En route to Social Media 2.0?

On 2007 I wrote an article co-authored by my Master student Stefan Fountain* (published in 2008 in the Journal of Direct, Data and Digital Marketing Practice) arguing that businesses could use efficiently the Social Media (the term Web 2.0 was more popular at that time) as Marketing tools. As you might remember at that time businesses were looking puzzled and helpless to the alarming signs of growing customer empowerment through the Social Media Revolution. For me and those following the developments closely at that time, was clear that the Social Media will be the next big thing in the Internet evolution and the next frontier for business strategists.
Today, just four years later, the Web 2.0 / Social Media movement (described as Groundswell by Charlene Li and Josh Bernhoff) has been firmly embedded in the minds and hearts of online users and business strategists alike. The Social Media have also become substantial channels of political expression and tools of citizen empowerment beyond the control of states or regimes.   The online users using social media as part of their daily routines has reached the hundreds of millions. With more than 50% of consumers using “smartphones, social networks and other emerging tools” McKinsey talks in a recent report about the customer becoming a media junkie. On the other hand the staggering adoption rates of social media platforms like Twitter, Facebook, Flickr, YouTube and LinkedIn by businesses has created a gold rush atmosphere reminding the dot.com age. In a recent report published here in Holland presenting the results of a survey about the adoption of the social media by businesses (Social Media Monitor, 2011) we read that by now 90% of the top 100 brands in Holland have now adopted the Social Media as part of their strategy, up from 67% last year;  48% of them has already a Social Media Manager in place. This has happened for more businesses very swiftly: only 5 from the brands that participated in the survey were active in social media longer than three years while the majority (56%) was active between six months and two years in social media.
While the picture looks encouraging we could ask ourselves whether the social media as marketing strategy is reaching its maturity stage and more importantly what will be the next step. I am afraid that soon we will detect the first signals of saturation: Any marketing tool when adopted by everyone is losing its effectiveness and uniqueness. The same I would expect to happen with the Social Media soon, mainly as a result of the unbalanced focus of businesses in 4-5 social media platforms and the very limited use of the social media as tools for promoting innovation, co-creation and mass customization. In the above mentioned Social Media Monitor we can clearly see that social networks are hardly used for R&D purposes. Furthermore there is little attention on the identification of Brand Promoters or Super Promoters as customer influencers while the social media domain is underutilized by most SMEs as (free) source of market intelligence.

Al in all a mixed picture on the status of social media as strategic marketing tools. On one hand the threat of saturation due to one-sided focus, on the other hand opportunities hardly utilized. Time for the Social Media 2.0 era?
* Constantinides E., Fountain S., 2008, Web 2.0: Conceptual foundations and Marketing Issues, Journal of Direct, Data and Digital Marketing Practice, vol 9, nr 3, pp. 231 – 244

Amazon in the grocery business: I was almost right

My 2005 article "Strategies for surviving the Internet meltdown: the case of two Internet incumbents" (Management Decision, vol. 42 no. 1 ) is one of my favorites. Not only because it won the 2005 Best Article EMERALD Award  but also because some of my findings about the growth strategies of web firms have been confirmed time and again in practice ever since. For those who do not know the article, it was an analysis of the growth strategies of two successful Web firms of the first generation: Amazon and the online financial firm E*Trade during the 90s. My conclusion was that the secret of the success of both firms was that they chose for a continuous transformation and expansion to new markets, new products or both. As to the question what the future of these firms will be and what are the growth directions for these firms I wrote  "One of the possible strategic options will be to attempt a new round of conglomerate diversification in totally new, unfamiliar commercial fields. This would mean for example opening online bookstores, music shops or online grocery outlets for E *Trade and entering the mortgages market or the ISP services for Amazon"
My prediction about the groceries was correct only it seems that AMAZON was faster than E*Trade: According to a BizReport post of today AMAZON has launched online grocery stores in Germany and UK. The fast growing online groceries market was the next logical step of expansion of the online giant. The question is still whether we will see in the future online banks like E*Trade to follow the example and whether AMAZON will enter the banking sector. I will keep you informed about such developments

When the Old Media Meet the New

It is encouraging to see that slowly the old media, one of the main victims of the Web, learn to turn the Web and more specifically the Social Media threat into a strategic opportunity by endorsing them as part of their marketing toolbox. Those who follow my publications and blog posts know that this is what my recent research is all about. I am glad to say that talking to either colleagues or practitioners I see that this issue is steadily gaining interest.
The New York Times is good example of an old media business that uses the Social Media very successfully as part of its campaign to increase brand awareness and customers. Their recent Facebook venture is a big success according to the Nieman Journalism Lab. I found very interesting that the NYT concluded that the campaign netted “4,3 times the value of the spend” while it quadrupled the NYT fan figures.

Hopefully those still skeptical about the New Marketing will think again

Ex student and co-author turns the theory into practice

I was glad to find out that my old student and co-author of my paper Web 2.0: Conceptual foundations and Marketing Issues Stefan Fountain is progressing in the cyberspace.
Stefan is the brain behind soocial.com an online content management tool enabling users to synchronize contacts between computers mobile phones and web applications. He seems to be lately very busy giving keynote speeches and as a good Web 2.0-era marketer puts the theory to practice by promoting his company via heavyweight online influencers like TechCrunch who writes quite nice words about it.
Stefan, lots of success, keep up with the good work

Internet and the Red Queen Effect: Google Insights

In my article titled "Strategies for Surviving the Internet meltdown: The Case of Two Internet Incumbents" published in 2004 in the Management Decision * I studied the secret of survival and success of two top online firms of the first web generation: Amazon and ETrade. These firms not only outlived the 2000 Internet meltdown but are still thriving online. My conclusion was that the strategy of these firms was quite similar and inspired by the Red Queen Principle: continuous transformation and expansion in new markets, new products or both.
It seems that the same principle is still the basis of the strategy of many successful new web firms and firms of the Web 2.0 era. A good example is Google: a recent development of Google (in beta) called Insights helps tracing the number of searches performed for any term, phrase or name worldwide or in any countries and in different time periods (up to 4 years). Very useful for those who want to optimize the findability of their site or simply want to know whether more or less users are searching for their brand or product than last year or if their brand / product is more popular search term than the brand / product of their competitors.

* Constantinides E., 2004, Strategies for Surviving the Internet meltdown: The Case of Two Internet Incumbents, Management Decision Journal, vol 42, nr 1, pp 89-107

An airline's digital transformation

As an old KLM employee myself I am always interested in developments in the airline industry and this company. While KLM was by no means not one of the pioneers of E-Commerce in the airline world they have shown a remarkable progress in this field during the recent years. An interesting article about the digital transformation of this company that expects now to earn 40% of its revenues online published by Accenture recently. The term of co-sourcing is introduced and explained also in this article; interesting for those allergic to rampant outsourcing.

Social Media as Marketing Tools

The nominations for the 2008 Forrester Groundswell Awards is a very good collection of interesting and innovative ways of engaging Social Media as marketing tools. The admissions in the contest were classified according to the Groundswell methodology in 7 categories depending on the objective pursued: Listening, Talking, Energizing, Supporting, Embracing, Managing, Social Impact

Manufacture on Demand (or Have It Your Way) II

Manufacture on Demand is an activity made possible by technologies in the Web 2.0 /Social Media domain. In a model I have developed presenting a classification of the Social Media as marketing tools the Manufacture on Demand appears in the 5th column: Social media as means of personalizing the customer experience. * The theoretical basis of the manufacture-on-demand principle is the (contradictory) concept of Mass Customization. The tool used in all these application is called Configurator. In the site Configurator Database you can explore the world of configurators. Prof. Frank Piller is one of the researchers with rich contributions in the subject.

* A working paper about using the Social media as marketing tools is available to those interested. Just send me an email in e.constantinides@utwente.nl

Manufacture on Demand (or Have It Your Way)

People who asked me ten years ago if the Web is the suitable channel for selling fast moving consumer goods (FMCG) like bread, butter, beer, candy, soft drinks and tomato ketchup got a categorical no for answer. But things are changing. If you ask me the same thing today I will answer to you: Of course!
What has changed is that we moved from Web 1.0 to the Web 2.0 era. The new online challenge is to manufacture and deliver customized products of all kinds to customers who are not satisfied with what they find in the supermarket or high-street shop, looking for something very personal.
The revolutionary approach of Dell Computers allowing online customizing and ordering of PCs in the 90s is becoming a routine today for an increasing number of products including FMCGs. Today you can customize (or even design ) online your T-Shirt, sport shoes, soft drinks, paper tissues, candy, tomato ketchup and beer. These products can be ordered and delivered at your doorstep, in many cases becoming available to other customers on line. The amazing capabilities of Web 2.0 applications combined with the explosive growth of broadband made this possible.
The list of customized products in the Web is growing every day and although some of them are not yet available everywhere it seems that the dream of Mass Customization is quickly becoming a reality. Print-on-Demand revolutionized the printing business but the Manufacture-on-Demand will most probably revolutionize FMCG production and retailing pushing the frontiers of branding and product innovation to new directions. The Long Tail can celebrate, it is taken now really seriously.

Misusing the Social Media

The misuse of online forums or weblogs by advertisers and marketers posing as online consumers enthusiastically talking about brands or products is nothing new. Walmarting is a term often used to describe efforts to plant advertisement into public online forums disguised as honest opinion of people. The Dutch television program Radar paid recently attention to the phenomenon by presenting the results of their investigation to the origin of some over-enthusiastic posts in blogs and forums.
The whole practice is naive if not stupid. Many such cases of fraud have been traced by vigilant web users in the past and reached publicity that in the end was damaging for the reputation and credibility of the firms involved. On the other hand the practice undermines the web neutrality and the very nature of the social Media as platforms of open dialog.
Is there any solution to the problem? Not an easy one I am afraid. The anonymity of the web makes such practices easy and very tempting. Screening of comments in blogs and forums by experienced moderators could reduce the number of fake posts. A filter that could stop such posts by adding their creators to a black list of a Hall of Shame would maybe help. Using clever data mining techniques identifying and blocking such silly practices could also be a part of the solution. For sure the best solution would be the obligation of participants in online discussions to register and fully disclose their personal data. This would also reduce the volume of posts that sometimes are just disturbing, offensive or pure nonsense but this is the most difficult to be accepted and applied solution. Maybe the best weapon is to be critical to very enthusiastic or very repulsive online comments.