Week 6 learnings

This course has taught me a lot about social media and new forms of marketing.  The "learning by doing" model was very effective -- as a result of the course, I am now a Twitter member and have published my first (and second, third... sixteenth) original blog post.  Exciting!  I have a new understanding about the art of maintaining a blog... the photo inclusion, original thinking, consistency, and attention-grabbing headlines is way more involved than I originally imagined.  And the formatting... wow!  The blogs I've followed over the past three years (many) have such a clean, graphic appearance, and I now have a much greater appreciation for the bloggers' efforts.

Here are my key learnings for week 6:

• Online auctions -- Advertising revenue, driven by online auctions, was worth $21 billion to Google last year.  The model saw a major boost when Hal Varian entered the picture.  Varian applied game theory to revolutionize the traditional advertising model (direct selling) and turn it into a two-sided matching system.  Though treated with some skepticism initially, the "Ad Words Select" auctioning system for all advertising spots on the site has transformed the online advertising model and turned traditional advertising technique into one based on algorithms and computer science.  (Secret of Googlenomics: Data Fueled Recipe Brews Profitability)

• Advertising revenue growing -- 86% of Facebook's revenue stream now from advertising, worth $1.09 billion in Q3 2012 and up +36% from the same time last year.  Ads are appearing in users Facebook "newsfeeds" in the form of sponsored posts and app recommendations.  Same method could be applied to Pinterest in its efforts to monetize its business model! (Facebook Q3: Advertising Revenues Up 36% To $1.09B, Now 87% Of The Total Mix)

Screenshot of my Pinterest @ pinterest.com/hannahaarsvold/pins

• Pinterest may be preparing for IPO -- Investors spending an additional $200 million, announced Feb. 2013, reportedly to continue development on technology and features, invest in infrastructure, recruit talent, and expand internationally among other things. (Pinterest Officially Pins Down $200M At $2.5B Valuation)

• Advertising models going through makeover to address the functionality of the web -- In his 2009 article, Eric Clemmons seems to predict the future.  He states, "Pushing a message at a potential customer when it has not been requested and when the consumer is in the midst of something else on the net, will fail as a major revenue source for most internet sites."  The prediction has come true.  2009 saw a decline in advertising revenue due to traditional methods being applied to a new channel.  Today, the model is evolving and advertising revenue is increasing again.  New methods of advertising to meet the online format include targeted ad placement (micro-segmentation), consumer engagement vs. 1-way communication, and use of social influencers to gain trust with consumers.

Three brands using Vine well

Vine is the nation's newest social media darling, owned by Twitter and released in January 2013.  The framework is a 6-second looping video.  Here's a short compilation of videos I find successful from a product marketing/messaging standpoint: 

RollingStone uses Vine to give a preview of their upcoming issues in what's quickly come to be an anticipated monthly social-media tradition!  

The teaser:

The reveal:

Another teaser:

And another:


Gap using Vine to establish credibility in denim -- video shows the brand logo evolving over period of 40 years

Cafe Moka filmed how they make a latte; the video is mesmerizing and entices me to stop in during my next trip to Virginia Beach

Pinterest business model canvas

Pinterest is a photo-sharing website, launched in March 2010, which allows users to create and maintain theme-based inspiration boards (pinboards) and follow the boards of others.  The model switched from invitation-only membership to unlimited membership, and boasts a intense following of fashionistas, party-planners, DIY-ers, foodies, brides-to-be, and more.  The numbers are staggering -- as of April 2013, Pinterest monthly active users topped 48-million and the most followed board, "Delicious" by Jane Wang, included more than 6.9-million followers!  The model is effective in part because it's using social influencers to generate product excitement; users choose to follow those with similar interests, so the content delivered to users through the Pinterest feed is of high relevance.

The opportunity for Pinterest is generating revenue through the enormous base of users already established.  There are two major opportunities that Pinterest can pursue right away: 1) kickbacks from click-through to e-commerce sites, and 2) enticing advertisers (retailers) to pay for affiliate advertising in dedicated space on the www.pinterest.com site.  

1) Because a large amount of the pins on the site are dedicated to product and because pins typically link directly to the e-commerce site, Pinterest should be able to partner with retailers to receive some type of kickback for directing traffic to the retailer site.  This kickback could be based on amount of traffic or on traffic conversion.  Pinterest has a lot of bargaining power -- the user base is predominately female (an attractive asset to retail partners!) and Pinterest has the power to allow or block click-through traffic through its programming.  

2) The second opportunity is integrating dedicated advertising space on the Pinterest site, either in top or side banners.  The Pinterest site is uniquely optimized for relevant advertising.  For example, Nike could pay for affiliate advertising on boards dedicated to fitness but avoid DIY boards and J.Crew could advertise on boards dedicated to style and fashion but avoid boards centered around recipes or home decor.  The optimization and key words associated with boards ensures that retailers would be utilizing ad spend effectively and that the advertisements would hit the customer base while their engaged with the topic at hand -- the perfect combination and selling point for potential retail partners!

The end of segmentation as we know it...

OLD:

NEW:

I came across an interesting article this evening about the Obama campaign's use of big data and social media during the 2012 election.  It relates to the big data lessons learned last week, and whether or not one is an Obama supporter, there are valuable lessons to be learned from his campaign's innovative use of social media and big data during the months proceeding the election.

Mike Ellsworth writes:

Time magazine[3] states that social media was extremely important to the get-out-the-vote efforts of the Obama campaign:

Online, the get-out-the-vote effort continued with a first-ever attempt at using Facebook on a mass scale to replicate the door-knocking efforts of field organizers. In the final weeks of the campaign, people who had downloaded an app were sent messages with pictures of their friends in swing states. They were told to click a button to automatically urge those targeted voters to take certain actions, such as registering to vote, voting early or getting to the polls. The campaign found that roughly 1 in 5 people contacted by a Facebook pal acted on the request, in large part because the message came from someone they knew.

The numbers also led the campaign to escort their man down roads not usually taken in the late stages of a presidential campaign. In August, Obama decided to answer questions on the social news website Reddit, which many of the President’s senior aides did not know about. “Why did we put Barack Obama on Reddit?” an official asked rhetorically. “Because a whole bunch of our turnout targets were on Reddit.”

According to Ad Age,[4] for the period between Sept. 1 and Oct. 14, the Obama camp had 497 creatives deployed across the Web compared with the Romney camp’s 90.

So advanced segmentation works, both on and off line. What does that mean for the future of brand marketing? That’s an answer for the next post.

Lands' End business model canvas

Lands' End is targeting two distinct customer segments -- comfort/staple seekers and style/fashion seekers.  It already has a strong market presence in the first customer group (comfort/staple seekers), but in the second (style/fashion seekers), the potential is relatively untapped.  95% of Lands' End revenue is generated through product sales.  The majority of costs originate from cost of goods sold and advertising expense.  Though Lands' End's current business model is profitable, I see further opportunity to advertise the right product to the right consumer in order to increase profitability and gain in market share.

Individual customization of e-mail campaigns has recently taken hold within the company, but the idea has not yet been executed through the traditional, cost-intensive model of catalog distribution.  This means that in catalog, staple-seekers are receiving fashion products, and fashion-seekers are receiving staples.  The introduction of "micro-segmentation" in e-mail campaigns delivered double-digit response rate and conversion rate increases.  If the same customization could be achieved through the catalog channel, Lands' End would be able to cut advertising expense by more than 7% ($260K quarterly) without shortfall on the revenue line.  Additionally, the brand would appear more relevant to consumers because the right products would be presented to the right audience!

Lands' End catalogs are produced by RR Donnelley, a key business partner, in 8-page segments.  By piecing together the appropriate 8-page segments for each distinct customer segment rather than sending a consistent catalog to all consumers, Lands' End will be able to decrease advertising expense and become more relevant to the consumer -- both generating positive financial results.

Week 5 learnings

My readings/viewings this week focused on the concept of big data and methods of using data to target the right customers and improve profitability.  This week, I read "Shopping and Social Media: The Retailer's Guide to Big Data," "Advertisers Get a Trove of Clues in Smartphones," the introduction to The Numerati," and "The world's most valuable brands. Who's most engaged?"  I also watched "The History of the Internet" and the Kimberly Clark lecture.  It's amazing to think about the amount of data available (estimated at 7.9 zettabytes by 2015 or the equivalent of 18 Libraries of Congress) and the speed at which internet marketing techniques are evolving.

A few relevant big data examples from my daily life are below:

1) There was an article about a year ago in Forbes titled "How Target Figured Out a Teen Girl Was Pregnant Before Her Father Did" that explained Target's use of big data to predict when a female was pregnant and learnings they had along the way of incorporating big data into their marketing strategy.  The success is that they could accurately predict a woman's pregnancy based purchases, even down to the month of her expected arrival.  This enables them to gain customer loyalty by sending relevant coupons/advertisements at just the right time.  By gaining loyalty early in the pregnancy, Target positions itself to be the destination for many large upcoming purchases -- cribs, strollers, diapers, baby food, and eventually, playground equipment, party supplies, toys, games, and more.  The learning they had regarding big data was that customers do not appreciate being spied on!  Target changed its marketing strategy from sending fliers entirely about baby products to unsuspecting consumers to sending fliers containing baby products along with ordinary items (e.g. lawn mowers).  This enabled them to reach the consumer at the right time, but in a more subtle manner.

Well... I recently received a flyer in the mail!  The instructional pamphlet was all about the proper form of diapering babies (designed for new parents) and registry-building tips, along with coupons for Pampers baby products.  The inside stated "Welcome to motherhood!  Congratulations!  We're so excited for your little miracle that's on his or her way, so we've collected our favorite tips and coupons to help you plan for the big day."  I am DEFINITELY not pregnant, but the situation is humorous and makes me think about what products I've been purchasing recently and from whom Pampers is purchasing/compiling their "big data."  :-)  



2) As mentioned in a previous post, at my employer, we are working to segment our e-mail campaigns even further than before -- to the tune of thousands of versions per day based on previous customer shopping/browsing behavior.

Similarly, we are now working on a project of using big data to segment the catalogs that we mail to households.  There are specific product categories that have polarizing appeal to audiences.  Catalogs are created in 8-page segments and stitched/glued together at the production factory.  In theory, our business model would be most effective if we could target the right product to the right consumer, rather than sending out a consistent 112-page catalog to the entire file.  Like the discussion last week around Warby Parker, where brick-and-mortar locations are now trying to model the online experience, we are doing the same thing with segmentation.  How can we get the same efficiency achieved through digital media in our traditional catalog channel??!  

Tumblr purchased by Yahoo

Hitting the news this morning, but yet to be announced officially -- Yahoo purchases Tumblr for $1.1 billion dollars...in cash!  The investment is said to be one of Marissa Mayer's key moves toward attracting a younger audience and integrating user-generated content at Yahoo.  Bold move, Marissa!  A good one, I think!

http://allthingsd.com/20130519/yahoo-tumblrs-for-cool-board-approves-1-1-billion-deal/?refcat=media