Category Report - Social networking

Category Report
13 March, 2009 12:00

Building brands on social networks: early adopters

by Sara White

Social networking may have taken the country by storm, but it is still a puzzle for businesses wondering whether to take the plunge and start marketing on social networks or set up a company intranet-style operation using typical social networking tools.

While the likes of Facebook, Bebo and MySpace take all the column inches, there are a number of networking forums targeted at the business community with networks such as LinkedIn and Xing boasting millions of global users. The question is how to harness this potentially powerful medium to promote your business. As there is no centralised source or methodology, each platform has to be viewed in isolation, demographic profiles have to be created in isolation and some of the branded advertising tools on some of the sites are fairly limited in scope.

There are clearly success stories where niche brands have made a mark in this milieu but the majority of the brands creating a real wave on social networks so far belong to multinational companies with significant marketing budgets.

Cautious approach

But is there scope for smaller scale ventures without a huge marketing budget? Research by Sapient Interactive found that almost half (41%) of marketers admit that a lack of understanding of how to use social networks in their marketing campaigns is the main reason against using the medium.

"If I can make one recommendation for any brand, whatever the size of the company, it is a Twitter search. With Twitter, you get immediate feedback on what people are saying about your brand," said Freddie Laker, Sapient Interactive Sapient Interactive director of digital strategy Freddie Laker said: "If you want to have a full media network strategy, you need to have a goal. You need to identify the focused sites, the ones that will have a meaningful effect on your business.

"If you have a specific business message, you could use LinkedIn to promote research or news services, or for recruitment. On the other side, you can have a Facebook presence and it does not always have to be a serious message. It is about being smart in your message.

"If I can make one recommendation for any brand, whatever the size of the company, it is a Twitter search. There are great ways to search things on Twitter. With Twitter, you get immediate feedback on what people are saying about your brand, the first page will be people talking about your brand in the past hour."

Brand reputation

While a Twitter search provides a snapshot of how your product is viewed, those with a larger budget can use social media analytics tools, which generate multiple searches looking for every relevant reference and keyword, and analyses the data in-depth including the sentiment of comments and overall reputation of the brand or product. Typically, this in-depth analysis costs £10-£15,000.

Companies like GoSocial and Ning offer an entry into social networking without large outlays of capital, a prime consideration at the moment. The idea is to create niche social marketing sites to target specific group interests.

Ecademy is one of the early business social networking platforms, founded in the late 1990s. The network now has members in 220 countries.

Speaking at the Social Networking Forum in London in March, Ecademy founder Penny Power said: "The customer is making all the choices. They have very little time so it is incredibly difficult to capture their attention. What people are saying about you online is becoming critical. Traditionally, business is conducted in a very different way; it is controlled and targeted. In the past, companies could be closed and secretive; now they have to be transparent.

"Businesses must ensure that they are communicating their expertise in as focused a way as possible. Everyone now is found through Google and business people must manage their brand on Google and ensure they are optimised. A good business social network that is ‘open' to Google will achieve this for them immediately and cost effectively."

The recession will be a catalyst for creativity and innovation. "This is when innovation is really key, when you need to think outside the box," said Anthony Lukom, MySpace MySpace managing director Anthony Lukom said: "Social networking is an umbrella term where you probably have to learn the differences between all the types. At MySpace, we term it a social portal. It has always been about ideas bubbling up and discovering new social trends. It is incredibly fast moving and it is driven by competition. This forces people to keep up and to communicate."

The recession will be a catalyst for creativity and innovation, believes Lukom. He said: "This is when innovation is really key, when you need to think outside the box."

But while social networking is a free service, there is the question of how to make this pay. "It is important to get the balance right. Every time people tried to introduce a premium model, people reacted badly. But if it is free, it needs to be paid for. MySpace always had advertising integrated into the site. The other thing is to keep the site interactive," added Lukom.

The Trident chewing gum promotion on MySpace was a classic example of a successful interactive campaign. ‘Mess with your head' focused on keeping the brand interactive and the company created a comedy prize, using the Myspace community to help create content and communicate with users.

"Brands have to work hard to create their brand online," said Lukom. "Brands are very cautious about putting a brand in a community as they might react badly to it. But it is better to know what people think and, if only one or two people are saying bad things, they are quickly shot down by the community.

"Audiences would much rather have targeted advertising than blanket advertising. There is a very delicate balance when using personal data. We would never sell a pure hypertime campaign. There is a difference between the things you are interested in and being bombarded by ads.

"Web 2.0 was the web essentially delivering what it said it would deliver. There is a voracious appetite for mobile too; we launched a BlackBerry app [application] and had a million downloads in a week. App-based services are going to be really big."

Audience targeting

Reaching a younger demographic is one of the draws of social networking. "Brands want to be creative but they do not want to be shoehorned into a programme or to spend millions," said Bebo managing director and VP Europe, Kate Burns. "Campaigns have to be low cost, but show high profitability."

Targeting the right audience is critical to the success of any campaign, especially when budgets are under pressure. Unilever is a brand partner on Bebo's popular Sofia's Diary show, promoting its new Sure Girl range of antiperspirant deodorants for the teenage market. The brand integration sees characters using the product and opens up a two-way dialogue with the Bebo audience. For instance, Bebo users will be encouraged to submit articles on the theme of 'What Makes You Sweat?' with the opportunity of winning a cameo role in the drama. Users will also be able to 'befriend' the brand via its dedicated profile page.

Pen maker uni-ball has just completed an online campaign for the uni Jetstream non-smudge pen. The company used Smudge, a character used to front a nationwide campaign for clearer handwriting, to generate video entries from students via a uni Jetstream Facebook group. The winner received a £2,000 prize and the campaign generated high levels of interest for the brand.

"Brands want to be creative but they do not want to be shoehorned into a programme or spend millions. Campaigns have to be low cost, but show high profitability," said Kate Burns, Bebo

It is not only the private sector that is using social networking platforms; the Central Office of Information (COI) used Bebo to promote its anti-knife campaign.

When putting together an online social network campaign, audience targeting is important. There three types of targeting to consider:

  • behavioural targeting, based on the type of sites visited;
  • contextual targeting, the placement of advertising next to related content such as a written webpage, user generated content, online video or search results;
  • demographic targeting, based on the user's public profile data.

With pressure on budgets, there is even more pressure on companies to get the best return on investment.

Interest-based advertising

Google has just launched ‘interest-based' advertising as a beta test on partner sites and YouTube. These ads will associate categories of interest - sports, gardening, cars - with your browser, based on the types of sites visited and the pages viewed. This should give advertisers a more efficient way to reach customers by providing more relevant text and display ads. Bearing in mind privacy issues, customers will be able to opt-out of the targeted search.

The service is likely to go live in April and will build on keyword advertising. Google VP product management Susan Wojcicki said: "Keyword advertising has been so successful because it is useful to users, advertisers and publishers - everyone's interests are aligned. We believe that interest-based ads will create the same virtuous cycle, by giving users more relevant ads, while generating higher returns for advertisers and publishers."

Reaching business users

While business to consumer (B2C) marketing is deliverable through the large social networks, companies are also looking at some of the professional business networks such as LinkedIn and XING, which have a powerful community of business users.

The market leader is LinkedIn with 36 million members worldwide and a strong UK following. German-based XING has a largely European network with seven million members and is now looking to break into the UK and US. The company also sees opportunities to develop company-branded networks within the XING system. PriceWaterhouseCoopers, for example, has set up a network to manage alumni and current employees using XING technology.

"You need to be a courageous company to enter this kind of marketing but if you don't do it, your competitors will do it and that is the worst way to kill a brand," said Davide Villa, LinkedIn

"What is true on the consumer side is true on the B2B side - to manage new customers, communicate closely with them and recognise the importance of referral, which is very important to business customers," said XING senior VP Davide Villa.

"It is really easy to waste your money with the difficulty of targeting the right people and companies do not want to spend thousands advertising without a specific target.

"You need to be a courageous company to enter this kind of marketing but if you don't do it, your competitors will do it and that is the worst way to kill a brand. We are still at the beginning of business social networking. The internet will surprise us in terms of its reach and functionality."

One of the drivers on these sites is recruitment, providing a rich vein of potential candidates for recruiters.

The latest feature on LinkedIn is a new tool for HR professionals. LinkedIn Talent Advantage is a suite of solutions for recruiters.  The newest feature of Talent Advantage is a ‘viewer-aware' hiring technology called LinkedIn Custom Company Profiles, designed to help companies present information that is relevant based on a job-seeker's function, industry and location. It also features an improved jobs network tool for viral distribution of job postings, Talent Direct for inmail campaigns and employer advertising targeted at specific groups of professionals.

There are two ways to advertise on the LinkedIn site, either using rich display advertising for marketers with budgets of £20,000 plus, or for those with more modest budgets, the LinkedIn DirectAds feature is designed for small to medium advertisers looking for targeted text advertisements, reaching a precise audience using custom targeting including job, industry, function and company size, and geographic  profiles.

Profiting from social networks

Making social media businesses profitable is a subject close to the heart of Julie Meyer, CEO of investment and advisory firm, Ariadne Capital, which specialises in start-ups and has backed a number of web 2.0 companies.

"In the Web 2.0 phase, the winners are those who fundamentally understand the ecosystem in which they operate, enabling existing business to get to another stage," said Meyer. "Before the early adopters, there are the early believers."

Ariadne Capital has worked with Zopa, the loan marketplace where loans are provided by community members rather than banks; 10Duke, which takes offline communities online using a white label social networking solution; and slicethepie.com, a financing engine for unsigned artists and musicians, which scouts music, and then acts essentially as venture capitalists for musicians and already has 11,000 musicians on its books.

At the other end of the scale, Monetise is a mass market mobile banking and payment service. "Retail banks began to adopt Monetise from July 2006; it did not threaten the banks, it just provided a service on mobile phones and works like the ATM system," explained Meyer.

White label sites

Another area to watch is white label social networking sites, which could drive a move to business social networking with the advantages of easy set-up and low overheads on niche networks.

"We are still at the beginning of business social networking. The internet will surprise us in terms of its reach and functionality," said Davide Villa, LinkedIn The big players in this area are KICKApps and Ning. A newcomer to the white label platform is SocialGo, a UK start-up funded by AIM-based BrightThing. SocialGo launched in October 2008; within four months, it had signed up 50,000 social networks. Market leader Ning has 900,000.

The volume of advertising on social networks increased from $920 million (£657m) in 2007 to $2.1 billion (£1.5bn) in 2008, with 10 per cent of this spend allocated to niche marketing. Nielsen figures show that one in every 11 minutes of online time is spent on social networking sites, so there is real potential to build brand awareness online.

SocialGo founder Alex Halliday said: "The question is how can you differentiate between a customer and someone who has an interest in something? Niche social networks are a very lucrative market for advertisers. There is so much information online and people want to get it monetised. But a lot of people don't want to be on Facebook so how do you reach them? Users all self-categorise themselves."

SocialGo allows you to build a social networking site quickly using a selection of templates, adding tools such as live video or audio chat, advertising space or a membership fee payment structure. It has strong monetisation tools, a third party developer programme and a widget store. The Premium package costs around £18 a month and the Concierge package with additional support costs £75 a month. The company is also planning to launch a managed service in April.  

Contact file

Business social networking sites

Ecademy http://www.ecademy.com

LinkedIn http://www.linkedin.com/

Xing http://www.xing.com/

White label social networking sites

KickApps http://www.kickapps.com

Ning http://www.ning.com/

SocialGo http://www.socialgo.com

 

Diary dates

Corporate Social Networking Forum - 8 June 2009, Riba, London W1
Booking hotline: +44 (0) 117 321 8300
Early booking discount ends 8 May 2009
The event will feature speakers from global brands who have implemented a social networking framework discussing its impact on their day-to-day business; find out how Enterprise 2.0 can benefit communications and productivity within your business and learn about the latest products and tools to incorporate web 2.0 functionality

Link

News: UK marketers miss out on social networks, says Sapient Interactive (12-03-09)