Eric Bradlow: 10 Paradoxes of Social Media

The Paradoxes of Interactive Media
Social Media  Social Commerce
Professor Eric T. Bradlow
Co-Director
Wharton Interactive Media Initiative
The Wharton School, University of Pennsylvania
OfficeArrow, LLC. 2009.
www.whartoninteractive.com

The Golden Age of media metrics…
The rise of data mining…
Customer engagement…
1 to 1 marketing…
Ethnic/gender/lifestyle marketing…
Viral marketing…
Mass marketing is dead…
The Long Tail…
Ad creation is a delicate art form…
Content is king…

…is now

…was 40 years ago

Social Commerce Takeaway 1:
It is the golden age of data, but we knew 40 years ago exactly how to optimally allocate resources across media channels to maximize ad revenue.

…but data will never trump simple theory
In genetics, for instance, it's becoming clear that knowing the entire genome of an organism will still not tell you all of the creature's physical traits… Knowing someone's future health, let alone personality or intelligence, based on a genetic readout may be impossible -- in a fundamental, inherent sense, not because we're stupid but because it is too complex.

…but data will never trump simple theory
We put forth a model that incorporates the basic concepts of new product diffusion, using a mixture of two distributions: one representing the behavior of innovators (i.e., those who place advance orders) and one representing the behavior of followers (i.e., those who wait for the mass market to emerge).

Simple models of behavior outperform complex models out-of-sample over and over again.

“Engaging your website visitors – not just informing them – is the next critical metric marketers must measure.”
“Marketing’s New Key Metric: Engagement”
Brian Haven, Forrester, August 2007

…but many customers are just looking for a “quickie”

Be careful the metrics which you optimize against. There is no single metric. There is no single metric that is correct all of the time.

1 to 1 marketing is the future of B2B and B2C Markets
B2B and B2C markets today provide the promise of unlimited targetability
Wired (2009)

but customers are too “antsy” (unpredictable) for it to succeed
Many companies have lost fortunes by building
large data warehouses that have never
materialized into profits.
Forrester (2009)

Money is made by grouping similar customers based on behavior as scale is obtained.

DVD purchasing by country of origin
Non-Hispanic
Hispanic
Mean
Total Spent ($)
Source: comScore panel data -- households with 1+ DVD purchase in 2006

Non-Hispanic
Hispanic
Total Spent ($)

…the cross-group differences are often “mean”ingless
Non-Hispanic
Hispanic
Total Spent ($)

No one is at the mean, all the action is in the variability of the group. Don’t chase (mean)ingless differences.

Viral Marketing…

Viral Marketing…
So how are sales? They started out strong, when Aqua Hoops appeared on the "most recent" page in iTunes, and when the game got some buzz from iPhone blogs and G4TV, a cable network for tech/gamer-types... That day, Mablekos sold 350 copies of Aqua Hoops -- $245 net revenue after Apple's 30% cut. If he could do that for a year, he'd take home $89,000.
But after hitting no. 91 on Apple's "top paid apps" board, Aqua Hoops is down to a more modest sales rate: about 60 sales a day, or $42 daily net revenue -- $15,000 a year. All told, he's made about $1,400 so far. "Can't quit job at pizza place yet," Mablekos joked...

Viral Marketing…
…usually it’s barely a sniffle

Viral Marketing is locally effective, but globally small. Great for B2B with concentrated markets, less so for B2C.

…long live mass marketing!

Mass Marketing is far from dead and is equally effective as ever, it is just really hard to do with all the different media channels that are available today.

The Long Tail…

The Long Tail…
…it’s all in the head
Don’t radically alter blockbuster resource allocation or product portfolio management strategies. A few winners will still go a long way – probably even further than before.

… hits are in highest demand just as they are in the retail market.
This isn’t the first time the Long Tail theory has been called into question… a report found that music provider Mblox also followed a “head-heavy” pattern...

More media channels are not cannibalizing, heavy users use each channel heavily (ESPN principles). Invest in heavy users!

“Advertising is the greatest art form of the twentieth century.”
Marshall McLuhan (patron saint of Wired)

…but statistical science is a good place to start

Predictive modeling is good art!

Content is king…

Content is king…
…but distribution is the ace

Content is king…
…but distribution is the ace
By pulling out of the deal with YouTube, Warner loses access to the Web’s No. 1 video site, which topped 100 million visitors in October. The site has increasingly become one of the Internet’s favorite ad-supported jukeboxes. Of the top 10 YouTube channels, 7 are music related. Warner Bros. Records is the 11th largest channel.
If we can’t reach acceptable business terms, we must part ways with successful partners,” Google said…

Putting content in front of the right consumers and many consumers is key!

The Golden Age of media metrics… was 40 years ago
The rise of data mining…data will never replace theory
Customer engagement… be careful what you wish for
1 to 1 marketing…is economically difficult
Ethnic/gender/lifestyle marketing… is “mean”-ingless
Viral marketing…is locally effective
Mass marketing is dead…mass marketing is alive
The Long Tail…the head is as strong as ever
Ad creation is a delicate art form…but modeling helps
Content is king…but distribution is a heavy mediator

Wharton Interactive Media Initiative
Thank you!
www.whartoninteractive.com
OfficeArrow, LLC. 2009.

Eric Bradlow: 10 Paradoxes of Social Media

by LIFT Summit 2009 on Sep 23, 2009

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Eric Bradlow: 10 Paradoxes of Social Media — Presentation Transcript