Social media cost of inaction (COI)

by Martyn Thomas ON 25 June 2012

The social media party is just warming up as business continues its ongoing transformation. An hour with Google can reveal the potential of embarking on a fruitful social media strategy benefitting businesses and their bottom lines, so why then is first mover advantage still there to be had in most business categories?

Management guru Edward Deming once said, “In God we trust. All others must bring data”. The hero topic in most social discussions is ROI, but I believe the focus should be on COI (cost of inaction). The cost of deliberating, for whatever reason, is always going to be higher than simply opening up collective minds to the undeniable opportunity that is social media.

Brands face an incredibly complex challenge as they have to play with many dials at the same time: traditional ads, digital, web, mobile, apps, social, behavioural. All are tightly intertwined, creating flurries of new metrics: ROI, naturally, but also engagement, sentiment and feelings.

So what possible barriers to entry could there be? What’s stopping businesses from capitalising on the biggest opportunity in decades to leverage a long term competitive advantage over their competitors?

We recently ran a ‘Where are you at with social?’ poll with our data/Twitter base and happily share our top 10 findings:

15% are hesitant to begin using social,
60% have tools in place but no long term strategy,
80% manage their social internally,
30% use social to stay relevant to their consumers,
20% use social for brand building,
20% don’t know much about social or how to start,
28% say convincing internal management is a barrier,
40% say having no resource/budget is a barrier,
40% want to know how to enhance their current offering, and
35% want case studies and examples.

To help overcome social media COI I’ve addressed four stumbling blocks:

the most influential people in companies (CEO’s) don’t believe in social,
social media ROI is difficult to identify,
traditional company cultures/structures are a natural barrier to social implementation, and
very few know how to begin the process of getting it right.

Don’t believe

When it comes to social media the first thing to avoid is the HIPPO (highest paid person’s opinion) syndrome.

In many organisations, the highest paid person in your organisation very often has no clue about social media marketing or believes the IT person actually does this! So when this person dictates strategies and tactics, you’re going to run into trouble.

We’ve witnessed time and time again that the most senior people in business ‘don’t know what they don’t know’ when it comes to most things social. Fair enough, sort of, but at least have the moxie to admit it, or invest some time to upgrade your knowledge.

ROI

In April this year Nielsen published their latest report on ‘Global trust in advertising and brand messages’. A key outcome, charted here, is in response to the question ‘What degree of trust do you place in the following forms of advertising?’

There’s been plenty of comment about this survey and I just want to focus on the top two most trusted sources: recommendations and opinions. I’d imagine that the degree of customers’ engagement and the commensurate cost are top of mind for brands.

Brands can have a credible presence here providing they don’t use the new tools in the old ‘push’ way, and providing they understand how they can add value to their customer base, not just talk about themselves.

The problem for traditional media is that they don’t own these two segments – social networks and consumer websites do. The likes of TV and print (newspapers and mags) which attract an annual investment of approximately $3.5 billion and $3.8 billion respectively, in Australia, are based on a less than ideal engagement metric. For example the all-important TARP metric is based upon the TV being on whilst someone is in the room and a reader is based upon having seen or looked at the front cover.

There’s disconnect here between outcome and cost. My thinking is not about one or the other, rather combining the higher reach/lower engagement traditional media channels with a lower reach/higher engagement social play. Admittedly traditional media still kicks ass but damn it’s expensive, is possibly becoming less effective and the ROI metric is far from ideal. Conversely a well-considered social media strategy can deliver trust and true engagement with metrics such as:

identifying who’s (demographics and location) saying what (opinion, sentiment) and where (forums, news feeds, blogs, Twitter, Facebook etc.),
identifying key category influencers and brand advocates, and
identifying real-time insights for your brand and competitors.

Size of budget has always been a key discriminator, until now. Now it’s about building relationships, something that takes time and cannot be countered with a competitor’s short term investment no matter how sizeable.

Company cultures/structures

Although the marketing department is usually the front door for social media, once it enters a business it should become all pervasive, across all departments (sales, customer service, IT, HR, PR, research, search, promotions, creative etc.) Rather than being 100% of someone’s role, it’s more likely to become 5% of 20 people’s roles.

Subsequently well-established silos within business will become eroded in the quest for an open and collaborative culture both internally and externally with partners and suppliers. Clearly this will take time, particularly in larger businesses.

Such a shift will be regarded as threatening by people who run these silos, generally middle management. The thing is that the shift is inevitable and it’s better to champion the new culture rather than ignore the inevitable. This ring true for anyone?

How to begin?

Well it’s not with the tools. If you’re beginning wondering how to use Twitter, Pinterest and Facebook then you’re starting in the wrong place.

It’s highly preferable to begin with your business’s relationship footprint, internally and externally. You have to understand your business needs, social capacity, establish your ROI metrics, audience analysis, staff guidelines, training and support and stakeholder participation.

This is 101 stuff but seems to be basically ignored. Following the six fundamentals of growing a successful social business is easy – you just need to make the jump.

Continue to disregard social media at your peril. Now is a great time to gain ground on your competitive pack through better understanding your customers. Aim higher than cursory ‘likes’ or ‘followers’ and turn COI into ROI.

Gen Z trusts no one, especially not marketers

by Marketing ON 16 April 2012

Generation Z, those born in the early to mid-1990s, are more cynical than previous generations when it comes to people in authority, and they don’t like being marketed to.

According to findings from research firm IBISWorld, Gen Z has trust issues with only one in two willing to trust people in general, making them the least trusting out of all the generations, and a high level of cynicism towards people in authority, such as marketers and politicians. They trust their friends’ opinions above all other sources of information and dislike being overtly sold to.

While they’re a prickly audience, it’s important for marketers to understand them, warns IBISWorld senior analyst Naren Sivasailam, as they will become the demographic with the most buying power over the next decade, projected to make up 13.2% of Australia’s population (or 2.9 million people) by 2015.

In order to reach them, marketers need to be more subtle, advertise through a variety of different channels and avoid ‘forced marketing’. “Generation Z don’t like that idea,” Sivasailam says. “They get annoyed when people tell them what to buy, and how to do it.”

“Obviously with technology there are ways to market and spread a message through more channels, including social media as well.”

IBISWorld reports that the average Australian has 78.1 leisure hours each week, but that members of Gen Z who are working or studying part-time may have more. This leisure time is being used to go shopping, play video games, play or watch sport, or indulge in their favourite pastimes – surfing the internet and social media activities.

The younger generation is espected to fuel the urbanisation trend, continuing the shift of people from rural communities to capital cities to access tertiary education centres, broader employment opportunities and the sense of cultural vibrancy attributed to urban centres.

They’re also more likely to live at home for longer, due primarily to decreasing housing affordability. Australian Bureau of Statistics (ABS) figures reveal that 48.1% of 20 to 24 year-olds were still living with their parents last year, up from 45.2% a decade earlier, and much higher than they’re older Gen Y counterparts at 13%.

The study also found that Gen Z is more likely to be empathetic to organisations with a social conscience, despite their cynicism.

Word of mouth more trusted than ever, trust in TV, print ads declines

by Marketing ON 11 April 2012

It’s no ground-breaking news that the vast majority of people trust word of mouth recommendations from friends and family above mainstream advertising, but the latest surveys from global research firm Nielsen indicate that it is growing in importance to consumers, while confidence in traditional forms of advertising is declining.

92% of people surveyed by Nielsen online say they trust earned media, such as word of mouth, above all other forms of media and messaging, which signals a rise of 18% since 2007.

The second most trusted source of advertising is consumer reviews online (70% of people trust them, an increase of 15% in the last four years), meaning that the opinions of strangers on the internet are more powerful to most people than any of a brand’s advertising, websites, social media promotion or emails.

That fact highlights the opportunity and challenge brands – especially retailers and consumer goods brands – face, and the reason review platforms such as Google Places and Yelp, which launched here in Australia a few months ago.

For a heads up on how businesses can take advantage of customer reviews, read Marketing mag’s interview with Yelp CEO Jeremy Stoppelman on the occasion of the site’s Australian launch.

The ‘Nielsen Global Trust in Advertising Survey’, of over 28,000 respondents around the world, also shows significant declines in consumer trust of paid advertising including television, magazines and newspapers. The figure of 47% representing consumers who trust those media hides falls of 24%, 20% and 25%, respectively.

Nielsen’s Randall Beard, global head of advertiser solutions, says that while brands increasingly seek to execute more effective advertising strategies, the research shows that the continued proliferation of media messages may be affecting how well they connect with their target audiences.

“Although television advertising will remain a primary way marketers connect with audiences due to its unmatched reach compared to other media, consumers around the world continue to see recommendations from friends and online consumer opinions as by far the most credible. As a result, successful brand advertisers will seek ways to better connect with consumers and leverage their goodwill in the form of consumer feedback and experiences,” he says.

The following is a break-down of results for other forms of media, with figures representing the proportion of respondents who find the source credible:

Owned media, such as company websites: 58%
Emails (that they consented to receive): 50%
Product placement in TV shows: 40%
Radio advertisements: 42%
Cinema advertising: 41%
Online video ads: 36%
Online banner ads: 33% (up from 26% in 2007)
Paid search results: 40% (up from 34% in 2007)
Sponsored ads on social networking sites: 36%
Video or banner ads on smartphones and tablets: 33%
Mobile phone text ads: 29% (an increase of 61% since 2007)

About the Nielsen Global Survey: The Nielsen Global Trust in Advertising Survey was conducted between August 31 and September 16, 2011 and polled more than 28,000 online consumers in 56 countries throughout Asia Pacific, Europe, Latin America, the Middle East, Africa and North America.