A nice reprise of the the classic What’s Next In Marketing & Advertising from Paul Isakson.

So, here’s the big one, does spending on social media really pay back? A fresh MBA graduate from MIT, Niki Gomez, passing through London and We Are Social on her way to Mumbai, gives her views.

At last, a study quantifies what many of us felt must be true, that social media does translate into increased sales. As Violette mentioned last week, a study by Wetpaint and Charlene Li’s Altimeter Group shows an extremely strong correlation between engaging in different social media and earning higher revenues. The study looks at the engagement of top 100 brands from the 2008 BusinessWeek/Interbrand Best Global Brands report and ranks them from 1 to 127, based on how they use social media channels. It finds that the top brands with their rankings in brackets are:

1. Starbucks (127)
2. Dell (123)
3. eBay (115)
4. Google (105)
5. Microsoft (103)
6. Thomson Reuters (101)
7. Nike (100)
8. Amazon (88)
9. SAP (86)
10. Tie – Yahoo!/Intel (85)

The most engaged brands experienced revenue growth in 2008 of 18% whilst the least engaged brands experienced losses of negative 6% over the same period.

Also interesting is that only arguably half of these are internet companies. The study categorizes the brands, a la Malcolm Gladwell, into mavens, those heavily engaging in 7 or more channels, such as Starbucks and Dell; butterflies, such as American Express and Hyundai who engage with seven channels but with less engagement; selectives who engage in six or less but do some on a deep level such as H&M and Philips; wallflowers like BP and McDonalds who engage with six or less but with a light touch. My question was whether social media pays off because of lower marketing spend, as there is a shift from spending on more traditional channels. However it seems, revenues, actual sales are up on previous years, even boom times!

Their findings conclude that it is not how many social media channels you use, but how deep that engagement is: so being social pays, but it’s the quality rather than quantity of these conversations that seems to triumph yet again. So, please think before you tweet… a good piece of advice for brands and individuals alike.

If my post on the purchase funnel and the consumer decision journey was a little too academic for you, then meet Dave, and follow his idealised journey from initial consideration to becoming an advocate:

Nielsen’s latest Global Online Consumer Survey confirms that people trust other people more than they trust advertising. As Jonathan Carson explains on the Nielsen blog:

The explosion in Consumer Generated Media over the last couple of years means consumers’ reliance on word of mouth in the decision-making process, either from people they know or online consumers they don’t, has increased significantly.

It’s not surprising that people trust the opinions of people they already know – it’s why word of mouth marketing is so powerful. But as the graph below shows, the trust in online word of mouth is significant. Globally, 70% of people trust consumer opinions posted online, and the same proportion trust a brand’s own website.

Good news for those who are investing in websites? Well, when you consider the ways that sites often try to drive traffic, you’ll notice these types of activity appear very low down the list.

It’s quite striking that online word of mouth acheives much higher trust than all other online-specifc activity. Opt-in emails (also known as ‘bacn’) are only trusted by just over half of us, and only one third of people trusting online banner advertising – though average click-through rates (0.1% in the US according to Doubleclick) indicate how successful they are at delivering people to their intended destination.

We’ve been building websites that allow consumer opinions to be posted (also known as blogs!) for some of our clients, as well as helping to increase online conversations about them, so we’re pleased to see even more evidence from Nielsen that this is a valuable thing to do.

Following on from our Best Buy social media case study back in May, I thought it worth looking at what the FMCG giant Coca-Cola are up to in social media.

Last month in Cannes, Jonathan Mildenhall, Coca-Cola’s VP of global advertising strategy, admitted the multi-national corporation had been slow to embrace social media and historically, they did make some mistakes. However, if you scratch the surface a little, they’re doing some interesting things.

In April they created a new office of digital communications and social media within its public affairs and communications department, giving Adam Brown, digital communications director, and Anne Carelli, digital communications manager, oversight of corporate digital and social media communications efforts.

It’s worth watching Adam speak about Coca-Cola’s social media strategy at the recent BlogWell New York conference (start 50 secs in):

You can also see Adam’s slides here.

Coca-Cola Conversations is the blog Adam mentions, check out the Coca-Cola Facebook page, and for a UK perspective it’s worth looking at this article about ‘Let’s get together’ and the Coke Zone blog.

Of course, there’s also the famous story of the Coca-Cola Facebook page:

Update: Adam has kindly tweeted me to point out that Coke are on Twitter too. I especially like the fact that they’re being very conversational, even with their arch-rivals Pepsi:

Update 2: Coke’s new social media policy

Update 3: Coca-Cola and social media: Fans first

Update 4: Coca-Cola builds new social media model

Update 5: Coca-Cola’s marketing shifts from impressions to expressions

Clay Shirky at the recent TED@State conference:

In a world where media is global, social, ubiquitous and cheap. In a world of media where the former audience are now increasingly full participants. In that world, media is less and less often about crafting a single message to be consumed by individuals and is more and more often a way of creating an environment for convening and supporting groups. And the choice we face, and I mean anybody who has a message they want to have heard anywhere in the world, isn’t whether that’s the media environment we want to operate in – that’s the media environment we’ve got. The question we all face now is how do we make the best use of this medium, even though it means changing the way we’ve always done it.

We had great news last week when we got the go ahead from Ford to continue into next quarter with This is Now, one of the pan-European campaigns we’ve been working on with them, meaning it will reach its 1st year anniversary in September.

Aside from being an amazing achievement for the team here at We Are Social who have been working so hard on it all of this time, it made me reflect on a discussion Sandrine had with Neil Perkin and Asi Sharabi in the comments of a post Neil wrote about the campaign just after it had launched.

Both Neil and Asi referenced Paul Isakson’s presentation on modern brand building:

Which has this killer quote:

Start looking at your marketing as a progressive story instead of as quarterly campaigns

Now this is something that all of us who have drunk the social media Kool-Aid take as gospel (and rightly so), but it’s often hard for both agencies and clients alike to actually implement in practice.

Although we’re finding progressive clients at all sorts of brands who get this, there are others who are perhaps more nervous of such a wholesale change in their marketing practices.

Then there are the structural issues to be overcome – Brand Managers typically change roles internally every two years and Marketing Directors don’t hang around much longer, which it makes it hard for any real long term commitment (especially if people new to the roles are keen to make their mark with a break from the past).

There’s also the question of the client’s other marketing activity (and their other agencies). It’s important that all of their marketing, from their advertising campaigns to their PR and experiential activity, works in unison and makes up a coherent whole and do not sit as isolated strands. Social media should be no different.

We have our own thoughts on this on how to deal with this dichotomy (and I have to say, we also have plenty of great case studies of successful short term social media campaigns), but it’s always more convincing to hear it from others. Over to Forrester’s Josh Bernoff:

Social [media campaigns] take a while to build, but last a long time. Think about the effort it takes to get people reading your blog, following your Twitter feed, viewing your YouTube videos, joining your community, or friending your Facebook page. They all start with zero viewers, but the more they grow, the more powerful they become.

Ad campaigns move at a faster pace. More importantly, they have a beginning and an end. You rent a chance to get some attention for a few months, then you see whether you moved the needle.

Since advertising people often get responsibility for social elements of marketing, this creates a fundamental disconnect. Marketers who tap into these two forms of communication can get whipsawed – the social builds too slowly, and the campaign ends too quickly, to make it easy to synchronize them. Even when they do succeed, there’s huge waste. If you’ve assembled 100,000 customers into a community behind your brand, what happens when you’re done with them? Send them a thank you email and say good bye? That’s a tragic waste.

The answer, as my colleague, Sean Corcoran, discovered in the research behind his report “Using Social Applications In Ad Campaigns”, means thinking of social fans as an asset that you can build with a campaign and then tap over and over again. To do this, you must also make sure you connect with and feed them between campaigns, to keep them interested.

Read the rest of Josh’s post over at the Groundswell blog

The purchase funnel has always been one of the main tenets of marketing theory.

We’ve intuitively known for while that it no longer holds true (if it ever did), but despite many attempts, we’ve had nothing come along that’s replaced it. For example, Forrester had a go a couple of years ago with the diagram below, but crucially it failed to provide a model that was easy to visualise, and it failed to catch on (surprisingly, neither did Giles Rhys Jones’ simpler alternative).

Now, finally, we have a viable alternative model, along with the science to back it up. McKinsey have conducted a study examining the purchase decisions of almost 20,000 consumers across five industries and three continents, and come up with what they call the consumer decision journey:

The funnel concept fails to capture all the touch points and key buying factors resulting from the explosion of product choices and digital channels, coupled with the emergence of an increasingly discerning, well-informed consumer. A more sophisticated approach is required to help marketers navigate this environment, which is less linear and more complicated than the funnel suggests. We call this approach the consumer decision journey.

Because of the shift away from one-way communication — from marketers to consumers — toward a two-way conversation, marketers need a more systematic way to satisfy customer demands and manage word-of-mouth.

We hate the word ‘consumer’ (we are all people as far as We Are Social is concerned), but that doesn’t make their model any less valid. David Court, Director of McKinsey’s global Marketing & Sales practice, has an excellent presentation that explains the research and what it means for marketers. The most salient parts being:

You have a trigger of some sort, where people start across the decision journey — they are now going to move towards purchase. The first stage is initial consideration. In many industries, people actually start in their initial consideration of a brand with a relatively narrow list, we believe because of the busy lives and bombardment of media — it’s just very difficult to get through all this clutter in this consumers initial consideration set. However, once the consumer decides they are going to buy a product, they move into a stage that we call active evaluation. It is here that the number of brands they are considering increases. Which is exactly the opposite of the premise of the funnel, going from broad to narrow. This is the stage when the consumer is intent on purchasing and they are actively researching the product.

What marketers should know
The most important thing for marketers to do is to make sure that their marketing activities are aligned against how their consumers research and buy products [...] companies need to look at their messaging in light of where they have the greatest opportunity. For example, companies’ messaging is all about trying to get into the initial consideration set, and yet, when the consumer reaches out during their active evaluation stage, they’re not providing the right facts and testimonials that the consumer is looking for [...] most companies are going to have to make fundamental investment in what we would call consumer driven marketing

Consumer versus company driven touchpoints
We analytically looked at which touchpoints were most influencing the consumer’s decision. We found two types — company driven versus consumer driven. In consumer driven, the consumer is reaching out to get information — they’re talking to their friends, doing internet searches, seeing what’s said on third party sites.

In the initial consideration it was still very much still company driven — the advertising was a very critical part of the touch points that influenced the consumer. However, when we got into active evaluation, two thirds of the influence of those most powerful touchpoints were from consumer driven touchpoints — word of mouth, talking to friends and family, searching on the internet.

And that is a very big change — you need to develop ways for people to talk about your product, so that word of mouth works. Be represented on independent internet sites where people will go and research and buy products. Because, if you don’t have enough presence on those types of consumer driven approaches, when the consumer is reaching out during active evaluation, you’re not there for them to find.

Amen to that…

Neil Perkin, Director of Marketing, Strategy & Digital at IPC Media and the auteur behind the seminal What’s Next in Media (above) has had his thinking cap on again. And it’s good stuff:

Conventional wisdom positions the website as the destination and focuses investment on search to ‘drive’ traffic to it. Think about the language we’re using here. Do we really think that people who are ‘driven’ to your website are going to stick around, interact with your stuff, click on your banners? Search is attractive because of it’s accountability, control and efficiency but ask yourself this: who would you rather have on your website – a person who is looking for a specific piece of information and is likely to leave as soon as they’ve got it, or a person who is passionate about what you do and has a desire to connect, interact, share, contribute. Both people count as a unique user. But only one of them will likely stick around, come back again and again, and be truly engaged. So I would argue that their value is very different.

There’s nothing wrong with investing in search, and it is an important tool, but it is not everything. Deploying search optimisation without social optimisation is only a partial solution. What do I mean by social optimisation? I mean participation in the conversation. I mean making the community elements in your own content as visible as possible (it has to feel like a community). And I mean creating tools and services to facilitate what that community is trying to do. This has pound notes attached to it – community facilitates repeat visits, engagement and interaction. Repeat visits, engagement and interaction facilitate subscription, transaction and advertising.

In a follow-up post, he goes on to say:

Aristotle defined three types of friendship – friendship based on utility (utility being an impermanent thing, changing according to circumstance, disolving when the utility is no more), friendship based on pleasure (of the moment, changing as pleasures change), and ‘perfect’ friendship which is based on goodness (mutual respect, nourishing, lasting, trusting). Friendship is not black and white, and ‘friend’ (or ‘fan’ or ‘follower’) is a very blunt term.

Think about participation. There are many forms of it, and a significant difference between simply reading, or commenting and actually contributing. Forrester’s Social Technographics ladder does a good job of reflecting the broad scope of such participation inequality.

I think one of the most useful ways of thinking about your audience is through the level of engagement and interaction they have with what you’re doing. The internet is a does medium. It’s not for passive consumption, it’s about interaction. So thinking of your audience in this way you immediately start to think differently about your content, and about the value you are delivering. Wary as I am about segmenting people into homogenous groups, I think it’s useful to put a simple framework around this:

In Tribes, Seth Godin talks about the fact that what people really want is the ability to connect to each other, not to companies, so services that facilitate connection, give people stories to tell and something to talk about, build permission. It flips the focus from looking for customers for your products, to seeking out products (and services) for the tribe.

This means that content owners need to reach out and engage their audiences wherever they are. When we think about online communities, it’s easy to slip back into old destination thinking about attempting to “build” an online community around your brand. But to paraphrase Mark Zuckerberg, communities already exist, so the job instead should be to think about how you can help that community do what it wants to do. Communities are fluid and ever changing. So a better model is to think about multiple assets (social objects or ideas if you like) each with their own levels of participation.

Anyway. My brain hurts now – you should go read his posts in full, and leave comments there…