Tuesday, October 29, 2013

Marketers Use But Are VERY Disappointed By Facebook—Forrester Study

A new report from Forrester’s Nate Elliott reveals what many of us in social business have long suspected: Brands may be using Facebook for marketing, but they are not particularly happy with the success they are seeing.

Forrester surveyed 395 marketing executives from the US, UK and Canada about the business value derived from 13 different online marketing sites and tactics. The outcome was that, “Facebook offered less value than anything else on our list.” Just how dissatisfied are marketers with Facebook? Even Google+ marketing is rated higher!

The report, “Why Facebook is Failing Marketers” (free for Forrester subscribers), notes that more than seven in ten marketers already post updates to a branded Facebook page and approximately half buy paid ads on the social network. Despite this, marketers report Facebook is furnishing disappointing business value and that Facebook ads “generate less business value than display ads on other sites.”

Forrester notes that Facebook status updates are delivered to just 16% of a brand’s Facebook fans; by comparison, the average opt-in marketing email delivery rate exceeds 90%. In the footnotes, Elliott notes, “It’s safe to say that if your email service provider was only delivering messages to 16% of your mailing list, you wouldn’t think twice before firing them.”

The report concludes with recommendations for marketers and Facebook. I hope both parties are listening, because if big marketers yank their ad dollars and Facebook fails to evolve their ad products, Forrester predicts a further degrading user experience on Facebook.

What I really liked about this report is that it does not simply stop at what marketers are saying but also digs into how significantly Facebook’s potential to change advertising has been missed. As I noted in my post earlier this month, “Facebook's Missed Opportunity to Change Advertising As We Know It,” Facebook had promised to change the very nature of advertising with new forms of marketing based on social signals. Today, however, the social network offers advertising almost undifferentiated from that available on other highly trafficked websites. “Only approximately 10% to 15% of the ad impressions delivered on (Facebook) use social connections as a form of targeting,” according to a Facebook executive, leading Elliott to note that the social network “has become a Web 1.0-style ad seller.”

For more information on Forrester’s survey of marketing executives and what marketers and Facebook should do to improve marketing value on the social network, check out Nate Elliott’s blog post or buy or download the report at http://bit.ly/WhyFacebookIsFailingMarketers.

Monday, October 28, 2013

Forrester to Financial Service Firms: Build Trust Now!

As a former research analyst, I see a lot of reports and white papers. Many frustrate me with weak analysis, dubious data and suspect methodologies. I find some reports informative and thoughtful. But it is the rare research report that I find not just vital but also inspiring. Forrester’s new report, “Financial Service Brands Fail To Earn TRUE Consumer Trust,” is one of those rare reports. I recommend that brand, product and service leaders in the financial service industry get their hands on this Forrester publication. (Subscribers to Forrester’s Social Technographics can download it for free; others may purchase it for $499.)

Forrester’s TRUE Brand Compass explores consumers’ attitudes about specific brands, evaluating the extent to which the brands command preference, referral and price premiums. Together, these success metrics combine to create what Forrester calls “brand resonance.” To arrive at a brand’s resonance, Forrester evaluates it on four attributes -- being trusted, remarkable, unmistakable, and essential.

By evaluating consumers’ responses within an industry vertical, Forrester can identify those attributes that are most important for driving brand preference, referral and price premium within that category. In the past, Forrester has performed its TRUE Brand Compass research for verticals such as health and beauty and food and beverage. Now, the research firm is applying its TRUE Brand Compass to financial services.

It will come as no surprise, I am sure, that being trusted is the attribute that drives the most brand resonance for financial service firms. Of course, trust is no small challenge for the finserv industry right now; as the report notes, we are in “an era where the reputation of many financial institutions has been tarnished,” and as a result, “financial service brands must work harder than ever before to regain consumer trust in their brand.” (For some examples of how financial service firms are working to solve the trust gap, check out my blog post and presentation deck from the recent LIMRA/LOMA Social Media conference.)

The Forrester study finds that being a trusted brand in financial services helps to build advocacy and preference, but that is not sufficient to create pricing power. To earn a premium price, brands have to become essential by making themselves irreplaceable in consumers’ financial lives. How? I know this is going to rock your world, but Forrester says the secret is “having products and services that meet (customer) needs, producing the highest-quality products/offerings, and providing good value for the money.” (Shocking, I know!)

The meat and potatoes of this thoughtful and informative report is the TRUE Brand Compass data furnished on specific brands such Visa, MasterCard, American Express, PayPal, Fidelity, Capital One, Citi and Bank of America. A few of these brands are doing well, creating brand resonance, trust and pricing power, but Forrester found that seven of the 10 financial service brands surveyed are laggards.

Forrester’s TRUE Brand Compass approach and findings are especially relevant to the financial service industry as it continues to struggle to win back trust after the 2008 financial crisis. Five years into our weak economic recovery, the industry still has a great deal of work to do to encourage greater trust. Social media can be part of the solution, but it is just as likely to be a driver of problems until financial service companies succeed in earning greater advocacy, improved Word of Mouth and more trust.

For more on this report, please see Tracy Stokes’ blog post on Forrester.com, or download/purchase the full report at http://bit.ly/ForresterFinServTRUE.

Tuesday, October 22, 2013

New Crowdsourced Social Media Management Software Guide from TrustRadius

If you work in social media, you probably are already familiar with Gartner's Magic Quadrant on Social SoftwareForrester's Wave on Social Relationship Platforms and Altimeter's report on Social Media Management Software (SMMS). Now social media professionals have yet another source to help in the selection and evaluation of the many competing SMMS options: TrustRadius has published its own guide to SMMS platforms.

In an approach reminiscent of Altimeter's "open research" methodologies, the TrustRadius report is both free and crowdsourced. It summarizes the experiences of actual social media practitioners, ranging from employees of large firms such as Dell and Hertz to professionals at agencies with fewer than 200 employees.

The source for this information is TrustRadius's website, which is a sort of Yelp for business software. The site permits professionals to share their observations and ratings of the business platforms they use. To increase trust, every reviewer is authenticated and every review vetted before publishing. TrustRadius has found the reviews the site receives are quite substantive, averaging more than 500 words.

Culling from the reviews and content offered by its users, TrustRadius has separated the plethora of SMMS products into seven primary use cases:
  • Listening and sentiment analysis
  • Publishing/engagement
  • Promotions
  • Curation
  • Analytics
  • Customer Care
  • Social Selling

The report is interesting and valuable, but it has a couple drawbacks. First, the data upon which the guide is based is fairly thin--just 100 reviews of 36 different SMMS products. This lack of depth is more apparent in some categories than others; for instance, over a third of the product ratings furnished in the "Publishing Tools" category are based on just a single review. In addition, the limited number of reviews means that the ratings for each product do not vary from one category to another--Adobe Social may be better for "Publishing" than "Listening," but it is rated the same three stars in both categories.

The report acknowledges the limited input from users, noting, "While the volume of content does not yet provide the basis for a definitive sector survey, the insights from users are revealing and point to some broad directional conclusions." I expect TrustRadius will repeat this process periodically, and as more reviews are received, the depth and quality of the report will improve.

I also had questions about potential conflict of interest in some of the information furnished. For example, the CMO at marketing agency Penguin Strategies praises Oktopost, but a visit to the Penguin website reveals Oktopost is a client of Penguin Strategies.

Conflict of interest is always a risk with this sort of open source research, but despite the concerns, there are many ways the TrustRadius guide can be of assistance to social media practitioners, especially since the price (free!) is right. First of all, it helps to define the players in the SMMS space and aligns them to specific use cases, which can help define the candidates to consider early in an RFP process.

Second, while I would not base any decisions on the praise and criticism contained in the report, the user comments can help guide vendor selection research. For example, the knowledge that some users have concerns about spam in Radian6 results can encourage you to explore recent improvements in that platform's spam filtering.

Finally, and perhaps most importantly for both social media professionals and TrustRadius, this guide can lead readers into the TrustRadius website where much deeper information is found. Few of us base moviegoing decisions simply on star ratings, preferring instead to dig into reviews to tell if a given film might be appropriate and interesting. In the same way, social media practitioners can start by reading the report but then dig into TrustRadius.com's in-depth data.

For instance, the Sprinklr page on TrustRadius.com furnishes not simply the overall rating (4.25 stars out of 5) and nine user reviews, it also aggregates ratings in attributes such as "Likelihood to Recommend" (8.6/10) and "Performance and Reliability" (9.1/10). In addition, TrustRadius has a nifty feature that permits simple head-to-head comparisons of competing products, such as this page which stacks Sprinklr up against SpredFast.

The report is useful, but the real value of the report is to lead readers into the deeper crowdsourced information found on TrustRadius's site. As more social media experts take the time to review the tools they use, the value of TrustRadius will only grow.

Thursday, October 17, 2013

Facebook's Missed Opportunity to Change Advertising As We Know It

It wasn't supposed to be this way. Those seemingly random ads that appear on the right side of your Facebook news feed were supposed to be hyper-relevant, super interesting, laser targeted and perfectly suited to each users' interests. At least, that's what Facebook said in its IPO, hyping the social network's ability to allow advertisers to target "specific interests that (users) have chosen to share with us on Facebook or by using the Like button around the web."

The word "relevant" appears 38 times in Facebook's Registration Filing, but relevance is not what Facebook advertising is delivering, is it? In the last week, friends like Forrester Senior Vice President Josh Bernoff have complained of seeing ads offering jobs in restaurants and New Yorker Nate Elliott was served ads for real estate in Denver. And in an example of retargeting rum amok, I continue to get ads for mens' shavers even though I shopped online and purchased one a month ago.

How did it come to this? The problem is that Facebook did not do anything to protect the value of the "like." Had brands collected authentic "likes" from authentic "fans," that data could have supported advertising based on actual consumer preferences. Alas, brands raced to collect meaningless fans and Facebook allowed the practice, so we find ourselves at a place where no one is happy--brands complain of their inability to reach all those meaningless fans without opening up the checkbook and users cannot rely on friends' "likes" as a meaningful signal of which brands they love versus which brands simply ran a sweepstakes on Facebook.

The biggest loser in this situation may be Facebook, itself. It strove to change the face of advertising, just like Google did a decade earlier. While other sites raced to amass "eyeballs" to which they could deliver ads, Google focused on serving the right ad to the right person at the right moment. In the end, those sites that chased eyeballs died while Google commands more than four out of every ten dollars spent on online advertising. That's what happens when you create a new, more relevant ad channel.

Facebook has not yet furnished a new, more relevant ad channel, and you can tell that even Facebook recognizes the situation. Gone is all the talk about "likes" creating bold, new ad targeting options; instead, Facebook today largely pushes the same sorts of digital advertising products as everyone else. You can upload your hashed email addresses to retarget ads to custom audiences. You can target your audiences demographically or by broad interest. And in Facebook's most recent announcement, you can serve ads to people who visit your websites or use your mobile apps.

If all that sound familiar, it is because it is--these ad options are little different than popular websites and ad networks have been offering for years. Of course, there's nothing wrong with selling "eyeballs" rather than evolving advertising in bold new ways, particularly when you have a monumental number of eyeballs to sell, but this puts Facebook advertising in the same competitive space as every other online ad option. While Google can command a premium for reaching people in ways advertisers find valuable, Facebook is offering substantially the same ad opportunities as Yahoo, CNN and other high-traffic sites.

For now, the undifferentiated ad strategy is serving Facebook well--it has doubled its stock price in the past three months, finally surpassing its May 2012 IPO price. But while many are bullish on the future of Facebook's stock price, I remain less so. (This is a good point to mention, I suppose, that I am not a financial advisor and the opinions expressed here are my own.)

Facebook is currently selling at a price/earnings ratio of 194 compared to Google's 27 and Apple's 13. The company has to increase its bottom line 700% to 1400% to bring its price/earnings ratio into the territory of comparable firms. While investors have cheered recent improvements in Facebook's earning, it is worth noting that the company's net income before taxes was up less than 10% in the first six months of the year. Investors may continue to buy Facebook stock at a tremendous price/earnings premium based on optimism, but that will not last forever; Facebook will have to deliver profound net income growth to keep its stock rising in the next year or two.

How can Facebook do this? With Facebook's user growth stagnating as the social network approaches saturation, revenue and income growth can only come from a limited number of different sources:

  • More ads: More ad impressions mean more ad revenue, but can Facebook continue to push more ads at users? We will likely find out, as Facebook may soon bring auto-run video ads to users' news feeds.  Given the increasing level of grumbling, serving even more ads to users seems a dangerous route, and Google+ and others would be happy to welcome today's social addicts if Facebook starts down the same path that doomed Friendster and Myspace.
  • Better ads:  Better ad opportunities can draw more of brands' ad budgets. This is why Facebook continues to evolve its ad platform with new products, and of course, the growth of usage and advertising on mobile is a bright spot for Facebook. Still, as Facebook mobile advertising becomes more common and familiar, the clicks (and ad prices) are likely to stagnate (which is exactly the same well-worn path that online ad performance and pricing has taken over the past fifteen years). In addition, while it is too late for Facebook to reclaim the value of authentic "likes," the company may yet be able with better text analytics and data mining to turn our posts and interactions into more valuable advertising for both users and marketers.
  • Different revenue streams: The best option for Facebook, in my opinion, is the one least evident in Facebook's recent actions, and that is for the social network to offer value-added non-advertising services that users would welcome. Facebook has tried and largely failed with offerings like gifts, but that doesn't mean this or other strategies may not be lucrative ways for Facebook to drive revenue diversification, income growth and higher stock prices. The growth of the sharing economy is one of the most profound changes occurring today, with double-and triple-digit growth for peer-to-peer companies such as Airbnb, RelayRides, Prosper, TaskRabbit and Lending Club. Today, the world's largest social network is sitting on the sidelines, but if it cared to innovate its business model as much as its advertising offerings, it could yet enter the peer-to-peer space in a way that would bring additional revenue streams for Facebook.

Facebook's IPO Registration Statement began with these words:  "Our mission is to make the world more open and connected." That is something the company has clearly achieved, but I see little of its mission evident in the company announcements in the past year or two. New advertising products may be cheered by Wall Street, but they do not make the world "more open and connected."  I hope Facebook does not forget its mission, because a world that is more open and connected economically is one that offers great benefits to consumers and Facebook alike.

Thursday, October 10, 2013

Why? The Right Question that Builds Brands in Social Media

Photo courtesy of @EmeraldIslePR
Yesterday I furnished a keynote presentation at the PR and Social Media Summit. My speech was about the power of asking "Why?," a question that leads to success in both business and social media.

In my five years of research, consulting and managing social media, I have been asked thousands of questions. Where? (Where do I post?  Where do I engage?), How? (How do I listen?  How do I measure?  How do I find influencers?) and today's hot topic, given the need for content to feed the social media beast, What? (What do I say?  Do I post pictures, videos, text? Am I funny or serious? Am I professional or casual? Should I offer discounts and contests to lure new fans?)

What I almost never hear asked is Why? Not simply the "small whys" such as "Why is my brand on Facebook" and "Why should anyone care to engage with my brand?," but also the "great, big whys," such as "Why does my business exist?," "Why should people buy from me and not my competitors?," and most importantly, "Why should anyone care about my brand?"

In the deck below, I present the basic tenets of two terrific books--Simon Sinek's "Start With Why," and "Can't Buy Me Like" by Bob Garfield and Doug Levy. While most companies and employees know the "what" and the "how," very few know the "why." Successful companies do something different--they start with "why," and in so doing, they give employees and customers a reason to care. 

The classic example of starting with "why" is Apple, which declares "We believe in challenging the status quo and thinking differently"--that's the "why." Then it answers the "how" or Unique Selling Proposition question: "The way we do this is by making our products beautifully designed and simple to use." And finally it arrives at the "what": "We make great computers." 

Source: Asymco
Of course, makers of Windows PCs make great computers, also, but by starting with "why," Apple is able to command rabid loyalty. While this has not led to a predominant position in the PC marketplace--Apple only commands 7% market share--it does allow Apple to make substantially higher margins on its computers. Apple earns more profit from computer sales than the top five Windows PC makers combined.

The fact Apple starts with "why" has also allowed the company to expand their product line; while Window PC brands have tried and largely failed to crack the smartphone, tablet and music player markets, Apple has enjoyed considerable success in these product categories. Such is Apple's success that today it could use just its cash on hand and short-term assets to buy (if it cared to) News Corp, Gannett, the New York Times, Staples, Office Depot, Office Max and CDW--and Apple would still have enough cash left over to purchase a ticket to the top of the Empire State Building for every man, woman and child in the United States. That's the power of "Why?"

Apple is not alone, of course. Havas Media produces a Meaningful Brands Index that measures the impact of brands in 12 different areas of well-being, such as health, happiness, relationships and community. It finds that only 9% of brands are perceived by US consumers as making a meaningful difference in people's lives, and these same consumers would not care if 92% of brands disappeared. It may seem obvious to point out, but if people do not care whether your brand lives or dies, then it is not earning loyalty, it cannot command a price premium and it is constantly at risk of being replaced. In fact, Havas finds that "meaningful" brands outperform the market by 120%. 

The lesson of "Start With Why," "Can't Buy Me Like," and the Havas study is this:

"People don’t buy what you do, they buy why you do it.”

In my presentation, I suggest a three-step process to success in social media and in business: It isn't necessarily an easy process, because for many organizations it requires profound change:
  1. Discover a High Purpose:  This is not merely about cleaning up a local park this week and donating time to a food pantry next week. Having a purpose is a never-wavering "north star" that guides decisions, inspires employees and gives people a reason to care.
  2. Make it Real: For too many companies, their "purpose" begins and ends with charitable giving and posts made on social media. Today's savvy consumers can easily see the lack of commitment on the part of many companies, which is why it is vital that purpose be made real--if it doesn't change the way the company works, what it does, or how it spends money in the long-term, then the purpose is merely window dressing. You cannot merely say your purpose, you have to be your purpose.
  3. Live it in Social Media: If you discover a purpose and make it real, social media becomes easy. All the challenges and frustrations brands face today trying to develop a sufficient flow of content for social media evaporates once purpose is made real. 
In the deck, I furnish examples of five brands that followed this process to considerable success:
  1. U by Kotex has committed to changing the way the world thinks about the word “vagina.” Because young women feel a stigma associated with their bodies and their periods, they are afraid to ask questions and are prone to believing myths, many of them unhealthy. The brand makes its purpose real by hiring panels of advocates, health experts, moms and teen peers to candidly answer health questions on its website; the brand also allows young women to order a free bracelet declaring "I know," signifying their knowledge of the facts about their bodies and vaginal health. The brand lives this purpose in social media by giving young women social media "conversation starters" that encourage dialog or bust dangerous myths. As a result of this effort, the brand has received 3 million requests for free product samples and increased market share from 4% to 7.8%.
  2. Barclaycard Ring gave consumers a reason to care by involving them in every decision about the company's new credit card product. While 65% of product launches from established firms fail, Crowdtap found that 98% of consumers are likely or highly likely to buy a product they helped ideate. Barclaycard makes their mission real by allowing customers to vote on product features such as late fees and engaging in a dialog about why the card does not offer rewards. (Answer: Rewards cost money, and the Barclaycard Ring has an interest rate of just 8%!) The community is even permitted to see the credit card's financial results--if the financial goals are surpassed, the community can decide how that excess is used. This sort of transparency and collaboration earns Barclaycard Ring substantial positive sentiment in social media, and the company estimates it enjoys an annualized benefit of $10 million due to higher customer retention and lower complaints.
  3. Secret Clinical Strength has discovered its mission: Fighting bullying. The brand makes their commitment real by holding national events and inviting educators, parents and girls join the livestream to learn about the impact of bullying. The brand also makes PowerPoint decks available so that educators can share data and tips in the classroom. Secret also gives girls downloadable "mantras" they can print and hang in their bedrooms and lockers, reminding them to stand up for someone today. In social media, Secret encourages girls to post pictures of their pinky painted blue, a sign they are committed to #GangUpForGood. The brand has earned more than a million appearances in fans' Facebook news feeds, and the clinical family of SKUs, the products associated with Mean Stinks, grew 20% year over year.
  4. Chipotle has committed itself to increasing the integrity of the food we eat. The brand makes it real by posting how the company's restaurants source ingredients--local, organic, pasture-based dairy or responsibly-raised meat. But the way the brand really makes their mission real is by publicly admitting where it falls short of its own ideals; under the heading "always room for improvement," the brand conveys which ingredients are genetically modified or contain preservatives or hydrogenated oils. (How many of your companies are willing to publicize the ways it falls short and is still striving to achieve its mission?) In social media, Chipotle has engaged millions with evocative online videos such as the award-winning "Back to the Start" and recent social campaign, "The Scarecrow." The outcome of these efforts is that Chipotle enjoys some of the highest same-store growth in the restaurant business while competitor Qdoba is shuttering many of its corporate-owned outlets.
  5. And finally, my former employer, USAA, has a mission that has been its obsession since the company was founded in 1922: The company serves those who serve in the United States military. Its mission is so real to USAA that employees can recite it, word for word. One of the ways USAA makes this mission real is by providing a week-long New Employee Orientation to every new hire. One of the exercises during NEO is to put yourself in the shoes of someone receiving deployment orders: In two weeks you will be shipping out to a dangerous corner of the world, so how can you help your family prepare not just for your absence but for the possibility you will not return? USAA also brings its mission to social media, where it strives to answer every question, criticism and compliment within two business hours. The result of this effort is apparent: USAA earns the most trust from its customers across 246 companies in 19 industries according to the Temkin Trust Ratings, and USAA Bank's Net Promoter Score of 83% is the highest score among more than 200 brands across 22 sectors.
These five brands demonstrate the power of "Why?" In the end, making money is not your company's mission--it is an outcome and not the answer to the reason "Why?" Having a purpose and making it real gives employees a reason to perform their best, gives consumers a reason to care and gives customers a reason to buy.

My deck is below, and if you're interested in what resonated with the audience, check out the Storify stream of tweets gathered by Dr. Daradirek "Gee" Ekachai.

As always, your feedback is very welcome!