ParisTech Review

“Markets are conversations,” prophesied in 1999 the authors of the Cluetrain Manifesto, a book dedicated to Internet marketing, which quickly became a bestseller in the United States. Almost 15 years later, it is difficult to deny that social networking sites, which are quintessential conversation spaces, have forged better informed, more intelligent and therefore more demanding markets. Such is the challenge for marketers today. However, it cannot be argued that, for instance, Apple’s presence on Facebook is particularly crucial for the brand’s notoriety. Apparently, not investing in social networks is not stopping such players from being part of the powerful… unless Apple does try to keep their distance from what has become a competitor, as Facebook is preparing a phone… or simply to stand out in the crowd. “I’m convinced the first thing that drives a brand to engage social networks is the herd effect,” admits Frédéric Pichard, CEO of Zebaz Data Marketing. Go there first, ask questions later. All these brands have been creating profiles with a vengeance since 2008. So, what do they actually see?

Networks vs. Media
Today, the term ‘social network’, promoted by the media and public opinion, makes us think spontaneously Facebook or LinkedIn. But one would be wrong to look no further, according to Mouloud Dey, director of solutions and emerging markets at SAS, a global publisher of business intelligence: “A social network is the structure, the platform that allows two given individuals to communicate. It is not to be confused with social media, which on the other hand is the actual content carried by such a network. On a Twitter account, for example, (media) content is released, whether people follow (and the act of following refers to the idea of a network) the user or not. ” Blogs are part of the same logic. A blog is not a unilateral website, but it does not induce a permanent link with the author (network). In this, he is a social media.

Whether it is interested in the structure (the network), or in the content (the media), marketing will not follow the same approach. In the first case, it will seek to capitalize on the propensity of users to share, and will seek to find traditional segments, leaders and followers, and to support this community. In the second case, marketing will focus on what is being said about the brand, on its image, in the context of social conversation. Bringing together a veritable live panel, social media are an undeniable vector of knowledge regarding consumers, as long as one knows how to deal with content (textual analysis, etc.). This is crucial when dealing with brands, and overlaps with the approach chosen for the network. To illustrate this point: a brand of Cuban rum may, in its marketing strategy, decide to become the emblem of salsa music. On Facebook, it will then seek to gather around itself a fellowship of salsa aficionados. Who, in turn, talk about that rum brand on their own profile (content) and become brand ambassadors through the network (structure).

With this distinction in mind, let us see what the current figures have to say. Through its seniority and power (the threshold of one billion users was reached in October 2012), Facebook has become a hallmark in terms of registered profiles. Then come Google + (500 million), Weibo (500 million), Tagged (300 million), Twitter (288 million), Vkontakte (204 million), LinkedIn (200 million), MySpace (54 million), Viadeo (50 million) and Tumblr (40 million). Already in 2010, a study conducted for Facebook France concluded that 80% of consumers wanted to interact with brands on the Internet, that 78% of users trusted recommendations from their peers on social media and that 74% of Internet users had a more positive image of brands that initiated dialogue via social media. So, if you’re looking for consumers, this is indeed the place to be.


However, if marketers rushed, it is also because they had successfully been targeted by Facebook’s own marketing services! For let us not forget that this player, in 2008, separated user profiles from fan pages, thus encouraging brands to be present on the platform. “Historically, it is from that point onwards that companies have been looking forward to engaging their fans, so that the latter become horizontal brand vehicles.” In this affair, which turned out to be a case of returning one another the compliment, Facebook attracted virtually all the advertisers in the world, at a time brands, for their part, found an ideal communication channel in times of crisis: “Digital business captures 80% of marketing directors’ energy but only 20% of budgets, notes Thierry Fontaine, Deputy Director General of 2MV (Havas Media) in an interview in Le Monde (3 April 2013). For less than € 300,000, brands can have a massive and highly targeted device on Facebook, whereas the broadcasting of a single 30-second TV spot in prime time can cost up to 90,000 euros.”


The new paradigm

Why deprive oneself, indeed? In fact, what can now be quantified is the result of a paradigm shift that occurred before the advent of web 2.0 and was pointed out in 2004 by Stephen L. Largo and Robert F. Lush in an article published in the Journal of Marketing: “Before, marketing was dominated by a logic focused on tangible resources, on their own value, and whatever transactions that resulted from it. In recent decades, new perspectives have brought about a logic focused on intangible resources, the co-creation of value and relationship.” Kristine de Valck, Associate Marketing Professor at HEC Paris, further elaborates: “Shifting from a focus on the product to a focus on service, experience and co-creation, from a bottom-up relationship between producer and consumer to an involvement of the consumer in the creation of the product’s value is something Ikea had introduced well before the Internet.”

Thus, begining in the mid-2000s, the consumer is no longer seen as a gaping mouth, ready to swallow whatever it is that marketers have concocted. It is clear that social media have fully embraced this trend. And well beyond the trend, some companies are now pushing the implementation of this “new paradigm” to new limits. This is the case of the U.S. firm Threadless. Its slogan is explicit: “T-shirts and other products designed by a community of 2 million artists.” The “artists” are you, me, all consumers wishing to create a T-shirt pattern and to submit it to the vote of the community. Every week, the firm elects the top 100 proposals before sending them to production and paying back the authors of the best motifs. Here, it is the consumer who builds brand value. And the easiest way to join the community of Threadless… is through Facebook.

Unpredictability
While the Web 2.0 facilitates consumer dynamism in developing a product (Danone’s Danette dessert brand regularly involves its Facebook fans in choosing the next recipe), it also promotes consumer disobedience when the moment of actual purchase comes. Procter & Gamble had already theorized the FMOT, “First Moment of Truth”, to describe the decisive moment a product is chosen inside a hypermarket. In 2010, Google invented the ZMOT, “Zero Moment Of Truth”, which reassesses the original interaction between customer and product, updating it to the Internet age: before purchasing, consumers are no longer satisfied with unilateral TV spots. They seek information through all the means at their disposal, especially social media, being that they are inexhaustible sources of information. A horizontal approach that establishes the consumer in a personal buying process – one that is much more difficult to model and predict. For Google, the challenge is therefore to be in the right place at the right time for any potential customer.

At a time when the product becomes “social”, that is to say, co-created, completed, commented and criticized, marketing services are necessarily upset. “This takeover by consumers via social media is forcing marketers to change their ways: it is a true windfall,” says Kristine de Valck. But buyers beware, nothing is to be taken for granted. Even when marketing services play ball with things viral and interactivity, the unpredictability of consumers can be daunting. In March 2013, Carambar toffees announced on Facebook and Twitter that there would be no written jokes anymore on the inside of the treat’s package – an institution for generations of children in France. This removal immediately raised protests and petitions from fans, blogs and even the French press. Except that four days later, the public learned that it had really been a prank all along, one carefully prepared by the brand’s marketing department. The operation would have been a success if the same commentators, upon learning the trick, had not turned against the treat. What should have been a prank specially designed for the web ended up being perceived as a cleverly orchestrated lie. Alas, it so happens that client-user-citizens are easily offended.

#itwasajoke

The hard lesson of this failed campaign is the inherent radicalism of social media. While their very characteristics of participation, freedom of expression and accessibility all represent an exciting opportunity to change the marketing discourse, such platforms are also a ruthless sounding board – the board of social media citizen-consumers. It is therefore crucial for marketers in this day to realize the risks posed by interactivity while agreeing to lose control of the message sent. In the meanwhile, before this hypothetical equilibrium is attained, they are launching mobile applications with a vengeance. “Of course, says Kristine de Valck, apps have the merit of proposing a variation of the brand that is at once manageable and adapted to the era of mobility. But more importantly, they represent an investment which is easy to budget.” According to her, the appmania is just one way among others for companies to keep control over things. However, to accept partially losing control does not come without benefits: it translates into added opportunities for interaction with their customers, brand loyalty, finer segmentation and sometimes, revenue growth.



Interaction and segmentation
As Cédric Deniaux remarks, “in most cases, it is unrealistic to believe that a brand can create its own community: few brands have this capability. However it can revolve around a movement, a passion…” He cites the example of the skateboard brand Vans and the community of skateboarders. “There is no such thing as a Vans community, yet Vans is an integral part of the skater community, being a brand with which that community shares common values (attitude, sport).”

By detaching themselves from the product to herald a “cause” or a “spirit”, some brands have not had too much trouble creating communities. On their Facebook pages, Canon brings together photography enthusiasts, Darty, a French household appliance chain, provides additional services such as recipes and DIY “tips”… and the Quebec-based bank Desjardins has succeeded in attracting a vibrant community (120,000 people on Facebook, with active conversations) around financial literacy.

Social networks also allow to identify followers, critics and especially leaders, whose spontaneous ability to spread the brand image contrast with the commercial and frozen discourse of traditional marketing. “Functional brands, for whom the question of image is secondary to customer relations, have every reason to play out on social networks,” notes Kevin Mellet, a socio-economics researcher at Orange Labs. In terms of after-sales service, François Laurent, co-president of the French Marketing Association (ADETEM), adds: “Nowadays, if you’re unhappy about a product, all you need to do is write a message in capital letters on the Facebook page of the company. Given the risk of virality, you can be sure they will contact you within the day.” Without reaching such extremes, it is clear that customer relationship is enriched by social networks (see IBM study). On the one hand, properly addressed dissatisfaction can lead to the opposite phenomenon and create new ambassadors. On the other hand, owing to a richer and more immediate upward flow of information (quotes, retweets, set as favorite), knowledge about customers is enhanced. Finally, by communicating on new offers, events or contests, social CRM (customer relationship management) also allows the acquisition of new customers.

In terms of marketing, digital communities also have the added advantage of becoming consistent and studiable targets, that are addressable by a specific offer. Currently, “real-time individualization of offers is establishing itself as an investment with high added value,” as stated in the 2012 study by the French Observatory of digital marketing (in French). Advance purchases and appropriate recommendations are already widely practiced by Amazon. It should be noted that with the adjustment of its real-time offers based on the behavior and the wishes of visitors to its e-commerce sites, 1800Flowers.com, a US online gift selling brand estimated to have increased its sites traffic by 30% during Mother’s Day. This has resulted in millions of dollars in additional revenue. Finally, the development of a mobile use of social networks is promising, especially for geolocalized apps: “With features encouraging mobile users to mention the places they frequent, many partnerships are being formed with different brands that offer their biggest sharing customers benefits pre-negotiated with the social network.”

Thus, the ROI seems clear to many companies. But it is also the case for institutions, as Jean-Marc Goachet, head of scientific communication and web marketing at Mines ParisTech points out: “Everything changed the moment we invested in sourcing work to understand the interest centers of our audiences. By identifying the nature of their queries, we re-focused our vocabulary to maximize SEO. Today, one video posted can lead to enormous benefits.”


However a question arises concerning the level of investment needed: social networks can potentially address all consumers, but customizing and segmenting customer relationship can be extremely expensive. Where is the threshold? A survey by Sinan Aral (Stern School of Business and MIT) and two of his colleagues gives an idea. They used data from a large-scale social network of 27 million people in daily interaction, to study the impact of day-to-day interactions on the adoption of a new mobile phone product. Three main findings emerged from their simulations. First, the risk of overestimating the effectiveness of “seeding” strategies (planting information). Second, the natural boundary formed by the small number of potential influencers. They thus found that seeding more than 0.2% of the population is unnecessary because the gain of adoption is lower than the gain of their natural adoption (without seeding). Third, seeding is most effective when peers demonstrate a greater influence. And this influence not only depends on the ability of people to be swayed, but also on the nature of the network and possibly its theming: a recommendation by a peer on a general network does not have the same value as the same recommendation on a specialized forum.

Sinan Aral and his colleagues call to relativize the added value of social networks for marketing. In a sense, the latter have radically turned the tables since today pretending they don’t exist is a no-no. Nevertheless, positively harnessing them still seems difficult. Hence the hopes placed in Big Data, that allow to pinpoint and to outline, in real time, virtual communities that are potentially and especially interested in a particular product.

Big Data: real windfall or mere rumor?
The race for “likes” is over, long live individualized targeting! The end of ram marketing (bombarding the market hoping to find a target) also explains the hopes invested in the Big Data treatment. A groundswell that has now been spreading for several months, Big Data refers to the immense amount of new data generated by the web. Although Western economies are overwhelmed by the processing capacity of these data, they are hoping for a conversion of this data into value and, thereby, into a a growth driver. “That is pure fad,” exclaims professor and blogger François Laurent: “In practice, there will always be a lot of data, this is not a revolution. It’s simply that the market for data has inspired some companies whose stock-in-trade is currently to scare advertisers, telling them that something huge and inevitable is coming.”

There is an emerging concept which underpins the investment in the work carried out by the algorithms of Big Data: homophily, which is defined as the tendency of people with similar characteristics to revolve around the same interests and to have similar preferences… While similar people may gather spontaneously and form communities and networks, the algorithms of Big Data can also match them up without their knowledge: this is how Amazon suggests you books purchased by readers whose tastes are similar to yours.

It is very difficult, today, to obtain figures on the added value of Big Data in terms of marketing. Until the facts confirm a real windfall, literature on the subject agrees that the sheer volume of information is as inexhaustible as it is complex to operate. How to structure such raw material into action-oriented processes? “The more we target, the more expensive it gets,” argues socio-economist Kevin Mellet, adding that brands are not so much in need of more data as of integrated data. “In this respect, the work that has been carried out by Facebook in terms of data aggregation and alignment on the traditional KPIs (key performance indicators) of advertisers is already huge.”

The real challenge is in decompartmentalization
In fact, it seems that the very place where real change has to take place must be within companies themselves: before they start hiring datascientists, they have much to do with the excessive compartmentalization of their services. A classic pattern? The company’s Facebook page is run by PR, the Twitter feed by the HRD and the database by marketing… Such fragmented management is an obstacle to productive engagement on social media. In his presentation of the results of the 2013 CSC Customer Intimacy barometer (video in French), Frédéric Pichard insists that companies must reorganize relations in light of these findings: the porosity between things offline and online is now complete, and the purchase process has become cross-media. Merging databases, developing skills internally within departments, finding an overall consistency between traditional channels (direct mail, phone, face to face) and digital channels… These are adjustments that are as basic as they are urgent and that need to be performed before espousing a truly digital marketing.

By shying away from engaging in social media, a brand essentially exposes itself to its own impotence. To not be able to interfere with conversations, to lose ground in consumer influence… These are essential dimensions at a time when, to quote Kristine de Valck, “marketing is more about fighting the loss of value than about creating it.” The question is no longer whether marketing should engage in social media or not, but rather to understand how to take advantage of this commitment. It is still quite possible to envision social media, even if they’re not the Holy Grail after all, as additional channels. The task then remains to maintain consistency between all the points of contact between brand and customer, a challenge Nespresso addressed particularly well. For the rest, the marriage between marketing and social media is more than ever showcasing the arising issue of control. If the rise of the social web has turned the consumer into a king that’s more influenced by his peers (horizontal) than by the expert (vertical), it may very well be that the use of Big Data once more reverses the great balance of power – and control – to the benefit of marketers. To confirm this, the best help will be a good measure of hindsight.

Previous Post Next Post

• Brain Molecule Marketing

  The facts appear to be collecting that the web is unproductive for business generation and likely most other things. Certainly in B2B and likely in consumer goods as well. So called social media may also harm company images and customer “relationships.” More sharing on Facebook, for example, alienates friends.

  Young women really, really use the web and smartphones but mainly to organize their in-group communications. Not to reach out.

  The core un-, or anti-, productivity effects are staring to show up in the financial results of the tech companies. Consumers, as the greater fools, will be the last to know.

  We have taken all of our B2B clients off the web and strictly forbid (anti-) social media. Too bad, would be great if there were a technology solutions for business, and personal, relationship problems. There aren’t. We’re back to personal contacts.