How the internet and virtual communities are changing the ways of business and marketing

Friday, October 13, 2006

Competition


Yahoo Teams Up With HP On Search Engine
Post inspired by Business Week article linked above 


It’s off to the races in the Internet mania that are search engines!!!! In a fight to obtain more ad revue, Yahoo and Hewlett-Packard (HP) have teamed up in the hopes of staying in the game with hot competition. Recently, Google, the largest search engine market, teamed up with Dell, who has a large market share in personal computer sales. Their agreement placed Google search engines in the toolbars of Dell’s computers. Yahoo trails second behind Google in the search engine market and hopes that its new agreement with HP (to have the yahoo search engine it all HP home computer toolbars) will give it the boost it needs to be number one.

As you heard from previous posts of mine, Yahoo is in talks with Facebook to acquire the rights to its social network. Yahoo has a long standing position as the most-viewed web site but it is being challenged for that spot now by News Corp.’s MySpace.com. This kind of pressure might be one of the reasons Yahoo has gone ahead to join up with HP.

So why all this drama over getting these deals? A major part of it is getting those precious advertising revenues. Being the number one search engine certainly gets the attention of prospective buyers of advertisement space. They are hoping to place a minimum number of advertisements to save on cost but want to place these advertisements on a website that will pay off with the number of viewers that will see it. The larger the number of viewers; the better it is for everyone involved. It is the hopes of the advertisers that through the viewing of their advertisements; eprocurement will take place. This is the when purchases are made via the internet, intranet, or extranet. In this case it would be through the internet.

I think this gives great opportunities for the consumers. Companies are constantly competing against each other and at the same time bettering their company to better serve their customers. At the end of the day, it is the revenue they receive from their customers that they are worried about. For them to get their advertiser clients on board with them, they have to dish out plenty of money in advancement, information, and tools to keep the internet users coming back. It is the internet user who, in a way, holds all the cards. Falling “hit” numbers are warning signs for companies such as Yahoo and Google so that is why Yahoo, who has started seeing these “falling numbers” trend is trying to tailor more of its services in areas, such as HP computers, where it can be easily accessed and viewed by internet users.

In comes down to a tight race between portal and search engines hoping to cash in. The stakes are high and these companies are willing to make huge billion dollar investments to keep themselves at the top. Like they say, “You have to invest big, to earn big” and that’s just the philosophy Yahoo, Google, and others big names are following.

The Ruminator


Friday, October 06, 2006

New place for advertising


Blogging for Dollars
Post inspired by Business2.0 article linked above

Blogging is no longer just a hobby - sites are starting to real in advertising dollars. Image here from SugarPublishing, one of the many new sites reeling in ad money. 



Blogging has gone from a simple individualistic hobby to a booming business. One that entrepreneurs have entered to make some extra disposable income or to launch their new full-time career. The article, “Blogging for Dollars” is written by Paul Sloan and Paul Kaihla and it explains the phenomenon that has become blogging. It sites examples of websites that have started to turn profit in their blogging endeavors.

So why has blogging become such a hot topic with marketers? Because, blogging allows for the creations of highly concentrated niche markets. These markets are key in today’s modern society. Niche markets can attract lots of advertising dollars. Many of the sites usually attract their consumer base by creating a theme or topic of discussion in their site. Then, they provide regular postings on the subject to keep readers coming back. Some of the sites don't even go through the hassle of consistent posting but instead create a forum for users to come and share their own posting or thoughts. This usually leads to passionate people with stubborn thoughts going into back and forth continuous rants. It keeps the readers and posters returning to the site and at the same time “soaking in” whatever is displayed on the site itself.

I think that we are making huge leaps in new communication technology. There is also a competitive market where advertisers are battling bidding wars just to be able to get their message out to the public. Blogging sites offer a venue for the advertisers to be heard and to target the people they want thier message to reach the most. It makes perfect sense for blogging sites to fit the new wave of communication technology and social networks are the prime hub in person to person informational exchange. 

Right now, advertising on blogger sites is in its very early stages. Big company names like Banana Republic have helped in instigating the trend. They recently bought out the entire ad inventory for a week in July for a new site company called Sugar Publishing. There have been other signings such as Apple and Hewlett-Packard with the blogger site TechCrunch. The question here is will the advertisements on such sites bring in better brand identity and help spread word-of-mouth (WOM)? I believe they will and in time the use of better integrated campaigns specifically designed toward blogger sites will cause companies to enter bidding wars for access to top hit sites. 

So how does a typical blogger site become one to have the "top hits"? One way that blogger sites get high web visit numbers is by setting up permanent URLs for each of their posts. This brings more visitors to the site because readers get the URL link in their search results when accessing a search engine. They go to the search engine to find information that they are looking for. They type words in the search tab that pertain to the information they are looking for and the search engine brings up URL posted sites with similar keyword-heavy headings. The actual URL site keeps readers coming back by regularly posting new information that pertains to the topic or theme of the site.  

An even better way that they keep their readers interested is by allowing readers to post comments on the postings they read. The readers can express their thoughts on a topic and return to the site at a later time to see if anyone responded to there comment. This is a feature similar to the one found on many social networks with one exception. Instead of tying users into the site through individual “user profiles”, blogger sites hone in on users passions and interests. Marketers in big companies are starting to realize that those passions translate into niche markets and marketers are jumping on the band wagon to be the first ones to get “in” with the new generation of bloggers.

The Ruminator

Friday, September 29, 2006

Niche marketing at its finest:

Post inspired by Businessweek Online article linked above



Getting a handle on niche markets
is all about strategy and outbidding
your competitor.


Yahoo has offered Facebook 1.4 billion dollars to acquire its social network. Even though Facebook has turned down the Yahoo offer, talks can easily start up again. So why is Yahoo willing to give so much? Well, it came to Facebook when its Yahoo shares lost 20% of their value on news that its new targeted advertising technology would be delayed. Also, its own attempt to start a social network was a flop and it lost out on the bidding war for the acquisition of MySpace to its competitors, Google and News Corp. So, Facebook seemed to be the next logical choice since it has become a top Web destination. According to comScore Media Metrix, It had 14.8 million unique visitors in August 2006 alone. With 56.6% of these users being younger than 35 years of age. This creates a perfect targeting niche that Yahoo desperately needs because advertisers would pay huge bucks for access.


There's the added benefit of Facebook having a large share of the college market. Its market's membership is bound to keep on growing due to the wonders of viral marketing that swarm college campuses. Basically, its directed word of mouth that spreads the word around about certain sites and products. Word of mouth being spread around campuses is what advertisers like to hear if they are going to be plugging their products on the site.

It seems that advertisers are now looking for web portals to provide them with niche markets that have better odds of bringing in revenue for the advertisers and, in turn, allow portals such as Yahoo and Google to rack in advertising clientele. So what does this mean for consumers of the net? Well, in my opinion, joining social networks turns their members into commodities. This gives a lot of power to the consumer. No wonder why Facebook was so quick to hush the uproar of its users. When Facebook created a news feed of “friend activity” without consulting focus groups or announcing the change to its users; a small turnover of users occurred. This turnover could have been bigger if Facebook had not responded as quickly as it had; a great move by its CEO Mark Zuckerberg.

So what does this mean for the users of Facebook if Yahoo does acquire Facebook? Are those pesky pop-up ads going to be on every page a user visits? Hopefully, that won't be the case.


Are great promotions going to be given to attract the typical college minded user? If so, it would be a win-win on the side of users and the advertisers. These Advertainments (as marketers call them) would benefit college users by showing them advertisements in the form of entertainment while the advertisers benefit from getting their “money's worth” in a successful campaign.

One things stands clear, if Facebook does decide to start considering offers for its site the bidding war will be nothing short of overwhelming.

The Ruminator

Friday, September 22, 2006

Marketers Turn a New Leaf in Strategy

 Marketing to Kids…
Post inspired by Businessweek Online article linked above






Companies hoping to attract young customers are building whole marketing campaigns around social network sites such as Facebook and MySpace”. --- Businessweek Online


Smart businesses start to join social networks such as Facebook.


The article that journalist, Rachel King, writes is what sparked this little post of mine. It describes how companies are using social networks as a way to reach younger users, below the age of 35, with their products and services.

Big names who have been the leaders in this type of marketing tactic include:

JP Morgan Chase --- Burger King --- Apple --- and Wendy’s (check out their advertisements in the link)

So why are these companies venturing into a different media and “testing the waters”? The reason is this: these companies have realized that if they want to promote to the younger generation or consumers they have to go where these consumers “hang out” and that would be in social networks on the web.

JP Morgan Chase chose to create a marketing program on Facebook, an online community that has millions of STUDENT members. A great call by the company since many of the users on the site have unofficially adopted the name “a Facebook addict” and/or “Facebook stalker”. Chase said they ran the campaign because research “showed young people prefer to interact with brands in familiar surroundings”. So users of Facebook can earn points by joining the Chase subgroup, signing up for and activating a credit card, and reading handy information about credit use. The great part about Facebook is that if kid joins the Chase group a bunch of his or her friends will also be exposed to campaign.




who knew Facebook (above right) and JP Morgan (below left) would ever have someting in common!




What young people want is to experience brands through interaction and not loud and disturbing pop-up banners. This is a great way for users to get exposed to a brand and have fun interacting with its promotions. This is exactly the idea that Burger King has gone with.
                                                                             

Burger King has joined the MySpace community and has giving their spokesperson, The King, is own MySpace page. Once a friend of the King, one can access his page and see free episodes of Fox shows like 24 and American Dad. According to Gillian Smith who is the senior director of media and interactive at Burger King, “Consumers respect us more as a brand if we are giving them something they can use”.

I couldn’t be happier with this new wave of marketing strategies. To think of a world where one can enter the net and not be bombarded with loud blinking pop-ups that stubbornly don’t disappear even when you hit the “close” button three times!

The other great thing about it all is that companies are willing to adapt to the consumer and their needs. Better marketing researching is helping companies understand the young consumers’ mind sets and pet-peeves (i.e. in your face disruptive advertising) and therefore are coming up with marketing solutions where both get something for their time spent together. A trade off of interests, you may say.

Now I must go….I can’t wait to see what fun new adventures await Jack Bauer on "24".

The Ruminator

Friday, September 15, 2006

Trouble for Facebook? I think not!





Facebook in trouble?
This post inspired by Businessweek Online article linked above


Sticking to the theme of virtual communities, the Facebook community is one that I, and many others, are a part of. This community website brings people of certain academic “networks” together, whether it be of college or high school affiliation. This community of students, communicating in one location, is centered around socializing and passing along information. Information can vary from comparing different academic institution to students' opinions about certain social causes to converging about recent class discussion and what social events may be taking place. Yet, the main advantage that marketers of various enterprises see is a prime market that they would love to infiltrate and, if given the right tactics and opportunities, profit from. Facebook is one of many virtual communities that exist today but it has been the most successful one of pulling in such a strong and concentrated youth market. The main goal of a typical virtual community would be to guide potential users to its site print advertising or word of mouth (WOM). The latter being the best kind of advertising around. A virtual community such as Facebook would want to create a simulation in its interactive site that engages the users in a way that they would want to keep returning, therefore becoming what we in the marketing world call “repeat users”. Facebook recently attempted to stay ahead in their interaction initiatives but is now dealing with strong backlash from its users for its hasty efforts. An article written by BusinessWeek Online expands with the following:

Facebook made an impulsive move in changing its extremely interactive site. It created a mini feed similar to a news feed that you would find on many news sites. The idea behind this move was to have information that users tend to search for on their friends’ profiles (i.e. a user goes on to see what changes a friend has made on his or her "recently updated" profile) and bring all the recent information to each friend's homepage. In the eyes of Mark Zuckerberg, founder and CEO of Facebook, it was a way to save users time when browsing through this ever expanding site.

Yet, such a drastic change to the method a user would obtain his or her listed friends' information was administered onto the site with no focus group test studies preformed beforehand. The sudden change did not boil over well with avid users of the site. Groups formed calling for the termination of the “new” Facebook and a change back to the “old” Facebook. The article states that due to the reaction Facebook received for its implemented changes, it may have lost some of its members to rival virtual communities with similar student appeal. Such sites include MySpace, Friendster, and CollegeHotList.

While I find this story interesting, it is what I saw by reading “between the lines” that really got my attention. In my eyes, this article gives insight to how committed users can be to a virtual community. These constant users of Facebook would not have taken on such time-consuming actions (i.e. coordinating a boycott or starting petitions) if the site was not an important part of their identity with their college/school life. If anything, this article showed the power Facebook holds in getting under "peoples' skin". Facebook redeemed itself quickly by sending out a letter to members addressing the issue. The quick response from the Facebook CEO himself promised to heighten security measures on the mini feed so that users would not feel the “invasion of privacy” that they had talked about in their emails.

So, how does Facebook turn out after all this drama? Is its reputation in danger? Well, from the outlook now it seems that publicity has been the one major result from the controversy. Businesses always love free publicity. There may have been some users who discontinued their account but the people who make up that group are very small in number when compared to the total number of members. So, Facebook continues to be a gold mine for marketers that are hungry to give college students information about various products and services. It should also be mentioned that the quick response CEO, Mark Zukerman, gave to his users was a great maneuver since it cleared up any gossip that may have been circulating. Therefore, I am sure that companies are still knocking on Mark Zukerman’s door; hoping to get “in” with this exclusive niche of money-spending consumers.

The Ruminator

Friday, September 08, 2006

Virtual Communities: A New Form of Communication for Businesses with Consumers

Virtual Communities: 
A New Form of Communication with Consumers
Article that inspired this post: click here

Journal
Electronic Commerce Research
Publisher
Springer Netherlands
ISSN
1389-5753 (Print) 1572-9362 (Online)
Subject
Business and Economics
Issue
Volume 6, Number 1 / January, 2006
DOI
10.1007/s10660-006-5988-7
Pages
57-73
Online Date
Tuesday, April 04, 2006

This article was taken from an online journal whose name- “Electronic Commerce Research”- also gives light to its specialized focus of articles. If you have never heard of Virtual Communities or you have and are now curious to see how they can be a positive contributor to Marketing strategies, than by all means read on.

In fact I would encourage anyone who has had personal experience with being part of these virtual communities and taking part in helping companies in their marketing research, to write your comments and thoughts. Now if your thinking…”Well I’ve never participated in these so called virtual communities and I’ve never helped a multi-billion dollar corporation design a product….chances are you have and just may not have realized it when you did do it. No worries…I’m here to explain to you how these marketing tactics all work and how they use the virtual communities that many of you frequently visit (knowingly or otherwise) to access your thoughts, ideas, and more at little cost to them and – on many times- no monetary pay for you. I’m here to give you- as the title of my page states- “The Know How” of how it all works in the marketing world.

Now let me state this right now, I think the use of using virtual communities online as a means for companies to get a better idea of what the consumers want from their company’s products is great!!! Absolutely fantastic!! But I also believe the public should be informed on what is actually going on around them when they voluntarily enter the Internet. (I have also produced links on my page that connect to other students in my class who want to share their knowledge and opinions of what goes on in the marketing world.)

Now there are two ways to view how Marketers obtain their information from consumers on the web.

There is the incorrect notion given in the example below:
Many unsuspecting internet users come upon a site regarding a specialized interest of theirs (hence a virtual community of a certain topic) and take part in expressing their thoughts…..only to find themselves added into an “elite” group of consumers who then became the voice for all potential consumers who may one day purchase the item-in-question. It is an item that is being developed at the particular moment and its “customization” is being formulated through the opinions and preferences on this particular “elite” and true-few group of random internet browsing consumers.

OR

There is the more comprehensive and thoroughly exhaustive process that a company goes through in order to obtain the group of consumers that can correctly encompass the concerns that a majority of consumers will hold. The article I previously mentioned above; concerning how members of virtual communities are brought into the product development process is provided in this link.



Now my opinion of using this type of marketing channel to enhance products in production and make them more appealing was formulated after I read this article. It explains how a company would integrate members to obtain valuable information that the company can then use in their new product development (known in short as NPD). This article explains how the four writers on this journal article took part in an Audi infotainment case and how this was successfully implemented using what they term as “Community Based Innovation” (CBI for short). This is a four step process that helps obtain the right consumers. It was compared with three stage NPD process. In this process, the three stages are Idea Generation and Concepts, Design and Engineering, and finally Test and Launch. According to the writers of the article in reference to the NPD three-step process, “The novelty of these approaches compared to conventional online market research is that users are not only asked about their opinions, wants and needs. They are invited to contribute their creativity and problem solving skills by generating and evaluating new product ideas, elaborating a detailed product concept, evaluating or challenging it, discussing and improving optional solution details, selecting or individualizing the preferred virtual prototype testing and experience in the new product features by running simulation, getting information about the new product or just consuming it”. As an example they described and gave the internet address of a company called Peugeot that had an internet-based design contest for car designs. The theme was “Retrofuturism”. (www.peugeot-avenue.com)

They then advocated for their CBI approach saying that it, “offers a deeper understanding of how to integrate consumer into NPD”. The four major steps are:

1) To determine user indicators:
a. They claim that “different type of users exist within online communities”. To group the varieties, they categorize the internet users. According to the article, “a “tourist” is lacking strong social ties to the group and has a rather small or only contemporary interest in the topic. The “mingler” maintains strong social ties but is not really into the topic. The “devotee” on the contrary is highly involved with the topic but not very much related to the community. The “insider” is strongly associated with the community and highly involved in the topic.
b. They want the “devotee” and the “insider”. They see them as lead users that “have product and service needs that are ahead of all other user groups in a given market. The additionally possess in depth technical knowledge and a general understanding of product functionalities.”

2) Get community identification:
a. Here they search for the online communities where the “devotees” and “insiders” can be found. Some companies even operate their own communities and use them as a way to bring in those specific users that hold those characteristics. The article sites the womensnet of Henkel (http://www.womensnet.de/ ) and the advisory community of Procter and Gamble (http://www.pg.com/) as some of these companies.

3) Create a virtual interaction design:
a. Here they discussed how “to set up an interaction process with community members the particular characteristics of the community need to be considered, that is their language, netiquette and norms as well as the motivation of the individual community member to share their knowledge and ideas….the design of the virtual interaction had to be tailored to its participants and to the development (sub) tasks(s) transferred to them.”
b. The writers of the article also say, “Managers, who believe that consumers can be motivated to participate only by monetary incentives…are mistaken in most cases. Intrinsic incentives like the demand for new and better products…..definitely do have a great impact on community members’ motivation to virtually take part in new product development.

4) Have user access and participation:
a. They finally talk about the final stage in the process where, “Once online communities are identifies for integration and the virtual interaction platform is programmed and tested the members can be accessed and contacted. E-mails, banners, pop-up windows, or short articles can be used to get in touch with the community members and inform them about their role in the innovation project.


They go on to talk about the Audi project, where once implemented Audi fans meet at www.Audiworld.com. They concluded by explaining how the Audi project helped promote the CBI approach to Marketing in virtual communities in order to better product development.

Now I'd like to hear your thoughts on virtual communities and thier effects on marketing. Feel free to leave a comment in regard to this post or any of my other future posts.

The Ruminator