The official Universal Studios Hollywood (Theme Park) Twitter 42,483
@UniversalPics Welcome to Universal Pictures 201,836

 

Both Disney and Universal are multinational media empires.  The Walt Disney Company owns all of the Disney brands, Touchstone, Pixar, ESPN, and the ABC News brands (The Walt Disney Company).  However, the Disney theme park’s social media presence emphasizes the many types of family-oriented experiences that guests can have through the Disney brand.  They offer everything from theme parks, to cruises, to sporting events.  Disney’s strategy is to focus on the interactive experiences that guests can have in multiple venues through Twitter (and of course its other online vehicles, including its website, YouTube channels, and blogs).

Universal (part of UniversalNBC) is a subsidiary of Comcast, whose brands also include all of the NBC franchises (MSNBC, CNBC), Telemundo, Bravo, Sprout, Xfinity, Oxygen, and hosts of popular TV shows and films (2011 Annual Review).  Universal’s strategy is to cross-promote its familial brands.  Hence, the theme parks become forums through which to sell the other entertainment offerings.  The difference between these two brand strategies can be illustrated by comparing the Twitter image associated with @WaltDisneyWorld and @UORnews, and the “following” lists of each profile.

@WaltDisneyWorldhttps://twitter.com/#!/WaltDisneyWorld/following has only 77 follows, including bloggers on Disney, news about Disney, travel advice, and a few Disney staff.  The banner image is the iconic centerpiece of the Disney brand, Cinderella’s Castle, paired with the “W” from Walt Disney’s signature as the tweet image.  In fact, all of the Disney images are variations on the official Disney logos.  They do not explicitly reference the popular characters.  Rather, the inhabitants of the Disney films and parks maintain real-world  existences in action films, games, toys, clothing, and of course in the parks themselves.

 

 

In contrast, https://twitter.com/UORnews has 407 follows.  However, sprinkled among the bloggers and fans are celebrities, characters, and films under the Universal/Warner Brothers umbrella, Despicable Me 2including @ConanO’Brien, @DespicableMe, @SpongeBob, and @kelly_clarkson.  Furthermore, the media connections of the brand are expressed in the fact that it follows major news and television outlets from around the world.  The image displayed (currently) on the Orlando theme park is a shot from the current film Universal Studios is promoting, next summer’s release of Despicable Me 2 (slated for June 2013).  The connections between these different aspects of Comcast (the different personalities, artistic products, and news feeds) help to create relationships that extend interest and loyalty from one brand to another.  It also leverages the highly popular personalities to make consumers aware of other aspects of the company.

 

 

Disney has a cohesive brand focused on family entertainment that enjoys instant recognition.  Their diversification strategy, therefore, has a common center that holds the pieces in place.  By contract, Comcast is in multiple, related, media areas, and needs to more actively connect the dots for the consumer.

Book Buying and Beyond

One of the great traditions of elementary school in the US is Scholastic books.  I remember bringing home the paper catalog, choosing a book, placing my order through my teacher, and a few weeks later getting my book at school to bring home to read.  It was a real treat.  Of course, these days, Scholastic books are a huge online extravaganza.  Although my child still brings home paper catalogs, the ordering can happen online.  The order goes to the teacher, I pay with my credit card, and the book comes home same as always.

The website has some tremendously valuable attributes.  First, it can be searched via a number of methods, including by the paper catalog issue/page, by author or main character and by age/school level.  Second, the site includes educational and instructional materials for parents, as well as expanded merchandise selections.  Third, the site allows teachers to interact with parents.  The teacher can suggest books that the students in the class might use, and teachers receive points that they can use to purchase instructional items for the classroom based on the amount of money that parents spend that year.

Scholastic has moved beyond books and into learning with a capital L.  Recommended reading lists that blend marketing with information are posted, but they are enlivened by commentary from actual parents.  See the comments on the Top 100 Books listing, including suggestions of books that are missing (Chicka Chicka Boom Boom, Roald Dahl titles, and no Laura Ingalls Wilder).  Blogs include advice on how to help children attain reading and writing literacy.  For example a recent article found via the parents Scholastic Facebook page (but hosted on Scholastics’ website) shows how to set up a writing center for children 5-7.  Beyond that, however, photos make the Scholastic Facebook timeline bright and helpful.  Children’s cardboard box structures, dog photos, and book covers illustrate the creativity that accompanies child critical thinking and literacy skills.  Click here for a great example of what kids can do with boxes!

In fact Scholastic is moving to compete with Kindle and the Nook.  Their website includes links to different apps that allows me to use the Scholastic books with my child in a few formats (including a mobile app that records the amount  of time the child reads as part of a summer challenge to motivate reading, and an e-book app).  The e-book app just won the “2012 Editor’s Choice Award” from The Children’s Technology Review (PR Newswire).  According to the company’s summary of the first quarter of 2012, e-Book sales were a large part of its 10% growth (Scholastic reports).

A 2010 Harvard Business Review story overviewed a new model of consumer behavior called the “consumer decision journey” (CDJ) which was originally introduced in a June 2009 issue of McKinsey Quarterly (Edelman, p. 1).  The CDJ model replaces the sales funnel model, showing that consumers spend more time in the evaluate, enjoy-advocate-bond parts of the purchase process than in the traditional winnowing process the funnel model emphasizes (Edelman, p.8).

CDJ ModelFigure A (Edelman, p. 8):  CDJ model – the post-purchase phase is extended and retains a relationship with the product.  Consumption is not limited to the immediate purchase, but includes more emphasis on the emotional connection the consumer feels to the brand through the social process of sharing the experience with others.

 

 

 

Figure B (Edelman, p. 8):  Traditional sales funnel – all of the emphasis is placed on the movement from awareness to decision in the pre-purchase phase.Funnel Model

The new open-ended relationships that consumers have with products, created by easy access to information sharing, means that retailers need to renew focus on creating a reliable, coherent message that aligns in reality with their product.  Scholastic’s entry into the book app market, with its track-record of helping parents help their children, is another win for parents who want to foster literacy and creativity within our upcoming generation.

Sources:

Edelman, D. (2010).  Branding in the Digital Age:  You’re Spending Your Money in All the Wrong Places.  Harvard Business Reviewhttp://hbr.org/2010/12/branding-in-the-digital-age-youre-spending-your-money-in-all-the-wrong-places/ar/1

Scholastic, Inc. (2011, September 22).  Scholastic Reports Strong Fiscal 2012 First Quarter Results.  Scholastic Media Room, Retrieved from http://mediaroom.scholastic.com/node/498

Scholastic, Inc. (2012, May 24).  Scholastic Storia Awarded The “Editor’s Choice Award” by Children’s Technology Review.  PR Newswire, Retrieved from http://finance.yahoo.com/news/scholastic-storia-awarded-editors-choice-170600046.html

Facing the Future

Does the Facebook fiasco of the last week matter?  It does, because it identifies the forces and tensions that are struggling to determine control of social media and the future of virtual communities.  In one corner are the companies that structure the internet, such as Facebook, that create the technological interfaces that bring people into contact with other people, goods, services, and information.  In another corner, there are the investors, corporations, companies, and other institutions who hope that these communities will serve as markets and prospective client bases that will generate profits.  In a third corner there are the various individuals who hope to engage with other individuals, companies, and other information sources in an honest, trustworthy manner.  As the Facebook story shows, there is no simple alignment between these forces.  For a full blow-by-blow of the last week, see Julianne Pepitone’s CNN Money Blog.  The key question, however, is simple.  What is Facebook worth?  From the investor perspective, does Facebook have a clear plan for how it will monetize the personal information that users provide to it in overwhelming amounts every day?  From an individual user perspective, does this plan provide enough benefits to keep the daily download of free and valuable information flowing?

It is easy to understand why Facebook’s collection of data makes marketers salivate.  Users willingly share contextualized information about who they know, how they know those people, and what interests they share.  The majority of adults who use social media, according to a 2011 Pew Internet Survey, use it to stay in touch with current friends (67%), family (64%), and old friends (50%); the next highest reasons are sharing hobbies or interests (14%) and making new friends (9%).  Marketing 101 tells us that the way to a consumer (or client’s) heart is through his/her needs.  Propose a solution to a clearly defined problem and the sale is at least half made.  Marketing 101 also tells us that people are more likely to trust information from known sources, including people they know or organizations they trust.  Publicize a product or idea through word of mouth, and obtain stronger credibility and more lasting awareness.  The contextualized information available through Facebook is a treasure trove of information that marketers can use to sell effectively.  Just browse Inside CRM’s 100 Tools and Tips.

So why the doubt this week?  First, investors are not convinced that they will receive a return on their investment.  One question is whether Facebook has the technological infrastructure in place to literally translate ‘likes’ into sales in a structured, guaranteed manner. The technology for culling through the mass of information to identify the most lucrative correlations and act upon them in a timely fashion may not be mature enough yet.  However, there is another issue.  Will the Internet communities created through technological interfaces such as Facebook remain constrained by those technologies?  Or, will they also mature, and demand more communal control over the terms of their participation?

Sources

Editors.  The Facebook Marketing Toolbox:  100 Tools and Tips to Tap the Facebook Customer Base.  Insider CRM, Retrieved May 26, 2012 from http://www.focus.com/fyi/facebook-marketing-toolbox-100-tools-and-tips-tap-facebook/

Pepitone, J. (2012, May 23).  Facebook IPO:  What the %$#! happened?  CNNMoneyTech. Retrieved May 24, 2012 from  http://money.cnn.com/2012/05/23/technology/facebook-ipo-what-went-wrong/index.htm

Smith, A. (2011, November 15).  Why Americans Use Social Media.  Pew Internet Survey.  Retrieved May 24, 2012 from http://www.pewinternet.org/Reports/2011/Why-Americans-Use-Social-Media/Main-report.aspx

Virtual Worlds for Virtual Consumption – Or, how to enjoy a cup of coffee online

Starbucks mocha-frappuccino-blended-coffee

Where can you record a custom soundtrack, visualize a custom beverage, and twitter the results to your best friends?  Starbucks of course.

Build your drink hereRecord your track here.

McDonald's Iced Coffee

Now what does McDonald’s offer?  Tasty coffee, but hardly an interactive, engaging online experience.

 Select your flavor here.

Dunkin' Donuts Coffee

How about Dunkin’ Donuts?  You can watch people walking outside of the NYC Dunkin’ Donuts in Time Square.  Great to know that DD has a NYC store, but what does that mean to me driving to work in Tallahassee?  Two clicks in, a visitor learns that DD uses Fair Trade coffees. 

Watch the webcam hereLearn about the story of DD Fair Trade Certified Espresso here.

Consumables have two challenges they must negotiate as they expand into social media.  First, as consumables brands embrace web 2.0+, they need to think about the relationship between themselves and their customers in new ways.  Perhaps the simplest way to phrase the question, is how can a consumable like coffee BE relevant online?  Second, the competition is these markets is fierce.  How can a company that sells coffee in paper cups obtain a cutting edge presence without the help of the taste, smell or feel of its product?

Starbucks has crafted and recrafted a brand that creatively entices consumers into enjoying the brand, visiting the website, and viewing a coffee as a luxurious necessity of life.  The coffee experience includes fun apps, music DVDs, poetry, and stories.  Starbucks’ social media presence extends from and returns to the stores via Facebook, coupons, the grocery store, and back via twitter to their website.  In 2010, the Starbucks social media team identified 10 elements of their strategy, the core of which is to enhance communications with customers at multiple levels simultaneously assuming, however, that these communications will intersect, enhance, and echo each other (Belicove, 2010).  Integrated marketing across the spectrum of relationships is given focus, according to the team, by understanding that the reality of being relevant is keeping up with the buzz:  as Belicove writes, “If it doesn’t matter on Twitter, it doesn’t matter.” 

Not only has Starbucks weathered a downturn in its profits, it has fended off competition by McDonald’s and Dunkin’ Donuts.  Certainly an upbeat economy helps, as does a unique market position as a specialist in coffee products (Misonzhnik, 2011).  Equally important, however, is that Starbucks is a specialist in coffee culture.  Not content to merely meet competition, Starbucks pushes the boundaries of social media with information, entertainment, and new features.  Their specialization in changing with their audience allows them to beat the competition online and in the ‘real’ world. 

The key to Starbucks’ success, it seems, is that it aligns its social presence across worlds, virtual and ‘real’ and allows customers to move seamlessly from one to the other.  So, how do you enjoy a cup of coffee online?  Go to Starbucks and see for yourself.

Sources:

Belicove, M. (2010, April 1).  How Starbucks Builds Meaningful Customer Engagement via Social Media.  American Express Open Forum, Retrieved May 17, 2012 from http://www.openforum.com/idea-hub/topics/marketing/article/how-starbucks-builds-meaningful-customer-engagement-via-social-media-1

Find Your Flavor.  McDonald’s, Retrieved May 16, 2012, http://www.mcdonalds.com/content/us/en/promotions/icedcoffee.html#

Frappuccino Drink Builder.  Starbucks, Retrieved May 16, 2012, http://frappuccino.com/en-us/drink-builder

Home Page.  Dunkin’ Donuts, Retrieved May 16, 2012, http://www.dunkindonuts.com/content/dunkindonuts/en.html

Misonzhnik, E. (2011, April 27).  Starbucks Recaptures Its Position at the Head of the US Coffee Market.  RetailTraffic, Retrieved May 17, 2012, http://retailtrafficmag.com/retailing/analysis/starbucks_recaptures_lead_coffee_04272011/index.html

Remix Soundboard.  Starbucks, Retrieved May 16, 2012, http://frappuccino.com/en-us/remix

The Espresso Story.  Dunkin’ Donuts, Retrieved May 16, 2012, http://www.dunkindonuts.com/content/dunkindonuts/en/coffee/espressostory.html