Thursday, April 24, 2008

Consumers, Social Media, and Customer Care

Today’s consumers gain more and more power, and marketers have to adapt. As the new technologies are evolving at a great speed, companies have to constantly look for new opportunities and change their marketing strategies accordingly. There was a time when having a successful website was enough, but not anymore.

Word-of-mouth has always been important, and its importance is growing now as social media gives the opportunity for happy and unhappy customers to speak up. They can convey their messages about long queues and high prices in the Nokia Care Center not only to their best friend, mum and a bunch of co-workers (the number of people depends on how long they had to queue) but to much larger audiences. Social media is free, convenient and enabling. It allows one to influence the others, and sometimes we don’t even realize how big this influence is. That is why so many brands are turning to relationship marketing now, trying to establish a dialogue with consumers.

A lot of people use social media not only for self-expression, but for research. The Society for New Communications Research is conducting a study “Exploring the Link Between Customer Care and Brand Reputation in the Age of Social Media”. The initial findings allow to state that a vast amount of consumers use social media to share customer care experiences and research companies’ customer service reputations.

More than 300 people participated in survey in February-March. The results show that 72% of respondents research companies’ customer care online prior to purchasing products and services at least sometimes, 74% choose companies/brands based on others’ customer care experiences shared online, 81% believe that blogs, online rating systems and discussion forums can give consumers a greater voice regarding customer care. When customers were asked which companies have used social media better than others, Dell and Amazon were the winners.

I see these findings as very important for the companies to look at. Brands can’t avoid listening to consumers. In order to have a better reputation, they need to provide better support to customers, communicate with them and understand their needs – both online and offline. Otherwise they risk not only losing a few customers in a short term, but possibly undermining consumers’ trust in their brand in a long term.

Monday, April 21, 2008

Internet Marketing for Luxury Brands: Good or Evil?

Today Internet is a medium used by the majority of the global brands as an indispensable marketing tool. Its multiple benefits make it look like a panacea for the marketers’ problems. Still, some of the well-known brands consider online marketing damaging to their image. Those are luxury brands. Luxury goods have a rarity value which makes them more desirable, while Internet is available to the masses seeking a bargain.

Luxury designers invest heavily in retail outlets which play the most significant role in the overall luxury buying experience. Physical surrounding and personal attention of luxury stores continue to remain important to the customers, while online shopping is seen as being to mass and not exclusive.

Few of luxury brands such as Prada, Bulgari, Burberry, Gucci, Louis Vuitton, Bang & Olufsen, Tiffany's, Chanel sell their goods directly online. Real luxury brands don't have successful websites. They look like shiny brochures, take a lot of loading time and lack functionality. I am not sure about the peacefulness of my dreams tonight after seeing the image on the index page of Prada website.

Yet, few companies, such as LVMH (Mo√ęt Hennessy - Louis Vuitton) realize the importance of their online presence. LVMH owns the E-Luxury site on which it sells most of its brands augmented with selected products from other high fashion brands. Still, instead of using any of its brand sites for the online selling, the group has set up an independent site, with an unconnected brand.

While most of the luxury brands keep ignoring the Internet, the demand for global luxury online sales is on the increase. Recent reports indicate that the wealthy are almost all online and are pleased with making online purchases. Therefore, even considering that online shopping is much less fun than traditional, there's no reason not to use the Internet to share information about the brand and create desire. Internet marketing for luxury brands could be an opportunity to reinforce the brand as it exists in offline world stores.

Image: Bulgari website

Sunday, April 13, 2008

Online Behavioral Advertising: How Much Privacy Do We Need?

Imagine that one day you go to visit your friend who’s just bought a new coffee machine. The coffee it makes tastes really good, and on your way home you start thinking that it could be a good idea to get one for yourself as well. But being an outstanding individual you don’t want to buy the same one as your friend has. So the next day at work (during the lunch break, of course) you Google ‘coffee machine’ and get overwhelmed by the variety of choice. Struggling to make up your mind you go to the Yahoo’s page to read a horoscope/rugby news headlines, and there it is, in the right hand-corner, the perfect coffee machine for just 99.99$!

That is not a miracle. That is online behavioral advertising (OBA), the tracking of consumer’s activities online – including the searches the consumer has conducted, the web pages visited, and the content viewed – in order to deliver advertising targeted to his individual interests (definition of Federal Trade Commission). Behavioral advertising is opposed to contextual advertising, and proves to outperform it by upwards of 10 percent.

Yet, at least in the USA, 60 percent of consumers are uncomfortable with web sites using data about their online activity to customize advertisements or content based on their interests. Behavioral advertising allows very precise targeting, provides more relevant ads to consumers, but they also may pose data security and privacy threats.

This week Network Advertising Initiative (NAI), a cooperative group of online companies engaged in the practice of online behavioral advertising, released its proposed guidelines for its members to follow when engaging in behavioral targeting. The group members include Advertising.com (an AOL company), Atlas (a Microsoft company), BlueLithium (a Yahoo! Company), Doubleclick (a Google company), Mindset Media, Tacoda (an AOL company), Yahoo!. The document was passed in response to principles proposed by the Federal Trade Commission last year.

NAI states that all the limitations to OBA should be carefully considered, as ‘the great diversity of content and services on the web is predominantly powered by advertising’ and that OBA ‘does not result in more advertising, but creates more relevant advertising’.

The guidelines outlaw targeting ads to children under the age of 13, using information about certain medical conditions (HIV/AIDS status, psychiatric conditions, abortion-related), or certain personal life information (sexual behavior).

The association also published a list of other topics that are potentially sensitive, which has been widely debated (age, addictions, pregnancy, race identification, death and others). Each company will decide, whether it is appropriate to use this information or not. But as Saul Hansell points out, ‘what sort of technology is needed to display advertising to potential customers afflicted by “death” goes unexamined in the document’.

It is understandably hard to define which data should be restricted. I value the benefits of OBA, but as a consumer I still want my life to be private. To my mind, these guidelines and rules of FTC are definitely good initiatives. But the further concern – is it enough to have just a voluntary self-regulatory code of conduct?

Image source: http://www.pigseye.com/hj/foreign/italy/masks.jpg

Tuesday, April 8, 2008

What the World Needs Is Zero?

As it was stated in Computer-Human Interaction Conference in Vienna back in 2004, ‘blogging is the latest form of online communication to gain widespread popularity and it is rapidly becoming mainstream’. Well, there are no doubts that today it IS mainstream already. Blogs in their current format emerged around 1997, and today, according to Technorati’s State of the Blogosphere report, we have an almost unlimited choice of blogs for our Readers, which amounts to more than 70 million, with 120.000 new weblogs created and 1.5 million posts written each day. So there’s little surprise that companies find blogging to be a very useful tool in their marketing campaigns. They use blogs as a new communication channel, providing an opportunity to inform their customers about their products and services worldwide and to receive feedback.

I am going to write more about how particular brands use this web phenomenon in the next posts. Today I just want to focus on one example, a controversial one, offering something to learn for the marketers. Enough about Pepsi, let’s talk about Coke for a change. Yes, Coke. Zero Coke. In 2005 as a part of a massive campaign in Australia Coca-Cola launched The Zero Movement blog. Oh, it’s awesome. Just have a look at it. The writer is apparently a young man in his 20s, depressed by working in a ‘cubicle’ under unbearable pressure. One day he wakes up (well, I think it happened just after he woke up, or, more likely, he was still dreaming – as such ideas come up only in the wildest dreams) and decides that ‘what the world needs is ZERO’. For real. I’m serious. ZERO = POWER. ‘Why do I have to act my age?’, ‘Why can’t a lunch hour go all day?’, ‘Why can’t guys…?’, and, of course, ‘Why can’t you have real taste and zero sugar?’. The comments to these posts are even smarter and look so real: ‘Coke Zero tastes really nice’ , ‘thank you Coke Zero... you made my life worth living!!’. You don’t have to wonder why this blog was widely criticized in press. The desire to connect to the target audience was apparently too strong here.

This blog got a lot of publicity, even more with the creation of The Zero Movement Sucks blog, criticizing Coke’s online spamming. But, of course, the campaign was planned with the intention to be controversial. The TV commercial they initially used in Australia was banned. Coke had to comment on ethics of its activities. Still, this campaign resulted in Zero Coke being the most successful new product launch in Australia retail history. Was Coca-Cola sure about its success? I think it might have failed just the same. But apparently well-calculated risks are worth taking if you want a success in marketing.

Thursday, April 3, 2008

Pepsi's Social Media Marketing: Wanna Play?

Some of you have probably already heard that PepsiCo International, a company with revenues more than $39 billion, is going to launch a social networking site focused on football later in April starting from Europe. The Beta-version of Pepsi Youniverse is already available for football fans, allowing to create your Visual DNA and compare it to those of big football stars like Lampard, Henry, Messi, Ronaldinho, and, of course, Beckham. The Visual DNA is an Imagini Holdings Ltd invention – it is a personality test, you have to answer the questions by choosing the appropriate images to get your psychographic description. Pepsi Youniverse’ Visual DNA describes what type of a football fan you are, using questions like ‘The best thing about being a footballer is…’. My closest match, according to this test, is Lampard, and football is definitely a huge part of my life (they don’t ask you whether you’re interested in it or not, it is assumed that you are). After launching this site Pepsi plans to create even more networks, focused on music and ‘hopes and dreams’.

There already exists another Beta-version (I am surprised how it’s got through the alpha test, though) which I personally find more interesting, but of which almost no one heard about (at least Google search makes me think so). It is another Pepsi social network targeting specifically the Pepsi Max drinkers. I liked it a lot not only because I had to choose what type of man I am (Visual DNA again), select the contents of my car and then select my gender (female, what a surprise), but because it lets you merge your email (whether you use Gmail, Yahoo or Hotmail), other networks (Facebook, Flickr), RSS subscriptions, and that’s not the whole list. It also includes space for blogging, digital storage, videos, and standard social networking site options. And as we are using more and more different sites, with even more appearing almost every day, merging it not a bad idea at all.

But let’s get back to Pepsi: all these networks could definitely become very powerful research and marketing tools. If people do really need them. How many teenage football fans and for how long would be amused by comparing their personal profiles to Ronaldinho’s? Are these investments going to pay off?