Digi-bytes & stuff

Facebook is on a shopping spree, announced within last week, the purchase of Instagram for a whopping $1 billion dollars, and then Tagtile for an unrevealed sum, assuming much less than the former.

The last time a company made a billion dollar purchase, was Google back in 2006. $1.65 billion to be exact, for the purchase of You Tube. Back then, Google’s purchase was seen as, on one hand, an offensive move, to gain majority market share in the video market fast, with the acquisition of what was then (and still is), the most popular online video site. On the other hand, this was also a defensive move, competing with Yahoo, who was said to be in the bidding war till the very end.

Five years on, while the industry is still wondering how much return on investment You Tube has yielded for Google, if at all, Facebook appears to be on a similar path, acquiring Instagram, as a way to gain a strong foothold in the mobile photo world, and also to counter Instagram becoming a competitor in its own right.

What is interesting with both these acquisitions is that they both seem to make perfect investment sense. Why not? Both these businesses command large volume of followers with high level of stickiness to the site or app. Surely, advertisers would pay to reach and engage with these consumers. In theory, yes, advertisers would. In practice, however, often, consumers utilising these environments, are not necessarily receptive to advertisements, which potentially makes these environments, less efficient or not as cost-effective for advertisers as expected.

Because we are able to track metrics relating to engagement and interaction, we can now discern the effectiveness of digital environments to the messaging and relevance for the brand. There are occasions where campaigns run on You Tube proved great in growing awareness, but other times, we may find that consumers do not go beyond the impressions, therefore rendering call-to-action banner ads in this space ineffective.

There are also occasions where You Tube are utilised by advertisers as destination sites, e.g. view brand videos on You Tube, where other media channels outside You Tube are used to drive viewership to You Tube. In such instances, advertisers are not necessarily spending on You Tube to get their audience, although our friends at You Tube would certainly recommend that you should.

I suggest that there is a flaw with the thinking that online advertising budget should go where the consumers are. This is only half the point. More accurately, advertising budget should be allocated to environments where consumers are in the mindset to act or perform actions that you desire of them. E.g. if you are reading a piece of news content on a news portal, brands could provide you with a piece of content in the same context as the article you are reading. Or if you are viewing videos, brands could be delivering videos of the same genre, or if you are searching for great deals, that would be the optimal environment and time for brands to present transactional content, i.e. deals, this stimulus would be on the mark with your mindset. Brand and consumer are on the right page, ready to make a connection or transaction.

In a traditional online publisher portal environment, while it is seen as a one-way online publication with limited social features or functionalities, it still plays a pivotal role in carrying advertising messages. Consumers in these online environments are more receptive to advertising. Banner ads were born in these environments, which meant that consumers are more tolerant of advertising in these environments than in social networks such as Facebook.

So back to the most recent Facebook acquisition move, the consumers are emerging the winners here. I applaud Facebook for recognising primary consumer needs, always seeking to integrate and enhance user’s experience. The purchase of Instagram is congruent with this move.

 It’s early days for Facebook with Instagram, but we can be sure many digital marketers like me, are wondering what innovative ad products would evolve from this acquisition, that would not distract, but enhance users’ experience, and yet allowing advertisers to effectively reach and communicate with their audience in the social space.

POE = Paid Owned Earned Media. A concept, when first introduced, focused primarily on digital media.

Today however, refined frameworks of paid, owned and earned media would address both traditional and digital media. We have certainly evolved from understanding what constitutes Paid, Owned and Earned media, the role and benefits each of these media types play, to the need now, to quantify and establish the relationships between them.

At UM, we are often challenged by our clients, not satisfied to just imply correlations, how do we quantify the relationship between paid, earned and owned media. Just as we know today, that traditional media has an impact on digital, we need to also acknowledge how these different media types relate to one and other, in driving business outcomes and ROI in dollar value for our clients.

This is where “POE modelling” comes in.

POE modelling recognises that it is not just the traditional, paid elements of marketing that effect consumers’ perceptions and interactions with a brand. The buzz that a product generates, or a brand website’s rich interactivity, these elements have a role to play, and can have a significant impact on how consumers think, behave and interact with brands. Traditional, paid media-focused modelling has often neglected such elements, to the detriment of its explanatory power and relevance.

The art and science behind POE modelling is in selecting optimal sets of variables that best represent the Owned and Earned components of the paradigm.

For Owned media, some typically use very basic measure of brand website activity, such as visits to the website, data easily collected online. An over-simplistic approach? Yes. In reality, what about visits to retail outlets? Are these not just large ads made of bricks and mortar? This form of data is often neglected in the analysis because footfall traffic is much more difficult to capture than website visits. So the “watch-out” here, is to ensure all “owned” touch points are accounted for, avoid using digital data only and hope that this siloed view could be representative of the total Owned. In this increasingly digital world, we could take the number on-screen as a good indicator of what’s happening off-screen.

On several such occasions, I have had clients concluding that their campaigns failed to yield desired results due solely to poor web traffic and web metrics. The only occasion I found myself more inclined to agree, was when the client was an online web-only brand.

For Earned media, there are a couple of options. Probably the best is a recognised measure like net promoter score or something from a credible research house. If you lack the budget for this sort of metrics, then organic search volumes can be a good alternative. Again, it would be flawed for us to only stop there. We need to acknowledge that while online search activity is a good, it does not quantify the value of offline chatter.

The result, despite the flaws, is a much more lucid view of the real world. From understanding solely the relationship between paid marketing activity and sales (or whatever we’re measuring), we can now explain a network of interactions, which may look like this:

The output of POE modelling is to correlate and quantify, not only the ROI of a marketing channel from its direct impact on sales, but also its indirect ROI from its sales impact via, e.g. generating more buzz or driving more people to a brand site.

From our experience, this amount of indirect ROI can be significant, enough to have profound implications for media mix allocation.

POE modelling is not perfect but it is as close as we can get, in out attempt to explain an imperfect (data) world.

I’ve spent some time with our team in Beijing recently, meeting clients and publishers. To say that China’s digital growth is imminent is an understatement. The growth is here and now, with still a whole lot more room to grow. Consumers are moving online in astounding numbers, young adults born in the 90s now entering into the work force, with many more young digital natives joining the league in the coming years.

Know that when we speak of digital in China today, we are talking about a mass-reach media, not a form of niche, emerging new media. In some aspects, digital networks in this country have the capabilities to reach more consumers countrywide, than the likes of TV, radio or print.

eMarketer’s latest report “China Digital Media: Usage & Marketing Trends” forecasted continuous growth in 2012 in digital ad spending, a strong year especially for social media and online video, with advertisers also considering mobile and location-based services, feeding a growing and insatiable consumer desire for social connectivity alongside retail spending and ecommerce consumption.

For advertisers, it’s not rocket-science to know to go where the consumers go. While TV remains a viable mass-reaching branding vehicle, changes in government regulations from January this year have not only stunted the supply, but have driven costs of TV commercial airtime upwards, forcing advertisers to seek alternate media outlets. Thanks to the fast-growing number of consumers adopting internet and mobile countrywide, digital channels now command enough volume and inventory, i.e. consumers, to become a cost-efficient and effective broadcast option for advertisers.

Why digital is mass-media? Just look at the numbers reported in eMarketer’s report (source: reported by social marketing agency “We Are Social”):

• Tencent QZone (536 million users)
• Tencent Weibo (310 million users)
• Sina Weibo (250 million users)
• Renren (137 million users)
• Kaixin001 (116 million users)

I was inspired after meeting some of these publishers. They have a vision for digital, as a matter of fact, they are in the driver seat, influencing and shaping the number 1 social networking market in the world (eMarketer: population of social network site users set to surpass 307 million this year).

Not only have they developed advertising products to “monetise social” more successfully than some had attempted in the west, I can’t help but also feel as if they have looked to the west, cherry-picked what worked best for consumers, aggregated these learnings and found ways to yield commercial value from these learnings,  e.g. when I was given a sneak-preview to Sina Weibo’s development roadmap, I saw a site that has skilfully combined similar features and functionalities from Facebook, LinkedIn, Twitter, Social, Content, Portal, enriching experiences of their audience, all in the one place.

All that talk that was had few years’ back in the west, e.g. about data portability and IDs synchronicity, some of these Chinese publishers have addressed them. And to their point, they do so to create stickiness and prolong consumer’s time-spend on their sites, which in turn serve to benefit advertisers engaging in re-marketing, behavioural targeting and performance optimisation across various properties on their sites.

What this means too, is the breadth and depth of consumer behavioural data these publishers would have collected over the years. What agencies and advertisers would do to be able to look into this data pool. I look forward to the day where third-party adserving becomes common practice and prevalent in this market, so we may interrogate and mine this invaluable field of data, to learn more about consumers, to go where consumers go.

I’ve forgotten all about Pinterest, till I was reminded of this site a few weeks ago.

I’ve heard about this social media site almost a year ago. Because I work in the digital industry, it’s my job to learn about new, up and rising players in the market. When it comes to social however, I adopt an attitude of “wait-and-see”, i.e. when will my social connections ”refer” or “introduce” this site back to me.  I feel that this gives me a sense of where the “ground-swell” originates. Not the most scientific approach, but some instant feedback that I allow myself.

Pinterest first appeared on my social radar about a month ago, when I noted a girlfriend via Facebook, she has just joined “Pinterest”. I reacted by getting an invite from Pinterest and started following her, and some other friends I subsequently found also “Pinterest”-ed. Now I too, have followers. And recently, I have noticed an influx of social chatter and articles talking about Pinterest. I guess the site has hit critical mass.

It’s a simple proposition, Pinterest allows you to organize images into boards for specific categories. When you “pin” something new, your followers will see it. They can like, comment or re-pin to their own boards. You get to share or showcase topics of interest to you.

As a consumer, I get my few minutes of ”fun browsing”, and possibly some engagement with my connections. In my opinion, jury is still out if this site could sustain interest, no pun intended, or has advertising value to marketers, or commercial value unto itself. As a business, it is remunerated via sending user traffic to merchants’ or retailers’ sites. Whether this would evolve to other forms of revenue models would be an interesting one to watch.

For now, I have more questions than answers:

1. At which stage of consumer decision journey does a social media site such as this play in?

2. What is the consumer’s mindset when they are on this site, the “what’s in it for me” question?

3. Pinterest on mobile – what’s the potential there?

4. Relevance of this product in the context of the brands and the markets these brands operate in.

I don’t have the answers, yet. Shall wait and see.