En route to Social Media 2.0?

On 2007 I wrote an article co-authored by my Master student Stefan Fountain* (published in 2008 in the Journal of Direct, Data and Digital Marketing Practice) arguing that businesses could use efficiently the Social Media (the term Web 2.0 was more popular at that time) as Marketing tools. As you might remember at that time businesses were looking puzzled and helpless to the alarming signs of growing customer empowerment through the Social Media Revolution. For me and those following the developments closely at that time, was clear that the Social Media will be the next big thing in the Internet evolution and the next frontier for business strategists.
Today, just four years later, the Web 2.0 / Social Media movement (described as Groundswell by Charlene Li and Josh Bernhoff) has been firmly embedded in the minds and hearts of online users and business strategists alike. The Social Media have also become substantial channels of political expression and tools of citizen empowerment beyond the control of states or regimes.   The online users using social media as part of their daily routines has reached the hundreds of millions. With more than 50% of consumers using “smartphones, social networks and other emerging tools” McKinsey talks in a recent report about the customer becoming a media junkie. On the other hand the staggering adoption rates of social media platforms like Twitter, Facebook, Flickr, YouTube and LinkedIn by businesses has created a gold rush atmosphere reminding the dot.com age. In a recent report published here in Holland presenting the results of a survey about the adoption of the social media by businesses (Social Media Monitor, 2011) we read that by now 90% of the top 100 brands in Holland have now adopted the Social Media as part of their strategy, up from 67% last year;  48% of them has already a Social Media Manager in place. This has happened for more businesses very swiftly: only 5 from the brands that participated in the survey were active in social media longer than three years while the majority (56%) was active between six months and two years in social media.
While the picture looks encouraging we could ask ourselves whether the social media as marketing strategy is reaching its maturity stage and more importantly what will be the next step. I am afraid that soon we will detect the first signals of saturation: Any marketing tool when adopted by everyone is losing its effectiveness and uniqueness. The same I would expect to happen with the Social Media soon, mainly as a result of the unbalanced focus of businesses in 4-5 social media platforms and the very limited use of the social media as tools for promoting innovation, co-creation and mass customization. In the above mentioned Social Media Monitor we can clearly see that social networks are hardly used for R&D purposes. Furthermore there is little attention on the identification of Brand Promoters or Super Promoters as customer influencers while the social media domain is underutilized by most SMEs as (free) source of market intelligence.

Al in all a mixed picture on the status of social media as strategic marketing tools. On one hand the threat of saturation due to one-sided focus, on the other hand opportunities hardly utilized. Time for the Social Media 2.0 era?
* Constantinides E., Fountain S., 2008, Web 2.0: Conceptual foundations and Marketing Issues, Journal of Direct, Data and Digital Marketing Practice, vol 9, nr 3, pp. 231 – 244

The airline cookie conspirancy: The myth investigated

In 2000 Amazon outraged some of its customers when it was revealed that different prices were charged for the same DVDs to customers with different shopping habits. This was the first widely discussed case of online price discrimination by web retailers depending on customer profiling. Since then online shops were often accused of using cookies in order to identify customers and charge them various prices. The discussion reached quite often the mass media where several cases of such practices have been revealed. The issue has been often become the subject of blogs: the airline industry, hotels and travel web sites in particular have been often accused of price discrimination based on customer cookie-based profiling. It is interesting that except Amazon who back in 2000 blamed a price test for the price discrimination and another case of a UK hotel that blamed a mistake in 2009 no online vendor has ever admitted in public that customer cookie-based profiling affects prices offered online.
Despite the mounting anecdotal evidence on the cookie conspiracy I was surprised to find out that no serious scientific research has been ever done on the issue. This while almost everyone of us can talk about an incident of unexplained differences in the price of an airline ticket that we bought online and found out that the neighbor who was flying with us in the same flight had to pay another price: no other explanation than profiling based priced discrimination is usually to blame.
The cookie conspiracy has become one of the web's urban legends and some time ago a consumer advocacy program of the Dutch TV asked me for help to investigate the issue. I am glad to say that together with a PhD student we did a moth-long study to find out whether the myth is true or not, at least in the airline world. Those interested in the answer (and speak Dutch) can see our findings in the TV program TROS Radar next Monday (20:30, May 9) in NL1. Those who will miss the program (or do not speak Dutch) but are interested in the answer must read my next blog post and the research paper we will write about the study.

Is Social Media Marketing interesting for B2B?

This is a standard question I get every time I talk about Social Media Marketing to audiences including people from the B2B domain. For many social media is strongly associated with B2C marketing while industrial marketers seem to be quite enthusiastic about it. A recent post in BtoB Magazine gives some nice examples of B2B applications of Social Media; for those interested in some stats I suggest to look to the E-Marketer  and this post of Brian Solis. An older report of Marketing Sherpa also indicates that B2B marketers are enthousiastic about social media as part of their marketing strategy. (see table below)

Conclusion is that there is enough talk and evidence about B2B and social media marketing and it seems that industrial marketers are equally (if not more) excited about it than their B2C counterparts. Let's wait for the first scientific evidence on this, I will keep you up-to-date here.

KLM Surprise

As past KLM colleague (I worked for this company in the 80s) I was glad to follow their latest social media campaign combining several tools and innovative ideas. With this video you can get a good idea of the campaign. Goed gedaan KLM.

Social Media Marketing in Practice Case 1: WePay

Winning mindshare and market share in the online payment domain is notoriously difficult. I remember the hundreds of online payment dot.coms that appeared and disappeared during the Internet boom in the 90s , all trying to become the standard of the online payments. The online payments business is for all intents and purposes dominated today by PayPal, the powerful credit cards, Google checkouts and a few

local successful online payment formulas like the Dutch iDeal.
WePay is a newcomer in the field with a somehow different value proposition; they opened their offensive against PayPal by a very simple and "cool" guerilla action that attracted the attention of mainstream media, of The New Influencers and created a substantial buzz in the blogsphere and Twitter: By Icing PayPal.
Taking the opportunity of some negative publicity around PayPal's freezing of customer accounts the WePay guys dropped a block of ice filled with frozen money on the sidewalk in front of the PayPal head office. A textbook Social Media marketing action following the Social Media marketing strategies matrix (below).
Let's see what blocks of the Social Media Strategies Matrix are relevant to this action.
Looking to the different options I would argue that the most important elements of their Social Media strategy include creating buzz around their brand with PR and Direct Marketing (column 3) using their web site blog , a YouTube film (communities) and Twitter (Social Networks) and also Reaching the New Influencers (column 4) with high caliber blogs like TechCrunch posting on the action.

Social Media Marketing Strategies 

Source: http://www.springerlink.com/content/k851316514746338/

From Brands to Frands

"Social media is no longer an experiment. It has arrived as an important media category deserving of a major role in marketing plans targeting mainstream and leading consumers alike. Social media is powerful because users are blurring the distinction between they relate to friends and brands, creating powerful new opportunities for brands to create uniquely close relationships with those how buy them.The era of consuming is over. The era of sharing had begun in earnest. Social media is the new mainstream."

Source: OgivlyOne: Frands: Friends, Brands and Social Media in China

Reccommended summer reading for colleagues and practitioners who want to know more about the marketing of the future. Frand is a brand in the friends list of the social networking site. Increasingly important to have your brands in such lists:
How else do Chinese consumers (and for all intents and purposes all consumers) interact with their Frands? According to the above report:

- 71% are watching commercials on video sharing sites
- 51% are downloading branded applications to their phones
- 33% post product or brand reviews
- 21% are making and sharing videos about products or brands.

Academics wake up: The practitioner is again showing us the way in Social Media Marketing

In my previous post I made the point that marketing strategies based on social media actually work (something I keep saying to my students for more than four years). As another confirmation of this I suggest my readers to have a look in the way Domino's Pizza is using the Social media and how this strategy has resulted in higher brand preference but more importantly to higher sales. Ben & Jerry's story is similar: in this case the switch from email marketing (that I never personally found such a great idea as an example of push marketing) to social media marketing was something that their customers actually demanded! The bottom line in both cases is that the modern marketer can not afford any more to ignore the social media as an increasingly important area of activity. This goes hand in hand with the realization that some serious work and investment is required here (something very obvious if you read just these two cases).
For me these developments are very welcome as well as expected and I feel that the research efforts of my Spanish colleagues and myself as well as our Social Media Research Center initiative on pursuing academic underpinning of the social media marketing are proved to be in the right direction. This is sometimes at odds with the ideas of colleagues who review some of our article submissions: Recently one of them saw nothing new in a study identifying customer segments among social networking sites users. As far as I know there is no word about this in any marketing textbook and academic contributions in this subject can be counted in the fingers of one hand. Anyway the practitioners are showing us once more the way, something regrettable since it should be actually the other way around. The good thing is that slowly but surely the number of students and even PhD's interested in social media marketing is growing. This blog that started in December of 2007 is a modest contribution to this direction but still supports the view (expressed in the very first post) that Web 2.0 and Social media is something worth attention and scholarship

Sosial Media Marketing: YouTube as damage control channel

During the recent strikes that crippled British Airways the company engaged successfully the YouTube as channel of communication with stranded passengers. The BA CEO Willie Walsh addressed the problem in a number of videos that have been made as part of a BA contingency plan. According to the Marketing Magazine the campaign has been very successful, a good example of engaging Social Media as PR tools;

Crowdsourcing: What is this?

My attention on the potential of crowds as business asset dates back to 2005 when I read the book of James Surowiecki "The Wisdom of Crowds" . (Visitors of this blog have also read about this subject here.) My interest in Crowdsourcing has been increasing ever since and Crowdsourcing has become one of the standard elements of my model (where I describe it as "Tapping Customer Crestivity) outlining the role of the Social Media as marketing tools. One of my recent research projects is an effort to understand the origins and limits of Crowdsourcing by means of a thorough literature review in cooperation with one of my graduating students. A working paper will be hopefully available in spring.
For those who would like to have a taste of what crowdsourcing is all about I advise the Crowdsourcing Examples blog and an introductory video by Jeff Howe, journalist of the WIRED Magazine, and author of the book Crowdsourcing: Why the Power of the Crowd Is Driving the Future of Business

When the Old Media Meet the New

It is encouraging to see that slowly the old media, one of the main victims of the Web, learn to turn the Web and more specifically the Social Media threat into a strategic opportunity by endorsing them as part of their marketing toolbox. Those who follow my publications and blog posts know that this is what my recent research is all about. I am glad to say that talking to either colleagues or practitioners I see that this issue is steadily gaining interest.
The New York Times is good example of an old media business that uses the Social Media very successfully as part of its campaign to increase brand awareness and customers. Their recent Facebook venture is a big success according to the Nieman Journalism Lab. I found very interesting that the NYT concluded that the campaign netted “4,3 times the value of the spend” while it quadrupled the NYT fan figures.

Hopefully those still skeptical about the New Marketing will think again

Ex student and co-author turns the theory into practice

I was glad to find out that my old student and co-author of my paper Web 2.0: Conceptual foundations and Marketing Issues Stefan Fountain is progressing in the cyberspace.
Stefan is the brain behind soocial.com an online content management tool enabling users to synchronize contacts between computers mobile phones and web applications. He seems to be lately very busy giving keynote speeches and as a good Web 2.0-era marketer puts the theory to practice by promoting his company via heavyweight online influencers like TechCrunch who writes quite nice words about it.
Stefan, lots of success, keep up with the good work

Internet and the Red Queen Effect: Google Insights

In my article titled "Strategies for Surviving the Internet meltdown: The Case of Two Internet Incumbents" published in 2004 in the Management Decision * I studied the secret of survival and success of two top online firms of the first web generation: Amazon and ETrade. These firms not only outlived the 2000 Internet meltdown but are still thriving online. My conclusion was that the strategy of these firms was quite similar and inspired by the Red Queen Principle: continuous transformation and expansion in new markets, new products or both.
It seems that the same principle is still the basis of the strategy of many successful new web firms and firms of the Web 2.0 era. A good example is Google: a recent development of Google (in beta) called Insights helps tracing the number of searches performed for any term, phrase or name worldwide or in any countries and in different time periods (up to 4 years). Very useful for those who want to optimize the findability of their site or simply want to know whether more or less users are searching for their brand or product than last year or if their brand / product is more popular search term than the brand / product of their competitors.

* Constantinides E., 2004, Strategies for Surviving the Internet meltdown: The Case of Two Internet Incumbents, Management Decision Journal, vol 42, nr 1, pp 89-107

An airline's digital transformation

As an old KLM employee myself I am always interested in developments in the airline industry and this company. While KLM was by no means not one of the pioneers of E-Commerce in the airline world they have shown a remarkable progress in this field during the recent years. An interesting article about the digital transformation of this company that expects now to earn 40% of its revenues online published by Accenture recently. The term of co-sourcing is introduced and explained also in this article; interesting for those allergic to rampant outsourcing.

Social Media as Marketing Tools

The nominations for the 2008 Forrester Groundswell Awards is a very good collection of interesting and innovative ways of engaging Social Media as marketing tools. The admissions in the contest were classified according to the Groundswell methodology in 7 categories depending on the objective pursued: Listening, Talking, Energizing, Supporting, Embracing, Managing, Social Impact

Manufacture on Demand (or Have It Your Way) II

Manufacture on Demand is an activity made possible by technologies in the Web 2.0 /Social Media domain. In a model I have developed presenting a classification of the Social Media as marketing tools the Manufacture on Demand appears in the 5th column: Social media as means of personalizing the customer experience. * The theoretical basis of the manufacture-on-demand principle is the (contradictory) concept of Mass Customization. The tool used in all these application is called Configurator. In the site Configurator Database you can explore the world of configurators. Prof. Frank Piller is one of the researchers with rich contributions in the subject.

* A working paper about using the Social media as marketing tools is available to those interested. Just send me an email in e.constantinides@utwente.nl

Manufacture on Demand (or Have It Your Way)

People who asked me ten years ago if the Web is the suitable channel for selling fast moving consumer goods (FMCG) like bread, butter, beer, candy, soft drinks and tomato ketchup got a categorical no for answer. But things are changing. If you ask me the same thing today I will answer to you: Of course!
What has changed is that we moved from Web 1.0 to the Web 2.0 era. The new online challenge is to manufacture and deliver customized products of all kinds to customers who are not satisfied with what they find in the supermarket or high-street shop, looking for something very personal.
The revolutionary approach of Dell Computers allowing online customizing and ordering of PCs in the 90s is becoming a routine today for an increasing number of products including FMCGs. Today you can customize (or even design ) online your T-Shirt, sport shoes, soft drinks, paper tissues, candy, tomato ketchup and beer. These products can be ordered and delivered at your doorstep, in many cases becoming available to other customers on line. The amazing capabilities of Web 2.0 applications combined with the explosive growth of broadband made this possible.
The list of customized products in the Web is growing every day and although some of them are not yet available everywhere it seems that the dream of Mass Customization is quickly becoming a reality. Print-on-Demand revolutionized the printing business but the Manufacture-on-Demand will most probably revolutionize FMCG production and retailing pushing the frontiers of branding and product innovation to new directions. The Long Tail can celebrate, it is taken now really seriously.

Misusing the Social Media

The misuse of online forums or weblogs by advertisers and marketers posing as online consumers enthusiastically talking about brands or products is nothing new. Walmarting is a term often used to describe efforts to plant advertisement into public online forums disguised as honest opinion of people. The Dutch television program Radar paid recently attention to the phenomenon by presenting the results of their investigation to the origin of some over-enthusiastic posts in blogs and forums.
The whole practice is naive if not stupid. Many such cases of fraud have been traced by vigilant web users in the past and reached publicity that in the end was damaging for the reputation and credibility of the firms involved. On the other hand the practice undermines the web neutrality and the very nature of the social Media as platforms of open dialog.
Is there any solution to the problem? Not an easy one I am afraid. The anonymity of the web makes such practices easy and very tempting. Screening of comments in blogs and forums by experienced moderators could reduce the number of fake posts. A filter that could stop such posts by adding their creators to a black list of a Hall of Shame would maybe help. Using clever data mining techniques identifying and blocking such silly practices could also be a part of the solution. For sure the best solution would be the obligation of participants in online discussions to register and fully disclose their personal data. This would also reduce the volume of posts that sometimes are just disturbing, offensive or pure nonsense but this is the most difficult to be accepted and applied solution. Maybe the best weapon is to be critical to very enthusiastic or very repulsive online comments.

Will it blend?

A bit extreme some times yet interesting way to create viral buzz around your product making use of online video in combination with blogging and cause marketing. Tom Dickson CEO of Blendtec, manufacturer of home blenders has persuaded everyone about the quality of his product by blending anything you can imagine in his blenders. From mobile telephones to athletic shoes! In the site Will it Blend you will see a imaginative (yet not suitable for every product) way to use the web as communication and customer retention tool. The cause marketing element? Auctioning the blended products in eBay and give the money to charities.

Online Marketing in four simple steps

STEP 4 SYSTEM: The Technology

The main areas where the System-related decisions are to be made are:
Web site administration, maintenance and service. Availability of technical and service personnel on a 24-hour, 7 days a week basis is the basic requirement for a reliable site.
Web server hosting and choice of the Internet Service Provider. External hosting is a popular option mainly for small and medium-size organisations.
Site construction. Constructing an above the average, transactional E-Commerce site requires a substantial initial investment. Outsourcing this activity is usual, there are however many editing tools available for low-budget solutions. Presentation quality, user friendliness, easy navigation, browser independence and speed are important success factors determining the choice of programming and development tools.
Content management. Important elements of content management are the frequent reviewing and updating of the content in response to constantly changing customer needs, market conditions, competitive strategies and market trends as well as the decentralisation of the Web site updating procedures. The later requires training and empowerment of employees of different departments in managing the site data under their responsibility and is needed for avoiding bureaucratic procedures harmful for the content quality.
Site security. Protection against any forms of malicious attacks as well as transaction and customer data safety are paramount concerns of E-Commerce managers and online customers alike. Identifying the proper security level for each content category is a sensitive issue since increasing security levels usually result in reduced functionality or diminishing user friendliness. A good approach is customising security levels on the different site elements therefore avoiding unnecessary safety overdoses while the sensitive data is adequately protected with minimum functionality sacrifice.
Transaction functionality. The main elements here are the construction of communication interfaces, the choice of the transaction and payment technology, the testing and administration of the system.
Collection, processing and dissemination of the Web site traffic and transaction data. This type of data fulfils, next to its administrative significance, an important commercial role as the vital input for evaluating the site performance, testing new ideas or assessing the effect of promotional activities.
System backup. A sound back-up mechanism is vital for Internet organisations expected to be operational on an around-the-clock availability basis. Technical problems and system failures must be quickly addressed with the minimum operational disruption.
Finally the site technical management must regularly and in collaboration with the commercial management identify and evaluate new technologies and new available products that could upgrade the site performance, enhance the customer experience and effectuate operational economies.

Questions: you can always email me in e.constantinides@utwente.nl

The Original 4S Web Marketing Mix paper

Online Marketing in four simple steps

STEP 3
SYNERGY: The Organizational Integration

Creating an online presence is one thing but making this part of your organization and its network is another. These are the issues that the Synergy in the Web Marketing Mix model is dealing with.
Integration into the organizational processes, value chain and network is a process often underestimated by web designers and site operators. Yet this can make the difference between functional and dysfunctional web sites, between online success and failure.
What is exactly the Synergy and what are the main issues underpinning the integration of the online and the offline organization? Synergy is the integrating processes necessary for realising the virtual organisation’s objectives. Synergies can develop between the virtual and the physical organisation as well as between the virtual organisation and third parties. This Synergy factor embraces a wide range of issues divided into three categories of integration: The Front Office, the Back Office and the Third Parties.

a. The Front Office Integration. Refers to integration of the company web presence with the conventional above the line marketing activities i.e. the corporate communication and product distribution. That means the full integration of the Web operation into the company’s communication plan (advertisement, promotions, PR) as well as the existing channel structures.
It makes a lot of sense to integrate the online presence part of the marketing program by assimilating for example the promotion of the virtual activities into the current promotional plan. The effort must be focused on utilising existing communication strategies, brands, tools and channels in order to promote and support the Web operation during the introduction stage. The objective of this communication is to inform existing as well as potential customers about the firm’s Web activities and communicate to target markets the advantages of doing business online.
In addition to the promotional integration the web operation must become an integral part of the existing distribution structures. Depending on the type of the firm distribution structure this integration can face different degrees of difficulty. The easiest case manifests itself when existing distribution models can accommodate the online distribution requirements without serious changes and disruption of existing operations. Mail-order or telephone sales firms had no difficulty whatsoever to use the existing distribution structures for virtual operations.

b. The Back Office Integration. The second type of synergy refers to integration of the web activities into the value-adding organizational activities like production, fulfilment, logistics and Total Quality Management. Often firms underestimate the effects of online operations on their operations, something resulting in bottlenecks and unhappy customers. The web forces many firms to review their traditional methods and find ways to improve their efficiency: Online customers require customize rather than mass products and the disintermediation of the Internet means that organizations must be able to respond directly to changes in demand levels without the luxury of the dealer’s buffer inventory; firms are forced to introduce lean and clean production and logistics structures.
Other organizational integration issues often overlooked are the assimilation of the web activity into the legacy TQM and control systems, ERP Systems and Databases. While these types of integration seem trivial they often become the reason of major bottlenecks and source of customer dissatisfaction.

c. Third party Integration. Until last year when I was referring to this type of integration I was talking about integrating the web activities into the organizational value chain by finding how to create win-win situations with channel partners and avoid channel conflicts. Another form of third party integration refers to finding other parties and co-operate with them in order to increase your online exposure and attract more customers. In this sense search engine optimization and affiliate marketing can be very useful tools.
However the last years another form of third party integration emerges. With the advent of the Web 2.0 and the Social Media, online firms and traditional companies must explore the available options to utilize such media as part of their online networks but also as means of informing their customers, listening to their wishes or complaints and influencing their buying behavior. Using the social media as marketing tools is a very interesting yet complicated issue but worthwhile to look at: according to a recent study of Deloitte Touche in the USA 62% of the US consumers read consumer-generated online reviews and 98% of them find these reviews reliable enough while 80% of these consumers say that reading reviews has affected their buying intentions. Engaging the social media as means to influence consumers is the secret of the tremendous success of companies like Amazon.com and it is also the dream of every direct marketer.


Next week: The Technology Issues (SYSTEM)
Details: The 4S Web Marketing Mix paper