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The State of Social Marketing 2011 – 2012

December 6, 2011 – 12:28 pm

The following report is brought to you by the Pivot Conference taking place in New York on October 15-16, 2012. You can download a full copy of the report for free by clicking here.

At the end of 2011, Social marketing stands at a profound crossroads. Some organizations are finally embracing the importance of social networks and, as a result, increasing investments in creative engagement, marketing, and service programs. Others see the future value, but lag behind in execution. At the vanguard, Social Businesses drive a virtuous cycle of discovery: Their successes in Social marketing lead to new data, which lead to insights, which lead to new and more effective programs as well as the business systems and processes necessary to improve internal and external collaboration.

In 2012, social media marketing, driven by these innovations, will only continue to mature. Bottom-up learning about what really works in Social will be essential for this expansion. Research conducted by IBM in 2011, for instance, revealed a gap between consumer expectations toward the businesses they support in social media, and executive assumptions about what these consumers wanted. This “Perception Gap,” as defined by the IBM study, demonstrates the importance of bottoms-up, informed social marketing programs, as opposed to the traditional top-down strategies tied to the usual monologue-marketing channels.

Not all customers are created equal. So, businesses are learning that there must be more than one approach to reaching and engaging customers through the emerging Social channels.

This year, at the second annual Pivot Conference, we explored the evolving landscape for consumerism as colored by the emergence of Social Consumers. Brands, agencies, academics and thinkers examined how Social Consumers find and share information, how they influence and are influenced by engagement, and also how they make decisions. In the end, it was clear that the Social Consumer is fundamentally unlike a traditional consumer and, as such, compels brands to rethink sales, service, and marketing strategies across social, broadcast, and mobile networks. At stake is a business’ relevance to the Social Construct, which is the new key to consumer connection and success. For brands today, if you don’t establish this connection, Social Consumers will just connect themselves and collaborate without you.

To help brands more effectively plan for improving customer engagement and experiences in 2012 and beyond, the Pivot team, along with The Hudson Group, surveyed 181 brand managers, agency professionals, and experts. Their answers paint a picture for how businesses intend to reach their Social Consumers. Additionally, the results serve as a benchmark as you, the Social Business leader, assemble your strategies over the next year.

The Rise of the Social Consumer

Who is this Social Consumer and how does he or she differ from traditional counterparts? Let’s start with a working definition. A Social Consumer is someone who first goes to their social networks of relevance to learn about products and services. Though somewhat influenced by their overall social graphs, Social Consumers emphasize the input of those who define their interest graph – like-minded individuals on any given subject who share common interests and experiences with them. In this way, Social Consumers evaluate the shared experiences of those they trust, and expect businesses to respond to their socialized questions. As a consequence, Social Consumers don’t follow a linear approach through the classic ‘interest to intent’ funnel during their decision making process. Rather, they follow an elliptical pattern where their next steps are inspired by the insights of others, and their experiences are, in turn, fed back into the cycle to inform the decisions of others.

Reprinted from The End of Business as Usual, Chapter 14

In the Pivot study, we asked if participants had a clear picture of who their Social Consumer is. An astounding 77 percent said yes.

Comparing these results to the working definition presented above, which survey participants did not review in advance, as well as the Perception Gap produced by IBM, I wonder how these numbers would change if the question was asked now. Given the results noted below, it appears that respondents believe they know who their Social Consumers are, even though they may not have actually engaged them in a detailed conversation.

When the Pivot team explored specifically if respondent organizations asked Social Consumers what they expect from engagement, most responded, “No.” This is intriguing because we have 77 percent of organizations who say they know what their Social Consumers want, but 53 percent haven’t really asked. They do not—cannot—really know how to deliver value in social and mobile networks, thus pointing to IBM’s Perception Gap. On the other hand, 35 percent did note that they asked Social Consumers about their expectations. Our belief is that these organizations will most likely outperform organizations that did not ask.

Businesses shared their perspectives on the benefits and customer expectations of social engagement in their responses to the survey. The results cover a wide spectrum of sales, service, and marketing benefits, with customer service, insight to make decisions, and the ability to learn about new products as the top three entries. Deals and rewards came in fourth and fifth respectively. Each of the benefits is important, however. Offering exclusive content, the ability to provide feedback for improvement and social commerce add to the complexity of reaching and engaging the varying needs of social consumers. We think marketers should look here at the whole tapestry, more than the individual strands.

When asked about the gender of the Social Consumer, respondents believe their Social Consumers are equally divided between male and female. This is result is intriguing for many reasons, not least of which is the findings in previous studies that females skew higher across popular social networks such as Facebook and Twitter, as well as for most social commerce services. Are we seeing the emergence of more men in social networks? Perhaps.

As we continue to examine the demographic makeup of Social Consumers, this study indicates they tend to be most commonly in their 30s and 40s. But there are strong showings of Social Consumers distributed across those 26-30, 46-50 and also 51-55. Clearly, social is no longer the province of just the young.

The household incomes of Social Consumers are scattered across the board. But in aggregate, it appears that Social Consumers lean toward desirable income levels. Median income from the study results is just over $60,000.

When asked which networks are frequented by their Social Consumers, participants stated that Facebook, Twitter and LinkedIn were numbers one, two and three respectively. Facebook and Twitter are viewed as essentially ubiquitous. At the time of this survey, Google+ hadn’t yet opened up brand pages, but as of November 2011, businesses can develop official brand presences. Yet, even without the ability to do so during the survey process, businesses recognized the important role Google+ plays in the lives of their Social Consumers

When it comes to Social Consumers’ increasingly common mobile activity, Facebook and Twitter still maintain the top two spots. Foursquare, though, jumps into the third position ahead of LinkedIn, an indication that geo-location networks continue to rise in popularity.

Pleased To Meet You, I Hope You Get My Game

Gamification is becoming part of social networking, education, and loyalty programs due to its attractiveness to the Social Consumer.

Zynga is currently the overwhelming leader in capturing the time and attention of Social Consumers when it comes to gaming, probably a reflection of Facebook’s current dominance. Intriguing here is that the second most common response is “other,” a sign of the diversity in this arena.

Social professionals don’t see a clearly dominant player amount the many current portable photo networks available for popular smartphone platforms. No option received even 25 percent of the responses. However, Hipstamatic is firmly positioned at the top of the list with almost double the usage of Dailybooth, which currently sits at number two, according to respondents. They seem to be leading a rather open field.

In the world of social and group-based deals, Groupon ranks number one among Social Consumers, but LivingSocial maintains a strong foothold in the number two spot. Facebook Deals was in third, but the service has since been discontinued by Facebook.

“After testing Deals for four months, we’ve decided to end our Deals product in the coming weeks,” Facebook told Reuters in a statement published in August 2011, during the time the survey was already in the field.

Engagement is not defined by conversations. Engagement is the act of a consumer and an organization or brand interacting within the consumer’s network of relevance through a combination of conversations, content, or related information. Engagement, and here’s the important part, is then measured by the takeaway value, sentiment, and resulting actions following the interaction.

Brands largely disagree with the belief that conversations in social networks alone drive meaningful business outcomes. The true test, of course, is whether or not outcomes are defined and if they are introduced into engagement as a desired click path. On the flip side of the coin, brands either completely or mostly agree that conversations help with brand lift and relevance responding with 51 percent and 45.5 percent respectively.

There’s notable difference, however, in whether or not brands think their Social Consumers want something of tangible value in exchange for a social connection. 21.6 and 45 percent completely or mostly agree. 27 percent and 6 percent mostly and completely disagree. Our advice: When in doubt, ask.

With all of the fanfare around social media, it would be easy for those living within the new marketing paradigm to assume that social media already was or soon will be mainstream within the organization heading into 2012. However, respondents were divided in their outlook. Just over half believed that social marketing is already mainstream within their organizations and just under half think that social marketing will still be experimental a year from now. This shows where we are in the social revolution: the reality of change is broadly accepted, but norms about fundamental issues still remain elusive. We know we are going to a new place, we just aren’t yet sure exactly where and how fast.

When asked what was preventing the organization from moving beyond experimentation in social marketing, respondents’ reasons were widely distributed. Budget was seen as a challenge, as was the inability to define or measure clear outcomes. We feel that, whatever your personal sense, each of these points is worthy of exploration and definition within the organization. This is the only way to ensure that the needs of Social Consumers do not go unmet. A working strategy and understandable benefits are critical to rallying support across the organization, especially among executives. Defined metrics tied to thoughtful strategies demonstrate progress. Listening combined with research will reveal the need for a cross-functional approach as data always spotlights the varying needs of Social Consumers – beyond marketing.

Confusion reigns today, but conviction lies on the horizon. 2013 is the year a solid set of respondents sees social marketing finally breaking beyond experimentation within the organization. Still, we can see the current uncertainty about the development of social: 15 percent look to 2014 as likely year for corporate breakthrough, another 15 percent see 2015 or later, and a sobering 35 percent still don’t know what to think.

While respondents see social marketing as crossing into the organizational mainstream relatively soon, an overwhelming 89 percent of participants see social marketing as a permanent series of experiments. The takeaway here is that professionals, for the foreseeable future, feel that there is much to learn with regard to the Social Consumer and how to effectively engage and steer positive experiences and outcomes for social marketers. As one area of social moves into the mainstream, it will just open up new areas for experimentation.

The trend in social media budgets is positive. The percentage of respondent companies spending less than 5 percent of budget on social drops by about half between 2011 and 2013 and the percentage spending over 50 percent more than doubles. The sweet spot hovers around 25 percent of budget, rising slightly over the next two years. All this indicates to us is that it remains early days in the development of social in organizations.

Looking ahead to 2012, brands are thinking through goals as they plan next year’s social marketing programs. At the top of the list, at almost 100 percent, is the need to increase sales, which is a reflection of the need for marketers to demonstrate tangible ROI. Consumer engagement, lead generation and brand lift are also atop the list. Among the notable responses from participants, influencing consumer behavior is at just over 60 percent, establishing points of influence at just under 60 percent, and discovering points of relevance shown at 40 percent spotlight how new touchpoints will play a role in driving desirable outcomes and experiences. The overall sense of the responses is a tilt away from “soft” benefits toward harder edged benefits that drive the bottom line.

Surprisingly, improving customer service and support was toward the bottom of the list, but it is promising to see that the research does show that businesses are placing it in the upper half of 2012 planning. We see customer service as one of the potential breakthrough areas for social networks.

Make the Pivot

Here’s the important takeaway: To successfully reach the Social Consumer and ensure that social media extends across the organization, look at this list as a series of steps rather than a hierarchical rank. Thinking through each item will force a more thoughtful approach to reaching Social Consumers and guiding positive experiences and outcomes. Budgets and support are the net benefits of following these action items.

1. Increase understanding of the benefits of the Social Construct within your organization.
2. Develop a clear strategy for social.
3. Define outcomes.
4. Tie strategies and supporting metrics to business objectives.
5. Earn executive buy-in with data, demonstrate the needs of Social Consumers, and show how others are successfully engaging them today.
6. Earn support across departmental functions by showcasing how the varying needs of the Social Consumer are unmet by key roles in the organization.

As you review these data and compare them to your 2012 plans, or if you’re in the planning stages now, remember that benchmarking against peers is only one part of the process. The real opportunity lies among your Social Consumers by identifying their needs, and benchmarking them against your solutions for them and thus your business opportunity.

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By Brian Solis | Posted in Industry Blogs, Research | Tagged , , , , , , , , , , , , , , , , , , , , | Comments Off

MarketPysch: Profiting from investor psychology and the Internet (podcast)

April 8, 2011 – 5:30 am

On Tradestreaming Radio, we’re interviewing lots of innovative entrepreneurs, investors, and researchers all trying to make investors better at what they do.  Check out our archives.  Subscribe on iTunes.

From this perch, it seems like investors are witnessing a Renaissance of tools, data, and research that overlays investor psychology on 24/7 streaming content of the Internet. The magic bullet for individual investors and hedge funds alike is to use this data to create profitable trading strategies.  Previous podcasts have looked at using Google search data to find rising stocks.  Other tradestreaming techniques have centered around creating forecasts of future events using online media. This week’s guest on Tradestreaming Radio is Richard Peterson, MD (yes, that kind of doctor).  He’s also an RIA and his firm, MarketPsych LLC helps to coach investors and their advisors into making better investment decisions.  More interesting, the firm has developed a sentiment analysis engine from its own experience trading quantitative strategies in an in-house hedge fund. Dr. Peterson’s new book, MarketPsych: How to Manage Fear and Build Your Investor Identity (Amazon link) is an amazingly refreshing read.  All investors struggle with assessing their risk tolerance, performance and decision making.  While behavioral economics/finance has helped us understand what problems we face, it hasn’t helped a whole lot in truly helping us change our investing behavior. MarketPsych provides a clear overview of the problems and gets its hands dirty helping us investors help ourselves. In the podcast, we talk about:

  • how investors make decisions
  • how investors can use changes in sentiment to forecast stock price movements
  • how hedge funds use investor psychology and Internet content/social media to profit
  • how technology innovation leads to higher stock prices.

Listen below

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By Zack Miller | Posted in Research | Tagged , , , , , , , , , , , | Comments Off

The Bank of Facebook: How will Facebook interact in the global economy?

April 6, 2011 – 7:47 am

design by ericaglasier.com - @EricaGlasier

What follows is a guest post by Venessa Miemis…I’ve asked her to share insights from a developing research project she’s currently leading, The Future of Facebook Project. I recently took part in the project as I believe this discussion is more relevant than we currently imagine.

There has been much speculation recently about the role Facebook Credits could play in becoming a global virtual currency, and even the possibility of Facebook becoming a bank. In many ways, it already is becoming a bank – just not in the traditional sense. Facebook is harnessing the power of the social graph and has certainly adopted an expanded definition of what ‘currency’ means. It’s time for the rest of us to hop on board.

As I’ve been conducting research for The Future of Facebook Project, the experts and thought leaders interviewed shared some compelling views about the evolution of virtual currencies, and Facebook’s potential role in their development. A big takeaway is that while we typically associate currency directly with money, the rise of the social web and quantification is shifting that reality to become more inclusive of kinds of capital that were formerly intangible.

Money is a tool we use for arms-length transactions, where there isn’t an assumption of any kind of relationship or trust between parties. But as data is being mapped at an accelerating rate – from self-quantification, to the contextual and relational data about our location and interactions, to our preferences and opinions, to our exchanges and transactions – we are being granted access to a much richer base of information in our decision-making toolkit.

What this means is that money isn’t the only kind of currency that can facilitate a transaction anymore. Trust networks are able to be tapped for recommendations and referrals, while predictive analysis algorithms can suggest the kinds of people, products, services, or events that would resonate with our personalities or value set. A new set of filtering tools are emerging that are shaping where we direct our attention and resources, namely intentions and actions.

These contextual clues around data become currencies in themselves, as they give us more information in order to make a choice or decide who to trust. Below are three examples of currencies that are having an impact on the formation of a new economic paradigm and redefinition of how we define, generate and exchange value: Facebook Credits, online identity, and reputation.

Credits as Currency

Facebook Credits are a virtual currency used within Facebook for the purchase of virtual goods related to applications managed on the Facebook platform. They’re like tokens you’d use to play games at Chuck E. Cheese’s – great for casual entertainment, but not particularly threatening to the real world economy. Yet.

What happens when individuals and companies become more comfortable with the idea of accepting virtual currencies in exchange for various types of interactions, goods or services?

“Increasingly as we move later into the decade, physical currency will be harder to differentiate from virtual currencies like Facebook Credits,” said Brett King, author of Bank 2.0. “We’ll start to see a new economy emerging through social media where virtual currencies will be a very real part of the way people trade and sell information, collaborate on ideas and value various products and services.”

In the near term, we’re likely to see retailers find creative ways to use Credits to entice people to interact with them, evangelize their brands, and gain customer loyalty. For example, every time you take a poll, watch an advertisement, or tell your friends about a purchase you made, you could receive Credits from that company that would then be redeemable for goods or discounts.

“We may see a kind of gamification of the real world take place through Facebook Credits, where a variety of outside vendors, businesses, and service providers can give us Facebook Credits, enable us to pay with Facebook Credits, and reward us with Facebook Credits for taking actions that they want us to take,” explained Nova Spivack, a technology entrepreneur and founder of Lucid Ventures.

In the longer term, Facebook Credits could become truly disruptive by becoming a currency for peer to peer lending, microtransactions, and for usage by the unbanked in emerging markets around the world. For instance, imagine the next time you clicked the “like” button for that social activism campaign you support, you could also add a small donation to the cause via your Credits account. Or what if Facebook evolved to have a functionality like Zopa or Lending Club, allowing you to directly lend and borrow with other Facebook users, and earn a great rate of interest. Extend that one step further to Facebook offering an entire mobile based money transfer system, something like M-PESA, which could then create a simple mechanism for international microfinance. If Facebook goes this far, Credits could quickly face regulatory scrutiny if they actually influence or devalue currencies in other markets.

As venture capitalist Eghosa Omoigui posited, “I suspect that Facebook may eventually have to create a trading platform that allows them to constantly mark-to-market what those Credits look like.”

The possibilities here are only limited by our ability to extrapolate out scenarios of what happens when transactions are made easy, secure, and frictionless. So Credits are a clear example of an emerging virtual currency that could have some far reaching implications, and will certainly face new regulatory challenges as well as a new set of competitors as they expand their offerings. But are there other currencies that Facebook is creating within its ecosystem?

Identity as Currency

How do you construct your online identity, and where is that information stored? Does it matter? It matters more than we know.

Every time you upload a photo, make a comment, add a friend, click a link, or make a purchase, that data is being harvested to create a map and a simulation of you. This is tremendously valuable information, and Facebook gets that. It hasn’t been by mistake that they’ve created a simple go-to portal to the social web, where logging in via Facebook Connect gives access to any number of other sites and services.

By analyzing even slices of this data, a wealth of information can be extracted and predicted about you. As a related example, Google vice-president Marissa Meyer was said to have claimed at this year’s SXSW festival that credit card companies can look at spending habits and predict with 98% accuracy, two years in advance, when a couple is going to divorce. Interesting. I wonder what Facebook is able to predict, and how that information can be served up to advertisers.

If the trend continues where logging in via your Facebook profile is the simple method for verification, some speculate this could lead to Facebook evolving to being an actual utility for identity. We’re already seeing companies advertising themselves through their Facebook profile (www.facebook.com/company). It seems possible that Facebook users could do the same. After all, if people are willing to trust sensitive data to Facebook, companies could use that info to offer better rates on car or health insurance, or help you secure a loan, via the platform. While this could seem convenient for the average user, it does carry serious implications in terms of how governments will respond.

“[Identity] will become the battleground within which this entire learning will take place, because today all the artifacts of a human being belong to physical and logical governments, and not to social networks. But the ability to move any form of asset between the virtual world and the physical world needs a commonality of understanding of identity,” said JP Rangaswami, Chief Scientist for salesforce.com.

The discussion around who owns your data and online identity and why it matters hasn’t really hit the mainstream yet, though there are communities like the Personal Data Ecosystem Consortium that are pushing for individual ownership, open standards and interoperability. A person’s identity is highly valuable information, and some would argue that despite the convenience of having a third party own that data, it rightly and ethically belongs to the individual. In the meantime, Facebook is playing a strong role in how we use identity on the web, and what information about ourselves and our social graph is shared every time we log in and interact.

Reputation as Currency

If you’re familiar with services like Klout and PeerIndex, you’re aware the task of quantifying reputation, authority and influence online is well underway. Just as a positive score in your eBay account matters if you plan to continue doing business there, we’re on the verge of having robust social scoring metrics that will become increasingly important for businesses and individuals to consider.

For example, when searching for a product or service, not only will we see a range of comparisons between companies with similar offerings, but also how our social network perceives the performance and quality of that brand. We can already see which of our friends “likes” a particular website that happens to display the Facebook social plugin in their sidebar. When the opinions about a brand can be displayed more robustly, we’ll know not only that you “like” a brand, but why. This gives information on both sides – the reputation of the brand, and the values of the individual. So if I choose to only interact with brands that have project both intentions and corresponding actions of what I consider “good,” which could include sustainable business practices, financial transparency, social responsibility, and, dare I say, corporate ethics, only those with a reputation that falls within that spectrum will make it through the filter in my stream.

As Brett King pointed out, “Social metrics, and the use of platforms like Facebook will have very real feedback in respect to the valuation of a brand economically, and obviously that will have an effect directly on revenues that are possible for providers in that space. So unless you’re playing in the social brand space, unless you’re engaged in the conversation, your social metrics are gonna be affected in a negative way, and that will have an effect on revenue, profitability, and the value of your brand.”

The power of this kind of sentiment analysis around brands, issues, events, people, or topics of any kind can’t be underestimated. As these metrics become more granular, it becomes easier to to make purchasing decisions and support initiatives that are more fully aligned with our values. One’s reputation and social standing, and the way they are perceived based on their words and their actions, are most certainly a currency.

Beyond its functionality for how we interact with brands, and perhaps even more interesting to consider, is how this reputation currency could impact peer to peer relationships and potential business partnerships. I’ve always felt rather disappointed in the type of information that passes for a Facebook profile. Sure, you can show where you went to high school and the kinds of entertainment you like, but none of it is particularly useful in terms of finding ways to generate economic value together with others.

Facebook has the opportunity to create a marketplace for intention, innovation, and entrepreneurship, if it expands the degree to which an individual can express their human capital and find others with common interests or goals. When I am able to express the types of skills I possess, resources I have access to, my intellectual capital, my relationships and social connections, and the types of projects or business ventures or causes with which I would like to be involved, a whole new dimension of interactivity will emerge. When others can vouch for the quality of my work or my knowledge or expertise, the kind of robust profile and reputation that then exists is incredibly valuable for me and for the potential economic opportunities that I can get.

None of these examples should seem like a stretch. In some ways, this is the next logical step in the evolution of Facebook. As technology writer Kevin Kelly said, “What we know from our very short history of living online is that community precedes commerce; there’s no commerce without community. What Facebook is doing is sort of blowing up the community to be 500 million or even a billion very soon. When we have a community of a billion, that means that the potential for commerce is enormous, is immense, and we’ve never seen that before.”

To me, that statement is speaking to us as the users, and how we can potentially be interacting with each other, not necessarily how we can interact with corporate entities or brands. Facebook has corralled us all within its walled garden, and created a place to share photos with friends, keep up on events, and perhaps click some ads. But the opportunity to use sentiment and predictive analysis to actually facilitate the connection of people around common desires and goals could be truly transformative in accelerating the rate of social innovation and job creation.

It’s not a matter of if this will happen, but when. Users already pump tons of data into Facebook about their preferences and tastes – it just hasn’t quite been served back to them in a way that’s economically useful. But if and when they do, it’s going to create a marketplace where your reputation is going to be quite important in getting prospects for what may be called ‘the future of work.’

New Currencies = New Banks

I hope this provided some food for thought on the evolving definition of currency and what we may consider a bank. We’re making formerly intangible and invisible things transparent, measurable, and tradeable, and that opens the door to a lot of new possibilities for what economic transactions and exchange look like. Social media companies like Facebook understand the enormous value in being the connective tissue of the social web and provider of your data and the social graph.

Facebook will continue to grow and face new challenges as it threatens the control traditional institutional structures have had over currency and personal identity. The implications of one entity owning this amount of information is beyond the scope of this article, but it certainly deserves a critical assessment. That huge privacy breach and wake up call hasn’t happened yet, so it’s not too late to ask what’s at stake when your data is contained in a digital silo owned by someone else.

By brian | Posted in Industry Blogs, Research | Tagged , , , , , , , , , | Comments Off

Report: Brands Pursue the Social Consumer

February 28, 2011 – 7:53 am

The Pivot Conference is unique in its focus of seeking and dissecting branding’s next revolution: The Rise of the Social Consumer. In October 2010, the inaugural event took place in New York, uniting brands, agencies, and industry experts to share insights, best practices and also explore the horizon for relevant emerging technologies and methodologies.

At the end of 2010, the research team at Pivot conducted a survey among its 700-plus attendees to reveal 2011 challenges, opportunities and the plans to organize efforts around them. The results were analyzed and underpinned the planning for the 2011 Pivot conference. However, the insights we learned in the process are far too valuable to keep behind the firewall. We’ve assembled the highlights into this report and are making it freely available to download, review and share.

The following data should not be viewed in the context of a conference. Instead, this information is reflective of the brand’s eye view on the state and future of social media in 2011 development and execution. Views included here give us access to the plans and corresponding spending in new media for the year ahead.

The Pivot Audience

Pivot attendees were by and large focused on marketing and advertising, comprising 78 percent of the audience. Brand marketers and business executives made up the majority of those seeking insights for the future of marketing, representing 54 percent of the overall audience. Agency professionals and consultants represented less than half of their in house counterparts.

Over two-thirds of survey respondents hold executive, VP or director titles, representing the following industries:

- Arts – 23%
- Banking/Financial Services – 15.9%
- Beauty – 20.6%
- Entertainment – 33.3%
- Food/Beverage/Restaurants – 17.5%
- Marketing/Advertising/PR – 34.9%
- Media/Publishing – 34.9%
- Retail – 19%
- Technology (Business) – 22.2%
- Technology (Consumer) – 30.2%

Social Media is held close to the brand vest. While many functions associated with advertising and marketing are outsourced to agencies, social media is an exception. Over half (52 percent) of brands report that they’re running social media marketing in house. 19 percent are feeding this function to full service ad agencies and another 15 percent rely on specialized agencies to lead their social marketing programs.

Roles and Responsibilities

The Pivot research team asked participants which marketing/advertising functions they are responsible for or what specifically they oversee. By far, social media marketing was the number one role at 64 percent followed by brand marketing at 58 percent and advertising/marketing campaign development at 50 percent. Marketing research and analysis showed a strong appearance at 48 percent. If we were to combine public relations and corporate communications, it would tie for second with brand marketing at 58 percent.

It’s clear that those focused on branding’s next revolution are responsible for a great array of functions. Functions with strong showings included Website development, product marketing, mobile and direct marketing.

Who Owns Social Media

While who owns social media may be the wrong question to ask, social media for the time being, appears to live in one primary department. Over time however, social media will extend the capacity of any business unit or division affected by outside behavior. When asked which departments are currently involved in social media 90 percent of participants pointed to marketing. Public relations followed with 64 percent. Sales showed a strong presence with 46 percent and customer service also made the list with a solid 39 percent. I found it interesting that investor relations made an official appearance the list. Even with 8 percent, it’s a telling sign of things to come.

An Investment in Time and Resources

Marketing professionals revealed how they plan to spend their time over the next 12 months. For those of us trying to figure out whether or not we’re focused on the right outside resources and opportunities, benchmarking against peers is as helpful as it is telling.

Social Media: In 2011, marketers plan to increase usage of social media by 75 percent. 19 percent will remain at current levels and only one percent of respondents actually plan on decreasing usage.

Mobile: Apps for iPhone and Droid will see a rise of 62 percent, 21 percent will remain constant and 1 percent will decrease.

Microblogging: 61 percent will increase use of streaming apps such as Twitter and Yammer, 27 percent will stay the course and 5 percent will reduce current usage.

Video: 55 percent of marketers will increase video production and distribution with YouTube, Vimeo and the like, 31 percent will continue as is, and no one plans to decrease their efforts in this category in 2011.

Blogs: Contrary to a recent story in the New York Times insinuating that the statusphere would spell the end of the blogosphere, brands will increase their focus on top tier blogs to reach customers and peers by 52 percent, with 35 percent staying constant and 5 percent reducing focus.

While every category will experience increases at varying levels, there are certain platforms and networks that showed double-digit decreases in 2011. Geo-location networks such as Foursquare and Gowalla and Review sites will see a 10 percent retraction in focus this year. On the contrary, brands will increase usage of virtual worlds such as Second Life by 11 percent.

Advertising/Marketing Budgets

The average annual marketing/advertising budget for those who could disclose it was $16.8 million. 24 percent of that budget, on average, was earmarked for social media.

Social Media Touches the Adaptive Business

Participants were asked whether they agree or disagree with a series of statements around social media.

Customer Focus: At the top of the list, 69 percent believe social media is a component of an effective customer relations program

Brand Impact: 66 percent believe that social media has a significant impact on companies and brands.

State of Adoption: 57 percent see advertising and marketing in the early stages of capitalizing on social media

Social Media as a Differentiator: Surprisingly only 35 percent of respondents see social media as fundamentally different from all other media. We predict this too will change over time as brands look beyond traditional command and control strategies in new media.

Social Media as a Disruptor: 22 percent see social media as a Trojan Horse in the market, giving hope to emerging brands seeking to displace established brands.

Social Media Success

Attaining ROI is an important quest in social media. A majority of brands that participated in the Pivot study are measuring social media against internal goals and objectives. Of those who are measuring, 73 percent find social media programs to be successful. Four percent say that social media is not delivering as hoped. However, a full 23 percent cannot yet tell. Expect this number to decrease by this time next year.

Social Consumers

The focus of Pivot 2011 is on the rise of the social consumer. The research team asked about the importance of the social consumer in the company’s social media marketing efforts.

59 percent see social consumers as pivotal to the brand, and as such, welcome their involvement and participation. On the other hand, 22 percent are proceeding with caution, maintaining control over process.

Who are Social Consumers?

Participants in the Pivot study were asked to estimate the age range of social consumers. 61 percent estimated 21-30 years old. 57 percent guessed 11-20. 43 percent targeted 31-40. 27 percent cited 41-50. For the record, Millennials currently fall between the ages of 16 and 31. The answers are surprising however. Social consumers represent all ages on the chart and are aligned by psychographics as we move forward, not demographics.

Are Social Consumers Important Marketing Targets?

This is the billion-dollar question. Aside from age group, 84 percent of brands and agencies participating in this study see the Social Consumer as a primary or secondary target in 2011.

Readiness to Support New Advertising Platforms

Brand marketers and their agency counterparts are more than ready to embrace new advertising platforms such as Twitter’s promoted products and Facebook’s new in-stream opportunities. 62 percent agree that if there’s benefit, they are willing to be among the first to test and use. 20 percent on the other hand prefer not to be among the first. Nine percent will wait and see.

Conclusion

2011 is a pivotal year for social media. While many brands believe in its importance, there is still a great deal to learn. What’s clear however, is just how early brands are in this growth curve. Social Consumers are expanding beyond the Millennial demographic as social-savvy individuals are migrating from the edge to the center of technology adoption and prowess. As they do, social networks and new media apps and services become their platforms of choice. All signs, according to this study, point towards greater investment in time, money, and resources to better understand and excel in social media.

About Pivot

The Pivot Conference is focused on helping brand managers, executives, creative teams, and agencies bridge the gap between brands and the emerging market of Social Consumers. Combining inspiration and education through a series of keynotes, discussions and workshops, Pivot teaches through immersion how to captivate attention where and when it’s focused and how to steer experiences and actions beneficial to the brand.

The two-day conference will engage the heart and the mind of attendees through a structured approach to understanding strategies and tactics to effectively attract and engage social consumers. Part inspiration and part education, together we’ll walk away with ideas and programs we can put to work immediately and throughout 2012.

Pivot will be limited to 500 brand and their agencies in 2011. (Click here to register.)

Contact Mike Edelhart at medelhart@pivotcon.com to inquire about sponsorships.

Connect with Brian Solis on Twitter, LinkedIn, Facebook

Image Credit: Shutterstock (edited)

By brian | Posted in Industry Blogs, Research | Tagged , , , , , | Comments Off

The Interest Graph on Twitter is Alive: Studying Starbucks Top Followers

February 8, 2011 – 6:41 am

Social media is maturing as are the people embracing its most engaging tools and networks. Perhaps most notably, is the maturation of relationships and how we are expanding our horizons when it comes to connecting to one another. What started as the social graph, the network of people we knew and connected to in social networks, is now spawning new branches that resemble how we interact in real life.

This is the era of the interest graph – the expansion and contraction of social networks around common interests and events. Interest graphs represent a potential goldmine for brands seeking insight and inspiration to design more meaningful products and services as well as new marketing campaigns that better target potential stakeholders.

While many companies are learning to listen to the conversations related to their brands and competitors, many are simply documenting activity and mentions as a reporting function and in some cases, as part of conversational workflow. However, there’s more to Twitter intelligence than tracking conversations.

We’re now looking beyond the social graph as we move into focused networks that share more than just a relationship.

Bringing the Interest Graph to Life

To demonstrate the value of interest graphs, I worked with the team at ReSearch.ly, a unique Twitter search platform that has indexed the last three years of Tweets to instantly provide a real-time and historical analysis of activity around keywords and also the people that Tweet them.

ReSearch.ly visualizes the interest graph, and also provides the ability to search within the search to sort activity by demographics and psychographics, sentiment, bio data, profession, and the list goes on. Essentially, it’s a product that anyone can use to learn about what’s really taking place on Twitter to better understand behavior and earn greater relevance by making more informed decisions.

As an example of audience profiling or competitive intelligence, we used ReSearch.ly to review the followers of @Starbucks, one of the most celebrated brands actively using Twitter today. We started by extracting 1 million follower profiles, sorted by follower count. The results were then further filtered to include only those who published a complete profile. ReSearch.ly provides the option to then organize the resulting information any number of ways, which in this case, we sorted the accounts by bio, location, and gender.

The Interest Graph

While we are what we say in our Tweets, our bios also reveal a telling side of who we really are. In this study we reviewed the complete bios of 50,000 of the top @Starbucks followers to learn a bit more about how they present their life story as well as their interests, opinions, and preferences.

Using the ReSearch.ly Twitter index, we created a word cloud to amplify the most common words used in each of the bios of these connected social consumers. Followers tended to use expressive words that suggest sentiment runs rich in the Starbucks interest graph. Top words include:

1. Love
2. Life
3. Friends
4. Music
5. World

We can also learn a bit more about Starbucks influencers by analyzing what interests them. Looking a bit deeper into the cloud, we can see that not only do emotions rise to the top; other revealing themes also surface:

1. Family
2. People
3. Mom
4. Wife
5. Husband

This is just the beginning. The words associated with the brands demonstrate the emotional and personal connections Starbucks holds with these tastemakers. Campaigns are a direct beneficiary of such data. As we submerge ourselves one level deeper into the study, we find that this information becomes paramount when we link it to individuals through demographics and psychographics. An import footnote is that the word coffee is among the least used words in the bio, but used nonetheless.

Studying Bio’graphy

With a 50,000-person sample in a traditional research survey, it may be difficult to organize individual responses. Here, we further reviewed each of the bios to find the commonalities in how each person presents who they are in a few precious characters.

Of those, we found that…

- 42 percent expressed strong ties to family, religion, and love

- 29 percent boast special interests, which is further discernible

- 22 percent are professionals who state their current place of employment and position

- 7 percent are students

Additionally, we can extract the attributes of @Starbucks followers further to better symbolize their digital persona. Further review highlights that followers…

- Identify themselves as enthusiasts, geeks, addicts, junkies, creatives

- Define the most popular areas of interest as Music, Food, Coffee, and Fashion

- Potentially favor dogs to cats (2 – 1 as per their mentions)

- Work in either Social Media and Marketing (Note: If we were to change the scale of followers, we would open up the sample to a much broader set of professions)

- Also are still studying. Despite the lower percentage, students account for more than any single professional field

Geo Location: Where in the World is @Waldo?

Brands are more than aware that no one marketing strategy reaches and moves everyone in the same way. Beyond demographic marketing, brands must also focus on driving traffic regionally. Having access to location data isn’t new, but using Twitter as a collective stream of intelligence to identify higher and underperforming locales and associative word clouds allow teams to surface the 3 W’s of real-time geo loco marketing:

Where is negative/positive activity taking place?

Why is it leaning in that direction? And,

What can we do about it?

To give us an idea of where the top @Starbucks followers are Tweeting, we zoomed in to their point of reference. We found that top users tend to Tweet from…

1. California
2. New York
3. Texas
4. Florida
5. Washington

Combining London and UK, we find that The United Kingdom would actually join the ranks of the most often cited cities.

Grouping locations provides a holistic view that provides regional marketing metrics and also areas in need of attention.

Here we can see that the top Tweeps are located in…

- US East, 30 percent
- Non US, 27 percent
- US West, 22 percent
- US Midwest, 21 percent

Tweeting from the Gender Lines

Over the years, I’ve studied the gender makeup of social networks and have consistently found that women outnumber men in some of the most popular networks including Twitter and Facebook. On Twitter, women represent the majority share with 57 percent.

Working with the team here at PeopleBrowsr and ReSearch.ly in conjunction with Klout earlier in 2010, we uncovered en masse, women are more influential than men on Twitter. In fact, the average Klout score within the general Twitter population 34 to 31 in favor of women.

Reviewing Starbucks top followers in ReSearch.ly, it comes as no surprise to see that the women are the predominant source of Tweets, 63 percent women vs. 37 percent men.

The Tweets Have It!: Introducing the Starbucks Brand Graph

The interest graph is defined by connections, but it is brought to life through self-expression. When we combine brand-centric relationships and conversations, the interest graph eventually evolves into what is essentially a brand graph. Within each brand-related graph is a group of highly connected individuals that serve as a company’s network of influence. The ReSearch.ly team extracted 50,000 of the most recent Tweets that included a mention of Starbucks. We then analyzed the connections between people and identified the top 100 individuals and the number of their followers who also mention Starbucks within the 50,000 mentions. We can then bring to light Starbucks influencers as a representation of its brand graph and influential hubs. As we can see, the difference between monitoring and gathering intelligence allows Starbucks to now identify relevant networks and introduce personalized campaigns to further spur advocacy and loyalty.

Here are the top 100 most connected people within the group mentioning Starbucks and the number of their followers also discussing Starbucks:

Accordingly, we can visualize the interest graph as connections, showing how influencers are not only interconnected, but also capable of disseminating relevant information and influencing behavior to varying degrees beyond the traditional reach of Starbucks.  Social consumers and their place within the social consumer hierarchy determine reach and ultimately outcomes. Everything begins however, with recognizing who they are and what inspires or motivates them.

Conclusion

The era of analysis paralysis is officially over. Instead of just listening, companies can now study people and their interests based on what they say and do and also how they color their profiles. This goldmine of insight gives brands the potential to improve marketing, promotional and advertising campaigns to start. What we’re talking about here is the ability to personalize experiences that go beyond demographics and start to employ psychographics and behaviorgraphics – the ability to connect with groups of people by interest and how they interact.

As this practice develops, brands can also gather the intelligence necessary, and widely available, to improve products, services, and spark new waves of tweets gushing with positive sentiment. Doing so over time helps to build the social, and more relevant, business of the future while improving relationships to convert followers into stakeholders.

Brian Solis is the Chief Data Analyst at PeopleBrowsr and ReSearch.ly and author of Engage, the complete guide for businesses to build and measure success in the social web. Follow him on Twitter, @briansolis or read his blog, BrianSolis.com

Connect with Brian Solis on Twitter, LinkedIn, Facebook


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If you’re looking for a way to FIND answers in social media, consider Engage!: It will help…


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By brian | Posted in Industry Blogs, Research | Tagged , , , , , , , , , , , | Comments Off

Floodgates open: Seeking Alpha begins paying contributors

January 17, 2011 – 7:33 am

So, the rumors were finally put to rest as next-generation financial site heavy, Seeking Alpha, announced today that they would begin paying contributors for their content.  As an aggregator, Seeking Alpha relied upon a mutual understanding for years: in return for permission to host investment bloggers’ content, the financial site provided more eyeballs and visibility than most small, financial bloggers could generate on their own.  That didn’t work for some of the larger voices (see Barry Ritholtz), but it did and does for many.seekingalphapaysbloggers

So, now, Seeking Alpha is paying $10 CPM for content they host (supposedly, about half of what they’re bringing in on the site).

I thought it would be a good idea to take a survey, a poll, of what the leading minds around the financial web would have to say (or think) about this groundbreaking move.  No names were changed and hopefully, no one gets hurt.

What the smart money is saying

Barry Ritholtz (The Big Picture): Those f’in little pischers?  You serious?

Howard Lindzon: Seeking Alpha?  Let me tell you why they suck and why StockTwits is the bomb.  Have you seen our new store and our premium data streams?? Who cares about them?

James Altucher: Well, this is essentially a good thing — I could have used this cash when I was living naked in a homeless shelter, working for a hedge fund that bribed me to keep quiet about Cramer’s antics surrounding the buying of StockPickr.  But that’s another post.

Tradestreaming: It’s all about finding the right person with the right information at the right time.  Piggyback ‘em.  Have I told you about my new doorstop book?

Downtown Josh Brown: Um…hold on.  I’ll let you know what I think in between my 3 appearances today on Fast Money, filming a new video with Das Racist and I’m producing a follow-up hit to Damn, It Feels Good to Be a Banker entitled Brokers Gone Wild.

marketfolly: Seeking Alpha’s founder and CEO David Jackson has recently increased his holdings in the company by 3%.  The long thesis here is probably the tried and true put-everything-you-have-into-your-startup-and-hope-and-pray-that-you-see-9-figures. Whitney Tilson, of course, thinks this is silly — he’s short (somehow).

Zero Hedge: Goldman Sachs is a silent investor in Seeking Alpha via an investment they made in Benchmark Capital (a longtime seed investor in the company).  Essentially, the U.S. frickin’ government is paying bloggers to post content on Seeking Alpha!  Have you heard about the financial blogger bailout in QE3, 4, and 5??

Farnam Street: This payment changes everything.  Human behavior — and particularly that of bloggerus economicus — is greatly influenced by incentives and this payment will transform most investment writing in the blogosphere from a hobby to a vocation.

Michelle Leder (Footnoted.org): Well, not sure about that model.  I dropped Seeking Alpha like an improperly accounted for ride in the ol’ corporate jet years ago when I discovered that management liked to dine on fancy 2-day-old sushi served on a china plate.  Can you believe it?  Hopefully, shareholders will be able to afford their own sushi amidst the revenue sharing party.

@50 Cent: I’d tweet about it or die trying but got bored after I wasn’t able to establish a large enough position in the company b4.  So, DAMN, you ain’t lyin.

Further reading:

photo courtesy of texas_mustang

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Research Report: Constellation’s Research Outlook For 2011

January 4, 2011 – 10:34 am

As an advisor to the Constellation Group, I am reposting the team’s first joint research report here. It offers a glimpse of the hurdles and opportunities organizations will face in 2011 and beyond…

Organizations Seek Measurable Results In Disruptive Tech, Next Gen Business, And Legacy Optimization Projects For 2011

Enterprise leaders seek pragmatic, creative, and disruptive solutions that achieve both profitability and market differentiation. Cutting through the hype and buzz of the latest consumer tech innovations and disruptive technologies, Constellation Research expects business value to reemerge as the common operating principle that resonates among leading marketing, technology, operations, human resource, and finance executives. As a result, Constellation expects organizations to face three main challenges: (see Figure 1.):

Navigating disruptive technologies. Innovative leaders must quickly assess which disruptive technologies show promise for their organizations. The link back to business strategy will drive what to adopt, when to adopt, why to adopt, and how to adopt. Expect leading organizations to reinvest in research budgets and internal processes that inform, disseminate, and prepare their organizations for an increasing pace in technology adoption.

Designing next generation business models. Disruptive technologies on their own will not provide the market leading advantages required for success. Leaders must identify where these technologies can create differentiation through new business models, grow new profit pools via new experiences, and deliver market efficiencies that save money and time. Organizations will also have to learn how to fail fast, and move on to the next set of emerging ideas.

Funding innovation through legacy optimization. Leaders can expect budgets to remain from flat to incremental growth in 2011. As a result, much of the disruptive technology and next generation business models must be funded through optimizing existing investments. Leaders not only must reduce the cost of existing investments, but also, leverage existing infrastructure to achieve the greatest amount of business value.

Figure 1. Innovative Organizations Face Three Main Challenges In 2011


Disruptive Technologies: Growing Enterprise Adoption – And A Few Bumps Along The Way

A flurry of mobile, social, cloud, analytics, and unified communication technologies from the consumer tech world continue to enter the enterprise. Technology buyers can expect that:

IT teams will face device proliferation while hardware vendors will face device flops (@maribellopez). In the mobile landscape, organizations have spent the past decade trying to consolidate everything into a single device which we deemed the “smartphone”. Today, the adoption of devices like the iPad and Kindle demonstrate that consumers and businesses are willing to embrace a device that excels at a singular or small number of functions. IT will soon realize that it will be supporting at least two devices per person, if not three. Why? Tablets can’t replace laptops for most employees; and smartphones while ubiquitous are good for specific tasks. Thus, organizations will see employees using different devices for different apps. A majority of the tablets in use in 2011 will remain employee-purchased which will cause IT to formalize employee-liable policies for security, manageability, and reimbursement. After the successful introduction of the iPad, everyone believes they can build and sell a tablet. Dell, HP, RIM, and others will struggle to compete against Apple as they look for the right combination of user interface and applications to drive demand. Android-based tablets will fare better but only if the OEM have provided significant software wrappers to plug security, manageability and UI issues.

Large enterprises will stall on adoption of cloud for voice communications (@eherrell). Despite announcements by major vendors, the cost model for replacing on- premises based voice equipment will not justify moving voice communications to the cloud in 2011. Cloud adoption will most likely begin to pick up during last quarter of the year, when pricing models become more competitive.

Cloud security will trump on-premises efforts (@fscavo). 2011 will be the year when SaaS providers find the issue of security turning from a perceived weakness of their offerings to a perceived strength. A handful of well-publicized targeted attacks against in-house IT applications, similar to what was seen with the recent Stuxnet worm, will lead many corporate executives to conclude that their in-house IT organizations can’t match the level of security offered by SaaS providers.

Forecasts in cloud security breaches will call for partly cloudy cloud adoption (@rwang0). Despite the woes in on-premises security and move to the cloud, cyber attacks will force companies to move from public clouds to private clouds in 2011 . Concern about cyber gangs hacking into commercial and military systems leads to a worldwide trend that temporarily reduces public cloud adoption. Hybrid models for apps in the public cloud and data in the private cloud emerge as users migrate from on-premises models. Data integration and security rise to key competencies for 2011. The bottom line – improved data security reliability will drive overall cloud adoption in the latter half of 2011.

Android will becomes more enterprise friendly by fixing major manageability issues (@maribellopez). Android, while very popular with consumers due to its Verizon relationship, still strikes fear in the heart of IT. Its lack of on device hardware encryption, which even Apple supports, makes it a non starter for some IT organizations. In general, Android will need to fix its support for for Exchange including areas such as 802.1x WPA2 wireless network authentication, corporate proxy servers, Cisco VPNs using certificates, OpenVPN, CalDAV, remote wipe, and managed apps and configurations. Sure, Android is a consumer platform, but consumer phones are now enterprise phones. Google must address these issues or risk losing share in its war against Apple.

Social media landscape transforms into information commerce (@briansolis). The social media landscape will undergo an interesting transformation as it ushers in a genre of information commerce and the 3C’s of social content — creation, curation, and consumption. While blogging typically resides in the upper echelons of the social media hierarchy, new services further democratize the ability to publish and propagate information. 2011 heralds the year of information curation and the dawn of the curator. Curators introduce a new role into the pyramid of Information Commerce. By discovering, organizing, and sharing relevant and interesting content from around the Web through their social streams of choice, curators will invest in the integrity of their network as well as their relationships. Information becomes currency and the ability to recognize something of interest as well as package it in a compelling, consumable and also sharable format is an art. Curators earn greater social capital for their role in qualifying, filtering, and refining the content introduced to the streams that connect their interest graphs.

Enterprise social software migraine (@sameerpatel). On the Technology front, expect a lot of noise and confusion on the social and collaborative front when it comes to customer, employee and partner collaboration. Technology will come from 4 camps: Pure Play Enterprise Social Software Vendors, ERP and CRM providers layering in collaboration and community features, Networking and UC providers adding social networking to VOIP and Online Meeting offerings, and finally, specialist HR and LMS vendors extending their offerings to include collaboration. From a distribution perspective, today’s largely direct sales model will see expansion into Telco reseller providers who have sold managed hosting solutions such as email and messaging in the past, as well as system integrator and strategy consulting providers that are ramping up practices. Due to the nature of rapidly evolving use cases for social software, traditional sourcing mechanisms and criteria that might work for static ERP and CRM system selection will be inadequate to make long term and roadmap decisions on tools and integration for enterprise social software.

Tools, networks and services that cater to the role of the curator will emerge (@briansolis). Storify, Curated.by, Pearltrees, and Paper.li break through as the coveted services of choice amongst curators as they not only enable the repackaging and dissemination of information, but also deliver in captivating and engaging formats. Similar to blog posts, curated content represents social objects and curation services will spark conversations and reactions, while also breathing new life and extending the reach of existing content – wherever it may reside. Curators play an important role in the evolution of new media, the reach of information, and the social nicheworks that unite as a result. Curators promote interaction, collaboration, as well as enlightenment. More importantly, services that empower curators will also expand the topography for content creation. Forrester estimates that 70% of social media users are simply consumers, those who search and consume the content available today…but never say anything in public about it. However, the ease of curation combined with the pervasiveness of microblogging start to entice consumers to share information, converting the static consumer into a productive curator or creator.

Social analytics will evolve from ad hoc experiments into refined information services (@rwang0). Organizations will continue to experiment in listening services that filter out noise from the social sphere, identify trends that deliver insight, and create models that support prediction. As algorithms increase in complexity, adapt to regional and cultural differences, and require greater vertical specialization, the end customer organization will no longer be able to support in house efforts. A new breed of information brokers will deliver social analytics at a scale that will support the challenges of big data in heterogeneous systems. Expect vendors such as Alterian, Attensity, Buzzmetrics, Cymfony, IBM, Radian6, SAS, Scoutlabs, Telligent, and Visible to shift their business models from software vendors to information brokers.

“The Cloud” will become the new Social Media (@ekolsky). Always looking for a technology or tool to overhype, the recent announcements from Oracle, SAP, Microsoft, Salesforce and many smaller vendors in the enterprise applications world has placed “The Cloud” as the center of controversy for 2011 and into 2013-2014. The lack of coherence and understanding of “The Cloud” will result in many wasted dollars trying to implement models that are not sustainable, or reliable, for organizations, fees paid to consultants with no real knowledge of the market, and failures that will only serve to reduce the speed of adoption of “The Cloud”. Buyers will still have to wait until 2015+ to see what happens, as most vendors have just begun developing their strategies and organizations have not yet adopted the model in sufficient numbers to justify faster R&D from vendors (with few exceptions).

Next Gen Business Models: “Outside In” Strategies Proliferate – With An Eye Towards Pragmatism.

Business model innovation will rely more on disruptive technology in 2011. Leading organizations will strive for a better synergy between business and technology. Constellation expects that:

Citizen engagement platforms will get more open despite the emphasis on security (@ideagov). The combination of the blow back from wikileaks; and the Republican takeover in the U.S. House of Representatives will lead to a rash of “military grade encryption packages” that will be stacked on top of many apps and platforms. Whether they work or not will not matter. Conversely expect to see an explosion of citizen engagement platforms striving to be even more “open.”

Organizations will put business back into social business (@sameerpatel). As organizations increasingly start to see the benefits of deploying social and collaborative initiatives to improve employee, customer and partner engagement, they will soon begin to realize that the decade old notion of streamlining repeatable processes made popular by ERP and CRM system-of-record deployments was largely over promised. In practice, customers and prospects have unique questions not answerable in the knowledge base or by marketing; employees living in rigid ERP systems need to constantly find experts who have the best answers and to collaborate with them. And reseller partners are constantly spending time looking for the right answers not available on asynchronous partner portals to keep end customers happy. Silo’d but open collaboration initiatives on activity streams and other enterprise social networking utilities currently being deployed will expose such engagement not historically possible in an ERP or CRM laden design. Consequently, LOB and IT leadership will realize that traditional process approaches and fluid collaborative constructs need to come together to truly accelerate business outcomes.

Sexy will be out for social media (@ekolsky). Organizations will realize that for something (social media) to feel sexy there is a lot of work that needs to happen behind the scenes. Time to pay the piper, as they say, and begin to build integrated platforms that can leverage social channels in constructing healthier, better relationships with customers. Despite the focus on tools and technologies, leaders will begin to realize that it is just about processes and people with support from technology. Want to get ahead? Plan, plan, plan – then roll up your sleeves and start doing, strategically speaking.

Organizations will get serious about mobilizing apps and embrace the platforms to support mobility (@maribellopez). In 2011, firms will deploy enterprise mobility management tools to support multiple device types and operating systems. Companies will also focus IT resources on moving line of business apps to devices. While cloud-based platforms and SaaS gain in importance, a majority of firms (75+%) will turn to in-house resources for development. As a result, firms will adopt mobile enterprise applications platforms and mobility frameworks to help them port apps using existing IT resources.

The distinction between BPO and ITO will blur (@pfersht). Integrated offerings from service providers with broad capability gain market share. With the leading IT services providers all heavily pushing BPO capability, there will be increased blurring of offerings as industrialized process solutions become more popular. Process-only BPO will continue to proliferate across horizontal offerings where there is significant labor arbitrage opportunity, namely finance and accounting, order management and procurement, however within industry-specific process, platform-enabled offerings are the only way providers can develop cost-effective utility models across their clients.

P2P will displace the old notions of B2B and B2C in social business (@rwang0). B2B and B2C will cease to exist in 2011. Organizations will conduct social business through Peer-to-peer (P2P) relationships. Attempts to stove pipe individuals into forced-fit, artificial market segmentations will fail because each individual brings multiple roles to the community. Each role brings a new perspective and a set of expectations in customer experience. Organizations will have to retool to the new rules of business and also move beyond social.

Sustainability software will lead to global starvation (@dahowlett). Sustainability software will conclusively prove that cows are the biggest contributors to greenhouse gases. The ensuing bovine cull will ensure population starvation on a massive scale thus solving our climate change issues. Those flogging carbon solutions will be put out of business.

Legacy Optimization: Flat IT Budgets And New Projects Increase Pressure On Legacy Costs

Between 66% and 75% of most technology budgets go towards supporting legacy systems. In order to make the shift to support new business models and disruptive technologies, leaders will have to find ways to optimize existing investments. Leading organizations can expect that:

Corporate IT spending will barely keep up with dollar inflation (@fscavo). Corporate IT spending in the US and Canada will increase a small 2.0% at the median, after two years of flat budgets. In addition, although most IT organizations are not currently adding to staff counts, we do see a significant upturn in initiation of new major projects, extended work hours for IT employees, and increasing use of IT contractors. This will lead to an improved IT employment picture by mid-year.

Technology refresh cycles will accelerate through 2011 (@ekolsky). The recent 2-3 years “nuclear winter” in enterprise applications, which coincided with the advent of social channels and social technologies, will give way to a massive acceleration of technology refresh channels – especially in Customer Service departments – leading to large-scale adoption of both new technology related to social media as well as new technology that was scheduled for later adoption. This large-scale adoption will result in several smaller vendors with innovative offerings gaining a sizable presence in Contact Centers and a disruption of the model for old-technology vendors that cannot adapt quickly to the changes we are seeing.

Organizations will cautiously recommit to BPO (@pfersht). Business Process Outsourcing uptake will creep back throughout 2011, as the recovery stutters and buyers pull the trigger on sourcing initiatives, however, many of the deals for the first-time buyer will be small in scope. Many businesses paralyzed by the Recession have been operating a “wait and see” strategy through 2010 regarding their Business Process Outsourcing (BPO) options. However, a slowing recovery and a growing pressure to meet budgets will drive a steady wave of increased BPO evaluation and contract signing in 2011, especially in Finance and Accounting and Procurement. HfS demand-side research has pinpointed a strong interest from buyers to increase scope in existing BPO contracts, and close to one-in-four businesses in the mid-market ($1bn – $3bn in revs) are expecting to investigate their first steps into F&A BPO. Moreover, many BPO services providers are more determined than ever to “penetrate and radiate” customers with initial small-sized contracts, due to the shortage of attractive captive acquisitions and affordable competitive acquisition candidates.

Organizations that reevaluate their IT strategies and contracts hand in hand will save the most money. (@rwang0) Most technology procurement strategies fail to align with IT strategy and vice versa. Consequently, buyers end up with extra device capacity and shelfware. As organizations consider their legacy optimization strategies, successful teams will bring enterprise architects, IT leaders, procurement teams, and business units together to identify waste to pay for innovation. Two -tier ERP and third party maintenance will prove to be examples where alignment can be achieved to create win-wins for IT and line of business leaders.

Organizations held hostage by high and useless software maintenance contracts will lead a massive backlash (@rwang0). Organizations faced with market pressures to create strategic differentiation amidst the burden of legacy systems will need to find a way to pay for innovation. Software maintenance fees will come under attack as user groups and leading organizations will spearhead efforts to renegotiate existing enterprise software vendor contracts. Existing software vendors caught off guard will suffer through a PR disaster that will cost them significant future sales. Third party maintenance vendors will continue to emerge to combat vendor-lock in and maintenance hegemony.

Your POV.

Ready for 2011? Got a prediction we missed? Add your comments to the blog or send us a comment at info (at) ConstellationRG (dot) com.

Please let us know if you need help with you in 2011. Here’s how we can help:

Disruptive technologies. Assessing the market for social, mobile, cloud, analytics, UC, and internet of things. Providing vendor selection frameworks. Comparing vendor capabilities. Negotiating vendor contracts. Providing independent validation and verification.

Next gen business models. Advising management teams and organizations on disruptive technology adoption leading practices. Designing next gen business models in Social CRM, digital marketing transformation, cloud adoption. social business, virtual commerce strategies, business process innovations, and cloud services.

Legacy optimization. Reviewing existing technology strategies for cost savings. Renegotiating existing maintenance contracts. Providing go forward optimization plans.

Reprints

Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact sales@ConstellationRG.com.

Constellation’s Research Outlook For 2011
Disclosure

Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, stay tuned for the full client list on the Constellation Research website.

Copyright © 2010 Constellation Research, Inc. All rights reserved.

Image Credit: Hugh MacLeod (@gapingvoid)

By brian | Posted in Industry Blogs, Research | Tagged , , , , , , | Comments Off

Yahooaol Finance in the works?

November 8, 2010 – 9:03 am

A story in the WSJ this morning alludes to a possible merger of Yahoo and AOL.

In recent days, AOL’s advisers have been presenting different scenarios to AOL officials that illustrate how the two companies could combine their operations and whether the complexity of any such transaction could be surmounted, the people said.
For investors, a combined entity would be somewhat interesting.  While Yahoo Finance continues its dominance as 800lb gorilla in online finance, AOL Money (DailyFinance) has been making strides with a different model.
While Yahoo Finance has stuck to its guns with its licensing model (3rd party content via partnerships), AOL has been more creative in its investing offerings by creating its own content (through BloggingStocks and other aggregation).
The combined entity could be something of a breakthrough in mainstream online finance — combining licensing deals (really, Yahoo still has the best pure news offering) and creative content developed in-house (this is commentary/opinions as opposed to news).

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Hiring in sell-side research picking up (a weensy bit)

November 1, 2010 – 6:51 am

Integrity Research has an article out today Sell-Side Expands Equity Research Hiring.  In spite of the article’s findings that there are some banks expanding their roster of stock analysts, it’s clear that the party is over.

After a little research, we have discovered that quite a few other sell-side firms have either been hiring research analysts, or are planning to do so in the near future.  The following blog discusses a few of these developments.

The article details some second (and third-tier) sell side banks adding to their research ranks but the pickings are certainly slim.

Source: Sell-side Expands Equity Research Hiring (Integrity)

See our recent piece on job trends in online finance

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Powered by social media, 5 new sources of research for investors

October 25, 2010 – 6:49 am

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In my book Tradestream, I wrote a whole chapter on what I defined as co-lateral research — those sources of information that are decidedly non-financial that investors can use to help bubble up new investment ideas or drill down further on an existing investment thesis.looking for the best stocks to own

Some of these sources of information are merely trade data posted online while others are truly emerging sources of advantage for driven investors, enabled and distributed via social media.

Here are a 5 of these sources of value outside traditional investment research (some of which I touch in the book, others not):

  • Trade data
    • vertical industry sites like iSuppli for semiconductors produce consistent periodic information about an industry polled from industry participants (some free, some very $$)
  • Sales data
    • Site like Amazon are treasure troves of valuable information regarding sales.  Amazon doesn’t release hard data; rather, it’s relative positioning of how well things are selling (see 3 Apple machines in best selling laptops) that is helpful for investors.
  • Customer comments
    • Serious investors are using information from product development/fan sites.  Take for instance the shoe company, Crocs ($CROX).  The company maintains Crocsideas.com for fans of the company to learn about new products, submit their own ideas, and vote on new styles.
  • Search data
  • Predicti0n markets
    • Large offshore gambling sites like Intrade allow parties to bet on the outcome of global events.  With real money on the line, it appears that these markets are relatively accurate in their prognostications.  Investors can use these sites as another data point in their research.

These resources are practically endless.  What sources of info do you use online to help size up investments?

photo courtesy of emilio labrador

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By Zack Miller | Posted in Research, Stock market | Tagged , , , , , | Comments Off
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