Digital Marketing Innovation Series: Social Media for Marketers Presented by: Mark Silva, Founder and Managing Director May 13, 2008

AGENDA Three takeaways about Social Media It’s Messy It’s Hot It’s Game-Changing

Three takeaways about Social Media

It’s Messy

It’s Hot

It’s Game-Changing

IT’S MESSY

IT’S MESSY FAILED SESSION TITLE: THE TWO MOST IMPORTANT LETTERS FOR MARKETERS IN A CONSUMER-IN-CONTROL MARKET: S & M (AS IN SOCIAL MEDIA)

FAILED SESSION TITLE:

THE TWO MOST IMPORTANT LETTERS FOR MARKETERS IN A CONSUMER-IN-CONTROL MARKET:

S & M

(AS IN SOCIAL MEDIA)

IT’S MESSY SOURCE: 2005 , Markus Angermeier : Web 2.0 Mindmap

IT’S MESSY Web 2.0 as defined by Wikipedia… A social phenomenon embracing an approach to generating and distributing Web content itself, characterized by open communication, decentralization of authority, freedom to share and re-use, and "the market as a conversation" Alluding to the version-numbers that commonly designate software upgrades, the phrase "Web 2.0" hints at an improved form of the World Wide Web; suggest that technologies such as weblogs, social bookmarking, wikis, podcasts, RSS feeds (and other forms of many-to-many publishing), social software, Web APIs, Web standards and online Web services imply a significant change in web usage HUH? WTF? Unleashing “… a trend in which people use technologies to get the things they need from each other instead of from companies.” - Groundswell, Charlene Li & Josh Bernoff, Forrester Research 2008

Web 2.0 as defined by Wikipedia…

A social phenomenon embracing an approach to generating and distributing Web content itself, characterized by open communication, decentralization of authority, freedom to share and re-use, and "the market as a conversation"

Alluding to the version-numbers that commonly designate software upgrades, the phrase "Web 2.0" hints at an improved form of the World Wide Web; suggest that technologies such as weblogs, social bookmarking, wikis, podcasts, RSS feeds (and other forms of many-to-many publishing), social software, Web APIs, Web standards and online Web services imply a significant change in web usage

IT’S MESSY

IT’S MESSY, BUT WE’RE TRYING TO CLEAN UP Bookmarking Video Photo Personalities = Social net/Individual Tribes = Social Net Regional; Clubs Microblog Mobile Blog Search Authoritative Fan/passing Related ads Tiered media A Social Map identifies key consumers activities and how to engage. The accretive sum of activities influence the key channel activity: Search “ The Website as we know it today is dead You need an armada of activity to reach people where they are.” Steve Rubel, Edelman 4/22/08

Tribes = Social Net

Regional; Clubs

IT’S HOT

IT’S HOT FAST GROWTH; LOW PENETRATION = HOT Visitor Growth by Category (1/07-1/08) Category Penetration (% of Online Users) Source: comScore “Digital World – State of the Internet’ 3/08

FAST GROWTH; LOW PENETRATION = HOT

IT’S HOT GROWING FASTER THAN PORN : SOURCE: THE ECONOMIST, 4/19/2008

GROWING FASTER THAN PORN :

IT’S HOT CONSUMERS LEADING WAY: 58% CAGR in IP TRAFFIC, 2005E-20011E Source: Cisco Systems, Global IP Traffic Forecast and Methodology; Mobility segment (0.1% of traffic in 2007) not displayed

CONSUMERS LEADING WAY: 58% CAGR in IP TRAFFIC, 2005E-20011E

IT’S HOT Source: eBay Investor Presentation, RockYou eBay starts Q2 98, PayPal starts Q1’00, Yahoo! starts Q1’95, AOL starts Q1’92, Facebook starts Q4’04, and RockYou Starts Q4’05 Facebook data represents active users, which was disclosed on 12/05 and 12/06. Undisclosed active user data is extrapolated by applying an average active user penetration to global Unique Visitors (per comScore Media Metrix) (2) Registered Users (MM) SOURCE: ROCKYOU! WEB2.0 CONFERENCE 4/2008

Source: eBay Investor Presentation, RockYou

eBay starts Q2 98, PayPal starts Q1’00, Yahoo! starts Q1’95, AOL starts Q1’92, Facebook starts Q4’04, and RockYou Starts Q4’05

Facebook data represents active users, which was disclosed on 12/05 and 12/06. Undisclosed active user data is extrapolated by applying an average active user penetration to global Unique Visitors (per comScore Media Metrix)

IT’S HOT 101MM visitors +305% Y/Y (67MM+ active users), 20B minutes (4# globally behind Yahoo!, Live , and YouTube), +365 Y/Y; 250K new registrations per day since 1/07; >50% of active users return daily (Facebook 3/08, comScore 1/08) 55K regional / work-related / collegiate / high school networks (>50% outside of college); Fastest growing demographic is those 25+ years old; 85% market share of 4-year US universities (Facebook 3/08) 14MM+ photos uploaded daily; 6MM+ active users groups on site (Facebook 3/08) Top non-US active users: UK (8MM+), Canada (7MM+), Turkey, Australia, France, Sweden, Norway, Columbia, and South Africa (Facebook 3/08) Source: comScore global 1/08, Facebook 3/08, Morgan Stanley Research

101MM visitors +305% Y/Y (67MM+ active users), 20B minutes (4# globally behind Yahoo!, Live , and YouTube), +365 Y/Y; 250K new registrations per day since 1/07; >50% of active users return daily (Facebook 3/08, comScore 1/08)

55K regional / work-related / collegiate / high school networks (>50% outside of college); Fastest growing demographic is those 25+ years old; 85% market share of 4-year US universities (Facebook 3/08)

14MM+ photos uploaded daily; 6MM+ active users groups on site (Facebook 3/08)

Top non-US active users: UK (8MM+), Canada (7MM+), Turkey, Australia, France, Sweden, Norway, Columbia, and South Africa (Facebook 3/08)

Internet + Personal Sources = Most Important Sources Of Information IT’S HOT Source: USC Annenberg School: Digital Future Report 2007

Internet + Personal Sources = Most Important Sources Of Information

IT’S GAME-CHANGING

IT’S GAME-CHANGING Source: Google, Yahoo! iGOOGLE + YAHOO! MOBILE

IT’S GAME-CHANGING Wikipedia.org Alexa Global Traffic Rankings 12/31/05; 3/12/08, Morgan Stanley Research 1 2 3 4 5 6 7 8 9 10 2005 (U.K.) 2008 1 2 3 4 5 6 7 8 9 10

IT’S GAME-CHANGING Next-Generation Assets: YouTube + Facebook + Skype + PayPal Source: (1) comScore global 1/08; (2) eBay CQ4, Morgan Stanley Research; (3) YouTube; (4) Facebook Payment volume +35% Y/Y; On eBay / off eBay payment volume +17% / +66% Y/Y (to 44% of TPV); Average transaction size of $68.88 (+10% Y/Y) (2) +16% 57MM(2) $1.67 annualized revenue per registered user (+9% Y/Y) on peer-to-peer network; 1.6B Skype Out minutes (+10% Y/Y); 11.9B Skype-to-Skype minutes (+25% Y/Y) (2) +61% 276MM(2) #4 site in global minutes; 67MM+ active users; >50% of active users return daily; 20K application s + 95% of Facebook members have used at least one (1,4) +305% 101MM(1) #3 site in global minutes; 51% of users go to YouTube weekly or more; 50% watch all video to the end; ongoing copyright challenges; 52% of 18-34 year-olds share videos with friends / colleagues often (1,3) +94% 285MM(1) Comments Y/Y Growth Users

Next-Generation Assets: YouTube + Facebook + Skype + PayPal

IT’S GAME-CHANGING In 5/07, Facebook opened its platform to 3rd-party developers, allowing anyone to create widgets for use on Facebook pages 20K applications, 859MM instillations, 34MM usages per day since APIs opened – may be unprecedented ramp (adonomics.com 3/08) Early to understand that individuals had the ability to innovate faster than it could, while users would govern quality / value as they customized their profiles Source: (1) Active user data unavailable; (2) E. Diep / J. Winterhalter; Source: admonmics.com 3/12/08 TOP FACEBOOK APPLICATIONS 12MM (1%) N/A (2) Quizzes 13MM (2%) RockYou! Hug Me 12MM (3%) iLike iLike 21MM (2%) Slide SuperPoke! 20MM (3%) Flixster Movies 16MM (2%) RockYou! Likeness 16MM (1) Facebook Video 25MM (9%) Slide FunWall 26MM (7%) Slide Top Friends 28MM (8%) RockYou! Super Wall Installs (% Active Users) Company Application

In 5/07, Facebook opened its platform to 3rd-party developers, allowing anyone to create widgets for use on Facebook pages

20K applications, 859MM instillations, 34MM usages per day since APIs opened – may be unprecedented ramp (adonomics.com 3/08)

Early to understand that individuals had the ability to innovate faster than it could, while users would govern quality / value as they customized their profiles

IT’S GAME-CHANGING Custom size pop-up w/ additional info appears upon mouse rollover on relevant quiz choice 646x90 banner clicks through to advertiser’s website Text link clicks through to advertiser’s website Application Integration: Custom Advertiser Quiz SOURCE: ROCKYOU! WEB2.0 CONFERENCE 4/2008 News Feed Mini-News Feed on Profile pages Profile box Notifications Email Message An advertiser’s custom Likeness quiz virally spreads through the a social network platform’s communication channels. 0.01% CTR for banner alone 65x better 0.65% CTR with integration

Applications can be skinned or branded with prominent placement for an advertiser with additional opportunities for sweepstakes, contests, streaming video units, and other custom programs. IT’S GAME-CHANGING Application Sponsorship SOURCE: ROCKYOU! WEB2.0 CONFERENCE 4/2008

Applications can be skinned or branded with prominent placement for an advertiser with additional opportunities for sweepstakes, contests, streaming video units, and other custom programs.

IT’S GAME-CHANGING WHY FACEBOOK OVER MYSPACE? Facebook offers a social network that is both standardized + self-controlled / flexible – a highly personalized first-stop portal for online connectivity – users can program their pages with growing number of drag-and-drop applications (aka widgets) Users like the ability to express themselves + connect with friends in a protected environment where they know / trust people in their network + don’t feel exploited / spammed y intrusive ads Source: MySpace, Facebook

WHY FACEBOOK OVER MYSPACE?

Facebook offers a social network that is both standardized + self-controlled / flexible – a highly personalized first-stop portal for online connectivity – users can program their pages with growing number of drag-and-drop applications (aka widgets)

Users like the ability to express themselves + connect with friends in a protected environment where they know / trust people in their network + don’t feel exploited / spammed y intrusive ads

IT’S GAME-CHANGING Source: Facebook; C. Messina on flickr SOCIAL MEDIA – ‘PRESENCE’ VIA MOBILE 24x7

IT’S GAME-CHANGING BUILDING ON THE NEW LOYALTY FUNNEL—NEW ROI

BUILDING ON THE NEW LOYALTY FUNNEL—NEW ROI

IT’S GAME-CHANGING FACEBOOK ADS

FACEBOOK ADS

APPENDIX: MORE CONVINCING STATS THAT I DIDN’T HAVE TIME TO PRESENT

THE MOMENTUM EFFECT How to create brand value in the Web 2.0 social networking space? Over 70% brand value is the result of consumer-to-consumer communication* The momentum effect contrasts direct exposure (B2C) to brand imagery, advertising, or indirect, second-hand exposure through another consumer (C2C) Why? Positive impact of seeing a brand within one’s social network Consumers react when given the opportunity to share their own story using the brand as a symbol and reference point Community members become highly engaged and focused on content they create, modify, or personalize

How to create brand value in the Web 2.0 social networking space?

Over 70% brand value is the result of consumer-to-consumer communication*

The momentum effect contrasts direct exposure (B2C) to brand imagery, advertising, or indirect, second-hand exposure through another consumer (C2C)

Why?

Positive impact of seeing a brand within one’s social network

Consumers react when given the opportunity to share their own story using the brand as a symbol and reference point

Community members become highly engaged and focused on content they create, modify, or personalize

WHAT BRANDS CAN SUCCEED? Brands who are already experimenting with involving users’ voices Companies who can move fast Companies who are open

Brands who are already experimenting with involving users’ voices

Companies who can move fast

Companies who are open

HOW TO APPROACH THE SOCIAL MEDIA OPPORTUNITY? Visit, homestead, rent, host, contract, or DIY? Utilize Ning, Pluck, etc to host an environment Host Liveworld, Communispace Contract It Out DIY Build Yourself Google Blog Search, Buzz Metrics, Nielsen & Analyze Monitor Be part of pre-existing communities, e.g.. Community Connect Rent Don’t over-stay your welcome Homestead Drop in where your consumers are Visit

Visit, homestead, rent, host, contract, or DIY?

WHAT IS SOCIAL NETWORKING? Social networking as defined by eMarketer… A site whose main purpose is to enable people to connect with others by creating personal profiles, describing their interests and sharing content Social networking as defined by Wikipedia… Social media is an umbrella term that defines the various activities that integrate technology, social interaction, and the construction of words and pictures. Social media can take many different forms Craft a unique identity, have a circle of friends, communicate, share Social networking as defined by eMarketer… A site whose main purpose is to enable people to connect with others by creating personal profiles, describing their interests and sharing content Social networking as defined by Wikipedia… Social media is an umbrella term that defines the various activities that integrate technology, social interaction, and the construction of words and pictures. Social media can take many different forms Internet forums Message boards Weblogs Wikis Podcasts Pictures Video Blogs Picture-sharing Vlogs Wall-postings Instant Messaging Music-sharing Crowdsourcing Voice Over IP

Social networking as defined by eMarketer…

A site whose main purpose is to enable people to connect with others by creating personal profiles, describing their interests and sharing content

Social networking as defined by Wikipedia…

Social media is an umbrella term that defines the various activities that integrate technology, social interaction, and the construction of words and pictures.

Social media can take many different forms

Social networking as defined by eMarketer…

A site whose main purpose is to enable people to connect with others by creating personal profiles, describing their interests and sharing content

Social networking as defined by Wikipedia…

Social media is an umbrella term that defines the various activities that integrate technology, social interaction, and the construction of words and pictures.

Social media can take many different forms

Internet forums

Message boards

Weblogs

Wikis

Podcasts

Pictures

Video

Blogs

Picture-sharing

Vlogs

Wall-postings

Instant Messaging

Music-sharing

Crowdsourcing

Voice Over IP

THE BBC! - @ www.bbc.com + Facebook + YouTube Source: BBC

SOCIAL NETWORK FACTS 27.4m US internet users age 3 and older use social networking sites at least once a month 12% of all time spent online by US internet users is on MySpace (2006) Since 2000 Internet Increased 50% TV Increased only 6% Facebook: 64 million active users Since going to the public in September 2006, its rank went from 60 to rank 6 in web traffic Social media applications will attract over 1b broadband users within 5 years Social network members tend to be younger and more engaged Social network and widget usage 18-24 43% social network 43% widgets 25-34 35% social network 25% widgets

27.4m US internet users age 3 and older use social networking sites at least once a month

12% of all time spent online by US internet users is on MySpace (2006)

Since 2000

Internet Increased 50%

TV Increased only 6%

Facebook: 64 million active users

Since going to the public in September 2006, its rank went from 60 to rank 6 in web traffic

Social media applications will attract over 1b broadband users within 5 years

Social network members tend to be younger and more engaged

Social network and widget usage

18-24 43% social network 43% widgets

25-34 35% social network 25% widgets

WHO’S USING SOCIAL NETWORKING SITES? Who has a profile? Audience size: 120MM 2 out of 3 Americans Who’s doing what? 12- to 17-year-olds 260 min/month Viewed 808 pages 35- to 54-year-olds 179 min/month Viewed 560 pages Source: http://www.emarketer.com/Article.aspx?1004636&src=article1_newsltr , Ad Age reported in October 2006

Who has a profile?

Audience size: 120MM

2 out of 3 Americans

Who’s doing what?

12- to 17-year-olds 260 min/month

Viewed 808 pages

35- to 54-year-olds 179 min/month

Viewed 560 pages

REFERENCES Strategy Analytics, The people’s revolution: Implications of Web 2.0 and social media applications press release, December 12 2007 eMarketer, Social Media Future Bright, Challenging, December 2007 eMarketer, MySpace is America’s Favorite Internet Time Waster, February 2007 Veronis Suhler Stevenson Study, September 2006 Alexa Internet Strategy Analytics, The people’s revolution: Implications of Web 2.0 and social media applications, November 2007 Adnomics comScore Widget Metrix press release, June 2007 Dynamic Logic Survey JupiterResearch, Travel Widgets, March 2008 eMarketer, Widgets Come to Online Advertising, October 2007 JupiterResearch eMarketer, What Can Widgets Do?, February 2009 JupiterResearch, Travel Widgets, March 2008 eMarketer, Widgets Come to Online Advertising, October 2007

Strategy Analytics, The people’s revolution: Implications of Web 2.0 and social media applications press release, December 12 2007

eMarketer, Social Media Future Bright, Challenging, December 2007

eMarketer, MySpace is America’s Favorite Internet Time Waster, February 2007

Veronis Suhler Stevenson Study, September 2006

Alexa Internet

Strategy Analytics, The people’s revolution: Implications of Web 2.0 and social media applications, November 2007

Adnomics

comScore Widget Metrix press release, June 2007

Dynamic Logic Survey

JupiterResearch, Travel Widgets, March 2008

eMarketer, Widgets Come to Online Advertising, October 2007

JupiterResearch

eMarketer, What Can Widgets Do?, February 2009

JupiterResearch, Travel Widgets, March 2008

eMarketer, Widgets Come to Online Advertising, October 2007

Building Viral Engagement User 3. Indirect friends => focus on messaging Focus on messaging to invite/notification receivers to drive more friends invites Deliver increasing AND simply understood value to app w/ every friend invited (Zombies) 1. New users => build clean flows New users absolutely key to viral engagement (vs returning user) Focus on linear, one-action flows to maximize activation for new users Forget registration 2. Direct friends => deliver clear value prop Provide clear value proposition to new user for inviting friend network (Likeness) Ensure invitation is first/second step of new user flow to maximize viral value of user (Superlatives vs Superlatives) 4. Interested parties => allow universal use Enable simple tools (comments, ratings, answers) that allow interaction w/o requiring full engagement w/ application (My Questions) Direct Friends Indirect Friends Interested Parties SOURCE: ROCKYOU! WEB2.0 CONFERENCE 4/2008

3. Indirect friends => focus on messaging

Focus on messaging to invite/notification receivers to drive more friends invites

Deliver increasing AND simply understood value to app w/ every friend invited (Zombies)

1. New users => build clean flows

New users absolutely key to viral engagement (vs returning user)

Focus on linear, one-action flows to maximize activation for new users

Forget registration

2. Direct friends => deliver clear value

prop

Provide clear value proposition to new user for inviting friend network (Likeness)

Ensure invitation is first/second step of new user flow to maximize viral value of user (Superlatives vs Superlatives)

4. Interested parties => allow universal use

Enable simple tools (comments, ratings, answers) that allow interaction w/o requiring full engagement w/ application (My Questions)

BEST PRACTICES-APPLICATION DEVELOPMENT F rictionless: simple, less is more A udience: on Facebook for their friends C ommunication: integrate into the viral channels E ngagement: hook users to return regularly B usiness model: design with monetization in mind O bjective: establish goals and success metrics O bvious: make each page’s purpose clear K eep working: develop, test, repeat Some rules of thumb from Context Optional

F rictionless: simple, less is more

A udience: on Facebook for their friends

C ommunication: integrate into the viral channels

E ngagement: hook users to return regularly

B usiness model: design with monetization in mind

O bjective: establish goals and success metrics

O bvious: make each page’s purpose clear

K eep working: develop, test, repeat

Lead Generation and Direct Response Leverage affiliate network providers at first (best offers w/ best payouts) Affinity Labs MyOfferPal Neverblue Ads Commission Junction Vet opportunities based on demographic mix of the application/site Successful lead gen/direct response campaigns on social media include: Mobile offers (SendMe) Dating (True, Match, SinglesNet) Education (UPheonix) Given unlimited funding for lead gen, effective way to fill remnant inventory at higher CPMs Actively research performance via discussion boards and directories Be prepared to process multiple lead gen offers to maximize performance Lead generation campaigns may burn through quickly; active management and tracking is required BEST PRACTICES-APPLICATION DEVELOPMENT

Lead Generation and Direct Response

Leverage affiliate network providers at first (best offers w/ best payouts)

Affinity Labs

MyOfferPal

Neverblue Ads

Commission Junction

Vet opportunities based on demographic mix of the application/site

Successful lead gen/direct response campaigns on social media include:

Mobile offers (SendMe)

Dating (True, Match, SinglesNet)

Education (UPheonix)

Given unlimited funding for lead gen, effective way to fill remnant inventory at higher CPMs

Actively research performance via discussion boards and directories

Be prepared to process multiple lead gen offers to maximize performance

Lead generation campaigns may burn through quickly; active management and tracking is required

CONTACT INFORMATION THANK YOU! MARK SILVA Founder & Managing Director [email_address] 415.522.1045 ext 304- o www.marksilva.com www.twitter.com/marksilva Thanks to all the Real Branding team for helping me in pulling this off.

THANK YOU!

MARK SILVA

Founder & Managing Director

[email_address]

415.522.1045 ext 304- o

www.marksilva.com

www.twitter.com/marksilva

Thanks to all the Real Branding team for helping me in pulling this off.