On Social Business

Twitter has been nothing short of a world phenomenon, popular in countries around the world and an undisputed factor in significant political change – and a star for customer service. It continues to grow rapidly, with a recent emarketer study projecting Twitter growth up to 4x higher than Facebook (on a lower base) in 2014. And, there are many of us who greatly value the discovery and connections we achieve through Twitter.

Our own research suggests exposure to social content has a significant impact on brand perception and sales impact (2-7x increased probability of purchase lift based on a restaurant study).  So, the general outlook for social content is bright.

The Problem

Yet even with its success in some high visibility areas and its fantastic growth, it just doesn’t seem like Twitter has quite hit its stride yet.  It has been overshadowed by Facebook and – at least for now – new entrants like Pinterest.

• It’s the #2 social network based on visits, but its current total user active user base is still much lower than Facebook’s (about 1/6 of Facebook in the US, according to eMarketer)

• Engagement is low — monthly average time spent on Twitter (36 minutes) is 91% lower than time on Facebook (6 hours 33 min) and 54% lower than Pinterest (1 hour 17 min), according to Mediabistro/Statista

• As a partial result of this (and probably as a result of other factors such as ad tools and analytics), monetization has lagged, with estimated 2011 revenues of $139.5 million (eMarketer), or about 1/25th of Facebook’s $3.71 billion actual 2011 revenues (S-1 filing).

It seems that these issues are among those threatening Twitter’s ability to increase its momentum with brands and organizations.

The Way Forward

Based on the data above, some of our own research, and some thinking based on work with brands, it appears that there are 3 steps that could make a dramatic difference for Twitter:

John Bell and I formally introduced the Conversation Impact(TM) measurement model at the Advertising Research Foundation’s Audience Measurement 4.0 on June 23rd.  Here’s a brief overview of the model, its goals and planned evolution.

The model was developed by our team to provide brands with a comprehensive, recognizable framework for tracking social media campaigns.   We relied heavily on our experience with a range of social media campaigns for both B2B and B2C clients, and considered the types of questions and reporting requests we receive with every new project or request for information.

We focus on simplicity and comparability across media – the latter, to help guide marketers with media allocation.  We categorize our metrics into 3 areas, corresponding roughly to objectives and “marketing funnel” stages; each is shown below, with representative metrics (the metrics are selected based on unique client needs).   Included are both familiar and new metrics.

Image courtesy of Crimson Hexagon

In an earlier post, I summarized the results of a study suggesting that several characteristics of movie word of mouth or buzz correlated well with expected total revenue over the movie’s release cycle.

There’s been a tremendous amount of word of mouth buzz surrounding this past weekend’s release of The Dark Knight, so I wanted to see what types of opening box office might be associated with pre-release buzz.

As a comparison, I also looked at volume of word of mouth around Hellboy II (the top release last weekend).

There are some brilliantly creative uses of social / conversational media – desktop apps, conversation monitoring, customer service programs, word of mouth and buzz creation services, facebook and myspace apps and games (to name a few) – that could potentially be very helpful for a brand seeking to expand its presence online and gain market insights.

From the perspective of a brand manager, marketing manager or agency seeking to maximize the value of their company’s /client’s marketing budget, however, it’s very important to understand how to allocate funds.  What metrics make sense to use for allocation optimization?

Here are some suggestions based on popular social media objectives. A TNS Media Intelligence / Cymfony late 2007 phone survey of 71 marketing professionals in the US, Canada, the UK and France suggests that marketers generally have the following objectives for social media:

If you’re not already using word of mouth campaigns for new product/service launches because of uncertain ROI, you need to read this! Research recently released by word of mouth companies BzzAgent and ChatThreads suggests that word of mouth may be measurably more effective than one of the current gold standards for online sales conversion: search engine advertising.  Furthermore, word of mouth campaigns may be 20-60% more cost-effective for branding than other media. Read on for details.

Intent to Purchase / Sales Findings

BzzAgent’s research shows that intent to purchase among participants in word of mouth campaign conversations ranges from 10-15% depending on the sector (people apparently love talking about food & candy):

Social media and buzz monitoring tools are growing up.  Here are a range of tools that can be used to monitor / track, analyze and engage in conversations about products and brands online.

These tools vary substantially in sophistication and focus; different tools will be appropriate for different size organizations and different marketing objectives.

Some of the considerations in selecting among these tools include:

Word of mouth campaigns have occasionally played an important role in the marketing of new entertainment and media (movies, music, books and games), but research to establish the major drivers of success has produced mixed results.  As a result, social media spend and monitoring is still a relatively small portion of the overall entertainment media spend.

However, a new research paper by Dellarocas, Zhang and Awad, has used different analytical techniques to demonstrate that – among other factors like box office revenue, marketing budget and star power – a movie’s early word of mouth (quantified as volume of online movie reviews, tone of review and the gender mix of online reviewers over the first few days of a movie’s release) has a significant impact on forecast movie revenues.

In the face of uncertainty in new media spending – What’s the ROI for blog outreach? Do widgets produce measurable returns? Is spending on word of mouth scalable? – it’s tempting to retreat to the familiar.

One rough rule-of-thumb for media/ad spend is the 70/20/10 rule (see What Sticks by Rex Briggs and Greg Stuart).  The rule suggests something along these lines: spend 70% of time/resources on proven techniques and media, 20% of time/resources on slight variants of proven techniques and media; and 10% on tests of brand new media and techniques.

In the aggregate, this model might make sense.  But, as always, the devil is in details: what’s proven media and technique for one product stage may in fact be unproven at another product stage; high-ROI media for one product stage may be low-ROI when deployed at a different product evolution stage.