Social Commerce Presentation Slides

s-commerce: The intersection of social computing and the transactional web October 12, 2006

Stephen DiMarco, Vice President of Marketing and Client Services, Compete, Inc. Charlene Li, Principle Analyst, Forrester Research Inc.

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How Marketing Is Changed By Social Media Charlene Li Principal Analyst Forrester Research

Social networking has matured over the past five years • Friendster opened up networks to connect friends of friends • MySpace built a portal on top of its portal » Brilliant move was adding “comments” which have become “slow IM”

• But niche and private social networks gain traction » Piczo, Multiply.com counter the “night club” feel of MySpace

• Buddy lists and address books get socialized » “s”ocial “n”etworking goes mainstream with AIM Pages and MSN Spaces/MSN Messenger

• Social networking components will be built into the best services 2

Entire contents © 2006 Forrester Research, Inc. All rights reserved.

What drives participation? • The need to help myself – new info sources that inform, entertain, save money, or make life easier for myself • The need for social currency – to be “in the know” • The need for validation and self-expression • The need to connect • The need to be in control • The culture of generosity

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Entire contents © 2006 Forrester Research, Inc. All rights reserved.

Consumers participate in different ways Creators

The Participation Pyramid Critics

Collectors

Couch Potatoes 4

Entire contents © 2006 Forrester Research, Inc. All rights reserved.

YouTube succeeds because of the social network it builds around the videos

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Entire contents © 2006 Forrester Research, Inc. All rights reserved.

Social computing is biggest with young people Activities done at least monthly

Adults

Youth

Creators

Publish a blog Publish Web pages

11% 8%

35% 15%

Critics

Write a product review Comment on a blog*

26% 13%

16% 27%

Collectors

Use RSS feeds Use social networking Tag content/photos

10% 21% 7%

8% 57% 33%

Couch Potatoes

Look at a review* Read a blog Listen to podcasts

37% 29% 10%

35% 49% 18%

Source: Forrester’s NACTAS Q3 2006 Devices & Access Online Survey and Q1 2006 Youth Devices & Access And Retail Online Survey *Source: Consumer Technographics Q3 2005 North American Media & Marketing Online Survey and Q4 2005 North American Youth Media & Marketing And Retail Online Survey

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Entire contents © 2006 Forrester Research, Inc. All rights reserved.

Age is a major driver Does this activity at least once a week

Gen Y (18-26)

Gen X (27-40)

Young Boomers (41-50)

Older Boomers (51-61)

Seniors (62+)

Read blogs

28%

14%

9%

8%

6%

Use social networking sites

38%

12%

6%

4%

3%

Publish your own Web pages

23%

12%

8%

6%

4%

Listen to podcasts

9%

7%

5%

4%

3%

Publish/maintain a Weblog

16%

5%

2%

1%

1%

Use RSS feeds

4%

3%

2%

1%

1%

Base: North American online households Source: Forrester’s 2006 NACTAS Benchmark survey

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Entire contents © 2006 Forrester Research, Inc. All rights reserved.

Social shoppers use social computing tools heavily

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Entire contents © 2006 Forrester Research, Inc. All rights reserved.

Social computing will be like air – you can’t imagine life without it • Blogs will become just another type of Web page • Social computing will be built into every meaningful online interaction • RSS and podcasting will be built into email, browsers, MP3 players, and TVs » MP3 players automatically updated » Videos from family appear in your TiVo playlist

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Entire contents © 2006 Forrester Research, Inc. All rights reserved.

Rules for advertising in a social computing world • Respect the user by not imposing interruptive advertising on the experience • Engage the user with helpful, entertaining content • Build a relationship over time – it’s not a “30 second stand” • Personalize the marketing experience for each user – and her social network

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Entire contents © 2006 Forrester Research, Inc. All rights reserved.

Google + YouTube: What it means for marketers • YouTube will develop a way to identify offensive/questionable content » Allows marketers to opt-out of ads around those videos

• Google will leverage its advertising base into video » Expands existing online and (potential) radio base

• YouTube must manage viewer backlash to ads that interrupt the video viewing experience » Marketers/agencies should act more like content providers than advertisers » Agency video production should link up with word-of-mouth experts to invent new Web experiences

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Entire contents © 2006 Forrester Research, Inc. All rights reserved.

s-commerce: An opportunity for marketers to reach beyond MySpace and YouTube October 12, 2006

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What we’ll cover today z State of social networking z Marketing challenges z Social Commerce as a solution z Getting off to a smart start

Confidential

© 2006 Compete, Inc. All Rights Reserved.

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The MySpace phenomenon

snapshot: Seventh largest site 56 million visitors 18 visits each month 1000+ page views per person 30 minutes per stay Refers 35% of visits to Facebook and 13% to Google myspace backgrounds, myspace layouts top searches on eBay

Confidential

© 2006 Compete, Inc. All Rights Reserved.

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The web is becoming more social Two out of three online consumers have visited a social networking site Fastest growing online category: 109% growth in people, 414% growth in usage (pages viewed) since January 2004

Confidential

© 2006 Compete, Inc. All Rights Reserved.

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Social networking motivations

Meet people

Confidential

78% join to communicate with existing colleagues or develop new acquaintances

Be entertained

47% join in order to find entertaining content

Learn something

38% join to get information from other people

Influence others

23% join to express their opinions in a forum

such as photos, music or videos

about topics that hold particular interest to them

where their ideas could be discussed or acted upon

© 2006 Compete, Inc. All Rights Reserved.

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Characteristics of online socialites Attractive demographics Younger: 37 years old Higher household income: $78,000 Greater discretionary income: $8,000 Media & buying habits 35% spend less time with traditional media 75% seek input from peers before buying 25% of total purchases made online Marketers’ equals Early adopters: 40% are the first to buy Influential: 37% influence others’ opinions Credible: 63% trust reviews from other consumers as much as experts

Confidential

© 2006 Compete, Inc. All Rights Reserved.

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Social saturation tempers growth Average online socialite already frequents three sites, only has enough bandwidth to join one additional site Marketers’ demand for new advertising outlets exceeds supply of consumers’ time How many social networking sites would you consider being a part of? 24% 20% 18% 14% 12%

average

7%

1

2

3

4

3%

5

6

2%

7

1% 8

0% 9

10+

Total number of social networks online socialites are willing to join Confidential

© 2006 Compete, Inc. All Rights Reserved.

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s-commerce offers marketers a new approach “s-commerce” goes beyond advertising on social networking sites Links transactions and online communities Broadens benefits of social networking Thrives on consumer participation Incorporates best practices from • e-commerce: online sales & marketing performance • social networking: fast growth, deep engagement

Confidential

© 2006 Compete, Inc. All Rights Reserved.

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Emerging s-commerce models Corporate brands grow social z z z

Confidential

Branded micro-sites Customer Forums Ratings & Reviews

New brands create mash-ups z z z

Peer-to-Peer selling Community-created products Product blogs/forums

© 2006 Compete, Inc. All Rights Reserved.

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“When it comes to beer, sharing is caring.” Miller Lite becomes the voice of men In concert with a new television campaign, Miller Lite launched ManLaws.com to develop a new code of conduct by men for men. Customers that go to the site can view each ad as well as contribute and vote on new entries to the Manlawpedia – the official book of laws that governs all men. z Adoption: 50,000 visitors spend over 10 minutes interacting with the microsite each month z Engagement: Customers submit video auditions to appear alongside “men of the square table” 100,000

Accumulated minutes viewed (000’s)

75,000

1,600

z Influence: Over 50,000 new laws have been submitted to the Manlawpedia by customers

1,200

z Positioning: 750+ daily blog posts containing ManLaws enhances Miller Lite’s brand among male beer drinkers

50,000

800

25,000

400

0

0 May-06

Jun-06

Jul-06

Aug-06

Other examples of microsites to study: Boldmoves; Seventeen & Aquafina MySpace profiles

Sep-06

Manlaws.com Unique Visitors Confidential

© 2006 Compete, Inc. All Rights Reserved.

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“What security software do I need?” Dell forum helps customers help each other Dell’s active community forum consists of threaded discussions among Dell employees and community members. Participants create profiles to personalize their posts and add credibility. Dell rewards participants with exclusive promotions & offers for community members. z Community: 52% of visitors surveyed said they feel like a part of a Dell community z Service: 75% trust the content within the community and do not require support from Dell

300,000

z Loyalty: 68% of members are likely to purchase their next computer through Dell

250,000

200,000

z Advocacy: 90% of members will recommend the online forum to friends and/or family

150,000

100,000

Other examples of online customer forums to study:

50,000

Cingular, Samsung, Microsoft

0 Sep-05

Dec-05

Mar-06

Jun-06

Sep-06

Dell Online Forum Unique Visitors Confidential

© 2006 Compete, Inc. All Rights Reserved.

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“Getting out of two mortgage payments after condo fire.” Borrowers bond with lenders at Prosper Inspired by eBay, Prosper is building a new socialfinancial marketplace. Borrowers use Prosper’s online platform to create loan listings; lenders then bid down the interest rate to compete for the loan. Borrower profiles, bid histories and “groups” make the process straightforward, transparent and safe. z Adoption: 145,000 visitors each month, 50% are registered Prosper users z Engagement: Users visit the site 3.6 times each month and view nearly over 65 pages per visit

250,000

z Community: Approximately 3,800 active loans totaling $18.1 million (loans in default: 4)

200,000

z Affinity: 3,250 borrower groups have formed to pool like people, mitigate risk and lower the interest rates offered by lenders

150,000

100,000

50,000

Other examples of peer-to-peer sites to study: Zopa, Lala, Peerflix

0 Apr-06

May-06 Jun-06

Jul-06

Aug-06 Sep-06

Prosper Unique Visitors Confidential

© 2006 Compete, Inc. All Rights Reserved.

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“California-style burger joints in Boston?” Local businesses & opinionated reviews at Yelp Yelp is quickly becoming the definitive city guide by offering community-generated reviews on local businesses from restaurants to dentists. Consumers post reviews to Yelp, and can collect and organize recommendations from peers. Advertisers participate via email ads, enhanced business listings and sponsored search results. z Adoption: 500,000 monthly users: 15% submit at least one review each month z Community: Yelp members are very active contributors; in San Francisco, the average Mexican restaurant has 50 reviews, and the average member has contributed over 100 posts

800,000

600,000

z Influential: 80% of Yelp members consider community reviews as trustworthy as advice from family member or friend

400,000

200,000

Other examples of product-focused forums to study: 0 Apr-06

May-06

Jun-06

Jul-06

Aug-06

Sep-06

Woot, Insiderpages, Judy’sBook

Yelp Unique Visitors Confidential

© 2006 Compete, Inc. All Rights Reserved.

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Roadmap for launching s-commerce initiatives

Research

Confidential

Research consumers, while they research you and your rivals. • Develop new online research program • Benchmark usage and adoption of social sites • Survey consumers to understand motivations

Channel

Create a channel to connect consumers and your brand. • Design, launch and iterate s-commerce site • Focus on sales, service, or positioning brand • Seek customer input into site features

Engage

Engage consumers in conversation: listen, learn & leverage. • Contribute to the dialog and reinforce your value • Participate via questions, discussions, offers • Apply learning throughout sales and marketing

© 2006 Compete, Inc. All Rights Reserved.

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Taking our own medicine – compete.com Launching compete.com as a consumer service on November 1 Consumers benefit directly from sharing their clicks with each other, Compete and marketers compete.com – clickstreams as consumer-generated content

Site profiles:

Trust:

Timely, accurate website analytics including visitors, rank, pageviews, time spent, etc.

Detects dangerous phishing sites and spyware offenders

Deals: Promotions and discount codes across more than 2,000 online retailers

Confidential

© 2006 Compete, Inc. All Rights Reserved.

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Questions from registrants •

How does s-commerce relate to my market (travel, auto, financial services)?

•

What are the issues around privacy and hosting consumer-generated content?

•

What are cost effective ways to incorporate s-commerce into a consumer website?

•

How viable an advertising channel are social sites for high-consideration products?

•

How effective are profile and sponsored pages on social networking sites?

•

What impact are communities having on sales, marketing and/or customer service?

•

What specific tools or features impact conversion rates?

•

What are online communities three most pressing issues?

•

How should marketers partner with social networking sites?

•

Do consumers really pay attention to ads on these social networking sites?

For copies of both presentations, please email Max Freiert at [email protected]

Confidential

© 2006 Compete, Inc. All Rights Reserved.

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Confidential

© 2006 Compete, Inc. All Rights Reserved.

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