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    Research project victoria gregory Research project victoria gregory Document Transcript

    • Impact  of  User-­‐Generated  Content  on   Retail  Entities       by  Victoria  C.  Gregory   ICE  Research  Analyst   ICE  —  Interactive  Communications  Enterprises            
    • Table  of  Contents        I.  Letter  Proposal                    II.  Executivie  Summary  III.  Research  Report     a.  Understanding  User-­‐Generated  Content     b.  UGC:  An  Economic  Phenomenon                            c.  Roadmap  to  generate  positive  UGC         i.  Facebook         ii.  Twitter         iii.  SEO           iv.  Customer  Reviews     d.  Case  Studies      IV.  Appendices  and  References           2  
    • ICE — Interactive Communications Enterprises  Memorandum  To:  Jim  Porter,  President  of  ICE  From:  V ictoria  C.  Gregory,  Research  Analyst    Date:  13  March  2012  RE:  A  proposal  for  V ictoria  Gregory  to  research  the  economic  impact  of  user-­‐generated  content  (UGC)  on  retail  businesses.  I  h ypothesize  that  this  research  will  d emonstrate  the  heavy  influence  user-­‐generated  content  has  on  a  consumer’s  purchasing  b ehavior.  Understanding  and  identifying  this  influence  will  a llow  ICE  to  show  their  clients  how  to  propel  positive  UGC  that  will  ultimately  increase  revenue  and  drive  conversions.      Purpose  &   “A  brand  is  n ot  what  we  tell  consumers  it  is,  it  is  what  consumers  tell  each  other  Significance   that  it  is.  ( Brant  Barton)”         The  words  of  Brant  Barton  are  relevant  to  retailers  in  the  current  marketing   climate,  now  more  than  ever.  Implementing  UGC  to  boost  sales  and  increase   conversions  has  a lways  been  a  strong  desirable  for  retail  companies.  However,   doing  so  is  a  tricky  process.  Many  companies  have  had  failed  attempts,  or  worse,   have  b een  caught  in  illegal  efforts  to  create  UGC  themselves.  ICE  s trives  to   understand  this  relationship  a t  the  core,  and  offer  a  solution  for  companies  to   propel  the  quality  and  quantity  of  positive  UGC  relevant  to  their  brand  or  retail   entity.  Web  2.0  has  a llowed  for  users  to  d isseminate  their  thoughts  about  a   product  or  brand;  this  technology  produces  either  positive  or  n egative   repercussions  for  the  retail  company  at  hand.  What  holds  to  b e  important  is  to   acknowledge  the  presence  of  UGC,  and  the  fact  that  it  will  only  quantify  with  time   as  social  media  p latforms  increase  in  number  and  gain  a  larger  user  base  daily.   Retailers  n eed  to  understand  how  to  increase  the  a mount  of  p ositive  UGC  and   decrease  the  amount  of  n egative  UGC.  In  essence,  retailers  must  u nderstand  the   intricate  relationship  between  social  exchanges  ( UGC)  and  economic  exchanges   (retail  p urchase  in-­‐store  or  eCommerce)  in  the  online  world  ( Ghose,  2).         Figure  1   This  image  chronologically  shows  the  influence  of  UGC  on  purchasing  b ehavior.  In   Social  Media  Marketing:  The  Next  Generation  of  Business  Engagement,  this  image   is  referred  to  as  “The  S ocial  F eedback  Cycle”  (Evans,  5).  “This  loop  –  from   expectation  to  trial  to  rating  to  sharing  the  actual  experience  –  is  now  part  of  most     3  
    • every  p urchase  or  conversion  process…  What  [it]  really  represents  is  the  way  in   which  Internet-­‐based  p ublishing  and  social  technology  has  connected  p eople   around  business  or  business-­‐like  a ctivities”  (Evans,  5).  This  n ew  connection  is  what   influences  an  end  user  to  make  a  particular  purchasing  decision.  Through  this   research  project,  ICE  will  understand  this  relationship,  and  thus  find  ways  for   retailers  to  s ee  a  greater  a mount  of  such  end  results.       Deliverables   • Roadmap  for  retail  companies  to  propel  positive  UGC.   • Case  s tudies  of  retail  companies  that  have  a  rich  amount  of  p ositive  USG  in   correlation  with  s trong  sales  and  conversion  rates.   • Implementation  of  a ccountability  and  measurability  of  retailer’s  products.     • Understanding  UGC  on  s everal  online  platforms  ( i.e.  eCommerce  s ite,   Facebook,  Twitter,  Pintrest,  etc.).      Client   The  results  of  this  research  project  are  relevant  to  a ll  retail  companies.  However,     results  are  most  applicable  to  retail  companies  with  eCommerce  and  an   established  online  presence  in  social  media  and  LBS  p latforms.      Methodology/   Conduct  s econdary  research  through  exploration  of  scholarly  articles,  white  Plan   papers,  published  books,  etc.  to  u nderstand  b enefits  a nd  influence  of  UGC  on   retail  companies.  Research  analyst  will  also  conduct  primary  research  of  UGC  on   social  media  p latforms  and  eCommerces  s ites.  Examine  retailers  with  s trong  UGC   and  compare  findings  with  retail  companies  that  have  little  to  no  UGC.  Through   primary  and  secondary  research,  research  analyst  will  develop  a  roadmap  for   retailers  to  implement  positive  UGC  that  will  lead  to  a  boost  in  sales  and  h igher   conversion  rates.      Qualifications   • Professional  experience  in  implementing  eCommerce  technology  for  retail   companies.   • Social  Media  expert  with  professional  experience  in  conducting  tasks   related  to  social  for  global  brand  Red  Bull  North  America,  startup  Giftiki,   and  various  clients  of  451  Marketing.     • Personal  consumer  of  online  retail  vendors.     • Experienced  researcher  in  the  field  of  d igital  marketing  and  online   communications.      Benefits   Our  clients  will  understand  the  importance  of  UGC  and  receive  instructions  from   ICE  on  h ow  to  propel  positive  UGC.  This  will  a llow  for  s everal  client  b enefits:     • Stronger  brand  loyalty   • Higher  conversion  rates   • Drive  in  sales   • Acquisition  of  n ew  users/consumers   • Increase  in  brand  a wareness     • Strong  rapport  between  business  and  consumer   • Reinforced  image  and  culture  of  brand   • Enhanced  and  organic  SEM  and  SEO  (natural  results  of  having  a  greater   amount  of  UGC)       4  
    •  Costs   Aside  from  my  own  labor,  this  project  is  a  zero  budget  effort.  The  d eliverables  will   be  a  result  of  research  conducted,  a nd  will  recommend  actions  for  clients  to  take   on.      Key  Sources     1.  Evans,  Dave.  (2010).  Social  Media  Marketing  :  The  Next  Generation  of  Business   Engagement.  Hoboken,  NJ:  S ybex.     2.  Ghose,  Anyndya.  (2008).  The  Economic  Impact  of  User-­‐Generated  and  F irm-­‐ Published  Online  C ontent:  Drections  for  Advancing  the  Frontiers  in  Electronicd   Commerce  Research.  (Doctoral  d issertation).  Retrieved  from  CeDER  Published   Papers.  New  York  University:  NY,  NY.     3.  Arnott,  Grant.  (27  August  2010).  Brant  Barton,  BazaarVoice  on  User-­‐Generated   Content.  Power  Retail.  Retrieved  from   http://www.powerretail.com.au/powerretail-­‐tv/brant-­‐barton-­‐bazaarvoice-­‐on-­‐ user-­‐generated-­‐content/.                                                                   5  
    • Executive  Summary       In  today’s  economic  climate,  retailers  are  desperate  to  boost  sales  and  generate  conversions  more  than  ever.  ICE  can  offer  clients  a  cost-­‐effect  marketing  solution  tailored  to  current  consumer  shopping  habits  that  will  boost  client  sales,  naturally  improve  SEO,  build  brand  trust  and  awareness,  and  generate  leads.  These  benefits  are  the  result  of  understanding  and  strategically  participating  in  user-­‐generated  content.  While  our  client’s  consumer  is  currently  making  off  and  online  purchasing  habits  based  on  online  customer  reviews,  blogs,  forums,  product  review  websites,  and  ratings  on  eCommerce  websites,  ICE  Research  Analyst,  Victoria  Gregory,  has  proposed  to  implement  research  of  these  platforms  and  their  content  to  provide  a  roadmap  that  will  allow  ICE  to  make  these  benefits  a  reality  for  our  clients.  The  relationship  between  user-­‐generated  content  and  a  product  or  brand  is  more  important  than  it  has  ever  been,  and  will  only  continue  to  show  stronger  trends.  As  an  innovative  agency,  ICE  must  be  a  pioneer  in  this  emerging  marketing  platform  and  optimize  our  client’s  presence  and  participation  in  UGC.  A  conversation  is  taking  place  online  about  our  clients,  and  they  need  to  be  apart  of  it.                                 6  
    • Research  Report    A.  Understanding  User-­‐Generated  Content  (UGC)    “User-­‐generated  content  comes  from  regular  people  who  voluntarily  contribute  data,  information,  or  media  that  then  appears  before  others  in  a  useful  or  entertaining  way,  usually  on  the  Web—for  example,  restaurant  ratings,  wikis,  and  videos.”1                                  User-­‐generated  content  is  a  growing  trend  and  in  tandem  to  its’  growth  hails  the  value  of  its’  presence  and  exposure  to  potential  consumers  of  a  brand  or  retail  entity.  In  the  simplest  words  reflective  of  extensive  research  conducted  by  ICE  Analyst,  Victoria  Gregory,  UGC  is  media  created  by  a  user,  free  of  advertising  incentives.  UGC  varies  greatly  in  medium  and  utilization,  however,  this  research  project  focuses  on  its’  economic  impact  for  a  brand  or  retail  entity.  The  emergence  of  UGC  is  ultimately  reflective  of  emerging  technologies  that  have  become  available  and  affordable  to  the  general  public.  UGC  arguably  did  not  exist  in  the  past  because  the  digital  communication  platforms  vastly  used  today  were  not  available  before  the  existence,  development,  and  evolution  of  the  Internet.  Today,  however,  consumers  are  constantly  generating  content  opinionative  of  a  product  or  brand.  Such  content  is  available  to  other  consumers  contemplating  similar  purchasing  habits.  Thus,  UGC  can  influence  a  new  user  to  make  a  certain  purchasing  decision.  This  project  aims  to  understand  such  UGC  and  how  to  implement  and  optimize  it  for  a  potential  ICE  client.  A  concrete  definition  of  UGC  has  been  debated  by  many  researches  like  myself,  but  the  Organization  for  Economic  Co-­‐operation  and  Development  (OECD)  has  proposed  three  main  characteristics:         i)  content  made  publicly  available  over  the    Internet       ii)  reflects  a  certain  amount  of  creative  effort          iii)  is  created  outside  of  professional  routines  and  practices2      While  UGC  exists  free  of  monetary  or  advertising  incentives,  many  may  question  why  it  exists  in  the  first  place.  THE  OECD  has  also  answered  this  question,  as  they  define  motivation  factors  to  “include  connecting  with  peers,  achieving  a  certain  level  of  fame,  notoriety  of  prestige,  and  self-­‐expression.”3  The  people  who  post  UGC  were  once  end  users  of  the  particular  product  or  brand  to  which  the  subject  of  their  media  is.  Their                                                                                                                  1  Krumm,  John;  Davies,  Nigel;  Narayanaswami,  Chandra;  ,  "User-­‐Generated  Content,"  Pervasive  Computing,  IEEE  ,  vol.7,  no.4,  pp.10-­‐11,  Oct.-­‐Dec.  2008  doi:  10.1109/MPRV.2008.85.  URL:  http://ieeexplore.ieee.org/stamp/stamp.jsp?tp=&arnumber=4653465&isnumber=4653458  2  “Participative  Web:  User-­‐Created  Content.”  Organisation  for  Economic  Co-­‐operation  and  Development.  12  April  2007.  pp.  1-­‐74.    http://www.oecd.org/dataoecd/57/14/38393115.pdf.    3  OECD,  pp.4     7  
    • reasons  for  posting  such  media  vary  greatly.  However,  understanding  these  incentives  can  allow  a  brand  or  retail  entity  to  optimize  positive  UGC  and  enable  its’  existence.       While  the  producer  of  UGC  is  most  often  a  common  end  user  with  a  miniscule  digital  presence,  such  producers  can  also  be  end  users  with  an  established  audience.  The  “well-­‐connected  homemaker,  or  the  hobbyist  blogger,  or  anyone  else  with  a  defined  passion  and  a  basic  command  of  social  media  publishing  can  amass  a  real  audience  and  can  exert  real  influence  within  it”.4    Clearly,  the  majority  of  UGC  that  will  have  an  economic  impact  on  a  retailer  is  going  to  be  a  social  media  platform.  While  UGC  exists  in  a  wide  variety  of  forms,  social  media  is  a  key  platform  in  which  persuasive  UGC  exists,  effects  purchasing  habits,  and  can  me  measure  and  understood.  For  these  reasons  it  is  a  key  focus  of  the  economic  impact  UGC  can  have.      B.  UGC:  An  Economic  Phenomenon                                      Once  ICE  understands  the  existence  and  producers  of  UGC,  we  will  have  to  show  our  clients  the  economic  impact  UGC  can  have.  The  statistics  below  show  the  value  of  UGC  and  its  influence  on  purchasing  decisions.  Such  information  will  be  communicated  to  ICE  clients  wishing  to  generate  sales  leads  through  understanding  and  implementing  UGC.       • More than half (55%) of consumers report that a product with a high rating will increase their likelihood of purchasing.5 • Nearly two-thirds of consumers (61%) use search engines to help them in their product research decisions leading up to purchase.6 • Three-­‐quarters  (75%)  of  young  people  (18-­‐26)  use  recommendations  on  social   sites  to  help  them  research  products  prior  to  purchase.7  The  following  statistics  have  been  cited  from  several  different  resources  from  Power  Reviews8   • 97%  of  UK  consumers  are  willing  to  trust  online  reviews,  and  over  two  thirds   rated  product  ratings  and  reviews  as  the  most  helpful  feature  when   researching  products  to  buy  online  or  on  the  high  street.   • 75%  of  the  reviews  posted  on  review  websites  are  positive.                                                                                                                  4  Evans,  Dave.  (2010).  Social  Media  Marketing  :  The  Next  Generation  of  Business  Engagement.  Hoboken,  NJ:  Sybex.  pp.  140.  5  Tornquist,  Stefan,  and  Jake   Hird.  “How  We  Shop  in  2010:  Habits  and  Motivations  of  Consumers.”  Econsultancy.  18  April  2012.  Online.    July  2010.  http://econsultancy.com/us/reports/habits-­‐and-­‐motivations-­‐of-­‐consumers.    6  Tornquist,  1.    7  Tornquist,  1.    8    “Social  Commerce  Stats.”  Power  Reviews.  18  April  2012.  Online.  2000-­‐2012.  http://www.powerreviews.com/resources/social-­‐commerce-­‐stats.       8  
    • • 92.5%  of  adults  said  they  regularly  or  occasionally  research  products  online   before  buying  them  in  a  store.   • According  to  a  survey  of  2,445  US  online  consumers,  82%  considered  user-­‐ generated  reviews  “extremely  valuable  or  valuable.”   • Customer  Reviews  have  a  15%  increase  in  product  page  views  within  30  days.   • The  number  of  user-­‐generated  content  creators  will  grow  by  similar  proportions,   reaching  114.5  million  in  2013,  up  from  82.5  million  in  2008.  That  will  translate   to  51.8%  of  US  Internet  users  in  2013,  up  from  42.8%  in  2008.   • Facebook,  blogs,  Twitter  and  customer  reviews  are  considered  the  most   effective  tactics  for  mobilizing  consumers  to  talk  up  products  online.   • About  one  in  five  (24%)  of  all  American  adults  have  commented  on  or  reviewed  a   purchase  online.   • Close  to  83%  of  online  shoppers  admitted  that  product  reviews  submitted  by   users  on  different  websites  are  one  of  the  main  influences  on  their  purchase   decision.   • Traffic  to  the  top  10  review  sites  grew  on  average  158%  [in  2009].   • By  2013,  half  of  retail  transactions  will  take  place  online  or  be  influenced  by  what   consumers  see  on  the  web.   • Consumers  are  67%  more  likely  to  buy  from  the  brands  they  follow  on  Twitter.      figure  1.0  reveals  that  consumers  of  all  ages  are  participating  in  user  generated  content.9       The  statistics  above  reflect  the  importance  of  UGC.  Online  product  reviews,  conversation  about  products  or  a  brand  on  social  media,  and  comments  about  products  on  blogs  and  review  websites  are  all  forms  of  UGC  that  are  highly  influential  in  a                                                                                                                  9  McCarthy,  Pat.  “Social  Data:  The  New  Currency.”  Word  of  Mouth  Association.  16  January  2012.  Online.  http://womma.org/researchdigest/?tag=online-­‐retail.     9  
    • consumer’s  purchasing  behavior.  While  the  majority  of  the  above  statistics  are  cited  from  Power  Reviews,  the  original  data  came  from  credible  sources  such  as  Econsultancy,  Pew  Internet  &  American  Life  Project,  Forrester  Research,  The  National  Retail  Federation,  GSI  Commerce  International,  ABI  Research,  and  Lightspeed  Research  among  several  other  sources.  Realizing  this  impact  of  these  UGC  platforms  and  communicating  it  to  our  clients  will  be  key  in  helping  them  adapt  to  the  new  climate  of  marketing.  It  is  clear  that  UGC  does  have  an  economic  impact  and  can  ultimately  boost  sales.    C.  Roadmap  to  generate  positive  UGC       “Social  media  begins  with  an  understanding  of  what  consumers  and  influencers  are  saying  about  your  brand,  product,  or  service  and  then  builds  on  that  through  participation  (yours  and  theirs)  for  the  purpose  of  encouraging  higher  forms  of  engagement,  up  to  and  including  collaboration.”10  Social  Media  should  be  the  first  focus  for  our  clients  in  finding  the  economic  power  of  UGC.  Rather  than  directly  advertising  to  consumers  persuading  them  to  purchase  your  product,  our  clients  should  be  engaging  with  our  current  consumers  and  participating  in  areas  of  UGC  in  which  our  brand  or  product  already  is  conversed  about.  This  way,  the  client  becomes  a  participatory  element  in  an  environment  where  their  potential  consumer  already  exists.    How  do  clients  communicate  on  UGC  platforms?  Consumer      Business    Consumer      Consumer  Consumer      Employees      1.  Facebook   • Create  a  business  page  on  facebook   • Focus  on  generation  of  “likes”  (this  allows  for  consumers  to  trust  your  brand)   o Platforms  such  as  PowerReviews  allow  consumers  to  verify  their  review   by  like  the  brand’s  facebook  page.  This  should  be  our  clients!11    2.  Twitter  ICE  clients  must  first  listen  to  relative  UGC  on  twitter,  and  participate  or  respond  to  these  already  present  conversations.  Platforms,  such  as  Hootsuite  can  be  used  to  monitor  key  words  relative  to  our  client’s  brand  or  product.  Monitoring  and  engaging  in  conversation  that  is  relevant  to  the  clients  brand  will  build  a  larger  consumer  following  and  generate  direct  consumer  engagement  that  will  lead  to  sales  conversions.        3.  Allow  UGC  to  naturally  boost  your  SEO                                                                                                                  10  Dave,  166.  11  Kirkpatrick,  David.  Marketing  Sherpa.  18  April  2012.  Online.  13  June  2011.                                              http://www.marketingsherpa.com/article.php?ident=31808#.       10  
    • New  content  on  a  clients  website  or  social  media  platform  will  allow  for  their  sites  to  rank  more  efficiently  in  google  searches,  as  the  algorithm  favors  websites  with  constant  new  content.    A  boost  in  SEO  is  a  natural  byproduct  of  constant  engagement  with  users.  Engaging  with  the  consumer  is  key.  If  applicable,  implement  a  Q&A  area  in  which  consumers  can  ask  your  brand  questions  about  a  product  and  you  can  respond  quickly.  Such  engagement  may  be  achieved  through  twitter.  Answer  consumer  questions  will  reduce  return  rates,  build  brand  loyalty,  and  increase  conversions  (while  naturally  boosting  SEO).      4.  Consumer  Product  Reviews    “Product  reviews  are  the  most  searched  for  mobile  shopping  content,  and  an  e-­‐commerce  site  with  strong  social  media  integration  -­‐-­‐  such  as  utilizing  the  Facebook  "like"  button  -­‐-­‐  allows  consumers  to  generate  content  and  immediately  publish  that  unique  content  throughout  the  Web  on  the  e-­‐commerce  site  itself,  Facebook,  Twitter  and  other  social  media  platforms.”12                                                                                                                                                  12  Kirkpatrick     11  
    • References      Evans,  Dave.  (2010).  Social  Media  Marketing  :  The  Next  Generation  of  Business                                      Engagement.  Hoboken,  NJ:  Sybex.    Kirkpatrick,  David.  Marketing  Sherpa.  18  April  2012.  Online.  13  June  2011.                                                            http://www.marketingsherpa.com/article.php?ident=31808#.    Krumm,  John;  Davies,  Nigel;  Narayanaswami,  Chandra;  ,  "User-­‐Generated  Content,"  Pervasive  Computing,  IEEE  ,  vol.7,  no.4,  pp.10-­‐11,  Oct.-­‐Dec.  2008  doi:  10.1109/MPRV.2008.85.  URL:  http://ieeexplore.ieee.org/stamp/stamp.jsp?tp=     &arnumber=4653465&isnumber=4653458.    McCarthy,  Pat.  “Social  Data:  The  New  Currency.”  Word  of  Mouth  Association.  16     January  2012.  Online.  http://womma.org/researchdigest/?tag=online-­‐retail.    “Participative  Web:  User-­‐Created  Content.”  Organisation  for  Economic  Co-­‐operation  and  Development.  12  April  2007.     http://www.oecd.org/dataoecd/57/14/38393115.pdf.    “Social  Commerce  Stats.”  Power  Reviews.  18  April  2012.  Online.  2000-­‐2012.     http://www.powerreviews.com/resources/social-­‐commerce-­‐stats.    Tornquist,  Stefan,  and  Jake  Hird.  “How  We  Shop  in  2010:  Habits  and  Motivations  of  Consumers.”  Econsultancy.  18  April  2012.  Online.    July  2010.     http://econsultancy.com/us/reports/habits-­‐and-­‐motivations-­‐of-­‐consumers.           12