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The Next Chapter in Online Advertising: Word Of Mouth at Scale
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The Next Chapter in Online Advertising: Word Of Mouth at Scale

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I gave this talk to a group of MBA students at Cornell University's Johnson School in a class called "Current Topics in Marketing". …

I gave this talk to a group of MBA students at Cornell University's Johnson School in a class called "Current Topics in Marketing".

This walks through the evolution of online advertising and how we got to the new chapter, brought about due to the rise of Facebook: "word of mouth at-scale".

We then explore what that means, how it works, and leave with a couple of examples.

Special thanks to the folks at Nanigans for all the slides.

*Please note: some slides did not convert to the Slideshare format properly, so contain missing content. I will try to fix.

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  • 1 billion MAU on desktop / 600M on mobileHours spent on desktop / person / month1:55 (MSFT)2:07 (YHOO)3:20 (GOOG)6:35 (FB)61% YoY mobile user growth3.2 billion likes & comments every day
  • http://blog.nielsen.com/nielsenwire/nielsen-news/trust-in-advertising-%E2%80%93-paid-owned-and-earned
  • 8X more engagement of sponsored stories (newsfeed PP)Higher brand resonance (vs. online avg)+31% brand awareness; +98% ad recall; +35% lower cost per conversionBroad Campaign Accuracy72% online avg FB is 95% (25% cost savings)Narrow Campaign Accuracy35% online avg  FB is 90% (60% cost savings)
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  • 1. rishi@rishidean.com www.rishidean.com Leveraging “word of mouth at-scale” [ The next chapter in online advertising]Rishi DeanNovember 20, 2012
  • 2. why me? why now?Rishi Dean – www.rishidean.com 2
  • 3. Provide an entrepreneurial lens Currently Started / Ground Floor Advise / VolunteerRishi Dean – www.rishidean.com 3
  • 4. “Creative destruction” with bigger amplitudes in shorter periods Δ tRishi Dean – www.rishidean.com 4
  • 5. Today… 1 Evolution of online advertising 2 Paid, owned, and earned media 3 Creating WOMAS 4 Consumer Decision Journey 5 The CaseRishi Dean – www.rishidean.com 5
  • 6. PART 1: The evolution of online advertisingRishi Dean – www.rishidean.com 6
  • 7. PART 1: The evolution of online advertisingRishi Dean – www.rishidean.com 7
  • 8. in the beginning…Rishi Dean – www.rishidean.com 8
  • 9. Person-to-person persuasionRishi Dean – www.rishidean.com 9
  • 10. Rishi Dean – www.rishidean.com 10
  • 11. Rishi Dean – www.rishidean.com 11
  • 12. Person-to-person persuasion Persuasive? ✔ Scalable? ✗Rishi Dean – www.rishidean.com 12
  • 13. mass media gave us scale “borrowed attention”Rishi Dean – www.rishidean.com 13
  • 14. Rishi Dean – www.rishidean.com 14
  • 15. Rishi Dean – www.rishidean.com 15
  • 16. Rishi Dean – www.rishidean.com 16
  • 17. borrowed attention Persuasive? ~ Scalable? ✔Rishi Dean – www.rishidean.com 17
  • 18. persuasion + scalabilityRishi Dean – www.rishidean.com 18
  • 19. PART 1: The evolution of online advertisingRishi Dean – www.rishidean.com 19
  • 20. online: chapter 1Rishi Dean – www.rishidean.com 20
  • 21. Rishi Dean – www.rishidean.com 21
  • 22. online: chapter 1 …digital borrowed attentionRishi Dean – www.rishidean.com 22
  • 23. Rishi Dean – www.rishidean.com 23
  • 24. Rishi Dean – www.rishidean.com 24
  • 25. Online Chapter 1 Prodigy, banner ads and portals Web in Its Infancy People findBehavior pages via link aggregations Channel Portals Print model goesAd Model online (banner ads)Targeting Mass content Winners Yahoo!, AOL, MSN, etc. Rishi Dean – www.rishidean.com 25
  • 26. online: chapter 2Rishi Dean – www.rishidean.com 26
  • 27. Rishi Dean – www.rishidean.com 27
  • 28. pay per click adsRishi Dean – www.rishidean.com 28
  • 29. Online Chapter 2 Overture pioneers paid search and Google perfects it Increase of Web Pages People can’t relyBehavior on portals to curate everything Channel Search enginesAd Model Search engine adsTargeting Keywords pay per click ads Winners Google AdWords Rishi Dean – www.rishidean.com 29
  • 30. Online Chapter 2 Overture pioneers paid search and Google perfects it Proliferation of UGC People rely evenBehavior more heavily on search Channel Niche sites and mashupsAd Model Contextual adsTargeting Site context Winners Google AdSense Rishi Dean – www.rishidean.com 30
  • 31. online: chapter 3Rishi Dean – www.rishidean.com 31
  • 32. Rishi Dean – www.rishidean.com 32
  • 33. Rishi Dean – www.rishidean.com 33
  • 34. 1 billion active users (58% daily) $4 billion in ad spend 1/3 of online display adsRishi Dean – www.rishidean.com 34
  • 35. Online Chapter 3 Facebook launches and becomes a mainstream media platform Rise of Social Networking People rely onBehavior friends to find information Channel Social networksAd Model Social adsTargeting People Winners Google AdSense Facebook Rishi Dean – www.rishidean.com 35
  • 36. Online Chapter 3 Facebook launches and becomes a mainstream media platform Proliferation of the Social Web People share whatBehavior they’re doing, in real-time Channel Social channelsAd Model Social ads StoriesTargeting People’s behaviors Winners Facebook Google AdSense (anticipated) Rishi Dean – www.rishidean.com 36
  • 37. takeaways…Rishi Dean – www.rishidean.com 37
  • 38. Evolution of Online Advertising Facebook sets the stage for the future Web in Its Increase of Proliferation Rise of Social Proliferation of Infancy Web Pages of UGC Networking the Social Web People find People can’t rely People rely even People rely on People share whatBehavior pages via link on portals to more heavily on friends to find they’re doing, aggregations curate everything search information in real-time Channel Portals Search engines Niche sites Social networks Social channels and mashups Print model goesAd Model Search engine ads Contextual ads Social ads Stories online (banner ads)Targeting Mass content Keywords Site context People People’s behaviors Winners Yahoo!, Google AdWords Google AdSense Facebook Facebook AOL, MSN, etc. (anticipated) Rishi Dean – www.rishidean.com 38
  • 39. Evolution of Measurement Core unit and performance metrics Chapter 1 Chapter 2 Chapter 3 • Pages • Keywords • People • CPM • CPC • CPARishi Dean – www.rishidean.com 39
  • 40. PART 2: Understanding paid, owned, & earned mediaRishi Dean – www.rishidean.com 40
  • 41. Framework for Defining Media TypesRishi Dean – www.rishidean.com 41
  • 42. The Facebook Marketing Landscape Key tools of successful social marketers Ads + Sponsored Stories Pages, events, apps & games Newsfeed activity Paid Owned Earned Off Facebook Properties Facebook provides built-in mechanisms for managing all media typesRishi Dean – www.rishidean.com 42
  • 43. Progression of Social Campaigns Paid is the trigger that generates initial awareness PAID awarenessRishi Dean – www.rishidean.com 43
  • 44. Progression of Social Campaigns Paid media catalyzes engagement in owned properties PAID OWNED engagement awareness purchasesRishi Dean – www.rishidean.com 44
  • 45. Progression of Social Campaigns Shares and invites generate earned media in the News Feed PAID OWNED EARNED engagement shares & invites awareness purchasesRishi Dean – www.rishidean.com 45
  • 46. Progression of Social Campaigns Others engage and share, driving further WOM referrals PAID OWNED EARNED engagement shares WOM & invites referrals awareness purchasesRishi Dean – www.rishidean.com 46
  • 47. Progression of Social CampaignsCritical mass of users can drive FoF awareness and re-engagement PAID OWNED EARNED retarget & find look-alikes engagement shares WOM & invites referrals awareness purchases Rishi Dean – www.rishidean.com 47
  • 48. Paid  Awareness Earned  Trust Trust  LiftRishi Dean – www.rishidean.com 48
  • 49. WOMAS is more trusted than traditional channelsRishi Dean – www.rishidean.com 49
  • 50. WOMAS is more trusted than traditional channelsRishi Dean – www.rishidean.com 50
  • 51. WOMAS is more effective than traditional channelsRishi Dean – www.rishidean.com 51
  • 52. Social’s Residual Value Word-of-mouth generates additional value Cost WOM Effective Spend on each ad = $5 Initial Per Referred Total Cost Per Installs Install Installs Installs Install Ad 1 4 $1.25 5 9 $0.56 Ad 2 3 $1.67 11 14 $0.36Rishi Dean – www.rishidean.com 52
  • 53. PART 3: Understanding “word- of-mouth-at-scale”Rishi Dean – www.rishidean.com 53
  • 54. Understanding the Open Graph Connections between people, actions and objectsRishi Dean – www.rishidean.com 54
  • 55. Evolution of the Open Graph: 2005 Mapping friends to friendsRishi Dean – www.rishidean.com 55
  • 56. Evolution of the Open Graph: 2007 Pages, Places, Events and Applications Friends Like Attend InstallRishi Dean – www.rishidean.com 56
  • 57. Evolution of the Open Graph: Today Any object (noun) mapped to any action (verb) Like Attend Install / Allow Song Listen Article Read Video WatchRishi Dean – www.rishidean.com 57
  • 58. Example: Fab.com Connect to the Open Graph and make a purchase Allow Connection 1 Connect to the Open Graph by Turning Social Shopping On; Fab incentivizes people to do this by offering credits Make Purchase As you shop on Fab, add items to your cart and ultimately purchase 2Rishi Dean – www.rishidean.com 58
  • 59. Example: Fab.com The purchase story is frictionlessly shared “Cheryl bought a product on Fab” 6 5 4 3 Timeline News Feed Flyout TickerPurchases from Fab are EdgeRank determines if Friends view purchase Friends view theaggregated and featured the purchase is featured details by scrolling over purchase in real-prominently on Timelines in friends’ News Feeds the purchase in the Ticker time in the TickerRishi Dean – www.rishidean.com 59
  • 60. Implications for Advertisers Action Targeting and Sponsored Stories Every action (and its associated object) a user takes is (a) targetable and (b) can be converted into a Sponsored Story Action Targeting Sponsored Story Ads  Ability to target actions and  Convert user actions and objects associated objects into an ad unit, featured on News Feeds  Introduces behavioral targeting on Facebook  Benefit from social contextRishi Dean – www.rishidean.com 60
  • 61. Actions Available to Advertisers Current and future Future Currently Available (pending Facebook availability) Default New Custom • App_used • Read • Bought • App_shared • Watched • Want • Check_in • Listened • Leveled-Up • RSVP • Played • ReturnedRishi Dean – www.rishidean.com 61
  • 62. PART 4: The Consumer Decision JourneyRishi Dean – www.rishidean.com 62
  • 63. CONSIDER EVALUATE THE LOYALTY LOOP BOND ADVOCATE ENJOY BUYRishi Dean – www.rishidean.com 63
  • 64. clicks browses ad site views ad adds to cart makes purchaseRishi Dean – www.rishidean.com 64
  • 65. clicks installs ad app shares views activity ad completes tutorial invites friends makes purchaseRishi Dean – www.rishidean.com 65
  • 66. The Case: Apply WOMAS + the Consumer Decision JourneyRishi Dean – www.rishidean.com 66
  • 67. Design a campaign to acquire newcustomers… Employ WOMAS techniques + paid, owned, earned media mix+ Consumer Decision Journey frameworkRishi Dean – www.rishidean.com 67
  • 68. I’m here to help  E-mail: rishi@rishidean.com  Blog: rishidean.com  Twitter: @rishideanRishi Dean – www.rishidean.com 68
  • 69. APPENDIX: Some examplesRishi Dean – www.rishidean.com 69
  • 70. Rishi Dean – www.rishidean.com 70
  • 71. Rishi Dean – www.rishidean.com 71
  • 72. Rishi Dean – www.rishidean.com 72
  • 73. APPENDIX: Understanding ad targeting & optimizationRishi Dean – www.rishidean.com 73
  • 74. Ad Engine Optimization A purchase exampleServe ads to initial Subset of target Subset of Page fanstarget base on FB base Like Page eventually purchaseRishi Dean – www.rishidean.com 74
  • 75. Ad Engine Optimization A purchase exampleServe ads to initial Subset of target Subset of Page fanstarget base on FB base Like Page eventually purchaseRishi Dean – www.rishidean.com 75
  • 76. Ad Engine Optimization A purchase exampleServe ads to initial Subset of target Subset of Page fanstarget base on FB base Like Page eventually purchaseRishi Dean – www.rishidean.com 76
  • 77. Ad Engine Optimization A purchase exampleServe ads to initial Subset of target Subset of Page fanstarget base on FB base Like Page eventually purchase Ad Engine measures this post-clickthrough behavior, attributes it back to the original ad creative and targeting, and optimizes to find more high-value look-a-likes on FacebookRishi Dean – www.rishidean.com 77