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SpirE-Journal 2007 Q3

The rise of E-communities – Online Marketing goes Interactive

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The rise of E-communities – Online Marketing goes Interactive

The Internet has increasingly become a participatory social network where user-generated content is just as important as traditional advertisements. Thanks to social media ranging from social networking sites and interactive blogs to reader-driven newspapers and video-sharing sites, consumers now have a voice and this dilutes the power of vendors and media owners. How should businesses approach this new communication channel with their customers? This article takes a closer look at the tectonic shifts taking place in online advertising and brand-building.

The birth of E-communities and social media

Traditional media is controlled by its owners. Hence the creation and transmission of information has been one-sided. Web 2.0 – the new, interactive version of the Internet – has however dramatically changed the balance of power between media owners and the public. In the context of social media, it means that anyone and everyone can create, shape and transmit information. Web 2.0 makes it easy for even technical ‘newbies’ to publish and disseminate their ideas to an astonishingly broad audience.

Far from being a transitory phenomenon, E-communities (user-driven sites) and social media (peer-to-peer online platforms) constitute a new wave in communications washing over society, from MySpace, FaceBook!, YouTube, Wikipedia to a vast sea of forums, blogs and other new media platforms that are growing every day. This means that corporate articles, blog posts, podcasts, forum threads and other comments on the Web are now critical sources of information about each company, product and service.


Asia rides the Internet wave

Consider the following examples of how multi-national companies are riding the trends towards E-communities and social media in the Asia-Pacific:

Nokia’s Asia-Pacific-wide “You make it Reel” competition sought video submissions from budding directors, as part of its Nokia N93i marketing campaign
Intel launched a wacky video competition entitled “101 ways to get a new PC” as part of its Core 2 Duo processor campaign. The video series generated two million views from Asia and many submissions from China in particular.
Kodak sponsored photo-printer prizes for competitions held by photography hobbyist E-communities in Korea such as Dica Nara
Singapore’s Starhub held a closed trial of its new messaging suite Pfingo with bloggers, prior to the full-blown pilot
Epson Korea organized a competition in Aug 07 to encourage consumers to upload its promotional video for the CX5505 printer on their blogsites

The attraction of E-communities and social media in Asia is understandable. The Internet already attracts more than 10% of advertising expenditure in Norway, Sweden and the UK but by 2009, seven other markets – three of which belong in the Asian region – will be expected to join them: Australia, Canada, Israel, Japan, South Korea, Taiwan, and USA.

Many countries in the Asia-Pacific are seeing booming broadband penetration, resulting in more time spent online doing more things. In fact, many Asian consumers not only spend more time online than the average US consumer, but also spend more time with media overall. And in the US, the Internet is already challenging television and radio for the top spot (see Table 1).

Compare this to a 2003 survey by SRI-Knowledge Networks (see Fig. 1).

 

The dramatic increase in Internet usage indicates that the medium has become a mainstream communications vehicle.

A Chinese Web surfer, for instance, now spends 18 hours on the Internet per week, more than the 12 hours that an average American spends online. And the corporate community’s early birds have already enjoyed considerable success in China thanks to social media marketing campaigns. Last year, global brand Pepsi leveraged its Internet presence into widespread buzz when it invited consumers to design ads for the company. Meanwhile, Motorola’s legal music download site in China (motomusic.com.cn) has become the most popular in the country and handset sales accordingly doubled in the last year.


Where’s the ROI?

Online promotions apparently do result in returns on investment (ROI). Since 2002, ACNielsen and Yahoo! have been working together on a measurement tool to assess the effectiveness of online advertising and promotions by consumer packaged goods companies like PepsiCo, Kraft, Unilever and Nestlé. The study results are consistent – they indicate that online promotions can lift offline sales time after time, whether the item in question is a food, personal care or household product. Furthermore, each campaign than twice the amount that the company paid to advertise online, with short-term sales increases of more than $3 million.

Common business practices online up till the emergence of social media have involved advertising banners, blogs, reviews and forum threads. At best, banners invite consumers into the corporate Website for more information, corporate blogs allow a company to interact with its loyal customers, reviews enable consumers to gain objective views on products and services and forums engage both sides for information exchange.

Advancement in the technology of interactive platforms, however, has raised the bar. The public is free to challenge convention. George Masters, a high school teacher in California’s Orange County, did precisely that with his 2004 Flash-animated iPod clip. The tribute to his favourite MP3 player was widely distributed and even praised as surpassing Apple Computer’s own commercials in originality.

Consumers are now actively making their voices heard and advertisers encourage them.


The power of viral videos

Fritz Grobe and Stephen Voltz, the people behind the popular viral video called the “Diet Coke and Mentos Experiments”, have earned more than USD 28,000 from ad spots at the end of the video, according to Revver, an online site that hosts the clip5. The video has been viewed more than 5 million times in the first two months.

The Diet Coke-Mentos video features footage, set to pulsing dance music, of elaborately choreographed fountains of Coca-Cola’s Diet Coke spurting into the air after Mentos candy is dropped into cans and bottles. It quickly became one of the Web’s bigger video hits.

Although the Coca Cola team’s reaction was blasé (it did not project the right image, they said), the executives at Mentos were elated. Mentos’ advertising budget is usually USD 20 million a year, and company officials estimate they have generated at least half that in free name recognition as a result of the viral video. Sales climbed 20 percent during the first viral tsunami, and even after the commotion died down, they remained 15 percent higher than they had been.

Viral videos such as these are showing both advertisers and agencies that sometimes even a little Internet buzz can be as effective as a well-executed, million-dollar campaign.

The Price of Success

The arguments for user-generated ads encompass every current marketing cliché. A company invites consumers to submit ads to its Website, which helps the product attain top-of-mind status. Entries are shown online to let the public chatter and vote. With luck, what consumers submit is good enough to stand out from the omnipresent marketing noise. And lest we forget: letting consumers do the work is inexpensive.

Whilst the “Diet Coke and Mentos Experiments” success sprung from an independent grassroots initiative, companies have capitalized on such gimmicks to actively involve consumers. One example is the Converse campaign that allowed customers to send in homemade videos to conversegallery.com. Fans were encouraged to make their own short films and define what the brand means to them. It attracted over a thousand submissions, several whichConverse ran on television, and generated buzz on the Web. Such competitions represent one of the corporate world’s most common forms of engagement with the new online media.

However, such efforts are not all smooth sailing. Chevrolet may attest to this. In early 2007, Chevrolet introduced a Website allowing visitors to take existing video clips and music, insert their own words and create a customized 30-second commercial for the new Chevrolet Tahoe.

The company was hoping that visitors to its Website would circulate their own videos on the Web or upload to public galleries, generating interest through viral marketing. By the measure of Chevrolet Tahoe videos circulating the blogosphere and video-hosting Websites like YouTube, that goal was achieved. But the videos that were circulated most widely attacked the SUV for its high gas mileage and alleged destruction of the environment.

A spokeswoman for Chevrolet, Melisa Tezanos, said: “We anticipated that there would be critical submissions. You do turn over your brand to the public, and we knew that we were going to get some bad with the good. But it’s part of playing in this space.”

Building a bridge to the new media

Corporate respondents to a recent McKinsey survey showed widespread but careful interest in social media. The level of investment in each of the Web 2.0 technologies cited in the survey varied across countries, with China being a fast adopter. There was even use of and plans for Web 2.0 technologies in general, with some locations (such as India) standing out for their enthusiasm9. According to the survey, there has been some positive business impact from these technologies. Respondents seemed generally optimistic about the benefits.

Most Web 2.0 tools are simple-to-use applications that are hosted offsite, such as
wikis, blogs, and social networking, which makes them easy to implement. Given the ease, it is not surprising that many grassroots efforts are often as effective as formal marketing pilots.

Co-create

The raging trend now is to tap the creativity of consumers. McDonald’s “McNuggets” video was created by improvisational actors in Chicago. They uploaded the clip to You-Tube and the giant fast food chain bought over the rights for commercial air-play on New York TV stations.

Others, such as Converse and MasterCard, invite the public to contribute advertising ideas or work through the medium of a competition. Not only does this generate buzz among consumers, the winning ad which is commonly voted by the public, ensures popularity.

Nokia’s “You Make It Reel” competition in the Asia-Pacific is a case in point. The initiative was tied to the Nokia N93i multimedia computer – the company’s latest high-performance device. The contest sought videography and photography submissions from consumers to unearth new directorial talent in the region.

Get involved

Not every company has a following like Apple or Doritos. So far, user-generated ads mostly push products that people adore. Where such advertising may not work, E-community marketing may work well. In 2001, Johnson & Johnson bought babycenter.com, a wildly popular community site for new parents.

China’s automotive maker, Chery QQ, set up an E-community for customers to discuss ideal automotive qualities, exchange ideas and basically live a virtual life online. MyChery.net has over 23,000 members and elicits an estimated 9,000 blog posts a day.

In Korea in early 2007, Epson organised a contest where consumers were encouraged to help advertise the company’s new CX5505 inkjet on chat forums, personal blogs and E-communities. Participants simply had to upload Epson’s CX5505 product ad video on such platforms, advertise the printer and send the URL to Epson. 25 lucky winners would be picked to receive cash vouchers and gift certificates.

Tapping into the strength of E-communities gets the company brand out in cyberspace and involved with the target audience. It makes people the heroes, and not just products or services.

Be transparent

Advertising, branding and marketing of any kind on the Web have to be open and authentic. “Packaged, filtered, controlled conversations are out,” says Debbie Weil, a former journalist and Internet marketing consultant who is author of ‘The Corporate Blogging Book’. “Open, two-way, less-than-perfect communications with your customers and employees are in.”

Wal-Mart learned this lesson the hard way when their branding plan fell through with the exposé of “Wal-Marting Across America”, a folksy blog that sprung up in September 2006. Ostensibly created by a couple traveling the country on a road trip and patronizing Wal-Mart stores, it turned out to be underwritten by Working Families for Wal-Mart, a company-sponsored group organized by the Edelman public relations firm.

Richard Edelman, president and CEO of the firm, had to issue an apology: “I want to acknowledge our error in failing to be transparent about the identity of the two bloggers from the outset. This is 100% our responsibility and our error; not the client’s.”

Expect feedback

The online space, where the public has free rein, is probably the best place to solicit frank feedback. It is best to be constructive – glow from the praise but also learn from the criticisms.

Starhub in Singapore, for example, set up a closed trial before the official launch of their new messaging suite Pfingo . Bloggers, both celebrities and the everyday variety, were approached for trials. Over the next few weeks, Starhub monitored online conversations to follow up with technical support and product improvements.

When StarHub later offered free three-month trials to the public to seek more user feedback, response was strong and 4,000 accounts were given out in three weeks instead of the projected 3,000.

This engagement of consumers is an open and transparent process where consumers are an integral part of the marketing campaign.

Think long-term

Engaging with social media should be a long-term strategic investment, not a series of ad hoc projects. Social media are a platform for companies to bond with their consumers.

Consider traditional advertising campaigns as waves in the sea – each has a definitive set of goals within geographical boundaries. Then imagine blogs, forums and viral videos as ripples in the ocean – starting out small but growing in every direction and over a longer period of time with effects that can be felt globally.

The only rule of the game is that there is no fixed set of rules.

The new generation of consumers attaches more credibility to user-generated content, since research demonstrates that customers place more weight on product recommendations from peers than from media or vendor sources. This helps explain the immense impact and popularity of E-communities and usergenerated media. What is beginning to take place is the large-scale engagement of companies with social media as a brand-building platform.

Video Website YouTube, officially launched in December 2005, plays more than 100 million clips per day with more than 65,000 video uploads added to its inventory. From August 2007, it is launching an advertising model to allow companies to place ads on some of the site’s most popular content.

Social-networking Website Facebook Inc. had 30.6 million visitors in July 2007 and is working on a new advertising system that would let marketers target users with ads based on the information people reveal on the site about themselves. Eventually, the system is expected to predict what products and services users might be interested in even before they have specifically mentioned an area.

Where giants head, others will follow. The growing momentum of the Internet, the new capabilities of broadband and the favorable prices available for online advertising and engagement all make Internet promotions an exciting and cost effective option. But to work well, marketing targeted at social media requires a revolution in thinking, one that “hands over the brand to customers” by prioritizing user-created content, facilitating horizontal communication among customers and above all accepting the risks that go along with that stance.

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