Internet Strategy Forum (ISF) Summit West Update

I’m spending the day at Internet Strategy Forum Summit West conference in Portland, Oregon. Charlene Li, co-author of Groundswell: Winning in a World Transformed by Social Technologies, kicked of the event with a keynote based on the concept and title of her book, Groundswell. She initially outlined the four step approach to the groundswell, aka POST:

People: assess customers’ social activities

Objectives: decide what you want to accomplish

Strategy: plan for how relationships with customers will change

Technology: decide which social technologies to use

She then went on to explain the Social Technographics Ladder, which includes the following categories (and associated population), Inactives (44%), Spectators (48%), Joiners (25%), Collectors (12%), Critics (25%) and Creators (18%). The most active creators are ages 15-26, averaging 39%. Charlene then went on to discuss the primary Groundswell objectives, based on function, which include:

Function > Groundswell Objectives:

Research > Listening

Marketing > Talking

Sales > Energizing

Support > Self-supporting

Developing > Embracing

She then outlined many examples of how corporations are implementing Groundswell strategies, as well as how to measure them.  While the costs are fairly straight forward, the value is not.  That said, Charlene did provide examples, including: advertising visibility, press, word-of-mouth and support savings, which typically far outweigh the costs. In conclusion, focus on relationships, not the technology, and start small, but think big.

Next up, Mike Moran, a regular speaker at ISF, discussed Internet marketing by the numbers. He started by comparing Internet marketing with traditional direct response measurement (DRM). The DRM process is: measure, experiment, test and monitor, which is highly intuitive, but of course, few follow the process. He reminded us that the numbers aren’t as important as the trends. Mike recommends the following metrics: impressions, selections and conversions. He also recommends looking at mini-conversion rates, like learn, shop or buy (IBM’s goals). For those that aren’t aware of the concept of firing your worst customers, Mike reminds us to do so, based on lifetime customer value. For the unwashed masses on the audience, he outlined A/B and multivariate testing strategies…something we’ve been doing for a few years now, but many corporations have not (unless they have an SEM firm like Anvil).

David Placier with Disney.com stepped up next to discuss the evolution of customer relationship marketing (CRM). According to David, key characteristics of CRM include:

1. Differentiating marketing treatment and/or service level for an individual or group
2. Differentiation of treatment is in order to optimize customer value to the company
3. Inherently based on ROI
4. Inherently targeted, not mass

At the highest level, customer value = income you receive from an individual – your expenses acquiring and managing the customer relationship. He touched briefly on display advertising, search, product recommendation and word of mouth. David discussed the future of CRM, which included: personalization, optimization, addressability, commonly available data and cross-device/platform continuity.

The pre-lunch presentation (can you tell I’m hungry?) was Geoff Ramsey with eMarketer, who is an entertaining and informative presenter. For starters, 18% of consumers say they dislike all forms of advertising. In 2005, 25% of US consumers trusted people who work in the advertising industry. In 2007, 17% of consumers had any confidence in advertisers or advertising agencies. Lastly, in 2008, 71% of consumers said they distrusted corporations. Also in 2008, the estimated growth rate for all forms of media spend is 3.3%. However, online advertising is expected to grow at 22.7% for 2008. Geoff is a big fan of rich media consumption and advertising, although he indicated the research is all over the map. eMarketer’s number for percentage of video consumers is around 73% on a monthly basis. Video is huge because 25% are more engaged in the content and 47% are more engaged in the ads. Roughly 30% of marketers are testing blogging currently. Lastly, he shared a story of Fear of Google story, outlining the snowball effect that happens in the blogosphere when a topic takes off. Geoff warns us, Caveat Blogitorium (blogger beware). In terms of trusted information sources, blogs are at the bottom of the list.  The highest level of trust for media formats is recommendations from other consumers at 78%. So the challenge, as Geoff sees it, is that companies must leverage the inherent trust consumers have in each other. Bottom line: give the user control, make it fun and give them tools to spread the word.  In terms of social media advertising, some industry experts believe the market is over-hyped, but the ISF audience disagreed.  Geoff  provided research to indicate we should all think twice about advertising on social media sites. According to eMarketer, 27% of US companies are using social networks for marketing. Some of the reasons marketers are holding back includes  concerns over how to communicate, not wanting to associate brands with questionable content, as well as targeting issues. According to a Mashable survey, 37% of respondents believe all social media networks have equally bad advertising offerings (Facebook  performed best at 25%). Facebook did not escape Geoff’s wrath with the Beacon program. The bigger problem facing social media is the dilution of the social graph (the more the friends, the less the trust/value). He recommends the 4Ls for social networking: look, listen, lounge & learn. Make sure your efforts are relevant and not overly sales or product-focused. Geoff shared his thoughts on the future: virtual worlds challenging 2D social networks, integration with e-commerce and will be more like air (everywhere we want or need them to be). Also, don’t worry about advertising as much as engaging in the conversation and embedding your brand in a logical way as well as providing tools that make collaboration and sharing easy. Don’t forget the influence of customer reviews on purchase.  With pets.com, conversions increased 49% while average order size increased 40% after incorporating customer reviews. He closed with the 5 big things. Reallocation: the entire purchase process needs to be allocated across marketing strategies (not just search).  Re-aggregation: media types are fragmented and will be aggregated. Re-contentization: content needs to add value with compelling content. Integration: the Web can’t exist in a vacuum.  Iteration: we need to continually experiment. Fear of Google indeed…Geoff is fearless.  More after lunch.