Why I Like "the Like"

by Shirley Pechthold

A recent study was conducted by Napkin Labs (a Facebook app developer) to measure the effectiveness of a brand’s Facebook page. Through an investigation of over 50 brand Facebook pages, the study concluded that only6% of the people who “liked” the page actually interacted with it (in terms of likes shares and comments). Furthermore, the study concluded that the interaction of the majority of the 6% was only once every eight weeks. Napkin Labs assessed that brands need to focus more on maintaining their relationships with “superfans” who interacted much more than the average. They also suggest that brands should focus less on achieving a high number of likes for their page, and focus more on creating more likes and comments by the already existing fans.

I think that that the conclusions of this study are important. After all, marketers have long known to focus on the most valuable customers. Yet, this study seems to be missing a critical component of a "like" and its relation to a Facebook brand page. 

Awareness building is expensive

Of course, it's true that a brand that has built a Facebook page is using that social community page to build relationships. That being said, the value of a Facebook page is not only to stimulate a track-able response via likes and comments (i.e. the outcomes of a relationship), but also stimulates awareness of the brand. By being "liked", the brand's identity is exposed to other Facebook users. Suggesting that there is no value to this exposure, is like saying there is no value to a brand logo being displayed on the boards at a hockey game. Yet, the market indicates that this exposure is worth a lot of money. Exposure of a logo on 8 feet of boards of the blind-side (non-camera side) of an NHL game is about $30,000 for the regular season home games.

But wait- there's something else too. When someone likes a brand’s Facebook page, news and updates are presented on their newsfeed from the brand. For me personally, I liked on Facebook a lot of clothing brands. When I open my own Facebook page, I get to see the brand's new products and hear firsthand about the brand's promotions. Often, these links will lead me outside of the Facebook environment to the brand's website (where I have made purchases). Other times, however, I will be linked to the brand's Facebook page (where I have made purchases). I assume that the brand can track how many clicks were generated off of this news update, and in turn measure how many purchases were made. But the research presented done by Napkin Labs zeros in on the Facebook environment.

The conclusion that I am drawing is this: Marketers ought to "Like" a  Facebook "Like" a lot more than Napkin Labs would have them believe!

The Battle of the Beauty Brands

by Bianca LaBelle

Blogs, social network sites like Facebook, and “microblogging” platforms like Twitter are technologies that facilitate communication, sharing and collaboration. They make information travel further and faster. These are the tools that empower individuals and explain the growing number of overnight phenomena in the world. It’s hard to imagine the Arab Spring taking hold without Twitter; Kony rise to notoriety without YouTube, or breast cancer awareness skyrocketing among youth without the “I like it on…” Facebook handbag campaign. Here’s a big reason why these tools are so effective: they give individuals the power to share information with friends and other like-minded individuals. Consider this simple question: how would you prefer to absorb information - from an ad - or via dialoguing through a community centered around a brand you are interested in? Companies recognize how powerful these tools are- and the benefits that can accrue from them. If a company can harness the “social networks” then they have an army of customers who act as their marketing departments!

Like many women, I love cosmetics and keep up-to-date with the online world of beauty-via the beauty community on YouTube. It's through this community that I interact with, and share my passion for brands and their products with other cosmetic lovers around the world.

While catching up on beauty blogs one day, an interesting discussion arose in the community forum: Which cosmetic brands have the biggest online followings? I decided to investigate this question beyond which the members that the community forum had. This question is particularly interesting because it also leads to other insightful questions: Do higher end brands have more followers because of their aspirational nature? Do more youthful brands have more followers because the online world skews to younger audiences? Would the best selling cosmetics brands in the world (L’Oreal/Estee Lauder) have their sales leadership extend into the online community world? To gain some perspective, I tracked mainstream cosmetics brands (L’Oreal, Maybelline, Revlon, Covergirl, Rimmel) and higher end brands (Estee Lauder, Lancome). I tallied their online following by checking a variety of metrics: YouTube subscribers, YouTube views, Facebook likes, and Twitter followers. Today, I’ll share my findings- some of which are surprising!

The first observation that I will make is that Maybelline is the clear YouTube subscriber winner.

There could be a lot of factors explaining this. Perhaps, Maybelline was the first to be listed on YouTube. This is not the case. It turns out that most of the brands (including Maybelline) developed their YouTube channels around 2006. Maybe, Maybelline posts more content? Not true. Several brands (including the parent L’Oreal) have posted more videos. In fact, a lot of the YouTube content posted by each brand is similar. For instance, you can find a lot of expert advice on the application/ uses of cosmetics from each brand. Perhaps, Maybelline’s YouTube success is due to its younger audience (in keeping with people who surf the web more)? Once again, this is not the reality. Rimmel, like Maybelline, also targets the younger audience (RMG Agency). So what is the explanation for Maybelline's subscriber supremacy?

I believe that the answer lies in what differentiates Maybelline as a brand. There are two reasons.

First, Maybelline is uniquely positioned as the young, trendy, fashionista brand with an edge. It’s the brand for the girl that goes out on the town. She knows the hottest spots and gets VIP entrance because she’s connected. She’s socially connected in the real world and online. She's ultra-linked with YouTube, Facebook, and Twitter. This "social connection" is endowed on the brand and is the magic behind the Maybelline YouTube subscriber leadership.

Second, unlike other cosmetic brands, Maybelline links its brand to trendy fashion. Case in point, Maybelline Canada recently sponsored fashion week in Toronto. If you take a look at Maybelline ads (see left), Maybelline is more likely to incorporate full body shots (rather than just head shots). In doing so, the brand is suggesting that Maybelline is a vital accessory to complete a look. The brand's online content (web site, YouTube channel etc), then reinforces this positioning: “We are Maybelline and we are the brand that ties your entire look together – from shoes to mascara; from handbag to lip gloss.”

Similar stories hold true for Maybelline in the other key metrics. The brand holds the leadership position for number of YouTube views (1,779,544), Facebook “Likes”(2,552,102), and “most talked about” (58,882). In fact it takes the lead in all metrics that I looked at except for one-Twitter followers where it is ranked #2 with 40,415 followers to date. In my opinion, what is most impressive is that Maybelline outshines higher end brands in these categories. The brand gives evidence that its not always the highest end brands that have the strongest online community followings.

I’d like to conclude my post with one thought. As the world moves more and more into social media (and the online world), there are going to be more of these socially connected girls. The future looks bright for Maybelline.

The Big Facebook Revenue Yawn.

Yeah. Facebook is IPOing. The words of one of my mentors sum it up best: "meh."

The stock will (initially) go up...
Morgan Stanley, Goldman Sachs and other Wall Street friends will undoubtedly have pre-sold enough shares (to quasi-informed dentists and doctors who want to be part of the "next big thing") to make sure that the stock goes up at IPO time (See a really interesting post on a related topic here: http://youarebeingmanipulated.com/pyramid-root-manipulation-part-3/). Today, I'm going to make a back-of-the-envelope case here that the revenue side of Facebook ain't anything to get anybody excited about. When reality sets in, I'll bet that the stock heads south.

Some pretty good margins and unrealistic expectations for growth

The Wall Street Journal reports that in 2011 Facebook had revenues of about $3.71 billion and profits of about $1 billion. That's about 26% margins. Not bad at all. But with a $75-100 billion dollar IPO valuation, Facebook would be priced at 75 times trailing earnings and about 20 times sales. In other words, there are massive expectations for revenue and profit growth. Where does this revenue come from?

There are predominantly 4 main streams:

1. Advertising
2. Marketplace
3. Sentiment analysis for companies.
4. Revenue shares from Zynga Farmville type applications.

Advertising:
Advertising constitutes the biggest chunk of Facebook revenue. But how much growth is in advertising for Facebook? Not a lot for two reasons. First the Facebook user base is not going to grow much more and secondly, there are much better vehicles out there for brand builders.

The audience size is already factored in
Let's go to the first point. Facebook has 850 million users. That's tremendous. But lion's share of global Facebook accounts has already been had and it is unlikely that high growth will come from new Facebook accounts. More certainly, the consumers with the most desirable income levels (which is important for advertisers) already have accounts. All of this to say, that advertisers have already absorbed/reflected on Facebook's audience size/desirability and have signaled how good Facebook is as an advertising/brand building vehicle. That amount is $1.9 billion. But, its hard to see how user growth factors can support the 8X or 10X ad revenues (and profits) that Facebook needs to support its proposed $75-100 billion valuation.

But wait a minute- perhaps Facebook users will spend more and more time on Facebook - giving advertisers better advertising opportunities. Evidence here suggests the opposite. Most users are most active when they first activate their accounts- adding friends, tagging pictures of themselves with their crush, or confirming Aunt Edna is their aunt. After that, the usage curve (for most) drops off and Facebook's functionality increasingly is geared towards messaging friends.

Facebook came in 2nd in a advertising beauty prize, here is $10.
Second, as Facebook heads more into the advertising world, it increasingly competes for advertising dollars with Google. But, what is a better venue for advertisers? If you were an advertiser selling wedding dresses in Idaho, where would would you rather target your ad:
A) On Facebook where a young woman who changes her status update from "in a relationship" to "engaged" or
B) On Google where the same young woman enters a key word search "wedding dresses in Boise"?

Google (and other online sites), simply has a better venue for targeted advertising- and that's what advertisers want. Facebook may have some excellent brand building opportunities via social networking (which is more viral but doesn't deliver advertising revenue) but it is clearly in a lower tier for generating ad revenues. Facebook's runner-up position in advertising reminds me of the old Community Chest Card on Monopoly.


Marketplace
Facebook's plans call for growing a classified sales in its Marketplace. This puts Facebook in Craig's List's domain. But here's the question: If I have an old table to sell, where do I have a better chance selling it - among my group of friends (or network of friends' friends) or via the site dedicated of bringing a much larger group of buyers and sellers together? For most items, Craig's List (or the online version of the local newspaper) gets the nod. There's revenue in the Marketplace for Facebook, but its not going to dominate the online classified section anytime soon.

Sentiment Analysis
One of my academic research involves how managers measure their brands. One of the findings is how managers are increasingly measuring their brands online- and how they should be (so many do it wrong). Some brand managers track how many Facebook users "like" their brand. Others perform Internet sentiment analysis. These are important additions to a manager's metric tool box. But, is there really a lot of revenue out there for Facebook in this domain when there are dozens of free sentiment analysis tools like Rankspeed, Twendz, and TwitterSentiment out there?

As an aside, I did some Twitter sentiment analysis on Facebook today. The online sentiments about Facebook are pretty much evenly split between positive and negatives. That ain't too good.

Revenue Shares
Farmville was a revenue bonanza for Facebook. According to the Facebook financials, revenue share from the game's transactions represented around 13% for Facebook. But will Facebook be able to replicate successes like this? So far no other application has been anywhere close to capturing the imagination of the maturing Facebook users like Farmville did. The fear is that the Farmville-type revenue stream may be closer to a one-hit wonder than a reliable ongoing revenue stream.

The point of this blog is not to trash Facebook. Facebook is a strong brand that has had amazing growth and a fascinating history. Even if a small percentage of 850 million users are lovers of the brand (Brand Mojo ratings on Facebook show that about 13% of respondents love the brand), Facebook will play a powerful role in shaping the online world in the foreseeable future. But when you break down the revenue side of Facebook's business, it doesn't look very exciting- certainly not at the level that deserves a market capitalization greater than Disney's or equivalent to McDonald's or Pepsi. When reality sets in, I'm betting most of the doctors and dentists will be wishing that they didn't buy the stock.

Brand Mojo quick update

To my faithful readership: Thank you for your patience. I've been busy preparing (and presenting) some of my research at conferences. I'm back from my hiatus with a lot of fresh content for this blog. But first, here's a quick Brand Mojo update. Let's look at the top 10 most loved corporate brands on the leaderboard:



Some quick observations:
1. The top ten continue to be very stable. Since the site began - Google has been dominant (although it is starting to slip from the overall 4.8 rating that it once had). The other brands in the top 20 have never been outside of the top 20.
2. The top 3 most loved brands are all free brands. Google, YouTube and Wikipedia give unbelievable value for money (free!)
3. One gender can drive up a brand. Check out the rating discrepancies between women and men on Tiffany. I ran a quick t-test and (surprise surprise) the rating gap is significant.
4. There seems to be a nostalgia impact on the most loved brands. Lego, Disney, and Warner Bros (via Looney Toons) are all endowed with rich, playful, emotional childhood associations.

What about the most hated corporate brands?


Tobacco, controversial and scandal-ridden brands (Halliburton, Bratz) continue to bottom feed on the leaderboard. Here's something new. MySpace became a new entrant into the most hated brands. With so many "haters" and "ambivalents" towards the brand, is it any wonder that MySpace recently sold for a dismal $35 million (representing a $500million loss for NewsCorp)?

This raises a question. If the lovers to haters ratio shifted so much so fast for MySpace, how is FaceBook doing? While still strong, the Facebook ratings are falling significantly, particularly around men. The summer 2011 ratings are below, down from an average of over 4.0 just 6 months ago.


This takes us to a quick recap of the most loved not for profit brand and celebrity brand. The Red Cross continues to be the most loved not-for-profit brand. On the celebrity front, Halle Berry has replaced George Clooney as the most loved celebrity. This switch may be more to do with Clooney's declining ratings which seem to correlate with his recent movie flop (the American). Clooney's ranking is still #2 but his ratio of lovers has fallen substantially.

That takes us to the most hated celebrities? Former American president George W. Bush and Hugo Chavez continue to battle for this position.

You can rate brands at www.BrandMojo.org and check out the leaderboard for more rankings.

Marketing of Fear, Faith, and Fun.

Technically 2010 is not a leap year, but it has been for me.

Last Tuesday, my personal trainer (Marie Pier) and I did our first skydive. We did it at a place in Joliette called Voltige and it was one of the best experiences of my life. As we approached the roar of the prop plane, the guy filming our jump yelled out: “Hey Bob, why did you decide to jump out of a plane today?” I attributed the idea to my trainer (who in turn “blamed” me) but the reality is that sky diving is thrilling experience that is a leap of fear, faith and a fun. There is something appealing and exciting about looking danger in the eye, and spitting at it. It's also a curious thing to understand the sources of growing demand for the "sport".

A bit on the the adrenaline kick.
When you complete a waiver form signing your life away, stare down at the ground from 4kms above the earth from an open plane door, and free fall at 200kms per hour, your juices get going. Indeed, the effects on the body are unmistakable. One study continuously recorded ekg’s of parachuter’s first sky dive and revealed that the average jump heart rate values were 64.5 beats/min 2 weeks prior to the jump, 112.8 beats/min immediately before the jump, 170 beats/min during the jump, and 122.8 beats/min after the jump. (For the nerds out there the mean difference between each phase was statistically significant with p less than 0.001 values.) Another study revealed hyper stress levels of the first time jumper (who is really tandem jump consumer) and a 2009 study measured the impact of the jump on adrenaline. I'm stating the obvious. Common sense tells you that a thrilling activity will shock, rock, and adrenalize the body. But from a consumer point of view it is indeed a curious phenomenon how a segment of the population actively seeks out (perceived) dangerous activities. This entry, however, is not going to focus on consumer behaviors- rather it is going to examine the state of this industry and relate it to a marketing phenomenon. Let’s start with some numbers.

Shakira Shakira Shakira: The Numbers Don’t Lie
Numbers are tough to come by in terms of the total number of jumps and who is jumping, but a United States Parachuting Association (USPA) press release shared these headlines: Skydiving Soars in Popularity (July 2007) and Skydiving Soars into 2008. The guts of the releases give us some selective numbers. The total number of skydive jumps in the USA were 3 million in 2007 (highest number recorded) while the number of all sky diving licenses has steadily been increasing over the last few years. To put some historical context around these numbers, 1960 the United States had 3,500 members- in 2010 this number has grown almost ten-fold. The numbers look healthy and if people are investing in licenses (which are not cheap), the future looks robust too.

What's Driving the Diving?
So what is propelling skydiving growth? There are a bunch of factors that can be attributed including: (i) greater safety record of the sky diving due to best-practice learning that has accrued over the last several decades, improvements in equipment technologies, and “safety day”- a day reserved to review safety procedures; (ii) more organized and accessible jump sites; (iii) a growing desire for more thrilling activities. (A big drop in baseball viewership has been attributed due to the slow moving nature of the game). But I am going to focus on a forth important dimension: Social network sites.

Skydiving and other thrill activities (hang gliding, heli-skiing, etc.) are tailor made for social web sites. Less than 6 hours after I jumped, my jump was my profiled on my Facebook page. Of course, my friends who had jumped before me had also done the same thing immediately following their jumps. The social network sites enable you to rapidly share exciting visuals of the experience with your friends, who in turn can get intrigued about doing the activity themselves (See Karl's comment on the image). The images also take off the "I'm going to die" stigma away from the activity. But, it is not just on Facebook or Orukt where the images are shared. A quick search on YouTube for “sky diving” returns more than 136,000 skydiving jump videos- a huge chunk of which are the first time tandem jumps. A quick search for “sky diving” on Flickr.com reveals more than 52,000 photos tagged with the topic. Each effort to post the image/video is designed to share the experience with family and friends. That is a lot of “free exposure” to highly targeted audiences- folks who are invested in their friends' well-being. Furthermore, the images/videos will spark many "you gotta do it" conversations. In short, the Web is helping to do what it does best for marketers- having the customers market the product or service.

While the numbers don’t lie, they certainly don’t tell all of the truth all the time. Here I will argue that social networking sites have made sky diving more of a mainstream activity- which is affecting the extreme sport core. Just like in the late 90s when the core-target market urban kids abandoned Tommy Hilfiger (pronounced with a heavy French accent Hil-fee-gggay) because it grew in suburban mainstreet appeal, the hard-core sky divers are increasingly engaging in new, more daredevil activities like base jumping, bird man / wingsuit activities (I wonder what the car thinks at 0:54). Some of the hard core divers may engage in also sky diving activities like plane to plane jumps or sky surfing. Of course, this is healthy for the overall thrill industry (although not necessarily for all daredevils) as new categories of thrills are emerging and new adrenaline activities are spawned.

Some quirky facts about Sky Diving:

Highest Dive 83,523 ft or about 26 kms. Eugene Andreev. (GuinnessWorldRecords.com)

Longest free-fall: 80,380 ft (24,500 m) from an altitude of (25,457 m). Eugene Andreev. (GuinnessWorldRecords.com) Let's put this in context. Our jump was 13,000 feet. Commercial jets fly around 30,000 feet. At 30,000 feet you need an oxygen to stay alive and it is easily -60C.

Highest Dive Speed 989kms/hour Colonel Joseph Kittinger stepped out of Excelsior III, a helium balloon, at an altitude of 102,800 feet or 31,330 meters.Let's put this in context. He jumped from 17,000 feet more than the highest level a plane has ever flown (85,000 feet). He fell for 4 minutes and 36 seconds and reached speeds of 614 mph or 989 km/h before opening his parachute at 18,000 feet or 5,500 meters for a total falling distance of 84.8000 feet or 25,830 meters. Evidently he used a chute to stabailize his fall so he does not get a Guiness entry, but he does make mackalskionmarketing.blogspot.com adulation.

Highest free-fall w/o a parachute: Vesna Vulovi fell from 33,333 feet without a parachute and survived. According to the Guinness Book of Records, she jumped as a flight attendant after the plane she was on exploded.

Oldest skydiver: 100 years and 60 days: Age of oldest recorded skydiver (GuinnessWorldRecords.com)