Online Real Estate Technology

6.7% of all US online ad spending to go toward social networks this year

Social network advertising is getting renewed attention in 2010. The US’s gradual economic recovery, combined with marketers’ incessant focus on reaching consumers in social media, has led companies to make big increases in social network ad spending in the first half of 2010.

eMarketer estimates US advertisers will spend $1.68 billion on social networking sites this year, a more than 20% increase over 2009. Spending will rise even further by 2011 to more than $2 billion.

In December 2009, eMarketer forecast $1.3 billion in social network ad spending for 2010. Strong performance from online ad spending in general, and Facebook in particular, has resulted in the increased forecast.

Facebook will receive half of all social network ad spending in the US while MySpace continues to diminish in importance. Twitter, which finally launched its ad business earlier this year, is incorporated into eMarketer’s forecast for the first time. While spending on the microblogging service will be low in 2010, the potential for 2011 and beyond could be dramatic if it proves that its “resonance” model of measuring advertising effectiveness works.

Spending on social network advertising will grow even more quickly elsewhere in the world. In 2010, eMarketer estimates just over half of social network ad spending worldwide will come from the US, but 2011 will bring a reversal in that proportion.

Another important development in the social network space is the role of online social games and applications. Advertising is not a primary revenue stream for game companies such as Zynga or Playdom, but their large audiences are drawing the interest of marketers. eMarketer expects such companies will attract $293 million in spending worldwide in 2011, up from $220 million in 2010.

Daily users comment and upload content at least twice as much as average

eMarketer estimates there are 26 million monthly users of Twitter in 2010. That makes users of the microblogging service a relatively small minority of internet users, at 14.6%, and daily users are naturally even fewer in number. But their voice is disproportionately loud.

According to ExactTarget, daily Twitter users are highly active across the social web. They are about three times as likely as internet users on average to upload photos, four times as likely to blog, three times as likely to post ratings and reviews, and nearly six times as likely to upload articles.

They create, share and comment on content at high rates, making them valuable to marketers for much more than their potential influence on Twitter alone.

“Consumers active on Twitter are clearly the most influential online,” said Morgan Stewart, principal at ExactTarget’s research and education group, in a statement. “What happens on Twitter doesn’t stay on Twitter. While the number of active Twitter users is less than Facebook or email, the concentration of highly engaged and influential content creators is unrivaled—it’s become the gathering place for content creators whose influence spills over into every other corner of the internet.”

ExactTarget also explored Twitter users’ motivations for following companies and brands on the service. In a deeper drilldown into consumer sentiment than previous research has conducted, the April 2010 study supported the general findings that microbloggers have many reasons to follow brands they like. While discounts and sales are toward the top of the list, finding out news and information about the company and its products come out ahead.

According to 360i, 75% of marketers’ tweets are informational, suggesting brands are responding to what consumers want—though they largely neglect to participate in conversations. Such deeper engagement might help them harness the power of frequent Twitter users across their other social activities as well.

Twitter followers are most interested in receiving information about a brand or extra value, according to a new study from digital marketing firms ExactTarget and CoTweet.

Followers Want Return for Following
“Subscribers, Fans and Followers: Twitter X-Factors” indicates the largest single percentage of Twitter users who follow a company, brand or association on Twitter are motivated to do so by a desire to get updates on future products (38%). Another 32% want to get more information about the activities of a company.

Following these two informational reasons, the next-highest percentage of Twitter users follows a company to receive discounts and promotions (31%). Thirty percent want to get information on upcoming sales, and 28% want to receive “freebies” such as coupons and samples.

Most of the other reasons for following a company on Twitter have some type of informational aspect (such as learning more about a company, 25%, and learning about company topics, 14%). Viral marketers have some work to do, as only 23% want to show support of a company to others and only 20% want to interact with a company.

The most popular reason to follow a company on Twitter with no direct informational or financial benefit is for fun and entertainment (26%).

Daily Twitter Users Contribute Socially
While a relatively low percentage of Twitter users follow a company to spread its praises, daily Twitter users are highly social in terms of general online information-sharing. For example, 80% of daily Twitter users comment on photos and videos, compared to 38% of other consumers.

Similar wide disparities exist across a range of online social activities, with notably high percentages of daily Twitter users engaging in activities such as uploading photos (76%), posting to forums (75%), blogging (70%), and posting ratings and reviews (61%).

Engage Daily Twitter Users
ExactTarget says the key to successfully integrating Twitter into overall marketing strategy is to not approach this channel as a way to maintain direct relationships with the majority of customers. Instead, ExactTarget advises companies commit to serving customers who do use Twitter on a daily basis. They control and influence the content that others are reading about a brand—which can directly impact the bottom line. And if marketers use Twitter appropriately with this important audience, they can add depth and character to customer relationships.

Twitter Has Higher Global Reach for Women
Twitter has a marginally higher reach among women than men globally, according to a new study from comScore. “How Women Are Shaping the Internet” indicates that despite Twitter’s status as a new technology, which is typically tried earlier by men, on a global level, more women are using Twitter. Among all women age 15 and older, Twitter had a reach of about 7% in April 2010, compared to a reach of roughly 6.5% among men age 15 and older.

In the US, Twitter’s reach has followed a less consistent pattern, with Twitter’s reach among men slightly less than 12% in April 2010, fractionally higher than its reach among women.

Online channels most effective—especially when rigorously measured

Lead generation budgets were slashed by many companies in 2009, but now that the economy is on the uptick again, dollars are flowing and acquiring new customers is a priority.

According to the “2010 Lead Generation Optimization Key Trends Analysis” from CSO Insights, more than 91% of companies worldwide reported increasing new customer acquisition was one of their top strategic marketing objectives for 2010.

Based on the quantity and quality of leads generated, companies said email was their best lead generation program, followed by live events, website registrations and webinars. The effectiveness of online channels, coupled with the fact that prospects indicate the web is the first place they look for more information, makes it natural for companies to be increasing their investments in web design, email marketing and search engine optimization.

Investments in new media are also on the rise, even if it remains less effective than more traditional channels.

At the same time, the web was the area companies were most likely to say needed improvement in its ability to execute lead campaigns. For many marketers, there has already been significant improvement: 51% said the web did not meet expectations in 2010, compared with 68% who said the same in 2009.

In addition, marketers’ ability to measure their own success affected whether they thought the web was an effective channel. Among those companies that had not adopted a lead generation management system, 65% were dissatisfied with the performance of web-based lead generation efforts. But among marketers that did have a system in place to track leads, only 37% agreed—putting the web on par in effectiveness with traditional media advertising and ahead of direct mail or telemarketing.

“As more lead generation efforts shift to the Internet, tools to help develop, execute, and track campaign effectiveness will become a ‘must have’ rather than a ‘nice to have,’” said the report.

The Baby Boom Generation is still responsible for a substantial portion of consumer spending and is technologically sophisticated, according to new data from The Nielsen Company.

Boomers Spend 38% of CPG Dollars
An estimated 78 million Baby Boomers, defined as those born between 1946 and 1964, currently reside in the US. This population segment spends 38.5% of CPG dollars. Yet it is estimated that less than 5% of advertising dollars are currently targeted towards adults 35-64 years old (which includes the latter half of Generation X, those born between 1965 and 1976, in addition to Boomers).

With most marketers generally targeting 18-49 year olds, more than half of the affluent Boomer demographic is ignored entirely. It is worth noting that Nielsen data shows Boomers dominate 1,023 out of 1,083 consumer packaged goods categories.

Boomers Watch TV, Employ Technology
Boomers watch one-third of all TV content consumed in the US. In addition, defying stereotypes of older people being out of touch with technology, Boomers:

• Watch the most video: 9:34 hours per day.
• Comprise one-third of all online users, social media users and Twitter users.
• Time-shift TV more than 18-24-year-olds (two hours and 32 minutes a month compared to one hour and 32 minutes a month).
• Are significantly more likely to own a DVD player.
• More likely to have broadband internet access at home.

Boomers Have Similar Web Tastes to Younger Adults
Baby Boomers have similar tastes in internet sites to adults aged 18-34. Of the top 10 sites favoured by 18-to-34-year-olds, eight are shared by Baby Boomers. Both demographics rank Google and Yahoo as their top and second-favourite sites, respectively. Baby Boomers rank Bing third and Facebook fourth, while 18-to-34-year-old reverse this order of favouritism.

The two sites Baby Boomers rank in their top 10 which 18-to-34-year-olds do not are Ask.com (ninth) and Amazon.com (10th). In comparison, 18-to-34-year-olds differ in their preference for Fox Interactive Media (eighth) and Apple (ninth).

Pat McDonough, SVP, insights, analysis and policy at the Nielsen Company, said Baby Boomers should be as desirable for marketers as Millennials (ages 15-32) and Gen-Xers (ages 33-44). “As the US continues to age, reaching this group will continue to be critical for advertisers,” said McDonough.

Boomers like Savings Tied to Spending
In previous analysis, Nielsen advised that Baby Boomers tend to be big spenders who like monthly or quarterly cash-back savings programs that reflect spending levels. The upsell can be pursued into prescription medications, insurance, gifts for grandkids and kids, entertainment, travel, even discount wines by the case.

In addition, Boomers are big online shoppers, comfortable using email and messaging to stay in touch. Twitter is a huge untapped outlet for reaching Boomers, who increased utilization 469% during 2009. Reach one and you can reach their entire follower base with product info and special offers.

Most of the attention in the online video space has focused on either media content and consumers or marketers and video advertisements. But companies continue to push further into this realm with non-advertising content.

Recent studies have shown that growing numbers of retailers are adding video capabilities to their sites. Surveys of Fortune 500 companies also indicate a broad-scale increase in the use of video for marketing purposes. In this sense, video has gone from a luxury to a near necessity for companies seeking an edge in marketing their products. From home-goods merchants to automobile manufacturers, companies across a wide spectrum are finding ways to use video in their marketing efforts, and consumers are embracing—sometimes demanding—these changes.

Retail is a sector where online video is becoming more important for driving sales. When asked by Multichannel Merchant to identify rich media features that they used, 46% of US multichannel retailers picked video, making it the highest-ranked category in the survey. Another 42.3% of respondents said they planned to add video capability in the next year.

Several studies point to increased use of video by US companies. According to Forrester Research, the percentage of the top 50 US online retailers that offer videos on their sites skyrocketed to 68% in 2009 from 18% in 2008.

Marketers are on board with more than just ecommerce applications, as well. A study led by the Society for New Communications Research noted 31% of Fortune 500 companies with public-facing blogs used video blogging in 2009, up from 21% in 2008.

Ad-ology asked US marketing executives whether they would increase, decrease or make no changes in their 2010 marketing budgets for social and traditional media. Nearly 27% said they would increase their online video budgets for viral clips and podcasts, while 5.5% would decrease their budgets. Out of the remainder, 41% would leave the budget intact and another 27% said they did not use video. These responses put video ahead of mobile marketing and search optimization as budget priorities for US marketing executives.

As eMarketer’s Tobi Elkin noted in the report “Consumer Packaged Goods Sector Taps into Online Video,” “Creating an online video presence helps marketers facilitate an ongoing dialogue with consumers, boost brand equity, lure prospective customers and solidify support among brand loyalists.”

On the receiving end of these marketing efforts, consumers are accessing increasing amounts of video on multiple platforms, from laptops and home PCs to smartphones and tablets. As these devices continue to penetrate the market, consumers will expect ubiquitous access to video content. Examples might include watching product videos at the point of sale or viewing a portion of a podcast on a PC and resuming the session on a tablet. Marketers are aware of the potential and are upping their game in a variety of sectors.

Smaller companies most successful at social acquisition

While many marketers struggle with how to measure social media marketing return on investment, some businesses are finding at least one hard metric where their efforts have paid off—customer acquisition.

According to a February–March 2010 survey from office services firm Regus, smaller companies see the most success, with nearly half of small businesses around the world having acquired a customer through social networks. Large companies were less successful, but more than a quarter had seen social success through customer acquisition. This was despite large companies being more likely to devote budgets to social marketing.

The survey of senior managers and business owners from around the world found customer acquisition varied by country, with the US coming in the lower half of the pack. Overall, 40% of businesses studied had acquired a customer through a social site, but only 35% of US businesses said the same.

“While the most popular function of these networks remains that of keeping in touch with contacts, businesses are also successfully acquiring new customers, supporting their retention efforts and interacting with customer groups,” said Sande Golgart, vice president at Regus, in a statement. “Organizations who have not yet ventured into the world of social networking may be missing out on sizeable business opportunities.”

In January 2010, Hubspot found that more than 40% of companies using social media marketing had acquired a customer through the channel. The Regus survey, which was not limited to businesses using social marketing, suggests that number may be slowly climbing.

Mobile marketing is not just for smartphones

Though smartphone shipments are rising and expected to surpass shipments of feature phones in 2011, according to Morgan Stanley, feature phones are still the devices in the hands of most mobile users. An April 2010 ExactTarget study found 58% of all US internet users ages 15 and older had one, compared with 31% who had a smartphone.

That means a large swathe of mobile users cannot be reached by more sophisticated mobile marketing efforts like sponsored apps, in-app ads or campaigns on the mobile web. According to location-based advertising network 1020 Placecast, opt-in text alerts are the smart way to target a fuller mobile audience.

A May 2010 survey conducted for Placecast by Harris Interactive found that while most mobile users still have not signed up for any text alerts, there was a small rise in interest since a similar poll in 2009: 28% were at least somewhat interested in the alerts, up 2 percentage points, and 8% were extremely or very interested, up 3 percentage points. For under-35s, interest was significantly higher.

Those who wanted the alerts were most interested in coupons and promotions from grocery stores and restaurants. Respondents who had signed up for text alerts said it made them more likely to visit the company’s website (34%), visit the store (33%) and purchase the product being promoted, either in online (28%) or in the store (27%).

Many agreed that making those text alerts location-based, so that recipients would get the right offer at the right time, could make the channel more useful or interesting.

While awareness of location-based text alerts is still building, there is the potential to reach a broader audience than with check-in apps such as foursquare or Gowalla, which are designed with smartphone owners in mind. And despite negative attitudes of many mobile users toward SMS marketing, Placecast reports low opt-out rates among recipients.

Consumers do want relationships

The social networking audience in the US has reached critical mass. eMarketer estimates that 57.5% of all US Internet users, or 127 million people, will use a social network at least once a month in 2010. By 2014, nearly two-thirds of Internet users will be on board.

Marketers have been chasing this audience for several years, but the question remains: Do consumers notice, or care?

“Those who still think that social network users are too busy engaging with friends to notice marketers must change their viewpoint,” said Debra Aho Williamson, eMarketer senior analyst and author of the new report “Brand Interactions on Social Networks.” “Brand interactions are real, valuable and growing. “

According to a February 2010 survey by Chadwick Martin Bailey, a market research firm, 33% of Facebook users have become fans of brands on the network.

Another survey, by Edison Research, found that 16% of social network users had friended brands there. And half (51%) had done so on Twitter.

Coupons remain a leading driver of brand interactions in social networks. Learning about sales and new products is also a strong motivator for people to interact with companies in social media. Beyond the tangibles, such as coupons, consumers do gain positive feelings about a brand as a result of their interactions.

Still, social networks are not seen as primary research sources when consumers are looking to buy. Although people are very inclined to take advice from friends and family about products they are interested in, they are not nearly as likely to seek out their social network friends when they are researching online.

According to a study by PowerReviews and the e-tailing group, only 3% of online buyers said they sought recommendations from social network friends first, compared with 57% who started with search engines.

“More than half of all Internet users now use social networks, and the percentage of social network users who talk about companies, either in organic conversations or on branded company pages, is growing,” said Ms. Williamson. “Consumers do pay attention and they do value positive interactions with companies.

“But while people trust their friends for advice and use social networks as part of their research process, social networks are long way from replacing search, if they ever will, as a source of information leading to a purchase.”

Business-to-business (B2B) companies are participating in the social space, but they are not yet as engaged as their business-to-consumer (B2C) brethren and face greater internal obstacles, according to a report from digital marketing agency White Horse.

Comparable numbers of B2B and B2C marketers were not doing any social marketing at all, but business-oriented firms were much more likely to say they had social media accounts but little marketing activity.

One reason: More than one-third of B2B marketers surveyed said there was low executive interest in social media in their company, compared with 9% of B2C marketers who said the same. Overall, about one-quarter of corporate marketers told White Horse they needed to learn more about social media to justify investment in the space, but the issue was more pressing for B2B respondents.

Fully 46% of B2B respondents said social media was perceived as irrelevant to their company, while only 12% of consumer-oriented marketers had the same problem. B2Bs also reported a much greater preference for traditional marketing tactics.

There was also a large disparity in the proportion of B2B marketers who said they were not measuring social success at all, at 34%, versus just 10% of B2C respondents.

Other studies have shown that B2B marketers are more effective at measurement because they focus on outcomes that matter to their bottom line, such as lead generation.