You can’t claim engagement if you’re buying it

Whether it’s a flier in a newspaper with a Facebook coupon, a tv spot with a Twitter url for a contest or an outright offer to buy fandom with a deep discount (see “Did This National Restaurant Chain Put Too Much Love Into the Like?” by Jay Baer) the result a purchase of a like rather than a connection with a customer. As this sort of buying becomes more common place, it’s not surprising that even as brands talk about wonderful ideas like engaging and building community, research from the Get Satisfaction blog shows that 43.5% of consumers are following brands for offers — and why not, that’s what they’re being told they’ll get.

Already missing the mark on relevancy, social sites penalize poor relevancy

With hundreds of connections per user noise has become so high that systems like Facebook’s EdgeRank now exist to tune down what a user, their friends, and even the overall “like” audience see from a brand page. Even on systems like Twitter that don’t have scoring of responses, the mere amount of information makes the less than relevant disappear into the bottom of a long stream. Thus the more a brand buys it’s following, the less each follower sees, or cares to pay attention to the brand. This becomes a cold reality when you discover that some brands are suppressed to over 80% of their audience.

This doesn’t mean abandoning growth goals, but rather settingt expectations about what they lead too

A brand that decides “I’m going to go out and advertise my page to build up” is wrong to use the word engage to refer to that program. Conversation is gone and while the activity is on a social channel, it is as much broadcast marketing as an email list or a weekly mailer… Even worse with virtually no segmentation offered by social networks, the existing loyal fan base is lumped in with the prospecting effort. Everyone becomes one jumbled mess.

On the other hand, a brand that says let’s insert a flier with orders to share a comment, or posts a sign inside our stores with a mention that you’ll find expert product insights, company updates and occasional offers on their social pages is building the expectation of dialogue and is attracting loyalty and certainly customers. A discount may be associated but the qualification is that you want to be an insider, a participant first, and get a little something in return for it in access and savings.

Bigger counts do not actually mean bigger reach or results

It’s a critical realization and once you step down the paid like road it’s very difficult to get back up the relevancy ladder.

Before I explain what EdgeRank is and how it could be killing your Facebook program, we have to look at the history of Facebook. When the site was new people connected with their direct network, whether that was fellow students or good friends, but now the joke is about how your grandma, the geek from high school, even your middle school gym teacher are all your Facebook friends. Add to that tens of thousands of businesses, charities and organizations all vying for your “LIKE” and the network has become awfully big – too big to just show you everything at once.

Enter EdgeRank, Facebook’s system for devising the first posts to show a user when they login and look at their news feed. Contrary to popular belief, the feed is not rank ordered on time and even if a user clicks the “view most recent” override, it is still personalizing out updates. Exact figures aren’t published [nor is the full details of how EdgeRank works so everything is a bit of conjecture] but I’ve seen estimates that place as few as 40% of brand posts as “viewable” to a given user on their news feed. 6 out of 10 never have a chance.

Now consider that something in the realm of 90%++ of all action on Facebook starts via the news feed. Pretty important to be seen there.

Just how potent is EdgeRank? Recently I’ve been working with a page for a company where we are talking about literally giving up on adding fans and working to re-engage or even replace who they already have. Why? Effectiveness. When this brand had just 150,000 “fans” their views ratio was 2:1 meaning that for every post nearly 300,000 impressions were generated – awesome exposure. Growth accelerated significantly thanks to ads and viral momentum but quality took a dive and the ratio has flipped to 1:3. Today with 600k fans they get fewer views with 5 times the users.

So how do you influence your EdgeRank to keep your posts in the top news feed, getting seen and doing their job? You think about your page the same way Facebook does — like a user. Continue to part II for 10 tips on what to do, and what to avoid, to maximize your Facebook views.

People may love your product but is that enough to get you selected as the brand they follow if you don't tell them why?

Step back and think about it… the call to action “become a fan” has got to be one of the most loaded statements in the history of marketing.

- A lifetime of purchases and evangelizing, was I not a fan before I joined your Facebook page?

- Is my “like” that strong of an endorsement that it makes me a fan versus just a follower?

- What is a fan? What’s so special about being one?

We can do better.

Exclusives, Useful Updates, Coupons, and even Just Brand Affinity can all be reasons to join up. But we have to spell them out so people know what they're getting.

Joining your Facebook, Twitter, YouTube or other channels may joining something on a “social” site but it’s still a conversion action just like any other to the user. They’re a person, you’re a business. Thankfully, all that time we spend in building content strategies, making the right branded applications and offering a strong combination of “value” from discounts to inside looks to contests is all the ammo to sell joining up. It just needs to be sold.

So let’s stop telling people just to “fan” or “follow” or “like” us and tell them the full message.

1. What is it you want them to do exactly?
2. What does they get for doing this? What’s in it for them?
3. What does becoming a fan really mean? What do you expect out of a fan? What can they do?

Without a defined offering for why someone should join it’s hard to know their value as a business either. How are you measuring likes versus loyalty in Facebook if the only goal is one action?

Thankfully the YouTube community has held onto some sense here and I’ve found a great video explaining how you get followers by PhilipDeFranco, a top followed channel. Not surprisingly, aside from a few gimmick ideas it all comes back down to having a clear offering that lets you stand out. Surprised?

Later this week I’ll be posting up a few examples of campaigns that successful brands are using to drive social interaction but if you have your own story, leave a comment.

If you were a typical consumer reading the news right now I’d bet you would think that the web had turned into one giant privacy problem in need of a very big piece of legislation to save your identity. And that’s exactly the problem – people don’t understand the issue.

No doubt there are bad marketers, bad services and bad uses of very personal information out there. There is almost always some baseline truth to legislation, a real issue that needs to be solved. But data has been collected and used long before the web and in much greater and potentially scarier ways. Grocery store chains don’t scan club cards for fun. Direct marketers didn’t randomly get lucky and find your new address to keep sending “junk mail” too. When you call a utility company and are asked to provide the last four digits of your social security number that you provide are not being given to someone who spent 4 years in ethics courses and risks a long career by doing anything bad. Data has needed rules for a long, long time.

So why now? Why regulation for the web?

I studied politics & society extensively in college [finally a good link between my degrees and work] but I’m no expert in this field so I can only assume that the decision for action “now” comes down to visibility of the issue, driven likely by the web its self. Hopefully it is a desire to protect people, rather than an attempt to catch the eye of the media [and voters], that spawned the laws we are seeing hit the committee rooms of the Senate but regardless the result is the same.

We have politicians trying to in-act a law to police something which few of them use [Obama’s Facebook townhall meeting being the first web-tech event I recall ever seeing a president, past or present] and which is, all things said, still in its relative infancy. Not a good combination when the web industry just begun to extol the benefits of the very thing that people are looking for us to stop.  

Marketers are not doing a good job marketing privacy.

The vast majority of sites, especially the ones that people actually like (and therefore have most of the data) are run by people who I would call ethical, or at least smart enough to know that there’s no real benefit in being unethical.

Dan Rowinski said it simply in a recent RWW article on this very subject, “Data is the lifeblood of the Web”. We all know this and we all know that while critical, data is just that – data: millions of records and entries that can seem highly targeted and relevant but are in fact so voluminous that how any individual fits, or doesn’t fit into it is virtually irrelevant. It’s not about the individual; it’s about the characteristics of a random identifier an individual poses. There’s no money in caring who Sally is versus serving ads to id 8cEfd342kA0zK. And that’s good for privacy.

We all know this but the populous (politicians and consumers) don’t. To many, data is something being misused at every turn in a space where marketers are running around without rules or consequences.

Education can turn potential negatives into positives.

I can recall a hundred experiences watching TV or Sports with friends where some irrelevant ad comes on and the whole room complains or flips the channel. Before any more news articles hit further condemning our industry to an immediate fate, we need to step out and look at privacy just like we look at conversion or retention and start optimizing our sites, our marketing and get in front of the issue.

There are real benefits to data but we’re not doing a good job of reminding people of them, or of the steps we take to protect that data.

1. Explain the benefits of data to the experience. If you’re mint.com or facebook people use you because of the data you collect. They want intelligent services that make suggestions, find friends, show you what’s happening in your world and as a result we’re just starting to get into web 3.0 and the era of data driven services. In turn users know they give data and while they may comment that the suggestions are a bit creepy at time, they rave about the systems. But do they realize the correlation? We have to remind them that to get personal you have to have an identity, even if it’s just a few attributes.

Facebook’s 3^rd party permission popups are a bit ominous but the idea is solid. Here’s what we have on you, here’s what you’re sharing with some application, do you want to do it? Not every site needs to go this far but if we explain what we capture and how it makes the experience; people can make an intelligent choice along the way and see the upsides. If they choose not to share then they don’t get to play with the same toys – that’s life.

2. Offer a relevant ad or an irrelevant one. People rave about Amazon’s suggestions despite the fact that they are ads because they’re relevant. The same people say they don’t click ads and at less than a quarter of a percent they don’t click them – much – but when the ad fits it stops being so much of an ad and becomes useful which is why conversion rates on targeting prove that this model works. Whether they click or ignore, relevant is [generally] preferred.  

Rather than running the current PSA’s on unused inventory how about a small campaign to extol the benefit s of targeting to giving the user something relevant, something they could on occasion discover. The same goes for those advertising with these methods – put a tag on the landing page, explain the campaign and why it works. 1/100^th or 1/1000^th of 1% of all internet advertising is nothing to sneeze at; we have the audience and the tools.

3.   Privacy policies in their current form have to go or at the very least be replaced by human readable explanations of what we are doing. What is captured? Where does it go? Who can see it? And how can the user opt-out? 3 page, 10-point font documents hidden in the footer do not make people feel secure. Infographics, Tooltips in registration, FAQs, video and all the other things we use to sell people show value in sharing. A for B.

4.   Anonymity, policies and control must be the norm. Most companies can find ways to get back from a profile to a person, through multiple databases or by storing information that’s freeform enough to allow for personality identity but we don’t. This is where it’s critical that people, especially those in office, understand what the industry is doing to keep the secrets locked away. We have industry policies, certifications like TRUSTe and PCI, but these are being skipped over in commentary so you can bet they are being ignored behind the doors in D.C.  

Regulation will come we know that, and should embrace it as there are unscrupulous people out there but we should be the ones painting a picture of what it is we do, why we do it, and enable people to choose what they want just as we have a choice right now, sit back and see what comes, or step out and have a say in the issue .

Relevant reading:

Storm Brewing: Commercial Data Bill Of Rights Introduced - ReadWriteWeb

Another privacy bill is introduced in Congress - Internet Retailer

One of the chief issues I’ve always seen with search delivering the right results is the lack of insight into who is searching. With the introduction of +1 Google gains a much more real insight – what those around you are looking at. In aggregate this is useful in killing spam, building up good resources and sorting out poor / unliked results but when applied back to a search’s network whether it’s a contact or location based it becomes hugely powerful.

For example, if I search for “Miramar” result #1 is a city, #2 is a military base and nowhere on page 2 is the result I’m looking for – my former apartment community. Using location Google is able to infer some information about what result I may want, and even shows a map, but it’s not enough certainity to switch out the result set. With +1 data from local (geotargeted) networks they get a whole other dimension of insights to counterweight what is the most relevant (aka most linked too/ word weighted) with what is actually being looked at and suddenly the right result has a real shot of making it up top.

If Google is able to build enough of a profile network, +1 could become even more important in driving search results by understanding that all of my friends searching for a particular sports bar with a generic name or from within a larger chain were looking at the same venue and adjust accordingly, potentially even resetting the result in time given the type of listing.

Facebook is already doing this to some degree by leveraging your own likes, connections and your larger your network to suggest people, places and brand results in searches, and most of the time it’s right on (and with 2 million+ likes, that’s a big headstart). As Facebook and Google war over who is going to control searching, relevancy to the individual has got to be in the top couple of spots for importance and whoever understands the most about the person searching can deliver the best results to win their repeat attention and usage.

Google, while smart to bring in social feedback, is behind in a big way when it comes to making this applicable personally. Facebook and even youtube, twitter and others simply have them beat in connections per user and a partnership a la Amazon’s “your Facebook friends…” would have let them move quicker to incorporate individual social learnings into output. Even without the deep networks for users there’s a lot of implications to improving relevancy right now just by weighting down “-1” results, and of course there’s going to be a lot of blackhat attempts to leverage the tool to influence results too.

Example Offers as Seen on Groupon's San Jose Page

From the analytics I saw floating around last year it would appear that daily deal sites are hovering somewhere in the 10-15% activation rate (10-15% of sign ups have actually bought a deal) and if this is hugely understated and 35% of sign ups have activated (30MM deals sold, 29MM users, 3x deals each =35% of users ), it’s still a huge opportunity (and probably why Groupon is hiring a Director of Customer Activation with double digit growth goals – sweet job too).

Looking at data from the other side, in a recent blog post, Jeff Bussgang, cites a rumored 3-4% CVR for Groupon. As a leader in the field Groupon should have one of the higher conversion rates as they certainly have many of the top offers and a huge core of interested customers (66% read deals daily!). But unlike a traditional eTailer where a 4% conversion rate is accepted because the vast majority of the 96% remaining users are considered potential future customers (they came to your site for a reason), with daily deal sites, there’s a huge issue – relevancy – which is to say that the traffic is all coming for diverse reasons and, without relevant offers, there’s little reason for conversions to take place.

So cutting to the chase, the issue I see, and keep seeing is the range of those offers. Groupon, Living Social, Yelp Deals, Daily Steals, they can all rake in users with the same deal types (follow a few of the sites and you’ll see businesses recycling old offers as they try different audiences, fee structures) but if what they offer back doesn’t relate to the customer, they leave huge dollars on the table every single day.

Living Social Offer I'd Be Signed up for Twice -- No Wonder Why it's Featured on their Site

Take Living Social’s Amazon $20 for $10 offer that generated over a million sales. The next day my offer was for some sort of premium spa service. I just went from something I really wanted to something I had little affinity for (not knocking spa’s, I just don’t buy their services frequently). To me this is like my sister logging into Amazon and having the entire homepage be filled with table saws – not very useful in her completely managed and very new NYC apartment even if she could use one now and then.

If you look at the demographics of either of the leaders what you see is opportunity. Deals tend to be for health & beauty services, fine dining, and the monthly car wash with an occasional outlier which ranges from exotic dance lessons (demotargeted female of course) to flying lessons. Problem is it’s not just one user type: on LivingSocial (probably thanks to the Amazon deal), 40% of the users are male and on Groupon it’s still 26%. Add to the age – users are young (68% of Groupon is under 34, 36% of LivingSocial) and single (49% of Groupon, N/A by LivingSocial).

Combine these all together and what you get is a dilemma – relevancy vs frequency.

Daily Deal sites have made a promise to deliver something every single day which means rain or shine, good or bad, that offer comes and while anyone can go to the spa or eat a nice meal, the overwhelming focus of the deals are to the same demographic – female, couples, older and for the same types of services (I dare a newly dating, 24 yearold guy to pull out a Groupon code when the check comes and then suggest the same restaurant again for next week). The deal sites know this, Mashable even wrote about it last year: Groupon Eyes Further Growth with Personalized Deals; < http://mashable.com/2010/07/29/groupon-personalized-deals/> but knowing and truly solving are very different as my inbox so aptly shows this morning.

So where do we lie – with opportunity of course.

The daily deal site that gets this first stands to win a lot. Sure the offers they have now may appeal to the majority of their core audience but the majority of their core is already being marketed too left and right by competing services; the generic offer is commoditized. So the site that broads up, ropes in more sales from its younger women (Groupon is doing more and more of this as told to me by several female friends in SF), parents, guys, and even their core demographic who is still seeing many off target offers, the more they stand to capitalize on their existing investment – that giant email database each company has.

If I was sitting in a corner office of one of the independent deal sites right now I’d be pretty concerned about how to up relevancy, and not just to a few major demographic groups but real niche relevancy with offers based on interests (some of us like to read, some of us like to get shot at with paintballs) and the ability to rate ads (oil changes are only for people with cars) and some friendly user reviews (better businesses sell more) to create something like the Facebook feed, but in deal form.

After all, there are a couple competitive businesses – namely Google and Facebook who have expressed great interest in the deal category and have business rolodexes so deep it resembles the size of most company’s consumer database… If they figure it out first you can bet it won’t be hard to get a lot, an awful lot, of businesses churning out relevant offers giving consumers a lot more reason to check with them first.

To sum it all up, daily deals are clearly a huge hit and have brought in revenue at a rate that seems to be unmatched, well, ever. But in a field of competition this fierce there’s a lot of value to users in jumping ship, playing the field, and any other ‘cheating’ metaphor you can come up with. While growing the core, picking up more users and delivering to more locations are all clearly going to help these businesses propel, lifetime value is a win that trumps all other and as Amazon has shown so well, LTV comes best from having something everyone wants, and helping them get right to it time again and again and again.

———————-

As a side note, there there’s a flip side to this for businesses outside the core of the daily deal sites – easy opportunity. While I’ve become less and less diligent about reading my daily deal emails (they all get sorted and put in a folder), an offer outside the box is going to catch the attention of a lot of people who haven’t bought recently, if at all. Perhaps that’s why my local rock climbing gym and the nearest paintball fields are such fans.

First I found out that it’s time for me to propose thanks To Robbins Brothers.

Then I found out this special someone works in an office thanks to ProFlowers.

This was news to me but all seemed slightly ok until Victoria’s Secret told me there was a new way for me to love my own body in time for Valentine’s Day, with a bra. I guess only women end up on their mailing list.

Tiffany’s also shot over a confusing one when they offered to help me get a gift for “him” although they were ambiguous about who exactly “he” was.

And of course we can’t forget the anniversary gifts, computer parts and other suggestions sent out by all my other favorite retailers, most of which had much less impactful insights into my world.

Now I’m not suggesting any of these companies should have held back on their campaigns, in fact I’d like to I commend them on trying a diverse set of campaign messages and using some great creative to drive the sale. And these campaigns aren’t much different from what we see on TV, hear about in radio spots and are bombarded with in every other channel possible. What’s different is the opportunity of the internet – with a little interaction, some micro-profiling or even just a fun email offer Robbins Brothers could know my relationship status, Pro Flowers could be sure the name they keep suggesting a gift for is still a part of my life and Victoria’s Secret could become aware of my gender.

Personalization isn’t only about stopping awkward emails; it’s also a conversion steroid. Just think about it – if 1-800-Flowers knew who my mom was (they’ve shipped to her), what the status of my current relationship is, and that I’m more of the random flowers type than the once a year guy they could have slaughtered all their competition with some targeted and really useful gift suggestions instead of 23 different offers over 14 days. Getting accurate consumer data is of course a fine line as you don’t want to scare people off but as the world becomes increasingly digital the opportunity for a little profiling exists, it just needs to be used.

20 of the emails I got from 1800Flowers in just 2 weeks. The shocker: This isn't everything.

Now if you’ll excuse me, I need to update my family on some recent insights.