Social Marketing Delivers on the Promise of Direct Marketing

RESOURCE INTERACTIVE THINK ABLE SOCIAL Introduction: The Power of Social Connections In their seminal 1993 book, The One-to-One Future, Don communities, yet still present individuals with an intimate Peppers and Martha Rogers taught all marketers the holy sense of personal interactions. Today’s digital reality of grail of personalized, individual marketing. Their concept social networks provides a means of tapping into this and definition were simple: Use relevant data to market the complex web of relationships. Savvy brands can become right product, price and promotion to the individual store part of this centralized social nervous system, transforming and household level. Almost two decades later, with the it into a brand engagement engine. rise of social, we may finally have the data to deliver on the intimacy of their 1:1 marketing vision. Brands must be strategic about how they approach this potential gold mine of consumer relationships and data, Social media has evolved, and it holds far more power however. Far from being a one-hit wonder of marketing, than even magazine covers and Hollywood movies have social is about building authentic, long-term relationships proclaimed. For brands, social’s impact is its ability to through relevant, compelling experiences that burrow not only precisely target prospects and customers based into the lives and lifestyles of consumers. The open on their social graph, but also to engage with them in nature of today’s social landscape, which is fragmented their own realm. Social allows brands to facilitate and and distributed across multiple networks, can make it participate in conversations among enthusiasts, not merely fundamentally more challenging for brands to maintain push information at them from afar, as traditional direct control of the conversation. marketing has often done. The depth of the personal information that people are willing to share will allow for Social marketing is the next step beyond direct marketing, intimate messages and calls to action. where push is no longer the order of the day. In a reversal of the power flow, pull experiences now shape brands and Social is embraced by the masses for its ability to connect inspire consumers to influence one another. multiple layers of people who share a history, an idea, a passion, or a purpose. Acting like a central nervous system for human relationships, social networks have always enabled communications across myriad, intersecting RESOURCE INTERACTIVE | ©2011 Point of View | Social 2

RESOURCE INTERACTIVE THINK ABLE SOCIAL But I was Promised 1:1 Marketing! Despite the best of intentions, the promise of 1:1 shoppers to more (and often generic) marketing and marketing remains a far cry from its current reality. In sales pitches. Old habits die hard, which is why marketing part, that’s because the right tools weren’t available until is still mostly about push. Because an individual consumer recently. The original promise of 1:1 marketing was that isn’t perceived as having an impact on sales beyond brands would come to know us intimately enough to speak her own purchases, brands haven’t cared much about “our” language, to extend offers and create experiences consumers’ shared passions or communities of that were almost eerily relevant to our needs. like-minded friends and acquaintances. The gold ring sought by brands attempting 1:1 marketing US Major Media Ad Spending, by Media, 2009-2015 wasn’t just consumer loyalty: It was consumer fealty, a (In Billions) 2009 2010 2011 2012 2013 2014 2015 powerful allegiance forged when consumers feel the brand TV $53.8 $59.0 $60.5 $64.5 $65.0 $67.0 $68.0 has a true stake in their lives, as would a trusted ally or a Internet $22.7 $25.8 $28.5 $32.6 $36.0 $40.5 $44.5 close friend. Think of the kind of passion fans have for their favorite sports teams or bands, and you begin to see what Newspapers* $24.8 $22.8 $21.4 $20.7 $20.2 $20.0 $19.8 consumer fealty (versus loyalty) looks like. Radio** $14.3 $15.3 $15.7 $16.4 $16.7 $17.1 $17.2 Directories * $10.3 $9.3 $8.2 $7.3 $6.5 $5.7 $5.0 We’re talking about passion, not mere consumerism. Magazines * $15.5 $14.7 $13.9 $13.2 $12.6 $12.1 $11.6 And 1:1 marketing was considered the path to glory. Outdoor $5.9 $6.1 $6.4 $6.8 $7.1 $7.4 $7.6 The Current Reality Total $147.2 $153.0 $154.6 $161.5 $164.2 $169.8 $173.6 Source: eMarketer, March 2011 *print only **excludes off-air radio & digital Today’s brands are largely still using a spray-and-pray method to market their wares. They continue to spend heavily on broadcast 30-second TV spots, print coupon- filled circulars or mail glossy promotions. Then, they wait for consumers to arrive at their stores, where they subject RESOURCE INTERACTIVE | ©2011 Point of View | Social 3

RESOURCE INTERACTIVE THINK ABLE SOCIAL But I was Promised 1:1 Marketing! The Changing Reality We’re poised to break free of this old-school marketing Sidebar: The Value of a Fan model, moving instead into the sphere of the social graph as consumer connector. What’s changed? We’re For all of the talk of fans and followers, one question continues witnessing a perfect storm of consumer behavior, social to be asked is, “What is the monetary value of a fan?” In a data collection and mobile (or “commerce is everywhere”) presentation at the Advertising Age Digital Conference in April technology. The resulting fast-evolving social graph is a 2011, Coca-Cola presented that they found that a fan consumes driving force in consumer profiling and shared experiences. two times more product than a non-fan, and that purchase Testing and learning is already happening. Facebook, for intent of a fan is ten times higher than that of a non-fan. example, is working on real-time advertising based on Also, after a specific activation (a campaign) on Facebook, real-time comments, plus additional work on ads Coca-Cola saw a 7% increase in consumption and a 10% targeting the status update. increase of purchase intent of their fan base. Envisioned Future: Tax Time Additionally, one of our partners, Vitrue, is working to quantify the answer. What they’ve found so far is that, on average, a Just imagine the power brands could have if these fan base of 1 million translates into at least $3.6 million in tests effectively bring together consumer data to equivalent media over a year. Vitrue arrived at its $3.6 million deliver just what a consumer needs, just when she figure by working off a $5 CPM, meaning a brand’s 1 million needs it. For instance, if a consumer updates her fans generate about $300,000 in media value each month. Facebook status that she’s working on her taxes and Using Vitrue’s calculation, Starbucks’ 6.5 million fan base -- needs a hand, TurboTax® might immediately serve acquired in part with several big ad buys -- is worth $23.4 up an ad, including which of her friends has used and million in media annually. (http://goo.gl/7czxi) likes its products. The social graph brings relevant information to the consumer and helps brands identify consumers who are in need of their products. RESOURCE INTERACTIVE | ©2011 Point of View | Social 4

RESOURCE INTERACTIVE THINK ABLE SOCIAL Through the Looking Glass to the Social Graph For all the talk of the social graph, many folks still How the Social Graph is Growing don’t know what to make of it (or how to define it). In its most literal sense, the social graph is a chart or While consumers are sharing their passions, interests illustration that represents our relationships and shared and daily lives with each other on their social networks, connections with others. It can be a Venn diagram, they’re also passively sharing their personal information, a star burst map, a bubble chart, a family tree, preferences and click-stream with tracking systems such or any other relationship visualization. as cookies and other analytics tools. They also actively share profile and preferences information when they take But as personal profile and behavioral data began surveys, sign up for new services or sites, or contribute informing the social graph, the concept has expanded to forums and review sites. Likewise, as they roam about into a potentially valuable marketing tool, serving as the or check into restaurants and shops while logged key not only to understanding individual consumers, but, into geo-location services such as Facebook Places more importantly, as the gateway to multitudes of other and Foursquare, their movements and preferences are people with whom those consumers share similar tracked. And all the while, those old-school loyalty passions, histories and habits. and affinity programs they joined years ago are still tracking their purchasing behaviors. The social graph is like the looking glass through which Alice stepped: It opens up a whole new realm of Every day, this data is added to each consumer’s social possibilities for brands seeking to access a consumer graph (and also connects them to others with similar population they’ve never seen before–at least not in the profiles), creating an ever-more-precise portrait of context of their shared passions and relationships. individual consumer and interrelated group interests, tastes, purchases, behaviors and relationships. RESOURCE INTERACTIVE | ©2011 Point of View | Social 5

RESOURCE INTERACTIVE THINK ABLE SOCIAL Through the Looking Glass to the Social Graph Layering for Social Warmth Dimensional consumer data is requisite to realizing the possibilities of true 1:1 marketing. By layering classic social graph information from social network behavior with geo- location data and traditional demographic and purchasing information, brands can gain a clearer, deeper picture of consumers, their activities and their preferences. This also helps brands provide gateways for word-of-mouth and brand advocacy by enabling recommendations, reviews, “Like” buttons and user-generated or curated content on their sites, blogs, Facebook pages and other touch-points. This evolution is starting to show promise. For example, Levi’s launched an online Friends Store that configures the digital shopping experience for its consumers based on what their friends in their Open Graph like. Every Levi’s web storefront is personalized based on the consumer’s Open Graph and can be different each time they enter based on what is happening within their friend-base. Brands like Levi’s now have the power to serve up a more customized offering when consumers enter their site (or eventually, store), based on consumer interactions with, and recommendations from, trusted friends. RESOURCE INTERACTIVE | ©2011 Point of View | Social 6

RESOURCE INTERACTIVE THINK ABLE SOCIAL Through the Looking Glass to the Social Graph “When asked what sources ‘influence your decision to use or not use a particular company, brand or product, 71% claim reviews from family members or friends exert a ‘great deal’ or ‘fair amount’ of influence.” (Harris Interactive, June 2010) Envisioned Future: Anything for the Pets Now imagine what happens when the data from a consumer’s entire social graph and CRM data combine. For example, when a mom enters a PETCO location, she uses Shopkick to passively check in to the store. Based on the information from her PETCO Pals account and her social graph, she’s recognized as a top-tier spender with great influence and many friends. At that point, a promotion is pushed to her phone, offering her a special gift-with-purchase for her dogs if she spends at a certain level. The offer drives her to spend more and as she collects her free gifts and shares the rewards with her dogs, the news of her great deal spreads to other friends in her social network. This, in turn, puts more of her friends—and their pets—on the path to shop that day. RESOURCE INTERACTIVE | ©2011 Point of View | Social 7

RESOURCE INTERACTIVE THINK ABLE SOCIAL The Future of Social Marketing Social marketing has so many different facets and experiences that cater to individual preferences, passions trajectories that it’s difficult to pinpoint exactly where its and purchasing habits. The social graph, in general, is next direct hit will take place. But one pathway is clear: going to influence most digital interactions (in a positive The social graph is poised to expand in depth and way, if the user allows it). importance. Social is about to break the bounds of online experiences, cropping up wherever we go. » Brands can start engaging in more direct relationship marketing as our web and digital experiences become The Opportunity for Brands more tailored to the social graph. Those experiences will be influenced by what we—and our networks— We believe there is exponential power in the social graph, have viewed, liked and shared on the web. For example, but no one is collecting and collating data at a broader imagine what happens when the site you’re viewing or level. This is where the opportunity lies, especially for the ad you’re looking at on your iPad version of Wired savvy direct marketers. By gaining consumer permission magazine is geo-aware and leverages your social graph to tap into the Facebook Open Graph as well as other to instantly push more relevant, personal content to your social information, brands can start to build a broader iPad. The result: the ad and content mix you see is tailored picture of their consumers’ complete social profile. specifically to you and where you are at any given moment The challenge lies both in access and in how to mine (both physically and socially). The experience for the and apply this new data, finding predictive variables to consumer is completely personalized and highly drive marketing communications toward increasingly relevant, while brands watch loyalty, along with their discrete segments of consumers as brands draw ever customer lifetime value, increase. closer to true 1:1 marketing. » The social graph will be the common element that » As the social graph becomes a richer, more dynamic and connects the consumer to everything—it tells marketers more portable tool (following users with logged-in devices what consumers like, what they buy, who they interact with wherever they go), brands will be able to instantly track and how to create meaningful personalized experiences. consumers, mine their data on the fly, and present spot-on This, in turn, will lead to compressed decision cycles, which RESOURCE INTERACTIVE | ©2011 Point of View | Social 8

RESOURCE INTERACTIVE THINK ABLE SOCIAL The Future of Social Marketing move consumers from decision to purchase graph. More and more, the consumer IS her social network; much more quickly. wherever she goes, her community is along for the ride. Catch her attention, and you’ve got a lot of listeners. Your Social Shadow Social Commerce on the Verge » As we go forward, we believe the social experience as we know it today will also evolve. How important will Social commerce (aka s-commerce) that regular social experience, like the Facebook Wall, be is “everywhere commerce.” when your social network is embedded everywhere? Will The advent of social as the next it have a single place, or will it be accessible and visible evolution of direct marketing everywhere? Your social network may not need to have will unlock new streams of direct a home base as much as it currently does, because it will revenue from consumers and effectively be following consumers wherever they go. enable brands to innovate on socially targeted products » We believe there will also be continued atomization and (including virtual ones) and brand distribution of a consumer’s social network. For example, experiences as never before. Facebook is more of a state of mind than a real place at this point, as it’s integrated with so many locales. We Social commerce success will already see pockets of this happening, when you go onto spring from brands presenting media sites like cnn.com and see what other articles your products and promotions as friends have read and shared. in-context “shoppable moments” —using a softer type of sales » To capture data from, and effectively market to, these message—versus catalog-style social shadows as they move through brand spaces, listings on destination sites, etc. companies should use social plug-ins and customize Examples of this trend already in experiences to take advantage of the expanding social play include French Connection’s RESOURCE INTERACTIVE | ©2011 Point of View | Social 9

RESOURCE INTERACTIVE THINK ABLE SOCIAL The Future of Social Marketing “YouTique” YouTube Channel, which showcases sexy, consumers should see offerings and offers that relate soft-sell videos and chatty “what to wear” spots. to them personally bringing the best and most relevant products and services to the forefront. On Facebook, the Home Depot is successfully selling products in the News Stream using Resource Interactive’s unique DCP (Distributed Commerce Platform). This sophisticated platform has additional functionality which can leverage the user’s social graph and integrate Facebook’s social plugins to create the type of shared shopping experiences today’s connected consumers demand. The DCP is also the first social commerce platform to achieve superior security with PCI-level 1 compliance—the gold security standard. Other major brands that have used the platform for social commerce include The Limited, Pantene and Pampers. Brands will achieve greater social commerce success by aligning their offerings as closely as possible to the interest pathways of their consumers—that will include verticalizing large sets of SKUs for easier discovery and browsing by shoppers online and off. One brand example to watch: Target’s new Target Style Facebook page. Now that commerce has been effectively embedded into social, the next step is bringing social into commerce, with a truly customized experience. In the future, RESOURCE INTERACTIVE | ©2011 Point of View | Social 10

RESOURCE INTERACTIVE THINK ABLE SOCIAL What Can Brands Do Today? As brands wait for the future to arrive and work continues on how to capture, layer, implement and measure the 03 Incentivize sharing and participation: Reward loyal brand fans and encourage the birth of new ones by giving them perks, special offers, VIP events and prizes for abundance of information that can be reaped by the social behaviors such as “liking” your Facebook page, writing social graph, a few key strategies can be implemented a product review, or re-tweeting a hot deal. Try experimenting today to get prepared for tomorrow. with credits, the new “social currency” that is rapidly replacing points as an acceptable tool for rewarding purchasing and 01 Integrate social tools on your site: Your site is no longer just a final destination—it can also serve as a hub to direct consumers to social touch-points where they can loyalty behaviors. Facebook Credits were used by 16% of virtual goods buyers in 2010. Likewise, virtual items on Facebook, often in the form of virtual gifts, can represent a significant support and promote your brand. Add Facebook “Like” buttons opportunity for brand marketers to connect with site visitors. (or a Facebook Connect log-in), link to your Twitter feed, point to your user forums, provide links for writing Yelp and Amazon The results: According to a Facebook presentation at a reviews, and feature other social tools to allow fans of your brand BazaarVoice conference in April 2011, when American Eagle to discuss and share your products and services with others. Outfitters added the “Like” button to their product pages, Facebook users spent 57% more than non-Facebook users. 02 Plan ahead: As the social graph evolves, it is becoming In that same presentation, it was reported that Ticketmaster more portable, persistent and embedded in everyday generates an additional $5.30 per-shared-link when they add activities. As a result, consumers will reap the benefits of being sharing functionality at the end of a transaction. Similarly, clients recognized and catered to wherever they go. To match this who implement Resource Interactive’s DCP: Facebook platform momentum, capture connected consumers’ social graph data have seen between an 8% - 39% conversion rate depending on (enabled through the use of social plug-ins) to begin shaping the campaign, and upwards of 80% fan growth once continuous more flexible, scalable and personalized consumer experiences. campaigns have been implemented. While results in any of The more you know about your consumers now, the better you’ll these situations vary, the important thing to note is that social be able to customize their future experiences. commerce is still in its infancy and, as experiences improve and consumers expect their social information to follow them, we believe we will see a surge in social commerce. RESOURCE INTERACTIVE | ©2011 Point of View | Social 11

RESOURCE INTERACTIVE THINK ABLE SOCIAL Final Thought Disruptive social technology is on the fast track and the integration of the social graph is following close behind. The purchase of Radian6 by Salesforce in March 2011 is just one example of the consolidation and new technology that we believe we’ll see in the coming year as we approach the promise of 1:1 marketing. Thanks to social, data is richer, more plentiful and better tied to the individual, and the combination of behavioral data with social creates an incredible opportunity for brands to elevate direct marketing, but the world of social can be confusing and fraught with contradictory Connect with Andy information about what to do and when to do it. And Let us help you prepare for today with tomorrow in mind. there are those brands that say they’ll wait to see how it all shakes out, but the risk isn’t in testing and learning Andy Kennemer and making it easy for consumers to integrate their Vice President, social graph; the risk lies in not doing anything at all, Social Marketing and Media because the changes that we’re talking about won’t be happening ten years down the road—they’ll be Email: happening in the next two years. akennemer@resource.com Phone: 614-621-2888 RESOURCE INTERACTIVE | ©2011 Point of View | Social 12

Social Marketing Delivers on the Promise of Direct Marketing

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Social Marketing Delivers on the Promise of Direct Marketing Presentation Transcript