Category Archives: Marketing Strategy

Crowdsourcing is Reshaping Business Strategy

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This is the first of a series of ten articles describing technology-driven business trends reshaping business strategy across all industries.

The first article in the series is about crowdsourcing, a term coined by Jeff Howe in a June 2006 article of Wired magazine. The official definition of crowdsourcing from Jeff Howe, is “the act of a company or institution taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call.”

Web 2.0 technologies provide the infrastructure for crowdsourcing. Their interactivity creates contacts at a lower cost and encourages participation on all levels of an organization. Web 2.0 technologies also bring greater scope and scale to organizations, strengthening bonds with customers and improving communications with suppliers and outside partners. This model of labor has been more and more embraced by all kinds of organizations. 70 percent of the executives recently surveyed by McKinsey said that their companies regularly created value through Web communities.

Wikipedia is one of the best known examples of crowdsourcing at work. Thousands of Wikipedia users have created an encyclopedia that studies have shown is as accurate as traditional volumes like Encyclopedia Britannica. Google is another example, as it organizes websites based on how they link to each other. Google sees links as votes for the relevance of a page. Basically Google is tapping the wisdom of crowds to determine which websites are the most relevant.

Intuit is among somewhat more traditional companies that use crowdsourcing to extend their reach and lower the cost of serving customers. For example, it hosts customer support communities for its financial and tax return products, where more experienced customers give advice and support to those who need help. The most significant contributors become visible to the community by showing the number of questions they have answered and the number of “thanks” they have received from other users. By McKinsey estimates, when customer communities handle an issue, the per-contact cost can be as low as 10 percent of the cost to resolve the issue through traditional call centers. Other companies are extending their reach by using the crowdsourcing for word-of-mouth marketing. P&G’s Vocalpoint network of influential mothers is an example. Mothers share their experiences using P&G’s new products with members of their social circle, typically 20 to 25 moms. In markets where Vocalpoint influencers are active, product revenues have reached twice those without a Vocalpoint network.

Click here for a list of other companies relying on crowdsourcing.


To assure crowdsourcing success follow these rules:


  1. Upfront research is necessary. Don’t neglect the up-front research needed to identify potential participants who have the right skill sets and will be motivated to participate over the longer term.
  2. Crowds should operate within constraints. To harness the collective intelligence of crowds, there need to be rules in place to maintain order. Not everything can be democratic. Sometimes a decision needs to be made, and having a core team (or single person) make the ultimate decision can provide the guidance necessary to get things done and prevent crazy ideas and groupthink from wreaking havoc on your product.
  3. Crowds must retain their individuality. Encourage your group to disagree, and try not to let any members of the group disproportionately influence the rest.
  4. Crowds are better at vetting content than creating it. It is important to note that in most cases, the group merely votes on the final product; they do not actually create it.
  5. Provide feedback and the right incentives. Give feedback to stimulate continuing participation and commitment. Getting incentives right is important as well: participants value reputation more than money.
  6. Gain a high level of trust within a Web community to earn the engagement of top participants.


Recommended reading:


Got a cross-platform app for that?

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According to a recent eMarketer article based on a report from DM2PRO and Quattro Wireless, apps for social networks in addition to mobile apps are under consideration by more marketers than ever before. Among those marketers who already had an app in 2009, Facebook was the leading platform.

Spending on social apps, however, will stagnate even though more marketers have already developed the applications.

Fewer than one-half of marketers created either a mobile or social app in 2009, but most plan to invest in a mobile app this year. The iPhone is the platform of choice, followed by Android.

There’s some solid reasoning behind the choice to move more resources to mobile. According to Scott Monty “The strategy: [is to] create more opportunity for engagement with customers. On social networks, we’ll see a greater opportunity for reach, targeting and sharing, but with mobile there’s more creative control and the ability to have a message stick with the recipient longer.”

The top one-third of marketers using mobile apps planned to up their investments by 75% or more. The reasons:

  • increase in mobile use by target audience
  • increased standardization in mobile
  • better tools to build mobile apps
  • and notably: the ability to create flashed based cross-platform apps.

Summary: during 2010 we are going to see interesting cross-platform app based campaigns leveraging each of  the distinct characteristics of social and mobile.

Augmented Reality: The Esquire Case for Marketers

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Technically, augmented reality refers to the technology that layers different kind of information, for example pictures, sounds words, etc. over live video. In its December 2009 issue, Esquire placed augmented reality markers that using a computer with a webcam trigger additional digital content on the computer’s screen. The Barbarian Group provided the augmented reality technology and Psyop the animations.

I scanned the Esquire cover which you can download and print to try it yourself. To run the augmented reality, you’ll need a software which can be downloaded from Esquire here.

In the past I worked on various marketing campaigns that combined online and offline into a comprehensive marketing mix. The Esquire example certainly shows possibilities for a seamless marketing integration between the digital and real world. I can imagine a billboard campaign where consumers point their smartphones and access a tailored augmented reality according to location, time, weather and other info, and that can be also constantly updated with real time offers. Interesting possibilities, yet I believe there is still real friction for consumers: They have to download and install an application (and of course have a smartphone able to run it).

Your brand is what your customers say it is

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Your customers have their own idea about your brand and with today’s social technologies they communicate with each other and decide what your brand is. Listen to what they say and:

  1. Find out what your brand stands for: Monitor the difference between the message you are trying to get across with what your customers or people and general are talking about.
  2. Understand how the conversation is shifting in time: Social media can give you better answers than surveys on a weekly or even daily basis. There is a growing evidence about the correlation between social media buzz and sales.
  3. Identify the influence sources: Find the people talking about your products, the so called influencers and cultivate them.
  4. Manage PR crises: Monitoring your brand is an early warning system allowing to respond to a crisis before it escalates.
  5. Generate new ideas: Listen and you can tap into the ideas your customers may have for new products or services

If listening to your customers is your current goal, expect at some point to be talking to them using social technologies– every fruitful conversation includes listening and talking.

Your social media plan in four steps

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You realized your company needs to get involved in Social Media, but don’t know how to implement it? Follow these four proven steps to create your Social Media plan:

  1. Define the engagement type of your customers
    It is crucial to know what your customers are already doing– your strategy should leverage this activity. Define whether they tend to be creators (of content), critics (posting ratings, reviews, etc.), collectors (of information), joiners (of networking sites), spectators (reading blogs, listening podcasts, etc) or are simply inactive. A helpful tool for this assessment can be found here.
  2. Define your Social Media goal
    Your company can pursue five basic goals with social media:

    • Listen: The use of Social Media for research and better understanding of your customers
    • Talk: The use of Social Media to extend the existing digital marketing spreading messages about your company
    • Energize: The use of Social Media to fuel viral marketing via your most engaged customers
    • Support: The use of Social Media to enable customers to support each other
    • Embrace: The use of Social Media to crowd-source your product/service development
  3. Define your Social Media strategy
    Basically the Social Media strategy should provide an answer to the questions: a) how will you engage your customers? and b) how will this engagement grow over time? Keep always in mind that the Social Media strategy should align the type of engagement of your customers with your company’s Social Media goal. For example you don’t want to build a social media strategy to enable customers to support each other (Support Goal) only to find out that your customers are more like to join social networks like Facebook (joiners group).
  4. Define your Social Media platform/technology
    Last but not least, it is relatively easy to decide on the appropriate technology (blogs, wikis, widgets, social networks, etc.) once you defined the engagement type of your customers, your social media goals and strategy.


Social technology growth marches on in 2009

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Josh Bernoff, co-author of Groundswell: Winning in a World Transformed by Social Technologies (Harvard Business Press, 2008) and  Senior VP at Forrester Research released the latest analysis regarding the adoption of social media and its technologies: This year more than four out of five online Americans are active in either creating, participating in, or reading some form of social content at least once a month.

First of, a little background information. Forrester analyzes consumers’ participation in social technologies with a tool called the “Social Technographics Profile” (check my post and use the same tool of this analysis here). The profile puts online people into overlapping groups based on their participation.  Groups and  behaviors are graphically shown in a ladder (Figure 1):

The ladder categories are kept consistent to allow Forrester to make year-to-year comparisons, across ages and genders, and across geographies. Thus, more interesting than the results of 2009, is the trend over the last 3 years (Figure 2):

  • Trend of Creators, Critics and Collectors:
    In the US, social technology Creators and Collectors grew slowly, and Critics didn’t grow at all. Creator activity appeals only to those who like to create or upload content, and regardless of the ease of blogging and YouTube uploading, this doesn’t appeal everybody. As for Critics, those who react to content, this group hasn’t grown at all. According to Bernoff, this is a result of a small but actual decrease in the number of people contributing to discussion forums due to the fact that much of this activity has been sucked into social network sites like Facebook.
  • Trend of Joiners, Spectators and Inactives:
    Joiner activity exploded and Spectators became nearly universal. The explosion in Joiners from 35% to 51% of online Americans reflects the appeal of Facebook, as both press coverage and invitations from friends suck more of us into social networks. Spectators — those consuming social content — reached all the way to 73% of online Americans.
  • Trend by Age:
    Looking at the data by age, the participation among those under 35 is nearly universal (less than 10% Inactives) and even among those 55 and over, is about two-thirds.
  • International Trends:
    Europeans adopt these technologies more slowly than in the US, with about 40% Inactives in the countries where Forrester does surveys. The Netherlands and Sweden have the most participation, Italy has the most Creators, and social networks are most popular in the UK.

Summary:

This data should end any skepticism about whether social media is real. The trend is clear: soon, if a person is online, it will almost certainly be consuming some sort of social technologies. With the level of social content being put out there, it will be virtually impossible for anyone online not to be a Spectator. And last but not least, social media is usually thought to be a way to engage younger generations, but the data shows that participation of older generations is considerable and growing at faster pace than that of the younger ones.

Today a successful digital marketing strategy should always include social media, either in the company’s own site, microsite, etc. or in a social a networking platform such as Facebook, Twitter and the like.

First video ad ever in print magazine

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An upcoming issue of Entertainment Weekly’s print edition will be embedded for the first time with a video player that will run ads for CBS shows and Pepsi.

The video player insert, made by a Los Angeles company called Americhip Inc., will be able to withstand the binding processes and mail delivery. The screen is 2.7 millimeters thick and has a 320×240 resolution. The battery lasts for about 65 to 70 minutes, and can be recharged with a mini USB cord via a jack on the back of it. The screen, which uses thin film transistor liquid crystal display (TFT LCD) technology, is enforced by protective polycarbonate. A speaker is embedded below it.

The cost is estimated at a several dollars per unit,  but the idea behind is to charge a premium for advertising that has potential to catch readers’ attention.

The ad comes in a heavy-paper package resembling the kind of novelty greeting cards that make noises. A roughly two-inch screen starts playing automatically as the page flips open:

This is an interesting development and if paired with other technologies such as RFID, maybe paves the road to the holy grail of all marketers: offline interactivity.

Five Years of the Long Tail

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Almost 5 years ago, Chris Anderson wrote an article in Wired magazine describing the niche strategy of digital businesses that sell a large number of unique items, each in relatively small quantities and elaborated the Long Tail concept in his book The Long Tail: Why the Future of Business Is Selling Less of More (ISBN 1-4013-0237-8).

Many markets have historically been dominated by a small number of best-selling products. The Pareto Principle, also known as the 80/20 rule, describes this common pattern of sales concentration. However, by greatly lowering search costs, information technology in general and Internet markets in particular have the potential to substantially increase the collective share of niche products, thereby creating a longer tail in the distribution of sale (MIT working paper titled “Goodbye Pareto Principle, Hello Long Tail” by Erik Brynjolfsson, Yu Hu, and Duncan Simester).

After 5 years not much has changed of course and when designing a successful digital business strategy, the following forces should be taken into account:

  1. The democratization of the tools of production: the universe of available content is growing faster than ever. Almost everybody can become a producer of content with the available tools. Talent is not universal but is widely spread– give enough people the capacity to create and gems may emerge.
  2. The democratization of distribution: the Internet makes it cheaper to reach more people increasing the supply at the tail. That in turn translates in more consumption and sales, though prices tend to zero (free).
  3. The connection between supply and demand: the technologies that connect consumers (like search, blogs, twitter, etc) is what drives demand from the head (popular products) to the tail.

To harness the power of these forces consider to:

  1. Make everything available: Use mass/popular products (head) to attract mainstream consumers, but almost anything is worth offering on the off chance it will find a buyer (tail).
  2. Lower your price at the head (mass market) and charge at the tail (niche).
  3. Help consumers find the tail: Provide the tools such as recommendations etc. to give tail products visibility to consumers.

Want to profile your customers?

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Companies often approach Social Media as a list of technologies to be deployed as needed — a blog here, a community there — to achieve a marketing goal. But a more coherent approach is to start with your target audience and determine what kind of relationship you want to build with them, based on what they are ready for.

Forrester developed this tool that allows you to classify consumers into six overlapping levels of participation in various markets. Try it, the results are very interesting!

  • For an explanation of these groups (Creators, Critics, etc.) and in depth analysis of the latest data, read this post.
  • Bars indicate the percentage of the selected demographic that are in each Social Technographics group.
  • The white marks indicate the same percentages for the whole population of the country selected.
  • The index indicates how the demographic compares to the population — a score of 100 means the demographic is the same as the population average.

    • Branding with Facebook’s vanity URLs

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    Starting Sunday, June 28 at 12:01am EST, Facebook has allowed all page owners to register a so called vanity URL.

    With a vanity URL, brands can improve their presence on the web. These URLs can be easily recognized anywhere (i.e. http://www.facebook.com/audi for Audi), and they can help a profile page appear more prominently in search results. There’s another incentive to get a vanity URL: preventing someone else to use a vanity URL with your brand.

    Vanity URLs come when FB is rolling out a number of other public-facing features useful to brands. FB’s new “Everything is Public by Default” setting allows to send out status updates and other information that are publicly available. This is excellent for brands, as a public-facing profile can be viewed by anyone. Companies can now have their social media presence established as a true extension of their brands, products and services.

    FB is also making ads more interactive. For example, you might see an ad for a brand’s page, see a “become a fan” button, and officially become a fan without having going to the page itself. Vanity URLs facilitate consistency with the ad message or title.

    Summary: FB is blending advertising with content users are sharing. The URLs make the brand more transmittable and accessible, while the ads invite users to create and disseminate co-created content. This branded content then becomes increasingly public and relevant.