Wednesday, December 21, 2011

Influencers segment

In the world of ads, we sell various segments to advertisers - audience, demographic, psychographic, etc. And categories - app categories, IAB categories, etc. We are now in the brave new world of social media, the market is looking for a new segment, i.e. word of mouth audience categories, or influencers.

Is this a new segment ? I don't think so. Advertisers have always looked for word of mouth marketing. Arguably the most influential form. Don't we all ask for opinions from our friends. When I bought my 65 inch TV, I looked around what my friends had bought and asked for their opinion. I actually bought a model, which was not rated very high by review sites such as CNET. Remember the Tupperware advertising model - tupperware parties, which is nothing but a glorified advertising model for word of mouth advertising.
Facebook caught on to this trend by allowing purchases to be advertised to your friend circles. A good idea but something which was revoked and reeks of privacy violation. I don't think it can be resurrected.

Influencer segment is highly viral and effective. So, how do we identify these influencers. One approach is to use the # of followers on Twitter as a measure of your "influence". The other is to identify the most subscribed person in G+ or FB. But can we do more? Can we identify individuals within your friends who can talk about a product?

And how will advertisers sell their products to these segments. i.e. how do we incentize these influencers or "publishers" to talk about product in such a way that it appears genuine? Do we give them schwags?
And who are working on these business models? Adly comes to mind.
What is the market potential of these segments? What do you think? More on this in my next post.

Tuesday, November 16, 2010

What are businesses and brands looking for in Facebook

I wanted to do a short write-up on what we heard and learnt from customers when we deployed Oolium apps for them. Our target customer was SME/SMB in the verticals of apparel, professional services, restaurant and food (local), niche equipment manufacturers. Though what I write is applicable to most verticals.
First of all, some facts.
  • Businesses want to follow their audience. i.e. consumers are spending time on FB, businesses are following 
  • Brand's web site is losing its value. Its more meaningful to get consumer's attention on FB vs. spend loads of money getting people to your site. 
  • Consumer time spent has seen the highest growth on mobile (40% Y/Y growth). And if you look globally, mobile is the most important medium. 
Brands and businesses have few simple advertising goals:
  1. Build or increase brand awareness
  2. Get leads using various means - performance/affiliate marketing, etc 
  3. Sell good and services to the leads using various techniques such as direct response, offers, etc. 
Today, facebook does a decent job at (1), however its not there from (2) or (3) perspective. 
Here are some recommendations
  • Brand awareness -  Facebook must continue to act as a platform and enable third party providers and developers create rich brand awareness pages for businesses. And it needs to be supported by a full fledged developer network. Look at MSDN (from Microsoft), they do an excellent job at providing developer support. Today, Facebook policies are favoring few preferred provider and not the general developer community at large. Its in Facebook's best interest to enable creation of rich brand awareness page.
  • Metrics -  have a page statistics page. I know today facebook provides some simple stats on pages - # of fans, new activity etc. But it needs to do more. Just look at Google analytics for web sites. 
  • Getting leads - these are your "fans" or likes. In this FB, has done a good job. You can not only get fans from your facebook fan page but you can embed it on your web site. Very powerful - they have allowed the "like" feature to "off-network".
  • Walled garden - sales fulfillment support is critical if FB wants to be the walled garden of this decade. Keep people on your site. Check out the most popular page on FB today - Lady Gaga. If you've to go to an event or purchase an item, you're taken to website. 
  • Sales fulfillment - provide platform support to the facebook page to enable storefronts and sales fulfillment. Few startups have started providing this but core platform support is needed. This is critically important to enable sales fulfillment.
  • Mobile, the deals platform is good start. I can view what my local businesses are and what they are offering. There is check-in available as well. More needs to be done - the combination of location and mobile creates an ideal direct response and loyalty end point. i.e. random check-in are not of much value but check-in with an intention to purchase or respond to a direct response ad or offer is needed. Direct response mechanism seems to be missing in the Deal platform today. The deals platform has loyalty deal but its based on check-ins, there needs to be sales fulfillment piece to it as well. i.e consumer gets a deal only if she checks-in (& broadcasts it to her friends) and purchases. 
  • Mobile - pages for local businesses. There are basics of pages built in and I'm sure FB must be working on more. We need images, videos, offers and friends likes built in as well. 

Friday, October 29, 2010

Zynga - interesting statistics

Zynga is all rave nowadays. I was reading an article in AdAge and wanted to share some interesting statistics.

  • Top 4 apps in facebook - time spent, are all from Zynga. What is more interesting is that on an average players spent 68 min/day on Farmville and 52 min/day on Mafia Wars! 
  • Virtual goods market is slated to be about $2.1B in 2011, however in-game advertising is tiny at $142M today and expected to grow to only $192M by 2011. 
  • Nearly all Zynga games play occurs in Facebook and in US (97%).
  •  It had 25M UUs in Sept and overall 250M MAU

Thursday, October 28, 2010

Google TV - some early thoughts

I've been reading reports about new interactive TV buzz - Google TV and its shenanigans with content providers. Goog has a fine demo out on Best Buy and on their web site. Looks neat but is it going to live up to its buzz.

My quick two cents on this, the world of TV is a typical multi-sided business model with each sides often having different demands. i.e. we've content providers/owners (people who produce TV shows), end-users, advertisers, content distributors or channels (ABC, NBC), and network operators (the distribution channel - AT&T, Comcast, etc.). And the lines get very blurry - Comcast own NBC Universal, Netflix is delivering content over Comcast and AT&T lines potentially competing with content distributors (ABC, FOX of the world).  Talk about getting completely lost in this value chain!

But few things I've learnt over the years - two universal truths:

  1. Content is king! Believe me, this is the universal truth on TV. You need access to premium, high quality content on big box. You can get away with it on PC, mobile but not on TV. The end-user (consumer) is tuned for premium content. 
  2. TV is lean-back experience. The consumer is tuned to be in a lean back mode on TV. Her mindset is very different compared to mobile or PC. What I'm saying is - do not design with lean forward mindset - e.g. three different PIP display with multiple chat windows, etc. Consumer are not going to be chatting on a TV.  
If you keep these two principle in mind when designing TV experience, you'll win.
Please note, the consumer behavior differs very widely with different customer segments - if you test interactive (lean forward) experience with early adopters or enthusiasts, you'll get very positive response. But the key is to test them with mass-market. I sincerely hope that Google TV has done that. We found very different responses back when I was at Microsoft. 

Secondly keep your content providers happy, so that you can get access to premium content. I think Netflix has done an outstanding job in that. They are moving the needle in getting better quality streaming content. Can Google TV do that? Their model is to allow users to search for content (e.g. ABC shows) and play them. I can easily see why content owners will balk at it. They need a piece of the pie - show me the money. They are never going to allow Google to play their content without getting paid for it. 

So, what should Google TV do? 
  1. First of all, decouple TV from Web thinking. I doubt that consumers will search a lot on TV - have you tried typing with a remote. Even if they provide a remote app on Andriod, I really doubt that consumers will be in a mood to search. I know this is contrary to Google thinking but TV is a different beast.
  2.  Focus on providing widgets on the main Google TV workspace which are anchors for monetization - local events, sports related, automotive, etc.
  3.  Provide richer integration with Android phones - sharing photos, videos, etc. 
  4. And last but not least - do rev share deals with content providers to feature content on the main Google TV workspace. 

Monday, October 25, 2010

Some interesting facts about twitter

I found this an interesting read about twitter. A peek into its numbers - it has 100M registered users. However, per RJMetrics research :

  1. 40% of its users have never tweeted
  2. 80% of its users have sent less than 10 tweets
  3. 1/4 of the accounts have no followers
  4. Average twitter user had 27 followers
Well, its the old Pareto principle or law of the vital few (80/20). 
Twitter seems to be more like a feature-add on vs. a destination. Its something which is "syndicated" vs. being site where users will spend time on. Unlike facebook, Twitter's monetization potential is not in its site but in figuring out new revenue model based on the syndicated feeds. Had they focussed more on create a destination features such as new Twitter interface, sooner. They might have had a better chance. Instead they allowed myriad partner to create businesses filling in these holes (e.g. Twitpic, yfrog, etc). 

Monday, October 4, 2010

Social apps stages - measure & management methods

Over the past few months I've spent a lot of time researching social apps and their lifecycle. I wanted to share some of what I've learnt in terms of how to manage and measure a social application. A lot of this data comes from tons of blogs that I've read and my own interpretation and learnings. Special thanks to FrameThink blog which has done a great summary of the customer acquisition metrics.

I created this table to put things in context, it lists the key items to track during a lifecycle of a social app, the levers to pull for improvement, metrics to track, and examples. This is assuming that we’ve a social app ready to go and that it’ll live for perpetuity (no end of life). In summary, the lifecycle stages of interest to us - product folks:
  1. Customer acqusition. Get users and more users. And ideally with zero customer acquisition costs (CAC=0). So, how do we do this ? Viral growth.
  2. Engagement. Now, that you’ve users, keep them engaged and coming back for more.
  3. Revenue generation. Make some money while you’re at it.
Social app stages-->Customer acquisitionEngagementRevenue generation
Mechanism / methodsViral growth Applications and widgetsVirtual goods
Real goods
Lead generation
Revenue share (storefronts)
Levers to pull Increase
1. Active users making contact with non-users
2. Contact rate - avg. num of contacts per time period
3. Duration of active users
4. User conversion - prob. that non-user get converted to users.
1. Understand user type.

The apps should have the following features:
2. Organic: encourage user to take action that has a side effect of causing other customers to re-engage
2. Promotions
3. Positioning: make it a must-have for your user.
1. Features such as collecting/decorating, frienship/love, gambling.
2. Scarcity of goods
3. Differentiated and targeted offers
4. Virtual goods lifecycle - goods wear out, so should virtual goods.
MetricsDAU and MAU

DAU/MAU ratio is a very imp. ratio: of your monthly users how many are coming back on a daily basis.  Ideally 0.2 to 0.3. Farmville is at 0.28.

K-factor (viral coefficient) = Distribution X Prob of conversion
Ideal value between 1.4 and 2 (super viral growth)
Distribution: how many non-active users will an active user contact.
Prob. of conversion: probability of converting a non-active user. .

CAC (customer acquisition cost)

LTV (lifetime value of customer) = Total sales & marketing costs / customers
LTV > CAC. A factor of 3 is ideal.
Engagement ratio: Reactivation of dormant customers exceeds the rate of customer fatigue. Revenue / DAU or Revenue / 1,000 DAU. Should be around $150-$200. $300 is great!


Repeat customers

Velocity of money. Keep it high.
ExamplesMessage user’s friends on activation of the app - i.e when the app goes live, send message to all fans.

Active users with non-actives:

Contact rate: invite 10 friends to get additional coupon

Duration of active users: insert collaborative filtering - ratings, rankings and comments; these tend to increase time spent.

User conversion: use image or videos to convert non-users in user to user messaging.
What is your user’s usage profile - is she killing time, socializing, browsing...

Organic: linked-in sending email listing status changes. Oolium sending notification about a user taking part in a social app.

Promotions: sweepstakes, video contest, polls, in the app.

Positioning: if the customer’s goal is to “kill time” make your product the goto product for killing time. i.e. associate the thought of killing time with your product. So when the user sees the icon in iPAD she instinctively clicks on it when bored.
In an ideal scenario, scarce virtual goods should be sold in a player to player secondary market.

Target sale of goods to women 25-35.

Thursday, September 30, 2010

SME and social media

I've conversed with many small and medium sized businesses. And one thing that keeps on resonating from them is - "what do I do in social media? Help us address it".

SME fully recognize the importance and relevance of social media. To them its a cost-effective channel to reach their audience. However there is confusion in their minds on multiple fronts:
  1. What is the best way to get their message out to users? i.e. should they put up a facebook fan page and have twitter presence? or both?
  2. What about mobile? What do they do - create a smartphone app or advertise in mobile. If so, how?
  3. How to measure ROI?
  4. They have invested heavily in building out their web presence, however audience growth is in social media. "Can I leverage my web site in there?" This is especially true for SME who have built out storefronts on their web site. How are they going to mimic it in social media.
  5. If everyone talks about "engaging with users", how is that achieved? Is it via simple ads or more engaging ads? If its engaging ads, what format works the best? Display or social apps?
  6. If they in the market for performance advertising - generating leads, etc. How to do it?
  7. How to do it in a cost-effective manner? Today companies in this area are charging arm and a leg - min. of $5,000 to start the campaigns.
  8. And, last but not least - "I want to do it now and in a cost-effective manner".
These are some of the questions we grappled with in Oolium when we built out customizable, simple to use social application for SMEs.