Tuesday, February 27, 2007

Social Networking Trends

Many people consider the beginning of the social networking trend with the advent of Friendster and their now patent pending linking to your friends algorithms. However, does anyone remember thesquare.com which still exists today? The Square is a site that created a community based on where you went to school. It underwent much criticism as being elitist since it only allowed the Ivy League Universities and a few other esteemed institutions (e.g. Stanford, Johns Hopkins, MIT).

The trend in social networking is rapidly looking like the landscape that the Square first pioneered: Building a niche group of individuals that have something in common. Sometimes ANYTHING! Sneaker Fanatics, Models from Top Modeling Agencies Only, Bodybuilders, are just some of the niche social networks that are popping up. In theory, each social network is great. There is a very easily identifiable demographic (e.g. sneaker fans), user generated content (freeing the company from having to think up anything new), stickiness (lots of time spent on site, since this is an interest for the user), and data sharing (each user gets more out of the social network the more information that they provide to it). However, because each social network takes up so much time and the whole point of the social network is to find others will similar likes and interests, only those with large enough user bases will be able to gain traction. MySpace has done very well with over 150 million profiles and counting, but marketers have caught on as well as the typical “gray” side of the internet, (adult sites, gambling, spam, etc). Profiles are being created that appear to be real people inviting you to online gambling rooms, to view their private webcams, and to hock other products and services traditionally tied to email marketing.

What will happen here? I think that companies like 5across (now acquired by Cisco) that are creating multiple social networks for multiple verticals which also allows the user to port their profile across different networks will emerge as the way to go. Today’s users have too many interests to be able to create a different social network profile for their myriad of interests. Other networks with not enough die-hard fans (Wal-mart shoppers, for example) will die a quick but quiet death.

Friday, February 16, 2007

It’s Only Text …. Or is it?

Let’s face it, cell phones are everywhere. Everyone you know has a cell phone and if they don’t, and you can’t get in touch with them when you want to, you probably won’t know them much longer. In fact around 80% of all adults carry a cell phone and most likely grab their phones before other items that were once necessities including a wallet, keys, or watch. Cell phones are slowly making these items into anachronisms with new technologies like PayPal mobile, SMS (short messaging service, e.g. text messaging) to open doors, and the obvious cell phone clock. With the cell phone becoming your new wallet, keys, and watch rolled into one, why aren’t marketers making more inroads into cell phone campaigns?

There are a few obvious answers to that question. First, is that the cell phone network is not free. In Europe SMS is free. In the US, you either have a plan with a predetermined number of messages or you pay per message. I doubt that neither you nor I would want to pay for a text message selling canned spinach. The cell phone network is also owned by the carriers. The carriers have invested an exorbitant amount of capital into this infrastructure and they are sure going to find a way to recoup these costs. Further, the carriers are making what amounts to rounding error in a marketer’s text message campaign as compared with their monthly subscription fees. If as a marketer you upset a customer and they switched carriers, you’d be in very big trouble.

Secondly, we live in a world of moving pictures, rich images, and stereo surround sound. However, the lowest common denominator amongst cell phones, carrier networks, and usage plans is text messaging. Many marketers feel that their message will get lost in the world of letters and numbers as opposed to images and sounds, that the message will be boring because in today’s world of hundreds of thousands of marketing messages, who is going to pay attention to plain old text?

The answer is probably everyone. Text messaging is an amazing technology because unlike the internet, text messaging is with you at point of physical purchase. We’ve just mentioned that the phone is replacing pocket staples as the one item to carry if you only could carry one item and unlike other point of purchase marketing vehicles, text messaging is interactive. As a consumer you can text answers back and forth to receive the exact offer that you want and as a marketer, you can collect demographics and purchasing behavior from your perfect target consumer.

Currently there are a few different tips and techniques on text messaging. The drive to web campaign allows you to collect the most data from the consumer but most likely results in less than full conversion. Consumers text a keyword to a short code (a unique 5 digit number) and receive confirmation of their entry as well as a passcode to be entered on a website for further incentives. By forcing consumers to enter information on a website, a richer profile can be built; however, this also results in some consumer loss. Simple one off text messages can yield greater conversion results. However, the demographic data that they produce is simply a phone number, which nowadays does not really mean much except for the city of activation. One off messages also does not allow the marketer to employ opt-in measures for continued receipt of communication. Interactive messaging appears to be medium of choice for marketers. This allows users to initiate the conversation with a text message to a short code. Automated responses follow based on the users previous answers and a near lifelike dialogue between the consumer and the marketer takes place. It is the best of both worlds because while not as much demographic data is being collected as in the drive to web campaign, a higher percentage of respondents are replying. Further, since the consumer is at the point of purchase a greater conversion rate should be attained.

Text to email is a slow growing technique due to lengthy email addresses, but with people purchasing their own domains yielding shorter email addresses, this should be a viable opportunity. Text to email allows the user to text a keyword and their email address to a short code to receive information on the product or service as an email to their inbox. This is perfect for when a user is interested but happens to be in a non ideal situation.

According to eMarketer studies, US SMS usage is only half that of the Europeans. A large reason for this is the per message charge that carriers still impose on SMS. (In Europe it is free, and a way for consumers to get around usage of peak minutes). SMS is inconvenient for many people to type with. T9 algorithms have made it easy but until cell phone manufacturers find a way to QWERTY our cell phones, older generations may shun the technology. Despite these barriers to SMS adoption in the US, the text message is a very powerful medium to communicate. In the near future as MMS (multimedia messaging service) breaks through, marketers will have their wish of bringing rich media to consumers at point of purchase, but for now, realize the power of text and the immense power of point of purchase interactive marketing.