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The 2011 Digital Outlook

  1. 1 Digital Outlook THE ENGAUGE 2011
  2. Digital Outlook THE ENGAUGE 2011 © 2011 Engauge. All rights reserved.
  3. 01 Create creativity in the era of co-creation | 06 shaping the conversation | 09 02 Innovate mobile | 26 location-based marketing | 32 storytelling | 11 loyalty and action | 40 start-up: figment | 14 start-up: placepunch | 48 courting the crowd: best practices | 16 gaming | 52 the power of play | 18 interactive tv | 62 the content play | 20 start-up: getglue | 70 augmented reality | 76 03 Relate a nation of narcissists | 82 04conclusion | 118 foundations of digital success | 120 social coding | 86 photography credits | 123 metrics and analytics | 92 best practices | 100 start-up: crimson hexagon | 102 consumer trust | 104 start-up: blue cava | 114
  4. Foreword The merger of creativity and technology is no longer an inspiring this cultural shift in social norms comes improved metrics and social idea, but the new imperative. As social media becomes the dominant intelligence analytics, providing compelling evidence of what many of channel of consumer engagement, brands now connect personally us have known intuitively: digital marketing can be a powerful driver with people. And consumers reach out to companies. Daily. of brand perception, consumer motivation and, ultimately, the bottom line for companies. There’s a new relationship to navigate. Fortunately, effective strategies and creative digital tools for driving As marketing strategies rapidly mature along with technology, so growth are now available to every marketer. You—right now—can will the two-way conversations between brands and people. Today’s help lead your company’s marketing efforts as a source of consumers determine when and where they connect with brands, and encouragement and empowerment. That’s the essential message of they expect brands to be available at all times, present in all places our 2011 Digital Outlook. Transformation isn’t a passive proposition. and accessible through every channel. At the same time, they’re also It requires a focus on doing. The actions of strategic digital marketing sharing incredible details about their lives, tastes and desires. With are clear: Create. Innovate. Relate.
  5. 3 READ RICK’S BLOG: RICKMILENTHAL.COM CREATE: Develop transformational ideas that connect brands and people. INNOVATE: Move beyond the ordinary and do what’s never been done before. RELATE: Create real meaning in the lives of consumers and growth for your brand. Will you join us? Rick Milenthal, CEO
  6. Develop transformational ideas that connect brands and people. 01 SECTION Create
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  8. 6 01 SECTION Create CreativityCo-Creation in the Era of The mandate is a seemingly impossible one: The question today is: how do you Reconcile the many disparate voices—shouts keep your brand from becoming an How to Build a from fans and friends, cranks and creatives— into something unified and intelligible, exquisite corpse? Coherent Brand something of real value to brand perception and equity. It’s a directive born of the singular Brand narratives are increasingly complex and composed of many voices. Smart Narrative brand lesson of social media: Marketing is made by all, not by one. Brand messages, now brands accept this new reality. Creatives can’t just sit down at their desks and dictate. co-scripted by the masses, can’t be controlled More than ever before, brands must plug like before. So what are the odds that they’re directly into the collective conversation competitively positioned and strategically and imagination to discover what grabs relevant? Or even coherent? and goes viral, what sways and makes us swoon, what will sit on shelves and what will Indulge the comparison. The collaborative sell. This is not a time to despair, though. writing game “exquisite corpse” was played This is not some doomsday denouement 70% by Surrealist Parisian poets of the 1920s. It brand marketers should fear. Rather, this required each player to successively contribute populist movement toward co-creation, co- a random word and create a sentence. The conversation and even co-invention reflects Fully 70% of executives game earned its memorable name from one an incredible resource of creativity and surveyed said their companies reaped value from online of the first mystifying lines: “The exquisite energy for brands. Embraced strategically, communities, but only a corpse will drink the new wine.” If that sounds the bottom-up contributions of the masses select few are achieving the like some of the comments on your brand’s are ushering in a new era of creativity. maximum benefit. Facebook page...
  9. 7 Embraced strategically, the bottom-up contributions of the masses are ushering in a new era of creativity. The Fan-based Business Model Local Motors is a global network of over 5,000 designers intent on building their own cars. Threadless is a crowdsourcing apparel merchandiser whose online community chooses which user-generated T-shirt designs are included in its fast-evolving fashion line. The business model of this new world is open source, fan-based and bolstered by grassroots support that can spread across the web like wildfire. Yet the potential for meaningful co- 10K creation is hardly limited to DIY disrupters and up-and-coming start-ups. Leading customer-centric companies from Starbucks On a typical day, the to Chick-fil-A have proven that business biggest brands each value—better service, better products, better spark 10,000 or more marketing—can be collaboratively created comments on social with direct cooperation from and conversation networks like Twitter, with consumers. They have succeeded in Facebook and YouTube. creating, fostering and continually improving online communities that deepen engagement and then pipe external insights to executives, designers and decision-makers.
  10. 9 Shaping the Conversation Focusing Broad Insights to Create Brand Equity Marketing messages don’t write themselves, that solicits the top solution. A highly not even with a broad array of social inputs. qualified field of contributors competed for Innovative products don’t simply materialize the million-dollar Netflix prize, awarded to out of the online either. And new services the team that most improved the algorithm don’t automatically launch just because used to recommend movies to customers somebody posted a terrific suggestion on based on their viewing preferences. Though your website. Heed the black holes: Among costly, the online challenge significantly 6% the numerous online suggestion systems strengthened Netflix’s competitive edge. rolled out in recent years, many imploded the moment the marketing department realized It’s an elegant model, a simple and Companies committed less it lacked the resources to review—much less powerful prism. Take a wide spectrum of than 6% of marketing spend the desire to respond to—a daily deluge of public inputs (consumers and active users), to social media in 2010, even comments from consumers. refine the focus (solicit ideas on a specific though American consumers issue) and then sort suggestions with an now spend about as much One solution was pioneered by Netflix: Ask efficient (algorithmic or vote-ranked) filter to time on the Internet as they a narrow question about a specific problem, ultimately identify the ideas with the highest do watching TV. then create a contest with cash incentives concentrated value.
  11. 10 Learning from Missteps Finding the Right Connection Within Online Communities at Starbucks Virtual labs, beta testing, custom modding, Indeed, fewer than half (42%) of financial Over 60,000 suggestions for new products brand ambassadors—choosing the right co- services firms that maintain a presence on have been submitted to the My Starbucks creation approach and platform depends on Twitter and Facebook reply to users’ posts Idea site since 2008, but many are based on the problem you need to solve. New product and comments, according to Forrester individual tastes and preferences. (A recent development? Charles Schwab learned early Research. Yet nearly two-thirds of all financial example: “Offer a skinny pumpkin spice on to listen to online communities and, in services firms maintain a presence on such latte!”) Accordingly, the site is awash with the process, discovered that underserved sites. So why do the rest of them bother? ideas that are strategically irrelevant for the Gen-X investors needed a new series of Why do companies invite consumers if company. high-yield checking accounts. What about they’re not going to show up themselves? customer experience? Comcast and AT&T To succeed, marketers must choose the So in its 2010 betacup challenge, Starbucks trawl for insights far beyond the corporate right channels, ask the right questions, learn changed its tactics. Borrowing from the firewall, deploying social media teams for to listen perceptively and provide frequent Netflix model, they focused their fans customer care that monitor chatter on social feedback. This keeps brand constituents on a problem that had proven internally networks like Twitter, Facebook and YouTube active, satisfied and engaged. None of vexing—how to reduce environmental and proactively contact (and try to help) the this is necessarily easy—not the first time waste from paper cups, a high-priority goal haters and complainers. or the second or the third—and, given the for Starbucks’ corporate responsibility. The rapid rate of technological change, even $20,000 contest drew 430 submissions, 5,000 The takeaway: Communities don’t run the top-performing social campaigns must ratings and 13,000 comments. The award- on autopilot. Even though fully 70% of continually evolve. winner, Karma Cup, recommended giving a executives surveyed by McKinsey said 42% free cup of coffee to every tenth customer their companies reaped value from online who carries their own reusable mug. In this communities, only a select few are achieving case, the positive PR from an estimated 10 the maximum benefit. Social media million media impressions may actually be marketing isn’t some automatic, hands-free, Only 42% of financial services worth more than the award-winning idea, but self-propelled phenomenon. It’s a discipline. firms that maintain a presence both are valid components of added value. It requires resources and commitment. on Twitter and Facebook reply to users’ posts and comments.
  12. Storytelling Radically Revising the Brand Narrative Brands can’t keep pitching the same kinds stage, they’ve got lines of their own and of top-down narratives. Stories, and the way they demand to be heard. They have, in we tell them, have changed dramatically. fact, the final word. It’s a shift in power No, thankfully, it’s not Surrealist poetry. that instead of diminishing the impact It’s more like a classic Greek play with a of creative advertising makes it all the chorus of followers on Facebook and Twitter more relevant and critical to brand and providing commentary and feedback on the marketing success. main protagonist—the brand. The challenge facing marketing departments and agencies Online communities and co-creation is deciding whether it’ll be a tragedy or a can produce a broad array of benefits— comedy. Though American consumers now deeper understanding of customer spend about as much time on the Internet needs, desires and demographics; better as they do watching TV—and, when online, messaging and brand engagement; new they spend twice as much time on social ideas for services and innovative products; networking sites than any other activity— novel fixes to persistent problems; and companies committed less than 6% of fresh content that is culturally relevant marketing spend to social media in 2010. and continually evolving. Done right, co-creation can benefit both consumers Bottom line, in today’s ad campaigns, and and producers. in today’s culture, the brand is no longer the only hero. The audience has become the cast and chorus—they’ve climbed on
  13. Q POINT OF VIEW What is the role of creativity for brands today? Welcome to the democratization of creativity. What do I mean? Well, let’s go back—starting a few centuries to a few years ago. Creativity was, by its nature, elitist, owned by few and awed by many. In order to create, you needed tools, a location and resources, not merely talent. The prohibitive costs and time commitments relegated creativity to those with the capacity to pursue it—the funded painters vibrancy of reality. It chose dialogue over monologue. The opinion of a teenager from Antioch, Wisconsin became as valuable as the postulates of a tenured Harvard professor. Anything was possible, and the unexpected became the expectation. Emotion hijacked logic. It was no longer necessary for logic paths and poets, the industry-backed musicians and filmmakers. to move rigidly from awareness to persuasion. No, it was marketing anarchy where the targeted audience usurped brand positioning right It was no different in business. Ad agencies possessed all the time, from the hands of unsuspecting marketers. tools and talent to create. Consumers sat back passively and watched or listened. Because agencies, bankrolled by marketers, could afford Now, what consumers say—in blogs and microblogs, on social to create the message, we had control. We owned the influence; we networks, in email chains, on socialized sites and video sharing commanded the mediums. We held all the creative cards. platforms—is the voice of your brand. And it can change in a nanosecond without rhyme or reason. Like it or not, this is the new Then technology came along and reshuffled the deck completely. world of creative influence. In the hands of the many, the voice of creativity changed. Its tone became collaborative. It eschewed production polish for the Some brands will resist, some will reluctantly accede. But those brands
  14. 13 Mike Bednar chief creative officer READ MIKE’S BLOG: ENGAUGECREATIVITY.COM that not only embrace but also join their new creators will triumph. Here’s the secret to why: Brand positioning, by its very nature, is emotional. Its foundations are, and have always been, built on constantly shifting sands. Perception is reality. And consumers have always held the ultimate control— they’ve either believed or they haven’t. They’ve created images of brands in their own minds. Now they simply have the ability to create the outward- facing image. Consumers accept the creative messages of other consumers more readily than from marketers. So give them the tools to create, unleash experiences and invite them in. Let them influence your brand’s direction, not the other way around. Trust them to know as much about themselves as your precious research does. Allow them to disagree, to argue—at least they’re talking. Create two-way content; share everything you have—without hesitation. Their creativity is limitless and infinitely effective. When it’s built around your brand, it becomes the most powerful marketing tool any brand could possess.
  15. Start-up to Watch The Social Network Teens for Literary Can Figment redefine the book market? Within five days of going live in December, media-sharing sites. More than a million drew 10,000 registered users. titles have been published, some even The social network for the literary teen catapulted to the top ranks of Japanese allows for sharing, reading and reviewing of literary bestsellers. “The first literary genre original works across all genres, from fiction to emerge from the cellular age,” is how to memoir. Figment co-founder Dana Goodyear dubbed the movement. Founded by two veterans of The New Yorker, Figment is an attempt to translate Before launching the site, Ms. Goodyear A conversation with CEO and for American audiences the Japanese and Jacob Lewis, the site’s co-founder, spent Co-founder Jacob Lewis. pop-culture phenomenon of the cell phone several months visiting schools, libraries and novel—a breakout category of romance literary organizations across the country to and fantasy fiction written by young women speak with teenagers, recruiting them to on their mobiles and initially appearing on participate in a beta version.
  16. 15 Q: You attracted 10,000 members in the first five days. and shared. It’s not being done with the full participation of What’s the appeal? readers and authors together. We think publishers will be able to discover heuristic information about how people are reading, A: It’s an inviting space as a reader, not just as a writer. There are which could help them make decisions about what to publish books on the shelf that you might want to read—a story by in the future. These really are the future readers and they’re a your friend or a novel that just came out from a major publisher. group that publishers have never had access to. Publishing has Putting those in the same place is important, because kids today a very bad hit rate. They lose out on 70% of their books. I think don’t draw a line between their own creativity and the stuff they we could have an impact on their performance. find in a bookstore. Q: What about advertising? Q: Do teens have fundamentally different expectations about reading and writing? A: Right now, we offer an integrated marketing platform for publishers to market individual titles to users of the site. There A: When I was 17, I wrote a letter to Philip Roth. He didn’t write are no banner ads, but we can facilitate ads within the pages back. Not surprising, really. Back then there was no expectation of the book excerpts—interstitial disruptive ads that appear on that a well-known author would respond to readers. That’s not the pages. So far, we have deals with eight to ten publishers. true now. There’s been a fundamental shift. When kids today We’re also very interested in looking into brand marketing. We interact with the authors they love, they expect a response. believe that brands that truly want to understand the millennial They demand a response. Reading isn’t a passive experience generation will come because of the activity level on the site. for them; it’s a social one. People want to participate. They’re writing things, reading things, sharing things. We think that Q: What did you learn from talking to teenagers during the six- experience could redefine the marketplace for books. month closed beta stage? Q: What’s the response from publishers? A: We were holding our breath for six months—spending time and money to watch and learn from these kids. But we would have A: As bookstores die and content goes digital, publishers are trying failed without it. A lot of the things we built, initially, were not very to find new ways to market themselves. Publishers are very wary useful. We’d built a lot of clichéd social networking tools—letting about eBooks. But there’s a deeper and more fundamental visitors “friend” somebody, creating a “wall” for comments. You problem with publishing, about the way content is created learn very quickly you’re never going to replace Facebook.
  17. 01 SECTION Create Courting the Crowd Best Practices for Brand Communities and Co-Creation 68M bloggers regularly review and recommend products and services. Who are your lead users, innovators and market mavens?
  18. 17 Brands are constantly discovering new ways to tap into the creative power of the crowd, but consider these best practices: STACK THE INVITE LIST. Leading SOLICIT FOR A SPECIFIC STRATEGIC DON’T CONFUSE MARKETING companies conduct up-front research INTEREST. Shape the conversation. GIMMICKS with consumer to identify key influencers in their category, Let consumers know where their ideas are engagement. Brand communities are not the to preselect a group of core participants who needed most. place for a one-way conversation. Nobody are likely to get engaged early and remain wants a social site that sanitizes all negative active over the long term. Among the 68 SEEK BUSINESS VALUE BEYOND comments. You’ve got to go way beyond million bloggers who regularly review and THE BUZZ. Letting consumers slogans and marketing collateral. Even some recommend products and services, who vote on the best ideas can help automate of the most marketing-astute brands have are your lead users, innovators and market the review process and reduce costs. But made these mistakes in the past only to mavens? And how many of them happen to consumers are not always privy to your experience a consumer backlash. already be loyal customers? business objectives—other analytics are needed to evaluate business potential. One EXIT YOUR COMFORT ZONE. PREPARE A TECHNOGRAPHIC approach is to identify users who’ve made Online, social and mobile platforms PROFILE. To build the broadest valuable contributions in the past and track often lend themselves well to experimenta- possible community, brands should strive to their future input, even when it fails to win tion. These technologies can, and should, be understand the online behaviors, motivations over the crowd. trialed in an iterative process, constantly field and usage patterns of their customer base. testing and refining brand strategies, instilling What are their common characteristics? What READ AND REACT. People want to confidence and creating value. Tactics can be sets them apart from other consumers? It’s be reassured that their opinions are custom-tailored to accommodate almost any not just about knowing how they spend being heard and valued. Regular feedback is level of technical sophistication, but you’ve their time, it’s also critical to understand essential for maintaining consumer attention got to step up and get started. what catches their interest and stimulates and activity in a corporate-sponsored online participation—coupons, discounts and environment. Find ways to encourage them STAY COMMITTED. Successful social cash rewards; games and contests; social to share their stories, and then loop those initiatives aren’t one-offs. The real recognition; or insider opportunities to beta messages back to the brand. benefits come from long-term engagement test new products? and continuous improvement.
  19. The Power of Play 18 18| 01 SECTION 18| Create The life of the average American is increasingly value of play—both online and off—exploring, spent online. We’ve come to depend on the imagining, creating and renewing our world. constant stream of information as if it were umbilical, an oxygenated and brain-sustaining When it comes to the power of play, some lifeline. Our workdays (and more nights brands are already plugged in. Converse, for and weekends than we’d care to admit) are example, is no longer just an athletic shoe punctuated by constant eyeballed bursts of company; the brand has been reinvented as information, posts, updates and tweets, a never- a curator of cool. In July, members of rock ’n’ ending digital pulse that, like a pacemaker, keeps roll bands Vampire Weekend and Best Coast us rolling and our hearts and minds in rhythm. produced a Converse-sponsored, web-released hit single, “All Summer,” which quadrupled Yet there’s no digital substitute for the real world. Converse’s web traffic and resulted in an We haven’t lost any passion for restaurants and estimated $6.5 million in brand mentions and bars, hair salons, football games, cinema and unpaid media. Now the company is developing shopping malls. We’re not in retreat from reality. a recording studio named Rubber Tracks in But more and more, we’re augmenting these Brooklyn, NY, where emerging artists will get free real-life experiences with mobile and online studio sessions and a chance to have their music Connecting in a connectivity. And the nexus of our online and offline worlds—the proliferating points of overlap distributed on Converse social media channels. Clearly, the company has re-embraced its legacy Converged World and integration—that’s where the interesting stuff is happening. as the über-cool cobbler to generations of rockers from Keith Richards to the Ramones to Kurt Cobain, leveraging a playful and powerful In 2011, we predict an accelerated integration cultural connection with consumers. of online marketing with real-world activities like promotional events, demographic research Other brands seek to offer consumers a taste of and in-store shopping. Interactive marketers adventure—on the web and all across the world. will increasingly look beyond the web to find Engauge client Chick-fil-A has built a robust new ways for brands to resonate with consumer owned-media channel using social media—and culture. In the process, we’ll rediscover the a fan base of more than 3.5 million. With this
  20. 19 Engauge helped Van Gogh Vodka develop its “Unbottled” campaign, sponsoring ladies’ nights at clubs and encouraging fans to pose for pictures. Photos channel, Chick-fil-A drives trial for new products and of women cheerfully embracing gives “raving fans” a way to engage with the brand the brand went viral after being in a fun way. The brand is strategically merging the uploaded to Facebook. online and offline worlds in this campaign, with fans dressing up like cows to earn free food in their restaurant locations and thousands posting photos of the fun within social media channels. Canadian Club Whisky, Starwood Hotels and Red Bull have all organized scavenger hunts that provide clues on platforms like Twitter and Facebook Places, mixing online sleuthing with real-world prizes, destinations and celebrities. With its Code Spotter Sweepstakes, Engauge client Nationwide Insurance drove fans to engage with NASCAR in a playful way instead of simply as passive observers. And play they did, entering 1.8 million codes that were plastered everywhere fans might look, even on the dashboards of racecars that show up on the in-car live camera feeds on race day. Ethnographic insights are critical for any culture- propelled social marketing campaign. Engauge client Van Gogh Vodka reached beyond the web to engage adult consumers in their natural habitat—their homes and favorite bars. Researchers interviewed Van Gogh fans over cocktails in their own kitchens and learned that women, in particular, were being under-served in a premium vodka category that traditionally catered to men.
  21. 01 SECTION Create TheAction Plan for Challenger Brands Content Play> Brands can realize bigger gains by producing 100 patrons, but the audience for the event and owning their own video content, rather grew exponentially online, thanks to a than bogging down somebody else’s show livestream video broadcast. with pre-roll or interstitial ads. Online video can be a force-multiplier for promotional Livestreaming—online coverage of live events, particularly those that create an events in real time or rebroadcast on- authentic, immersive experience with a niche, demand—remains a small portion of total but influential, target audience. online video content. But this segment has escalated at a particularly rapid clip. 40% For brands with a small budget competing Consider: Americans viewed 650% more against category leaders with outsized media online live video in 2010 than the previous Videos now account for buying power, it’s a chance to finally compete. year, according to comScore. Mind you, almost 40% of all this figure only includes videos from five consumer Internet traffic. The Livestreaming Revolution publishers:, USTREAM, Livestream, LiveVideo and Stickam. Fans and filmmakers at the Los Angeles Film Festival in June—with two more nail-biting YouTube recently trialed a new livestreaming days to wait for the premiere of Twilight video service, broadcasting talk shows and Saga: Eclipse—were treated to a free concert how-to videos in real time from programmers by up-and-coming L.A. band Honey Honey Howcast, Rocketboom, Next New Networks 650% and singer-songwriter Chris Pierce. Cameras and Young Hollywood. Ad buys and were rolling as the crowd filled the club, a sponsorship opportunities are expected to venue dubbed the “live.create lounge,” follow. Facebook, taking a different strategy, Americans viewed 650% more live online video where premiere sponsor ZonePerfect now provides a fly-on-the-wall feed into the in 2010 than the Nutrition Bars showcased nearly 30 other company’s Palo Alto headquarters via its previous year. musicians over the course of the festival. The new Facebook Live channel. In addition to intimate club only accommodated around corporate presentations and press events,
  22. 21 Much More Than Repurposed TV Spots: the Facebook service is peppered with celebrity Best Video Ads Slyly Play Off Cultural Connections of Brand and Base appearances, like a cameo by actress America Ferrera, who stopped by the launch party to pitch There are many other creative ways to commit to video. Many of the best online her latest indie flick, The Dry Land. videos play off a unique cultural component of the brand and its customer base without overtly sermonizing about the company or its goods and services. Seismic Shift in Spending With its web-based sitcom Back on Topps, for example, the baseball card Brands have been pumping up budgets for online company Topps found ways to consistently be funny while inherently emphasizing video advertising. Total spending for online video the social connections of the brand. Rather than an advertisement, it’s an ads will jump by over 40% in 2011, according to immersion, inviting the viewer to live within the brand. The fictional faux- eMarketer, after skyrocketing nearly 50% in 2010. documentary series—similar in style and feel to The Office—has been viewed over These numbers are a direct response to changes in 1.5 million times on YouTube. consumer media consumption. Web video continues to gain greater importance for brands as consumers Similarly, a five-minute YouTube spot for Orbit Gum scored over a quarter million crave more and more content: views since its debut in June 2010. The piece was developed by DumbDumb, a sponsor-driven advertising and production company founded by actors Jason • American viewers are spending significantly more Bateman and Will Arnett, both of Arrested Development, who infuse the long- time watching videos on YouTube (up 68% in format video with their own brand of humor. 2010) and Hulu (up 75% in 2010), according to comScore. Rather than thinking of the Internet as a smaller, cheaper, lower-profile platform for • Nearly 180 million Americans regularly watch repurposed TV ads, which often fail to reflect the style, feel and immediacy of the online videos, an activity in which they spend, on digital format, breakout brands have learned it’s often more effective to provide average, 14.3 hours per month. original content for consumers. Consumers clearly want high-quality online video • Videos now account for almost 40% of all content, but brands don’t always need to produce a viral sensation or develop an consumer Internet traffic, according to Cisco, and online version of Friends to use video effectively. Creative interactive campaigns will reach nearly 60% by 2014. can satisfy the demand and keep engaged consumers coming back for more.
  23. 22 Move beyond the ordinary to do what’s never been done before. 02 SECTION Innovate
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  25. Innovation in Action Dizzied by the breathtaking pace of digital innovation, marketers fast-following competitors. Even category leaders rarely have time to risk being swept up in the crush of the trend-chasing crowd, running rest. Gap, for example, lent major credibility to online coupon company scattershot without a clear strategy, entering a flash-mob marathon Groupon with its first national promo deal in August. But within three without a finish line. months, the apparel company had changed course and rolled out a new offer with Groupon’s newest and biggest rival, Facebook Deals. Though brands increasingly recognize the value of establishing digital relationships with audiences, the fundamental choice of finding the From livecast video to virtual goods, interactive TV to location-based right interactive platform is more difficult and complicated than ever. services, social gaming to next-generation mobile ads, marketers The channels are multiplying. Online, social and mobile ad alternatives face an incredibly diverse mix of new opportunities. Much of the continue to proliferate. Every day we face a fresh deluge of tech overall acceleration in online and mobile marketing can be attributed updates and trend alerts. Marketers need to be more than merely to emerging companies such as Facebook, Zynga and Twitter. Yet familiar with these new technologies; they need to be strategic. They large incumbents, such as Apple, Google and Microsoft, have also must see beyond the hype to accurately evaluate their options, then proven capable of pushing the pace with innovations, moving faster deploy the best new digital tools for their brand. than their smaller competitors. The competitive field of technology firms is guaranteed to reconfigure again within the next five years and The pressure—and potential payoff—is immense. Groundbreaking marketers will need to remain nimble, attentive and ready to reallocate marketing campaigns are generally only a few months ahead of their resources accordingly.
  26. 25 Jeff Hilimire chief digital officer FOLLOW JEFF ON HIS BLOG AT JEFFHILIMIRE.COM OR ON TWITTER @JEFFHILIMIRE Marketing mastery of digital technology goes far beyond knowing what’s hot today, what’s launching tomorrow and how it all works. The best interactive campaigns are more than just a buzz-driven choice of a new media channel. They reflect a deep understanding of the target audience and its technographic profile combined with potent creative concepts that affirm and amplify the cultural connections between brand and consumer. Those campaigns represent innovation in action. Engauge’s Digital Innovation Group The Digital Innovation Group, also known as DIG, researches, tests and experiments with emerging technology with the goal of connecting brands and people. Launched in late 2009, clients now include Coca-Cola, Chick-fil-A, Reese’s, Cisco, IHG, NGK Spark Plugs, Nationwide Insurance and Food Lion.
  27. Consumers Hands 26 26| 26 02 SECTION Innovate Hold the World in Their Is this finally the year of mobile? As a profession, But given the history of hype in this subject, we’ve been asking—and dodging—this question it’s important to keep these numbers in for an absurdly long time. It’s a shopworn refrain context. The most wildly optimistic forecasts Can Innovative that’s become a joke: Mobile is the future of marketing—and always will be. suggest that mobile ads will become a $10 billion market in the U.S. in 2011, but Brands Deliver the most industry analysts put the numbers Not anymore. Mobile is now. Brands spent much lower. Middle-ground estimates from Right Message at 80% more on mobile ads in 2010 than in 2009. eMarketer indicate that mobile marketing the Right Time? The launch of Apple’s iAd mobile advertising (display, search and message-based ads) in network and Google’s acquisition of AdMob the U.S. will grow from $1.1 billion in 2011 have given mainstream credibility to mobile ads, to $2.4 billion in 2014. One or two billion making them a legitimate choice for mainstream hardly qualifies as a major breakthrough marketers. when compared to the $120 billion spent on advertising in the U.S. across all media, In the year ahead, brands will spend over $1 much less the $450 billion in global ad billion on mobile marketing in the U.S. for the spend. That’s not a drop in the bucket, it’s a first time. Globally, too, the growth curve shows nanoparticle in the Pacific. a significant arc. Google, in fact, has reported a $1 billion run-rate for its worldwide mobile Marketers, of course, recognize that budgets ad revenues since late 2010. Marketers are are rarely the best barometer for valuable responding, in part, to the rapid adoption of innovations and future-shaping trends. smartphones by consumers. Forecasts from Indeed, in mobile marketing, there are very Mobile Morgan Stanley suggest that global smartphone good reasons why the level of excitement sales will outpace personal computers in 2012, exceeds current expenditures. just five years after the introduction of the first iPhone.
  28. 27 $1B In the year ahead, brands will spend over $1 billion on mobile marketing in the U.S. for the first time.
  29. 02 Within two years, global sales of smartphones will outpace PCs.
  30. 29 What Makes the iAd Special? Apple opened the door to “freemium” discovered that the demographic profiles content when it began allowing in-app and usage patterns of mobile-empowered Since the iPhone and iPad don’t support purchases in late 2009, enabling developers shoppers can be extremely attractive. Flash, Apple has been hard-pressed to find to distribute a free trial version of apps with a workaround that can deliver the interactive additional features that could be “unlocked” Retail is a top-ten activity for American content that marketers crave. Enter the iAd. when users requested and paid for them. mobile users, but in terms of popularity, it The model proved successful: one-third of lags behind social networking, news, sports Apple’s new HTML5 advertising platform the top-grossing apps (34 out of 100) were information, banking, weather, movies and enables brands to build better mobile available as free downloads as of November maps. Last year, 7 million Americans per ads—with interactive content, video and 2010. The iAd platform is freemium with a month visited retail sites via mobile browsers, games—and serve them seamlessly to twist—consumers now “pay” to unlock the and 2.7 million used mobile shopping apps, consumers within apps. Nike, Toy Story 3 and content by watching ads within the app. according to comScore. The U.S. is behind Target have produced entertaining iAds that the global curve in this category: 57% of function, essentially, as apps within apps. In a related development, Apple also claimed shoppers in Asian-Pacific countries, like a leadership position with the iPhone 4, Japan and Korea, compared to 14% in the But the greatest significance of iAd is its with its high-resolution retina display that U.S. regularly make purchases after receiving new monetization model for the App Store. can convey a premium visual experience. a promotional text message, according to The iAd platform effectively encourages Competing device manufacturers quickly e-Dialog. But don’t be too quick to dismiss developers to make their apps freely pumped up their pixel counts, too. This those meek American numbers—we’re available for download, rather than charging is particularly important for luxury brands, catching up fast. Shopping app adoption in up-front fees from consumers. That means which have been reluctant to design or the U.S. rose over 90% in 2010, and there developers will increasingly (and, perhaps, deliver mobile brand messages that were was a 50% jump in browser-based mobile more profitably) derive revenues from ad anything less than beautiful. Finally, they retail. Many shoppers now use mobile as sales. To boost ad sales, they’ll need to grow have a mobile showcase suitable for the a price-comparison tool, but their usage their audience as big as possible, beginning crown jewels. will become increasingly transactional with with free distribution of content. Brands and gradual uptake of location-based marketing consumers both stand to benefit from the The Mobile Retail Revolution and direct-to-mobile offers. new arrangement, but the biggest winner will be Apple. For hosting and selling the As the technology of handheld devices grows People tend to be highly targeted in their ads, Apple takes a 40% cut of developers’ ad more sophisticated along with their potential mobile activities. Marketers should respect revenue. That’s a big bite. as marketing platforms, many brands have the constraints on their time, attention and
  31. 30 2.7M Americans used mobile shopping apps last year. screen size and make every effort to serve and The Gristle Missile, who snort and stalling at the starting line while they user-relevant content. stomp and promote a steady diet of chicken debate about what “mobile” actually sandwiches. At-home entertainment for iPad- means. Though SMS still dominates mobile The best mobile campaigns begin with a equipped preteens, the comics have proven messaging—6 trillion text messages were firm grasp of the cultural and technological to be smart, funny and engaging. sent in 2010, according to the International demographics of the customer base. Telecommunications Union—mobile Engauge client Ruth’s Chris Steak House, for Yet many companies still seem frozen in place marketing is no longer limited to text, search example, understood that a big portion of when it comes to mobile marketing. They and display. its clientele were executives who wanted a can’t figure out how to approach the space. way to book lunch meetings and after-hours What’s preventing them from overcoming What passes for “mobile” today may dinners with ease and absolute assurance. their inertia? Why aren’t they already moving actually be an amalgam of multiple The restaurant chain responded with a ahead with mobile? platforms—online, social, video, music, custom-tailored app that facilitates mobile- gaming, payments, retail transactions, made reservations. Businesspeople booking Partially, it’s because marketers are stuck in a location-based services and augmented tables with their iPhones and BlackBerrys traditional mindset that prevents quick-and- reality. Social networking, in fact, is now the receive automatic confirmation and the dirty field testing of new technology. The fastest-growing mobile activity, according assurance that they won’t be left waiting for a barriers have a number of different names to comScore. Accordingly, a big part of the table when taking an important client (or the like “demographics,” “reach,” “projections,” problem for marketers is figuring out which CEO) out to lunch. “plans,” etc. Major mindshifts in marketing foot to put forward first. rarely happen overnight, of course, Catering to a much different demographic particularly when the profession is faced Those decisions depend on a careful in the restaurant business, Chick-fil-A with a new, transformative medium. But with calibration of brand, base and message, but, developed a series of comic books that mobile, in particular, the excuses have been generally, the best strategies emerge from proved popular with kids. The quick-serve egregious. continual testing and fine-tuning, because chain is expanding the concept by publishing when it comes to mobile, what’s needed the series as an iPad app featuring cow After waiting years for mobile to become now is a little less conversation and a little superheroes named Cold Cuts, The Swatter legitimatized, some companies are now more action.
  32. Going Mobile and a Fast Start 31 Getting a Firm Grasp Marketers should be actively experimenting with new apps and technologies to determine their potential value and how best to use them. Here’s our perspective on how companies can start embracing mobile: IT’S OK TO FAIL, JUST FAIL FAST. FIGHT ANALYSIS PARALYSIS. GET IT IN YOUR CUSTOMERS’ In the start-up world, the only way you We are all for making sure you have a HANDS. Today, successful start-ups get better is to try, fail, learn and retry. The plan in place, and having research to support work hard to get their product in front of cus- key with being good at failure is failing fast. that plan is great. But if that plan is being tomers as soon as possible. This allows them Don’t stall at every setback. Instead, be ready used as a crutch to avoid getting started in to get immediate feedback and fine-tune un- to adjust as you go. mobile, then you need to find a way to move til they’ve developed a product that people through it. Which brings us to the third point. will use. With mobile, testing campaigns or apps in specific markets—and rolling out REMEMBER HENRY FORD. functionality as you go—is a great way to get Mr. Ford is often quoted as saying, “If invaluable and timely input from customers. U.S. Mobile Ad Spending 2009-2014 I had asked my customers what they wanted, millions and % change they would have asked for a faster horse.” And, lastly, ask yourself: ‘09 $416 30% Visionaries like Steve Jobs often use this DO YOU REALLY WANT TO BE quote to emphasize why they do things that AN IMMOBILE BRAND? ‘10 $743 79% are contrary to what research might indicate Do you want to be a brand that is severely is the right path. Sometimes your customers limited in where and how you interact with ‘11 $1,102 48% don’t know what they want until you give it customers? If you’re continuing to find rea- ‘12 $1,501 36% to them. sons why your company isn’t ready to start testing mobile, you’ll just keep standing still. ‘13 $2,036 36% Nobody wants to be an immobile brand. ‘14 $2,549 25% Source: eMarketer
  33. 32 Getting a Fix On Location-Based Mobile Marketing 80% Last year was the ignition phase for location- dramatically, adding new users at an expo- based mobile marketing with the launch of nential pace. Meanwhile, Facebook, which Facebook Places and the upward trajectory of recently debuted Places after being rebuffed Currently, location-based social networks are primarily other check-in services like Foursquare, Gowalla, in its bid to buy Foursquare, clearly intends a hit with young, geeky guys: SCVNGR, Loopt and Twitter Places. to win the geolocation space race. nearly 80% of users are male, and the vast majority are Will we see a liftoff in 2011? Foursquare and Facebook Places attracted several million between the ages of 19-35. Google-funded SCVNGR have been rising users within its first few months and gained
  34. 33 the support of major brands like Gap Who’s Got the Holy Grail of Location-Based Engagement? and The North Face for its test run of Facebook Deals. Check-in promotions have appealed to a achievements, like run time and total vertical wide range of consumer-oriented companies, descent. Like those Disney guests waiting However, fewer than 5% of Americans were including Whole Foods, Starbucks and outside Epcot Center, Vail visitors spend much using these location-based mobile services McDonald’s, but certain brands are of their days in line, while queuing and riding as of August 2010, and only 1% do so on a particularly suited to location-based ski lifts. With EpicMix, the resort discovered a daily basis. Geolocation services will require marketing. way to turn the downtime of a lift-ascent into brand support before moving beyond early an opportunity for deeper brand engagement. adopters to reach the mainstream. Forward- Disney Parks, for example, teamed up with There’s also an EpicMix kid site for skiers under thinking innovators are already in action. Gowalla to create virtual stamps and special age 13, with special privacy controls, which The trend-aware followers are getting in line. trips for participants at over 100 top theme should appeal to parents intent on keeping And the laggards are, as always, in danger of park locations, including Epcot Center, Space their children under supervision. By monitoring being left behind. Mountain and Pirates of the Caribbean. real-time updates, parents can keep constant Presumably, they’re not trying to drive more track of their children’s whereabouts, even if Backed by creative campaigns, appropriate visitors to these rides and destinations—they’re their 12-year-old speed demon leaves them privacy policies and added functionality, already popular. Rather, Gowalla provides stranded at the top of a black diamond. location-based mobile marketing could easily visitors something to do while waiting in long gain enough momentum to go stratospheric lines, which creates additional experiential In 2011, expect more brands to pursue within the next two years. layers for guests. It’s a brilliant application of partnerships with location-based service the technology. providers. The sheer volume of start-ups in At the moment, location-based social this category, however, inevitably adds a great networks are primarily a hit with young, Vail Resorts just launched EpicMix, a deal of time and complexity for marketers geeky guys: nearly 80% of users are male, location-based app that’s linked to the bar trying to choose applications. Among the and the vast majority between the ages of codes on lift passes that are scanned by many competing services, each with a slightly 19-35 (70%) with college degrees (70%), resort personnel every time a skier heads different story and spin, who will ultimately according to Forrester Research. This is the up the mountain. The application provides win this market? same crowd that was using Twitter three maps, messaging, weather forecasts and years ago. Draw your own conclusions. snow reports. It also calculates stats and
  35. 34 Who’s Got the Grail? location-based platforms
  36. 35 Marketers seeking greatest reach and recognition will probably favor the largest contender, Facebook Places, but start-ups like SCVNGR and Checkpoints have introduced valuable innovations that can offset their smaller profiles. Facebook Places Foursquare Yelp Check-In Offers Scoop: Launched in August 2010 with Scoop: Generally given the most credit for Scoop: The popular Yelp website added functionality that’s instantly familiar popularizing the concept of mobile check-ins, check-in service in January 2010 where to users—finding nearby friends and, Foursquare was founded in 2009 and recently consumers review and rate local busi- if you’re traveling together, tagging passed up a $100 million buyout offer from nesses. But it wasn’t until November companions. Yahoo!. that Yelp finally introduced Check-In Size: Facebook claims Places is more Size: 5 million members. This represents a nearly Offers to allow brands to reward their popular than any other location-based 1,000% increase since March 2010. loyal checked-in customers. service. Significance: People are getting tired of Size: Not reported. Founded by members Significance: In combination with Facebook gimmicky badges and mayors and will need of the so-called “PayPal mafia” in 2004, Deals, the check-in service attracts more functional offerings before the site Yelp is supported by ad revenue and mobile shoppers with local incentives and loses relevance. But don’t call it a comeback. has a strong following with 38 million delivers strong tie-ins to brand pages. Foursquare remains quite healthy in terms of users monthly, making it a natural fit for new members. The site added 1 million new location-based services. users within two months after the launch of Significance: Given Yelp’s status as a SCVNGR arch-rival Facebook Places, then registered the trusted source of consumer reviews, next million in under six weeks. this emerging check-in channel will be Scoop: A game-based approach with worth watching in 2011. Unfortunately, check-in challenges and shared photo Yelp may have copied the wrong pages snaps, SCVNGR puts a welcome spin on Gowalla from the Foursquare playbook when it the location craze. It’s tightly integrated Scoop: The latest version of Gowalla’s location- added “Yelp Badges” and “Yelp Roy- with Facebook Places. sharing app allows users to check in to other alty” like Dukes, Duchesses, Kings and Size: 800,000. location networks. Barons into its check-in app. Significance: The game-based approach Size: 1 million members. creates a deeper level of consumer Significance: The cross-platform play was a engagement within location-based smart move, removing the pressure of an services—way better than badges. all-or-nothing decision for marketers who’ve been struggling (or stalling) to pick the perfect location-based platform.
  37. 36 Loopt WeReward MyTown Scoop: Since 2006, Loopt has let users see Scoop: WeReward allows consumers to Scoop: A mash-up of Monopoly and Second where their friends are and what they’re accrue, exchange and cash out points via Life, this addictive GPS-enabled app is doing, incorporating local content from PayPal, earning $10 for every 1,000 points. built around the idea of buying and owning Citysearch, Metromix, Bing and Zagat. It’s also the first location-based service your favorite real-world hangouts. Consum- Size: 4 million users on Sprint, AT&T, Verizon, to integrate check-ins, product sales and ers check in to unlock rewards, accruing iPhone, Android and BlackBerry devices. reward-app downloads with CRM function- points that can be used to buy virtual real Significance: Loopt offers ad services for ality from Salesforce. estate based on actual locations, and then brands across a suite of products including Size: Not reported. charge other players “rent” for future Loopt, Loopt Star, Loopt Mix and Loopt Significance: While attempting to fine-tune visits to that venue. Released by Booyah Pulse for the iPad. Despite the impressive its closed-loop CRM functionality, WeRe- in 2009, it’s become the most popular membership numbers, they lack the buzz ward has been offering the service for free location-based social game. of Foursquare and Facebook Places and to large clients like Domino’s Pizza. They’ve Size: 3.3 million players. face stiff competition from similar services also rolled out a double opt-in feature that Significance: Several pioneering brands have like whrrl, buzzd and brightkite. allows advertisers to continue communica- set up shop in MyTown. Volvo presented tion with consumers after the initial deal is branded virtual goods to players checking done. into locations like garages or auto dealer- Twitter Places ships. H&M showcased its Blues collection Scoop: Highlighting tweets at any given of denim garments on MyTown, report- location, Twitter finally launched the edly drawing interest from around 700,000 service in June 2010 after several months players. of rumors. Size: Not reported. Significance: Stay tuned. Currently, brands aren’t allowed to “claim” their own Twitter Places, but a company spokesman told Mashable: “We’re experimenting with a variety of features. Allowing businesses to claim a Place is a natural thing to consider for the future.”
  38. 37 37 Checkpoints Scoop: This iPhone app launched in Septem- ber 2010 and gives rewards for scanning bar codes of participating products. Check- points advertisers, in turn, can deliver coupons, recipes, games or other digital content to the consumer’s iPhone once the item is scanned. Size: 100,000 downloads of the iPhone app occurred within the first month. Significance: Checkpoints deserves credit for recognizing how packaged-goods brands can benefit from location-based services. For brand partners such as Tyson, Belkin and Seventh Generation, the real value of product check-ins will be measured by what happens in the checkout lane. 4% of online adults in the U.S. use geolocation services like Gowalla and Foursquare.
  39. Q POINT OF VIEW What’s the most important tech platform today in digital marketing? Social is no longer an optional add-on; it’s the new default. Facebook reached an epic milestone in November, accounting for a quarter of all webpage views in the U.S., according to Hitwise. For some brands, social presences are now the primary platform for brand expression and interaction. In 2011, their owned-media channels will be augmented by and community managers—but success in social is rarely attributable to how much money you throw around. Rather, social campaigns live or die as a result of creativity, commitment and mindset. Creativity, in particular, matters more than ever. Unlike traditional media like TV, brands can’t “rent” an audience for thirty seconds by buying an spot traditional homepages, rather than the other way around. in a popular program. In social media, brands have to build and retain their own audience. However, those tech-savvy brands are the exceptions; the bulk of marketing has not kept pace with the advance of innovation. Marketers bemoan the proliferation of platforms because of the Brands should also recognize that successful owned-media channels increase in required resources. They continue to view these platforms on Facebook, Twitter or YouTube can be launched with minimal as “tactics,” rather than an invaluable extension and expression of technological sophistication and very little up-front investment. It’s not consumers themselves. Brands should take solace in the fact that completely free—somebody has to pay the salaries of dedicated staff these technological changes have reinvigorated engagement.
  40. 39 Raghu Kakarala svp, creative technologist FOLLOW RAGHU ON TWITTER @INTERPOLATE Social and mobile have increasingly become essential “life tools” for mainstream users. Over 20% of U.S. consumers visit social networking sites and blogs on their mobile phones, according to comScore, and it’s expected that half of all U.S. consumers will have a smartphone by the end of 2011. If consumers are allocating their time and money, what’s holding back brands? Today’s early adopter is often an average consumer, rather than the neighborhood techno whiz. That’s why it’s not too early to begin testing emerging technologies like connected TV, where brands can come alive through addressable commercials, or social TV, with mobile apps that enable audience participation. These technologies may be logical next moves for brands that have already mastered their owned-media channel.
  41. 40 02 SECTION 40|40| Innovate This year, Groupon, a digital coupon company that taps the buying power of the crowd, may become the fastest-growing, billion-dollar business in history. >60% of consumers now search for deals digitally before shopping. Loyalty and Action
  42. 41 Digital Deals Retail Experience Change the The new technology of thrift comes with a very More and more, online and mobile offerings oriented spending would increase at least retro twist—we’ve devolved into a society of are being used to supplement traditional 5% annually. hunters and gatherers. Shoppers are scouring shopper channels like in-store displays and online reviews, checking price-comparison sites circulars. Today’s brands are using new The primary push has been economic. Nielsen on their smartphones and signing up for digital technology and data-driven insights to create reports that one in four North Americans deals before hitting the stores. Long gone are increasingly customized reward programs. The have no discretionary income. But this shift the gilded days of carefree consumption. digital menu includes search, social media, is also being driven by a broad range of new online coupons, daily deals, thematic content, online and mobile options. For marketers, the This year, a digital coupon company may relationship marketing and apps. challenge is in selecting the most effective mix become the fastest-growing, billion-dollar of platforms, messaging and incentives. There’s business in history. The success of Groupon A recent report from Booz Allen for the Grocery no one-shot solution. Brands need to review offers a lesson for brands: The convergence Manufacturers of America found that over 60% all their options, honing reward programs and of shopping and digital marketing offers of consumers now search for deals digitally shopper-oriented strategies to drive consumer opportunities for innovative brands to surge before shopping. Not coincidentally, over action. forward, leaping over the economic slump if 80% of packaged goods executives in the they can deliver campaigns that add some zing survey said their companies would be boosting The goal is frictionless engagement, a state to the zeitgeist while coordinating tactics across shopper marketing budgets over the next three of brand nirvana we define as the removal of emerging technology platforms. years. The majority indicated that shopper- barriers that inhibit consumer decision making.
  43. Futurecast: from A Fictional Scene the Year Ahead After traveling to Zurich on business over Reading her email over coffee the next morning, Valentine’s Day, Cissy Halstead wanted to Cissy found a new Groupon offering a half-price do something special for her fiancé, Trevor, pedicure at a nail salon that recently opened when she returned home that weekend. downtown. The promotion required a minimum of 25 paying participants by a one o’clock While waiting for her return flight, she deadline, otherwise, the deal would disappear. found a seat in the airport lounge and checked her iPhone. She’d received a tweet She quickly posted a note—part appeal, part from a friend and fellow foodie. “Can’t wait lark—on Facebook: “Spa day? Who’s up for a to use my @MediciRestaurant Groupon pedi?” By noon, she’d received 11 responses: tonight! The tiramisu is amazing!” Cissy two yesses, one maybe and eight wish-we- clicked the link, filled out the form with coulds. She went ahead and registered and so her credit card information and ended up did three of her friends, pushing the number of saving 50% off a romantic dinner for two. participants past the necessary 25 people. By That night, Trevor was surprised—and two p.m., all four friends were seated side-by- impressed. He relented, with a smile, when side at the busy salon, enjoying their impromptu she reached for the check. mini-makeovers.
  44. 43 1% Only 1% of coupons for consumer packaged goods are distributed online, but those coupons account for nearly 5% of all CPG coupons redeemed by consumers and 20% of their total value.
  45. The New Cool: Direct Action Digital Coupons Drive By matching deal-seeking shoppers with and subsequently spurned a $6 billion Game Over for Groupon? local promotions, Groupon, Facebook takeover deal by Google. Deals, LivingSocial, Tippr and other sites Not so fast. In many ways, the mobility have collectively pulled off a major coup in Facebook introduced Facebook Deals and instant gratification of Facebook Deals marketing—making coupons cool. with a breakout debut in November and represents a significant improvement over quickly attracted many major brands, the Groupon model of daily deal emails. Daily coupon sites tap the purchasing power including Gap (three months after Yet consumers make an estimated 80% of of the consumer collective by encouraging its much-touted deal with Groupon), purchases, on average, within ten miles of shoppers to share offers with their friends McDonald’s, Starbucks and Chipotle. It their homes. Groupon may survive (and thrive) on Twitter, Facebook and Yelp, leveraging links to location-based Facebook Places if it can capture the local markets. social networks—and a sense of deadline- and offers mobile functionality that allows induced urgency—to make sure that deals smartphone users to browse deals on- The benefits are quite clear for marketers—not pass the “tipping point.” the-fly from nearby restaurants, stores only attracting new customers, but convincing and other venues. Consult the map-based those customers to participate and spend Daily deals have proven ideal for businesses app, pick a deal and check in. money within a specific timeframe. Groupon offering services that today’s penny-pinchers claims its consumer customers spend 60% might have trouble justifying without a Facebook, in total, has over 20 times more above the value of the coupon, on average, deep discount—an hour-long massage at members than Groupon and can provide and 95% of its business customers say they’d the day spa, a holiday travel package or an more detailed consumer demographics use the service again. Even so, the promotions afternoon at the driving range. for brand clients. So it’s not surprising that may not be immediate moneymakers for some industry analysts immediately hailed participating vendors. In fact, companies like The initial frontrunner, Groupon, Facebook Deals as the “Groupon Killer.” Groupon generally split the resulting revenue went mainstream with an $11 million with their clients—revenue that already nationwide promotion for Gap in August reflects a steep discount of around 50%—so incremental sales can be negligible.
  46. 45 Retailers Look Past Competitors To Create Their Own Offerings For brands, online coupons have emerged by allowing customers to receive their offer their own Facebook-based deals. But as a compelling tool for engaging early for free if they convince three friends to some brands may be better off pursuing adopters and spreading the word in participate. partnerships with better-known providers like extended social networks. Walmart Groupon and LivingSocial, which can help introduced its own group-shopping app, ConAgra took a similar approach to spread the word. Boulder-based business Crowdsaver, on its Facebook page in incentivizing participation by offering Giant Nerd, for example, used the Wildfire October. The first deal—an 18% discount a coupon on its Facebook page that tool but couldn’t find five people willing to on a $500 plasma TV—passed the minimum progressively increased in value as more buy a $1,000 bike for $450, according to threshold of 5,000 “likes” within 24 hours. people “liked” it. Ad Age. Similar location-based services are offered Newcomers include Tippr, DealBug, The W Hotel in Scottsdale recently launched by companies like ScoutMob and Placecast, GroupSwoop, Homerun and Zozi. They’ve its own group deal in an app on its Facebook which target shoppers when they’re inside all tweaked the Groupon model in hopes of page, offering rooms at nearly 50% off its or near a participating store. In some differentiating themselves in a crowded field. $295 rack rate if at least ten people signed categories, these new technologies claim DealBug, for example, donates a percentage up. But how many people looking for hotel redemption rates of over 60%, compared to of proceeds to charity. Other sites tailor their reservations are going to already be “fans” 2% for traditional clip-and-save coupons. pitches for foodies, fashionistas, social gamers of the hotel in the city where they’re headed? or outdoor adventurers. Evidently, there were several locals in Prior to the launch of Facebook Deals, Scottsdale who didn’t want to sleep at home the second-biggest daily deal site was For brands with sufficient scale and scope, that weekend, because 28 people signed LivingSocial, which now serves nearly 100 like Walmart, launching their own Facebook up, according to Ad Age. But, in general, local markets and has raised $50 million app makes perfect sense. Several developers, certain types of brands may be better served in venture capital. LivingSocial has upped including Palo Alto-based Wildfire, have through deal-linking services with search the ante (and the social networking payoff) designed apps that allow marketers to design capabilities and similar functions.
  47. Q POINT OF VIEW What can brands learn from retailers’ embrace of convergence? Every day, shopper expectations get higher and higher, and the brand that is present in every channel on every device is the one that is going to have the best chance to make a real connection with them. Not long ago I stumbled across an Altimeter report, “The Rise of Social Commerce,” that talked about the enlightened state of Consumers shop in stores while using their phones to check competitive pricing, read product reviews and ask their network of friends for their thoughts and experiences. The more considered the purchase, the more highly social it becomes as anxiety to make a good decision drives consumers to reach out for real-world input. Accepting and enabling these behaviors is the first step. Best Buy gets a nod for “frictionless commerce” in which social and retail are integrated for early adoption by putting Internet-connected terminals inside stores to a completely redesigned shopping experience that’s truly consumer- allow consumers to do that very thing. centric. Even for non-retail brands, there are benefits to adopting an e-commerce mindset when it comes to convergence. But why We now see the integration of Facebook Connect with brands’ own stop there? site-registration processes. In addition to making the log-in process simpler, Facebook Connect provides a detailed picture of customers. The future of marketing is frictionless engagement. I call it brand The data goes far beyond demographics. We know what books they nirvana and define it as the removal of barriers that inhibit consumer read, events they attend, brands they care about and who their friends decision making. are. Amazon is leading the way by making the site your experience,
  48. 47 Shannon Delaney director of behavioral brand planning reminding you to buy gifts for friends’ birthdays and suggesting books and music you should buy based on your “likes.” Sometimes people are so excited about a great score or the pure joy of something they recently purchased, they want to share it with the world in real time. And yet, recently, a client asked, “Shouldn’t we wait to launch our social presence and spend six weeks doing focus groups to ask people what they really want from our social offering?” My answer: “Why wait? Every day is another day that you aren’t present in a place that they expect you to be and even more important is you have a social focus group right there.” To truly influence consumer behavior, you need to recognize that digital retail and social are not isolated channels. Seamlessly integrated and highly personalized experiences will lead to frictionless engagement. That’s not only nirvana for brands; it’s also heavenly for consumers.
  49. Start-up to Watch Breaking Down Location-Based Service Silos Can’t decide between Foursquare and Facebook Places? PlacePunch enables brands to think bigger— multiple platforms and venues. The suite with a broader perspective and better brings together Foursquare, Facebook Places analytics—when building their own location- and similar services under a unified dash- based loyalty programs. board, freeing marketers from the constraints of exclusively focusing on one channel at a Launched in September, PlacePunch provides time. PlacePunch also coordinates personal- online tools for managing and integrating ized brand messaging via Twitter, email and A conversation with CEO and location-based marketing programs across online couponing. Co-founder Adam Steinberg. (Disclosure note: Jeff Hilimire, chief digital officer at Engauge, invested in PlacePunch Q: What inspired the idea for PlacePunch? What was missing in the marketplace? through a start-up incubator.) A: Check-ins are driving bottom-line revenue for businesses. But marketers don’t want to be constantly keeping track of how many people are on Foursquare versus Facebook versus Gowalla. PlacePunch makes it easier for marketers to think strategically and integrate across all those services.