Archive for August, 2008

Marketing and Money

Was it Milton Friedman that said that there are four types of spending?

1. Spend your money on you.

This makes the spender cautious–interested in acheiving an individual ratio of cost versus value. You want a nice car that you like to drive but that doesn’t break your budget in gas bills. This is where the consumer gets the best ROI, return on investment, because the consumer dictates the value of a purchased good or service.

2. Spend other people’s money on you.

Now the spender can be a bit less concerned with price and more concerned with quality (or status). You can blow a bit more cash on a nice car if your parents promise to cover the insurance. Not such great ROI for the spender, but a lot of fun (or at least less cost anxiety) for the person that ultimately consumes the purchase.

3. Spend your money on other people.

Do you buy Grandma a piece of jewelry or a nice sweater? What if it’s for your girlfriend? For Valentine’s Day? After a fight? The logistics involved in this question merit a certain amount of cost/value math modified for the person on whom you’re spending the money as well as the reason why. ROI can be hard to judge here. As a consumer, Grandma may get a lot more satisfaction out of a sweater than a diamond ring, but the ROI on a ring for your girlfriend may make you, the spender, happier.

4. Spend other people’s money on other people.

This is where a spender generally wastes the most money and gets the worst returns. This is why a lot of government spending is notorious-there is too much cash with not enough accountability or consumer satisfaction. If, as some studies suggest, the United States economy spends close to 11.3 billion dollars on health care yet some 47 million Americans, 16 percent of the population and growing, are uninsured and unable to access satisfactory, much less appropriate care, one has to wonder where the money is going.

Number 4 is also where marketers get stuck. They spend corporate cash on campaigns geared towards nebulous customer niches. Measuring the returns on some of this marketing can be difficult. Are consumers happier because they are consuming more? Or is a brand better off because consumers are more appreciative of the corporation’s reputation and sense of civic sponsorship? How to tell?

Measure online buzz.

Most online communities attract like-minded individuals. These communities congregate around topics, ideas, events and even brands that interest them. They talk about these initial community interests, but they also discuss other issues of importance to them.

For example, an online community built on interests in individual health and lifestyle will inevitably discuss favoured lifestyle trends and diets. Measuring and monitoring the buzz produced by these communities allows producers to anticipate the needs and desires of their customer niches. It lets them measure the possible returns on marketing before launching a campaign, identify where to launch the campaign and attract the most relevant and most reactive consumer audience. Lastly, after launching a campaign, monitoring and measuring online buzz can demonstrate how the buzz picks up and reacts to the campaign.

Listening to buzz lets a marketer know whether Grandma would buy herself a sweater if she had the cash or a diamond ring. It lets a marketer know not only whenand why the girlfriend wants the ring, but how big, how many carats, and with what setting. Online buzz puts a marketer as close to the market as s/he can be by letting the consumer dictate the best way to spend corporate cash and get real, measurable reactions (and returns) from consumers.

Health Care Consumers and online conversation create communities

An Economist article explored the trend of medical tourism in Europe and the United States. Consumers of medical services are going abroad to escape high prices and long lines at home. Hannaford, a grocery chain, and a few intrepid insurance programmes, are exploring the possibility of lowering total employee heathcare costs through incentivising traveling abroad for health care needs.

Physical travel, however, is the tip of a rapidly decentralising (disintegrating?) health care consumer paradigm. HCPs (Health care consumers) also go online rather than travel abroad to find products and services that they couldn’t otherwise access. In doing so, they frequently discover new and innovative products and services that pique consumer interest and fuel further individual (as well as corporate) research.

HCPs find communities of like-minded patients and caregivers and exchange information, ideas and opinions about health care goods, services, even specific providers. They research medications and treatments through forums and health care social networking sites like Trusera and PatientsLikeMe.

HCPs that share languages compare and critique public health systems. They let each other know what’s available where and who or which insurance is willing to fund what. Even institutionally-based medications, once limited to the institution that provided them, can now limit the institution. If a patient can’t access the med that s/he thinks s/he needs locally, s/he goes online and finds a provider that is willing to access the HCP–through the mail, through a network, through travel.

Health used to be geographic. What the next-door neighbor perceived as “health” could be considered standard for the neighbourhood. Now, the community of patients or HCPs determines what is “health” for their community. A patient suffering from dysthymia, a mood disorder, can go online and ask fellow patients across the globe how they best deal with depression. Then that community can advise, support, sympathise and even supply a patient with the products and services that patient wants.

Conversation about Casual Games

The casual gaming market reaped over 2.25 billion dollars in revenue in 2007. And this is just a bottom of the bottom line expected for this year’s casual gaming industry.

A casual game is “a stand alone entertainment software title that is digitally distributed by one or many ‘portals’, or independently owned Internet retail sites”. Like traditional board games, a casual game is picked up by a group of individuals. If they like it, they pass it on—through forums, through blogs, through Facebook or other social networks, and through on and offline conversation.

Producers love casual games because they offer a number of ways to identify and engage with a consumer demographic. Put a casual game on a website to increase return traffic to the site. Play viral ad videos between game levels or while a game is downloading. Use a game to promote a product, display a potential service, or highlight a brand. Games let consumers practice and review a product, a brand, or service, giving producers insight into what their consumers like and dislike.

Users love casual games. Casual games offer users try-before-they-buy trials for bigger, more expensive games and applications. Users play games that let them interact with their favourite books, TV shows, and social networks. Users use casual games to improve time management skills, brain train, practice for offline games (from poker to chess), and generally waste time.

The newest demographic to either stimulate or exacerbate the casual game trend is the female user. Casual girl gamers have given games some of their best word of mouth. It’s about time that the big game companies took notice. And the industry is doing its best to attract the young ladies; games sporting cute ponies, puppies, and dancing abound in new releases. Ubisoft is cashing in on the girl gamers transitioning from cute to college and even corporate, producing games like My SAT Coach, my Spanish Coach, and My Weight Loss Coach. Casual games generated around 25 percent of Ubisoft’s full revenue last year, five percent more than expected. Nintendo, Microsoft, and Sony are jumping into the market, trying to cultivate a consumer base with women of all ages and interests.

As the generation of girls that grew up with the Internet begins to raise daughters, the online gaming world is made up more and more of social entertainment networks. The communities of online ladies dish about games, game sites, and game graphics. They talk about what makes a game worth the time it takes to download or play it. In forums, blogs, and discussion boards, women pass on sites and names, recommending their favourites and criticizing the games that could be better.

For example, Attentio’s software notes that French women fawn over word games, while many North American ladies want games that simulate office skills. Wives want games that they can play with their families and Moms want games that stimulate and hone their children’s academic abilities. Each network is a community, and each community cultivates its own network of games and online entertainment through online conversation—through buzz.

WOMM. Simplified.

There is a lot of WOM about WOMM these days.

A study published by JupiterResearch suggests that advertisers under-spend on social media marketing. BuzzAgent has been stung by some bloggers for its recent campaigns to “prove” how WOMM works in social media. Advertisers complain that there are too many possible social media and other types of online outlets and no proof that any of these are especially effective.

Social media marketing, online WOMM, etc. is much like any marketing concept. It is an extension, not an alternative, to traditional advertising, market research, and PR. Successful communication with clients and stakeholders, along with customer engagement is as limited in methods of communication as are its customers.

Customers, clients, and stakeholders are online, generating social media as well as other forms of online content, so advertisers and marketers are too. And determining how to listen to and engage with different groups online is as multifaceted as it is offline. Online content and strategic involvement runs the market research and advertising gamut, from online focus groups to online billboards. Social media, however, is something different.

For example:

Synthetron, a neighbour or ours, identifies stakeholders and uses online formats to create targeted stakeholder conversations around an important issue. How? Synthetron first selects stakeholders for a study. Stakeholders must have an interest and a desire to impact a certain conversation. Invitation-only online discussions are then used to create an open forum for stakeholders to dialogue. Individual stakeholders included in a study remain anonymous; their ideas and concerns do not. This sort of online stakeholder forum aggregates and evaluates relevant stakeholder WOM, rather than target individual complaints and concerns. To me, it sounds like an online focus group, one in which stakeholders are invited rather than solicited. It permits incentivized stakeholders to be heard as a group without being hurt as an individual.

BuzzAgent is criticized for soliciting content in the manner of a traditional marketing focus group. As with any solicitation, the individuals solicited do not offer their information for free. They are not concerned stakeholders but paid informants–the information that they offer is rarely given for free. These individual informants want something for their time–free samples, extra influence, or face time with an influencer. This is not a new way of collecting ideas, and it can be quite useful in understanding why people are or are not discussing a particular brand or product. Focus groups can help stimulate conversation and generate new ideas. Holding a focus group online or offline involves parallel benefits and risks. Individuals can fib in person as well as in email.

And then there’s social media. Conversation. Buzz.

Creating a WOMM campaign online is not all that different from creating a WOMM campaign offline. But the means of measuring WOM online are more exact. That’s what the Attentio software targets.

Attentio does not solicit online content. Attentio measures and monitors spontaneous buzz as it emerges online. The tools size a social media conversation and measure it in comparison with other conversations. What generates more buzz, pharmaceuticals or automotives? In which online media are cars more popular, blogs or forums? Within the automotive conversation, do people talk more about Opel or Toyota? Do they discuss car design or price more? Attentio monitors the conversation around certain topics as new government regulations are implemented or tax systems are changed or general social opinion turns from red to blue. These trends show up online in numbers that can be quantified and, with a little analysis, qualified. Unsolicited, self-identified stakeholder/client/consumer/producer conversation filed and displayed for anyone interested in a particular market.

Knowing buzz numbers help a marketer—traditional, innovative, online, offline—plan an effective and efficient campaign. Knowing the buzz from social media lets a marketer know if a focus group might be useful, or a stakeholder discussion necessary, or an offline sale worthwhile. It is not a means of marketing; it’s a means of measuring the market and determining how to best engage.