Thursday, December 30, 2010

why internet marketing

Editor’s note: Brand dollars are still the biggest unclaimed prize on the interent. Guest author Steven Carpenter handicaps the players who are most likely to get them.

One of the biggest business opportunities in the consumer Internet space is to create products and services that attract a share of the billions of dollars in held-up brand marketing that has yet to find its way onto the web. With the explosion of various kinds of content and the innovative ways advertisers can segment and track users, why are marketers so reluctant to open up the floodgates? Quite simply, because the current online solutions—search, lead generation, display, video—do not provide a high enough return for these kinds of categories and are not consistent with the image these brands have invested so heavily to achieve.

Commensurate with the potential riches, there is an enormous amount of startup energy and experimentation going on in this area. In this installment of the TechCrunch Teardown, I will look at the four leaders—Facebook, Twitter, Foursquare, and Groupon—and how their new interactions—“like”, “follow”, “friend/check-in”, “group coupon”—are fairing with brand advertisers.

The $20 Billion Opportunity

According to Ad Age, the Top 100 Global Advertisers spent over $100 billion in 2009 across the various print, television, radio, outdoor, and Internet channels; based on data from the previous year, 39 of the 100 had budgets of $1 billion or more (see table 1, click to enlarge). Procter & Gamble, manufacturer of 50 leading brands (such as Tide, Dawn, Pampers, Gillette, and Crest), of which 23 generate $1 billion or more in sales, is the world’s largest advertiser, spending close to $9 billion annually. It should follow, then, that the Internet economy as a whole is effected by how the brand managers at these companies decide to allocate their funds online.

As you can see from the last column in the table at right, the leading marketers are only spending $1.8 billion, or 2.6% of their total budgets, online, despite the fact that consumers are spending close to 30% of their time on the Internet. Of the top marketers, only General Motors, Disney, Bank of America, and News Corp. allocated more than $100 million to the web.

So who has found the best marketing value online? Companies that market and sell financial services, insurance, automotive, communications and media, and consumer technology. It makes sense: these are companies with products that can be found easily using search, and whose customers are most likely to be acquired online because they can transact online. To date, Google and vertical content sites such as Yahoo! Finance and Bankrate have been the largest benefactors of these re-allocated dollars.

New Kleiner Perkins partner, and former Morgan Stanley analyst, Mary Meeker, estimates that closing the gap between consumer attention and ad dollars spent on the Internet to be a $50 billion global opportunity. If the Top 100 marketers bring their marketing budgets in alignment with 30% of time spent, I estimate online brand marketing to be a $30 billion global opportunity and $20 billion in the U.S. As evidenced by Google’s recent pursuit of Groupon, its traditional CPC and display advertising may not be sufficient enough to meet these marketers’ needs.

The Four Horsemen

There are four Internet companies currently best positioned to work with brands to create innovative marketing solutions that will appeal to millions of consumers—Facebook, Twitter, Foursquare, and Groupon. I acknowledge it is not exactly a fair comparison for two main reasons: 1) Facebook has enjoyed a 3-4 year head start on the field and 2) each product has a different use case and thus attracts a different audience with distinct revenue opportunities. Each company, though, has found its way into the mainstream and now finds itself with an attractive platform for brand experimentation.

I see the four product experiences these companies offer on a continuum of online-to-offline interaction on one axis, and requiring passive-to-active behavior on the other. The Facebook experience, for example, is largely an online one where a user can say something about herself by associating with a particular brand by “liking” it. This is an incredibly passive expression that requires a split-second action with little to no long-term repercussions. She can choose to visit the brand page and see the news feed at her convenience.

Twitter, on the other hand, is a personal tool for gathering realtime information—no one knows which feeds the consumer decides to consume or to ignore. While Twitter is similar to Facebook in its largely online-focused consumption, it is a much more “active” medium. Users are constantly reminded when they are following a brands’ information stream. As soon as the information becomes unimportant, too frequent, or spammy, she will simply cut off the connection.

Groupon (which I wrote about in an earlier teardown) is the lightest application, ironically, even though it is the only one of the four that requires a user to make a purchasing decision. Transactions occur easily online and the offline experience of presenting a coupon is consistent with decades of proven user behavior.

As of now, Foursquare asks the most of its users in relation to branded campaigns, but it is also the closest of the four to placing customers in the physical proximity of brands and retailers.

How They Are Doing

You can see how the four different interactions 1) naturally lend themselves to different brands and 2) exhibit a large disparity in terms of the sheer number of participants. And this is not necessarily a bad thing: 44,000 passionate luxury fashionistas at NY Fashion Week may be more valuable to Yves Saint Laurent than 5 million fans on Facebook.

It should come as no surprise that the biggest brand in the entire social ecosystem is Coca-Cola with 20 million Facebook Fans. Whole Foods is the biggest brand on Twitter with 1.8 million followers and the Gap, having sold 440,000 half-off coupons using Groupon, is that startup’s largest brand experiment.

Of the top 50 pages on Facebook, 8 of them are leading advertisers and brands, compared to Twitter which doesn’t have a single brand in its top 50 users. Of Facebook’s top 50 brand pages, 31 of them are food and beverage companies, while 11 are consumer products such as Converse All-Stars and Victoria’s Secret. The most important takeaway is that brands have a far greater following on Facebook than they do on their own sites. Facebook’s best move has been to convince brands to market their Facebook pages rather than driving traffic to their own websites.

The most interesting finding is that what seems to be popular on Facebook is not so on Twitter. If you click on the table at right an dlook at the top 50 brands on Facebook, the “Follower/Fan Ratio” (the result of dividing the number of Twitter followers to Facebook fans) does not get higher than 8% (Disney). This indicates that Twitter might have a more difficult time than Facebook in attracting overall brand dollars with its current product feature set.

This is evident when you look in detail at one CPG company and its portfolio of brands. I did a comparison of the differing success of P&G’s top brands using the two platforms (click on table at right to enlarge). In every case except one (Dawn), the branded experience on Facebook is more popular in terms of numbers than on Twitter. In a few cases, there does not appear to be a reason for even having a Twitter presence. It is interesting to note that the most followed P&G Twitter account is the company’s own corporate PR team.

Facebook still has a lot of work to do and it is far from a foregone conclusion that it has won. While the lightness of its interaction makes getting to scale easier, maintaining enough valuable interactions on the branded pages and engaging long-term customer interest is a huge challenge. For example, according to eMarketer, nearly 1/3 of Facebook users who unsubscribed from a branded page simply were no longer interested in it. And, more to the point, simply because Coke has 20 million Fans does not necessarily mean Coke will pay for the privilege to advertise on Facebook if it cannot see a return.

So what brands seem to be working well on Twitter and far better than on Facebook? Daily deals, such as Dell Outlet, Amazon, and Woot, and companies that place customer service and community at the heart of the brand experience, like Zappos and Etsy, exhibit the most lopsided Follower/Friend ratio. It is important to note that two companies that had horrific customer service challenges over the past few years—JetBlue and Toyota—have fully embraced Twitter as a direct communications channel. The biggest driver of Twitter success as compared to Facebook is the timeliness of the information.

Twitter, then, is well positioned to capture marketing dollars from companies optimizing for deals, retailers that have frequent specials, ticketing and events, movie studios, television shows, last minute deals, airlines, and hotels.

It is still early days for both Foursquare and Groupon in terms of working with big brands. Foursquare has seen traction with high-end luxury and media brands, likely as a result of its headquarters being located in New York and early media partnerships. Of course, Foursquare’s long-term viability as a stand-alone “check-in” company is still an open question with Facebook Places breathing down its neck. This is a strategic move on Facebook’s part to get closer to offline actions, transactions, and local commerce.

While Groupon is the defining company of next-generation e-commerce, it has a tougher road in terms of working with brands and large retailers. These companies tend to be more sensitive to heavy discounting as they don’t want to train their customers to wait for 50%-off coupons. And, they don’t like to be so indiscriminate with their offers.

Overall Assessment

I evaluated the four companies along the six different types of offers and campaigns that I can see consumer brands wanting to engage in:

Coupons: Simple discount off purchases

Location: Physical check-in or product scan

Loyalty: Frequency, “Mayorship

Time-based

Special Events: VIP’s

Inventory Close-Outs

Based on my research, while Facebook, Twitter, Foursquare, and Groupon are the best positioned to capture the estimated $20 billion in pent-up consumer marketing dollars, none of the four are currently optimized to execute along all of the necessary dimensions. There are considerable opportunities for startups to innovate and capture share. I look for this to be one of the most attractive areas for entrepreneurs in the consumer internet for years to come.

Bugatti teardown photo credit: Flickr/David Villarreal Fernández

Unity Stoakes is the co-founder and president of OrganizedWisdom, an expert-driven digital media company focused on health and wellness. OrganizedWisdom is building the world’s first digital mapping of online health experts to help people easily discover and connect with credible health resources.

Is your doctor easily accessible online, or does he or she believe that the class='blippr-nobr'>Internetclass="blippr-nobr">Internet isn’t a resource for accessing health information?

If it’s the latter, it may be time to find another doctor. With nearly 90% of online Americans searching the Internet for health resources, it’s likely you and your friends and family already use the Internet to research health issues. It’s true that the web has a jumble of health information, and engaging online takes time, which most health experts don’t have. The good news, however, is that the increasing number of health professionals now embracing the Internet as an important and useful tool for health and wellness is beginning to change your options as a consumer.

Read on for some ways that social media can help doctors, health experts and everyday users.

Social Wellness Trends/>

An exciting new social media trend is emerging that disrupts the standard view of health care delivery and will have a profound impact on us all. Thousands of doctors, nurses, allied health professionals, and health advocates are publicly engaging with people online. In fact, nearly 40% of Americans turn to social media for health information.

Patients (and a few early adopter health pros) moved online years ago to share health guidance, give support and find answers. But until recently, many health professionals have avoided using the Internet and social media as a way to help patients. This reluctance is changing, as savvy physicians, nurses, dentists and other health pros are realizing that if their patients are online, then perhaps they should be too. Health practitioners who were once too busy, inexperienced or afraid to share their expertise online, now actively share links on Twitterclass="blippr-nobr">Twitter and Facebookclass="blippr-nobr">Facebook, blog, write for online medical journals, engage on Q&A sites, or contribute to online health sites and forums.

For too long, health and wellness has been a do-it-yourself proposition for patients online, and people have been left on their own to determine how to effectively utilize empty search boxes. People have great access to lots of information, but they must sort through the billions of articles to determine the credible from redundant health encyclopedias, marketing web sites or sites with potentially unknown sources. Then, the task of deciding the credibility of the sources and articles has fallen on the patient alone.

While the number of health experts interacting with patients online is relatively small, there is a clear trend taking shape. A recent Manhattan Research survey of U.S. physicians shows an increase of Internet usage for professional purposes up from 2.5 hours per week in 2002 to 8 hours per week in 2010. More strikingly, while more than 100,000 doctors are using closed social health networks like Sermo.com and publishing in peer-reviewed journals online, thousands of health professionals are now blogging, using Twitter, and connecting with patients on Facebook in very public ways. So much so that this November, for the first time, the American Medical Association released a set of guidelines to direct physicians communicating and engaging with patients via social media. And earlier this year, the CDC also published its own best practices toolkit for how health professionals should be using social media.

Given that so many people now go to the Internet before, during and after their visit to the doctor’s office, the lack of guidance from credible and trusted health experts online is a growing problem. In fact, Manhattan Research shows that 61% of people now use the Internet instead of visiting a doctor. Thankfully, the tide is turning as thousands of health practitioners move online to do much more than interact with friends, family and colleagues and are instead using the social web to dispense their particular health expertise.

What This Means for Health Information Seekers/>

We are standing at the precipice of a new online revolution in health care. As more and more health experts embrace the Internet and increase their social media activity, health information seekers will undoubtedly benefit in profound ways. Based on conversations and surveys conducted with experts and health information seekers, here are some of the benefits associated with a robust online community of active health experts:

Interaction With Experts: In the real world, people seeking answers to important health, financial or legal matters look for guidance from the best experts. With a growing community of health experts participating in online discussions, people have access to more expertise than ever before at their fingertips.

Credibility and Trust: With doctors and other health professionals contributing information online in increasing numbers, it is important for a trust filter to separate credible information and sources from information that is not credible. The community of health professionals that is forming online will act as a system of checks and balances to separate good information and sources from the bad.

Transparency: It’s been a watershed year for increased transparency as government, big business, the financial services industry and other sectors have been shining a light into their operations like never before. Healthcare is taking a major step forward in this regard at the grassroots level, with an expert community being formed online by doctors, nurses and other health professionals across the country. As more doctors view social media as an extension of their professional reputation, you can be sure that they will treat their online interactions with the same care as they do in the offline world.

While the increase in the online activity of health experts is a welcome development, searching for crucial health information online remains an overwhelming and intimidating process for many. In the offline world, people searching for health information seek out the best experts — and now with more health professionals moving online, people will finally be able to connect with credible experts they can trust.

More Social Media Resources from Mashable:

- 4 Effective Tools for Monitoring Your Child’s Online Safety/> - Social Media Parenting: Raising the Digital Generation/> - 5 Fun and Safe Social Networks for Children/> - HOW TO: Help Your Child Set Up a Blog/> - The Case For Social Media in Schools

Image courtesy of iStockphotoclass="blippr-nobr">iStockphoto, dcdr

For more Social Media coverage:

class="f-el">class="cov-twit">Follow Mashable Social Mediaclass="s-el">class="cov-rss">Subscribe to the Social Media channelclass="f-el">class="cov-fb">Become a Fan on Facebookclass="s-el">class="cov-apple">Download our free apps for Android, iPhone and iPad

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Thursday, December 30, 2010

Social Wellness Trends/>

What This Means for Health Information Seekers/>

More Social Media Resources from Mashable:

For more Social Media coverage:

Tuesday, December 28, 2010

Thursday, December 23, 2010

Embracing New Opportunities Is Being Defeatist?

from the please-explain dept

Wednesday, December 8, 2010

Tuesday, December 7, 2010