Proof that Facebook fans are worth more to brands

by Josh Bernoff

The debate about the value of Facebook fans continues to rage on. I hate raging arguments in the absence of solid evidence. So I was delighted to see that analyst Gina Sverdlov of Forrester Research had applied actual statistical modeling to address the question, in a new report called "The Facebook Factor."

Gina's technique is simple to understand. Using a statistical technique called logistical regression, she examined a large number of factors that potentially contribute to whether a consumer will purchase, consider, or recommend a brand. The technique could work for any brand; the report specifically analyzes Best Buy, Walmart, Coca-Cola, and Blackberry.

The results are very suggestive.

Here are some facts from the report.

• For all four brands, being a Facebook fan of the brand boosts purchase, consideration, and recommendation. For example, 79% of Best Buy Facebook fans bought there in the last 12 months vs. 41% of non-fans. And 74% of them recommend Best Buy vs. 38% of non-fans.
• Of all the questions we asked (and there were many), being a Facebook fan had more influence over these behaviors than any other factor. Being a Facebook fan of Best Buy increases the odds that a customer will purchase by 5.3 times; the next closest influence factor is having researched consumer electronics, which only increases the odds of purchase by 1.4 times. The pattern is repeated for every single behavior and every single brand. For example, having a Walmart nearby doubles the odds that you'll consider buying there, but being a Facebook fan of Walmart increases those odds by more than a factor of four.

Does this mean you should pour your budget into building fans for your brand? No! While there is a strong correlation between these positive behaviors for your brand and being a fan, there's no proof that being a fan causes people to buy, consider, or recommend your brand. If you boost your fan base artificially, those fans will be less avid on average.

What this analysis does show is that fandom is worth something. Your Facebook fans are more likely to buy from you, consider you, and of course, recommend you. 

This means that cultivating them with content and interaction on your Facebook brand page is well worth it, because this is where your most enthusiastic customers are. You have the opportunity to supercharge them, not just to buy, but to spread your message. For companies that don't provide these fans what they want -- interaction, content, things to share -- this is a wakeup call. And if your brand doesn't have a Facebook page, this report is proof you're stuck in marketing thinking from the previous century. Use this analysis to justify putting your marketing budget and effort into a Facebook page and the staff to keep it lively.

 

Take our survey, score your HERO project (social media, mobile, or other tech)

by Josh Bernoff

That social media project you are working on. Is it worth it?

The iPhone app -- is it going to pay off, or just drag your job into the toilet?

Our new book Groundswell HEROes is about highly empowered and resourceful operatives (that's you, if you're considering, building, or managing a technology project that touches customers). As we reviewed these projects, we realized that people often have difficulty up front in identifying just what they are about to get themselves into. It's not just the value for customers that's in question, and it's not just the technical effort. It's the political effort -- all the people who have a stake and try to stop you or help you (or "help" you).

We devote a whole chapter to this, and we've also developed a tool for measuring projects. Answer a few questions, and then the tool tells you if the effort is in line with the expected value, and whether you've generated a cute little idea (class 1) or a major "shadow IT" effort (class 4). We call it a value-effort evaluation (VEE score).

The tool is in beta. I'd like your help in testing it. Here's what to do:

1. Click on the "TRY IT" button below to take the survey and see how your project stacks up. It works for projects you are about to undertake, or ones you are in the middle of, or ones you have completed.
2. Please take notes while taking the survey, if you see something that seems wrong or missing or confusing.
3. At the end of the survey, we'll provide you with a screen that shows a little insight into your project and the challenges you will be facing.
4. Please help make the tool better. There's a little box at the end of the survey, you can include feedback there based on your notes. Or add a comment on this blog. Or email me at jbernoff at forrester dotcom.

I think the tool will be helpful in clarifying the path you are on. I know you can help us make it better. Look for a much nicer version of this once the book is done.

Note: because the survey tool costs a small but nonzero amount of money per completed survey, we may have to shut this down if more than a thousand people take it. Unlikely but possible. We'll let you know.

Social technology for health care: check out the imc² point of view

Amber Benson, a strategist at digital marketing agency imc², has also been researching use of social technologies in health care. Since her perspective comes from within the company that developed marketing programs including the groundbreaking alli circles campaign, it's well worth checking out.

You can download the imc² paper "Is Social Media Right For Your Healthcare Brand" from their site. We interviewed Amber and her team for our own pharma research, and her thinking influenced mine, as you'll see from reviewing the paper. We agree that carefully examining the conditions to be treated along dimensions of use and involvement is crucial. For instance, I like their criteria for evaluating the level of investment a community is likely to get from people with a given condition:

Outcome investment represents a patient’s relationship to a condition, a combination of several factors, which include severity of symptoms, visibility of symptoms, social impact of condition, and potential morbidity. Outcome investment answers two key questions:

• How much does someone have to gain by actively seeking a resolution to symptoms or a
treatment for the condition?

• Are the benefits of resolution greater than the potential downside for identifying with this
condition or brand?

Any health care company pursuing a social strategy should give these ideas a thorough review.

Join me in person February 18 and build your groundswell strategy

by Josh Bernoff

Briefly: if you're on the verge of developing a social technology strategy, or just want to know more about how to do it, we can help. We're holding a full-day workshop here at Forrester's Cambridge (Boston Area) offices on February 18. It's called "Marketing With The Groundswell In Tough Economic Times" and will include our latest cases studies and new (Q4 2008) data about marketers' investments in social technologies in a recession.

This is similar to the workshop I've done for companies including Wal-Mart, Charles Schwab, Rogers, and about a dozen others, but updated and revised. We use the POST method (People, Objectives, Strategy, Technology) to help you structure your thinking.

Top five reasons to come to Cambridge:

5. Get a full day immersed in social technology strategy insights, case studies, and examples, and work on your own strategy with help from analysts and fellow marketers.

4. Interact with 10 or 15 other marketers who are working on the same issues. (Our clients are, as they say in Boston, wicked smaht.)

3. Get a free signed copy of Groundswell or the Groundswell audiobook -- your choice. (I know you probably already have one, but you can give this to your boss or client with a personal note from me!)

2. Meet Sean Corcoran, our newest social technology analyst, who will be sharing insights from his agency work with Carat.

1. All that stuff you heard about how cold it is here in Boston -- don't believe it! It's cozy to bundle up, and seeing all those Harvard and MIT students walking around will make you feel warmer, or at least younger.

I know travel budgets are tight but at $2,500 this is way cheaper than having me come to your company for the day. See the agenda and sign up or email our events team. I can't wait to work with you.

Should you talk about your competitors?

By Josh Bernoff

It’s a truism in the marketing world that you don’t, in general, talk about your competitors. The apotheosis of this was reached in those silly old soap commercials that compared the company’s product to “Brand X” which it beat hands down. As a consumer, your reaction was “who is this brand X? Of course you’re better than them – that could be anybody. Show me you’re better than the brand I actually use!”

In the social world, and especially among social technology Purists, the wisdom is the opposite. You’re supposed to stop pretending you have no competitors and talk about them whenever they do something interesting. My colleague Jeremiah Owyang (though he’s hardly a Purist) calls this one of the “impossible conversations” in the groundswell and explains that not talking about competitors is "welded deeply into nearly every corporate culture." 

Here’s my problem. One of the other sacred tenets we’re supposed to uphold in the groundswell is to “be authentic.” I strongly agree with this – pretending to be something that you’re not is a big mistake, because you will be found out, and there will be a backlash. But what if you authentically believe your company’s products are the best? Shouldn’t you say so? Why give props to the other guys?

This is real dilemma, especially as more corporations start building social strategies. It’s an archetypal example of the Purist/Corporatist spectrum, with the Purists holding up their competitors and the Corporatists saying “we’re not gonna give those other guys free publicity.”

As usual in these debates, I try to find an appropriate middle ground. And the principle here is “Don’t try to prohibit conversation about your competitors – you’ll lose out. But when speaking yourself, you don’t need to bring up the competition. Just don’t always behave as if they don’t exist."

For example: you run a community of your customers and similar people. People in your community insist on talking about your competitor’s product. What should you do? Certainly, don’t shut them off – they’ll just bug out and talk about the competition somewhere else. Instead, join the conversation, and respectfully offer your perspective.

You write a blog. Should you blog about the competitor’s products or announcements? You don’t have to, but if everyone is talking about it, you might be better off. That’s what HP blogger Eric Kintz did in response to Jonathan Schwartz’ blog post about HP.

Should you twitter about the other guy? Again, only if you’re trying to make a point of your own. 

I agree with Jeremiah (I asked him about this in an email) that talking about the competition shows confidence. People will respect that. But if you really think their announcement isn’t worth commenting on – and nobody else is talking about it either, then don’t bring it up. But if they are talking about it, you'll look silly if you don't give them credit for what they do well, then articulate your own position/

And I think that’s a position people in real companies can live with.

Turning radicals into revolutionaries: the key to kick-starting your social strategy

by Charlene Li

In my work, I often find that companies eager to create a social strategy often struggle with how to get started. One of the key recommendations we have in the book is to find the spark, champion, and evangelist within the company -- the person who is most passionate about forming a relationship with your audience, be it customers or employees.

You probably already know who this person is within your organization. It may be the technie who brags that she's been blogging since 1999, or the corporate communications person who loves to talk with customers on external bulletin boards. This person is probably also a bit a thorn in the side of management, constantly agitating for under-represented customers who are suffering some sort of injustice at the hands of management that just "doesn't get it".

As Shel Israel and Robert Scoble put it so nicely in "Naked Conversations", these radicals constantly push against the corporate membrane, stretching it close to the breaking point.

Well, it's time to get these radicals turned into revolutionaries. Let me explain by telling the tale of two Thomas' -- Thomas Paine and Thomas Jefferson.

Thomas Paine wrote Common Sense in 1776, which advocated for American independence from Great Britain and stimulated colonial fervor toward independence. He was the spark that lit the American revolution. But Paine never really settled down and after the American Revolution was over, he headed off to France and its revolution, got thrown in jail and almost executed. Prominent Americans interceded and he was released to return to the US. Back home, he cast about for a role, but the revolution was over. He was a man without a cause, and when he died only six people attended his funeral. One obituary read, "He lived long, did some good, and much harm." Paine was a radical, agitating for freedom and challenging authority.

Thomas Jefferson, in contrast, was a revolutionary. A writer and scholar like Paine, Jefferson was chosen to write the Declaration of Independence. But it wasn't just his writing skills, but also his ability to forge compromise and consensus that won him the job. Through the hot summer of 1776, Jefferson worked with the Second Continental Congress to draft the Declaration. It took time and effort to put together the framework and the process to bring about the revolution. He forged relationships with the other members of Congress, and brought them to the table to sign the document. There was fear about the consequences, but the Founding Fathers leaned on each other for support. Jefferson went on to become the Governor of Virginia and third President of the US.

I tell these stories because companies are in the midst of a social revolution -- specifically, one being led by their customers and employees. The question becomes how do companies deal with it, but more importantly, how do they tap into the energy of potentially disruptive radicals and channel them into being revolutionaries who can lead positive, lasting change?

This was the gist of the speech I made at SXSW last week (slides are available). I believe that:

Making revolution stick will require frameworks and process

The POST method provides much of that framework and process. It's a blueprint, and starting point for the revolutionaries in your organization. They need to know that executives are bought into the process, and they need to know what the goal is. After that, I suggest that you let them do their thing -- stand back and watch them revolutionize and transform your organization.

Could the Social Network Create An Obama Win?

by Josh Bernoff

Months ago, I signed up for my.barackobama.com just to check it out. I've been getting emails from the candidate's people regularly, including notices about his appearances in Massachusetts, where I live. Yesterday I got one that started like this:

 

Dear Josh,

Yesterday, supporters all across the country responded to Barack's request by making more than 300,000 calls into crucial March 4th primary states.

We reached our goal of one million calls much faster than expected, so we're setting a new goal: 1,500,000 calls to voters by Tuesday.

Use our online phonebanking tool and start making calls right now:

http://my.barackobama.com/call

There's no easier or more effective way to keep building momentum for this campaign than making calls to likely supporters.

And there's no more important time to get involved than right now.

The primaries in Ohio, Texas, Rhode Island, and Vermont this Tuesday, March 4th, could be decisive for this campaign. Reach out to voters in these states, listen to what's important to them, and share your reasons for supporting Barack.

The online phonebanking tool is easy and fun to use. Here's how it works:

1. Choose a state you'd like to call.
2. Log into My.BarackObama.com and get a list of 20 names that only you will receive. (If you don't have a My.BarackObama account, creating one is fast and easy.)
3. Click on a name and you'll be led through a simple script, question by question.
4. Start making calls.

There's lots of talk in politics about "energizing the base." my.barackobama.com is the base for Barack Obama. I still feel there's a flaw in this social network of Obama supporters -- I've seen no evidence that Obama is listening to anything they say. But terms of taking a base of supporters and turning them into a force to accomplish your goals, this may be the most powerful example there is.

Meanwhile, Hillary Clinton is zooming all over Ohio and Texas, shouting herself hoarse. I know Obama is doing the same, and I know Clinton's people are engaged in plenty of get out the vote activity. But Obama has this asset: thousands and thousands (millions?) of volunteers he's never met, using phone banks he set up.

Some of those phone calls will be "off message" -- but many will also be passionate personal word of mouth. Could this make the difference?

And the question I really want to know. If Obama wins in November (or even if somebody else does), how could this technique be used to improve the work of government?

P.S. This post is about Obama's and Clinton's techniques, not their positions. Please think a moment before trying to post policy-based comments -- this is not the place to try to win people over to your candidate.

POST method report available for bloggers

by Josh Bernoff

Interested in our report "Objectives: The Key To Creating A Social Strategy?" The report describes the POST method in detail (see previous post).

I'll send a review copy to the first 100 bloggers to email me at groundswell@forrester.com.

Include your blog's URL with your email. Looking forward to hearing your take on this.

The POST Method: A systematic approach to social strategy

by Josh Bernoff

What do most companies do wrong when they enter the social world? No, it's not that they're being fake, or don't "get it." It's that they don't really know their objectives.

Is your company doing its social strategy backwards?

If you started by saying "we should do a blog" or "we should create a page on a social network" or "we should create a community" the answer is probably yes.

In any other business endeavor we start by figuring out what we want to accomplish. Social technologies are not magic. They accomplish things, too. It's time to stop doing social because it's cool. It's time to start doing it because it's effective.

To help clients with this fundamental idea, we invented a little acronym called POST. It's been one of the most popular ideas we've ever created, even though it's so simple and commonsensical. If you were at our consumer forum in October you saw it (and many of you who were there contacted us afterwards for help with your strategies). It's at the heart of our book Groundswell. Now I'm sharing it with all of you.

P is People. Don't start a social strategy until you know the capabilities of your audience. If you're targeting college students, use social networks. If you're reaching out business travelers, consider ratings and reviews. Forrester has great  data to help with this, but you can make some estimates on your own. Just don't start without thinking about it.

O is objectives. Pick one. Are you starting an application to listen to your customers, or to talk with them? To support them, or to energize your best customers to evangelize others? Or are you trying to collaborate with them? Decide on your objective before you decide on a technology. Then figure out how you will measure it.

S is Strategy. Strategy here means figuring out what will be different after you're done. Do you want a closer, two-way relationship with your best customers? Do you want to get people talking about your products? Do you want a permanent focus group for testing product ideas and generating new ones? Imagine you succeed. How will things be different afterwards? Imagine the endpoint and you'll know where to begin.

T is Technology. A community. A wiki. A blog or a hundred blogs. Once you know your people, objectives, and strategy, then you can decide with confidence.

This may sound simple to the sophisticated readers of this blog. But it works. Try it. Think your strategy through. Even if you're just clarifying your own strategy, this should help you explain it to your boss.

Or, feel free to ask us for help. it's what we do.

Thanks to all the bloggers who've posted after our presentations and encouraged us to get this out there.

UPDATE: Free review copy of the report to the first 100 bloggers who email me at groundswell@forrester.com with your blog's URL.

MySpace and Facebook launch new Advertising products, why Hyper Targeting, Social Ads and rise of the “Fan-Sumer” matter to brands

By Jeremiah Owyang, insight from Charlene Li and Shar VanBoskirk.  This is also being cross-posted on the Jeremiah's Web Strategist Blog and the  Forrester Marketing Blog. 

Executive Summary
Both Facebook and MySpace have launched profile and network targeted advertising and marketing products. As they both use member interests and the communities which they are part of, trust continues to become key in adoption as information is passed along the network. The sheer size of MySpace’s member base, as well as the thriving local business membership will lead to success. Facebook, which brings a unique solution evolves advertisements to endorsements and encourages members to subscribe to a brand in what we are calling “Fan-Sumers” (an evolution of the consumer). As consumers share their affinities, brands can advertise using trusted social relationships.

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Data: Highest trust comes from friends or acquaintances

(Left Graph: Consumers trust their friends and acquaintances far more than any other sources –Report: Leveraging User-Generated Content, 2007)

Trust is and will continue to be one of the most important attributes in the decision making process. 

Communities form online, trust develops
How we get information continues to evolve as communities form online organized by individuals with similar interests. Just like in real life, we identify our interests, and are often influenced by opinions and experiences of trusted peers in our communities. For many, social networking sites embody these relationships and influence how trusted decisions are made.

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MySpace: Brands have a home and can hyper-target ads
The already active MySpace platform is leveraging their already active member profile pages, encouraging the many small and medium businesses to setup a online storefront and providing tools to make it easy to self-serve advertisements to their customers. It’s easy to make the case that demand and inventory are present.

[Brands can now self-serve a targeted marketing and advertising campaign within the already thriving MySpace community]

Webmaster not needed: MySpace profile for businesses
Small businesses can continue to build their online profile on MySpace (many of them already have), but now, because of their familiarity with self-marketing (restaurant, nightclub, and other local businesses and their customers) on Myspace.

Self-service ads remove middle man
When friction is removed, efficiency is created. With MySpace’s “Self-Service” ad network small businesese can target ads across a variety of affinities (over 300) and deploy ads on users’ profile pages. These ads, which should (by theory) be relevant and contextual to a user who has self-populated their profile page will have these ads displayed.

Advertising balance required in already busy MySpace
With marketers already with a strong presence in MySpace this could continue to erode away at early adopter “cool kids” from embracing MySpace. But as cycles have shown, where communities form, marketers follow.

User experience continues to be free-form
These ads, which will conform to IAB advertising standards (sizes) will give advertisers the freedom to create the ads in the style accustomed to the network. Yes, expect more blinking text.

To watch: OpenSocial
As OpenSocial starts to be deployed across MySpace and other partners, expect profile ads to be tied to widgets and vice versa; a fabric of links. I’ve already outlined How to explain OpenSocial to your executives.

Inaccurate user profiles could result in mis-targeting of ads
We know that many members do not make their profiles accurate which could yield inconsistencies in how and where ads are displayed. While MySpace has assured they’re accounting for rogue outliers, expect some inefficiencies in advertisements.

Our Call: Sheer mass will yield success
We think this to be a win for MySpace, given their great reach, there are millions of users with active profiles, and there’s also plenty of inventory as many small and local businesses that are present will be comfortable deploying ads where their community already exists.

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Facebook: Rise of the Fan-Sumer
Going beyond just profile matching of advertisements, Facebook allows consumers to self-identify with brands and becoming fans. In turn, brands can use these “Fan-Sumers” as endorsers to their own trusted networks, resulting in trusted word-of-mouth. Brands can also self-manage their own campaigns, and there’s some unique opportunities for eCommerce widgets or applications to be part of this formula.

[Using Facebook, consumers will publicly endorse brands, resulting in the birth of the “Fan-Sumer”, causing efficient word-of-mouth marketing in their trusted network]

There are three major components to today’s announcement, they include the following:

1) Facebook Pages: Brands get their own profile
For the first time, businesses will legitimately be able to setup profile pages, much like MySpace’s business profiles feature. Next, Facebook members will add these brands as ‘fans’ (much like friends) and this will produce a connection between the parties. Members will self-identify with brands in what we are calling “Fan-Sumers”. Furthermore, this service, called “Beacon” gives third parties the ability to share information on the newsfeed and provides lots of unique opportunities. Sponsored groups will start to evolve into this new form brand profile as this system gets adopted.

2) SocialAds: Endorsements at the friend level lead to eCommerce
Once a member has indicated they are a fan of a brand, that brand can choose to purchase SocialAds (from Facebook Sales or via a self-service platform). A unique endorsement of a product or brand will now appear on that individuals news feed or banner or skyscraper ads. Advertisers can purchase social ads target by profile demographics and profiles, as well as by activities done in Facebook. Payment is an auction-based system available to marketers via both CPM and CPC pricing.

3) Use “Insight” for control and flexibility
This self-service dashboard called Insight gives the marketer detailed knowledge how their advertising campaign is working on Facebook. It’s expected that advertisers will have flexibility, control over the type of ads they deploy, in what quantity, and the demographics they want to target.

A likely scenario:
Shauna, who enjoys Revlon products, indicates she’s a fan of the brand and becomes a Fan-Sumer. Marketers at Revlon can then purchase SocialAds, which will then display on Shauna’s newsfeed or on ads on her profile. If Shauna purchases Revlon makeup from Amazon, her newsfeed could indicate an eCommerce links recommending it to her 100 trusted friends, resulting in further sales.

[The traditional marketing funnel as we know it is distorted; endorsements are now passed from trusted customers to prospects, not direct from the brands themselves]

Implications for Facebook:

Members have more control over ads
Facebook users can opt to turn off social ads, and friends of that user can ‘dial down’ endorsements they see using preferences. We believe that Facebook is attempting to respect the rights of users by giving control to members to ‘opt-in’ to become a Fan-Sumer.

Quest for Fans will cause brands to beg
Since social ads only work if a member has indicated they are a fan, brands will be working to earn and buy fans to accept them as members. Expect a lot of noise to be generated from this activity as brands run campaigns to encourage members to add them as fans through discussion boards, banner ads, and special offers.

Hard to qualify a “business”
Facebook is limiting these features to ‘real’ businesses and organizations. Expect an entire team to be crawling and dealing with this qualifying the issue. As recent member accounts have been disabled from Facebook, expect businesses and organizations to encounter same issues.

Limited ad supply to raise prices
Because Facebook members will see only two social ads per day, we expect the supply of ads to be in scarce supply and thus raising prices and not matching the value. This could shift ad buying to large brands who have experience buying and managing search and direct response ads.

Our Call: Brand affinity leads to community endorsements and more trusted marketing.
We see this as a win for Facebook, this highly targeted system isn’t just about web advertising but about brand affinity and hooks into what’s really important, trusted endorsements from people in a network. This truly is the next generation of advertising. Facebook tells us that the worst case it will be 2 times click through rate over the performance of (existing is 4-26%)

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Next Steps For Brands

Experiment: Because of the control and flexibility, we recommend to brands that are currently on either of these social networks to experiment and test.

Learn how to efficiently manage your campaigns. There’s clearly a trend towards self-service, which provides efficiencies for both businesses and the platforms.

To know: Marketing has changed, advertising is no longer a sole-solution. Marketers must also learn how to be part of communities, engage with them, and be part of the conversation.

To know: Marketing is now distributed, brands must embrace communities where they currently exist, rather than solely driving them to their corporate website.

[While traditional search advertisers like Google and Yahoo match by keyword, My Space and Facebook match on something far more powerful: people and their relationships]

This digest not only explains what is happening, but why it matters to you. If this was helpful, please pass it on. Love to hear your thoughts, please leave a comment, even if you don’t agree.