2010 07-21 womma webinar v03ss

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Influencers: Why They’re the Holy Grail For Your Word of Mouth Marketing

Wednesday, July 21st, 2010 @ 9:00AM PT/11:00AM CT

WOMMA

Published in: Technology

2010 07-21 womma webinar v03ss

  1. 1. The Holy Grail of Word of Mouth Marketing: Influencers Tweet:          #womma @phsoffer @mich8elwu 0
  2. 2. Speakers Dr. Michael Wu, Principal Scientist, Analytics Lithium Technologies twitter: @mich8elwu Philip Soffer, VP Product Marketing Lithium Technologies twitter: @phsoffer Tweet:          #womma @phsoffer @mich8elwu 1
  3. 3. Traditional Marketing Tweet:          #womma @phsoffer @mich8elwu 2
  4. 4. Traditional marketing: ideal scenario Tweet:          #womma @phsoffer @mich8elwu 3
  5. 5. Tweet:          #womma @phsoffer @mich8elwu 4
  6. 6. Traditional marketing is losing effectiveness Consumer attitudes toward advertising plummeting between September 2002 and June 2004. Forrester (2005) reported: 40% fewer agree that ads are a good way to learn about new products 59% fewer say they buy products because of their ads 49% fewer find ads entertaining Tweet:          #womma @phsoffer @mich8elwu 5
  7. 7. WOM will Influencers: Key to WOM fix it all Tweet:          #womma @phsoffer @mich8elwu 6
  8. 8. Influencers: Key to WOM Who are they? How to find them? How to work with them and keep them engage? Can we quantify the WOM value of an influencer (ROI)? Case studies Tweet:          #womma @phsoffer @mich8elwu 7
  9. 9. Who are the influencers? What do most people think: Kevin Smith: Too Fat to Fly Southwest (2010) Dave Carroll: United Breaks Guitars (2009) Jeff Jarvis: Dell Lies. Dell Sucks (2005) They are NOT really marketing influencers Celebrities = PR influencers Do influencers exist (in marketing context)? Universal influencers DON’T exist! Context/domain specific influencer DO exist Everyone has influence Influencer do not fall into any standard demographic Influencer = someone who can sway another’s thoughts (sentiment) or actions (purchase/adoption) Tweet:          #womma @phsoffer @mich8elwu 8
  10. 10. Influence involves 2 parties Influencer Domain Credibility: The influencer's expertise in a specific domain of knowledge. High Bandwidth: The influencer's ability to transmit his expert knowledge through a social media channel. Content Relevance: How closely the target's information needs coincide with the influencer's expertise. Timing: The ability of the influencer to deliver his expert knowledge to the target at the time when the target needed it. Channel Alignment: The amount of channel overlap between the target and the influencer. Target Confidence: How much the target trusts the influencer with respect to his information needs Target Tweet:          #womma @phsoffer @mich8elwu 9
  11. 11. Finding the potential influencers High Potential Credible Bandwidth influencer users users Tweet:          #womma @phsoffer @mich8elwu 10
  12. 12. Importance of relevance & timing Friendship Relevant relationship FanGirl w/in 1 month WizKid 1 month ago 3 month ago 6 month ago PopGuy Tweet:          #womma @phsoffer @mich8elwu 11
  13. 13. Social network analysis (eigenvector centrality) How did Google identify influential web pages? Tweet:          #womma @phsoffer @mich8elwu 12
  14. 14. Social network analysis (eigenvector centrality) How do we identify influencers? Tweet:          #womma @phsoffer @mich8elwu 13
  15. 15. Key Take-Aways There are no universal influencers To find the influencers that exist, you need data Influence requires six different factors Tweet:          #womma @phsoffer @mich8elwu 14
  16. 16. Now you have influencers, so what? What about WOM? Tweet:          #womma @phsoffer @mich8elwu 15
  17. 17. WOM challenges in the real world Low efficacy WOM do not propagate vary far Passionate influencers are too scattered WOM decays before reaching another influencer who will pass it on Over time, even the passionate influencers lose their enthusiasm Tweet:          #womma @phsoffer @mich8elwu 16
  18. 18. Community WOM Tweet:          #womma @phsoffer @mich8elwu 17
  19. 19. Community WOM is effective Overcome the decaying effect of distance and time Key: High concentration of passionate consumers Many of them + close proximity to each other Result: Ongoing conversation heightens enthusiasm Persistent content prolonged message lifetime Ideation and innovation increase relevance and adoption Tweet:          #womma @phsoffer @mich8elwu 18
  20. 20. Community WOM Tweet:          #womma @phsoffer @mich8elwu 19
  21. 21. Community WOM Tweet:          #womma @phsoffer @mich8elwu 20
  22. 22. WOM challenges in the real world Low efficacy WOM do not propagate vary far Passionate influencers are too scattered WOM decays before reaching another influencer who will pass it on Over time, even the passionate influencers lose their enthusiasm Tweet:          #womma @phsoffer @mich8elwu 21
  23. 23. What if you can’t find any influencers? Customers advocates Interest-oriented communities can cultivate influencers (a.k.a. superusers) Tweet:          #womma @phsoffer @mich8elwu 22
  24. 24. Evolution of a customer community Tweet:          #womma @phsoffer @mich8elwu 23
  25. 25. Evolution of a customer community Identify rising superusers as their influence grows Influence ≠ number of connections Tweet:          #womma @phsoffer @mich8elwu 24
  26. 26. Community WOM What about the greater social web? Tweet:          #womma @phsoffer @mich8elwu 25
  27. 27. Community WOM Tweet:          #womma @phsoffer @mich8elwu 26
  28. 28. Customers Tweet:          #womma Advocates @phsoffer @mich8elwu 27
  29. 29. WOM Beyond Community Tweet:          #womma @phsoffer @mich8elwu 28
  30. 30. Key Take-Aways Interest-oriented communities create sustained topic engagement Interest-oriented communities concentrate messages Community platforms should provide influencer analytics Tweet:          #womma @phsoffer @mich8elwu 29
  31. 31. Do influencers matter? vs. Malcolm Gladwell Duncan Watts (best-selling author) (sociologist) Quantifying the value of WOM. Join work with Prof. Barak Libai MIT Sloan School of Management Recanati Grad School of Business, Tel Aviv Univ. Prof. Eitan Muller NYU Stern School of Business Recanati School Prof. Renana Peres The Wharton School, U Penn Hebrew University of Jerusalem. Tweet:          #womma @phsoffer @mich8elwu 30
  32. 32. How does WOM turn into value? W O M ? Agent-based model based on real network structure from 12 social graphs (6 from Lithium) Simulation parameters for investigating the effect of: Influencers: Influencer seeding vs. random seeding Brand equity: Brand monopoly vs. competing brand Seeding program size: 0.5% to 5% Tweet:          #womma @phsoffer @mich8elwu 31
  33. 33. Summary of Lithium-only data Seeding Program Competing Random 10.3% brands Gain via acceleration Influencer 17.4% Gain via acquisition Brand Random 86.8% monopoly Influencer 113% 0 20 40 80 100 120 Result 1: Two mechanisms combine to create WOM values Acquisition of customers Acceleration of adoption Tweet:          #womma @phsoffer @mich8elwu 32
  34. 34. Summary of Lithium-only data Seeding Program Competing Random 10.3% brands Gain via acceleration Influencer 17.4% Gain via acquisition Brand Random 86.8% monopoly Influencer 113% 0 20 40 80 100 120 Result 2: Influencer seeding increases gain 49.4% Tweet:          #womma @phsoffer @mich8elwu 33
  35. 35. Summary of Lithium-only data Seeding Program Competing Random 10.3% brands Gain via acceleration Influencer 17.4% Gain via acquisition Brand Random 86.8% monopoly Influencer 113% 0 20 40 80 100 120 Result 3: First mover advantage is huge 7.5x Tweet:          #womma @phsoffer @mich8elwu 34
  36. 36. Case studies Members as well as non-members buy more after visiting the book club Member spending 41% 2008 Member spending 66% 2009 Net promoter score 20 points Tweet:          #womma @phsoffer @mich8elwu 35
  37. 37. Summary Finding marketing influencers requires consideration of the target All 6 factors must be accounted for to achieve true influence Community: Offers an effective way to keep the influencers engaged High concentration of influencers makes WOM effective Value of WOM Created by acquisition and acceleration Influencers increases gain by 50% First mover advantage is 7.5x Impact Increase adoption/conversion Persistent consumption Advocates WOM beyond community Tweet:          #womma @phsoffer @mich8elwu 36
  38. 38. Q&A Speakers: Dr. Michael Wu, Principal Scientist, Analytics Lithium Technologies twitter: mich8elwu Philip Soffer, VP Product Marketing Lithium Technologies twitter: phsoffer Reference Lithosphere: http://lithosphere.lithium.com Whitepaper: http://pages.lithium.com/word-of-mouth-marketing.html Tweet:          #womma @phsoffer @mich8elwu 37

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