Category: Marketing Strategy

Is Social Media Necessary for your Bottomline

Is Social Media Necessary for Your Bottomline?

By Sujata Ramnarayan, Ph.D.

A recent HBR blog decried the amount of resources spent and talk by marketers on social media. Some of the criticisms included:

—–Is social media adding to the bottomline? #NOPE

—–Is there an opportunity cost to using social media?

—–The metrics for evaluating social media are wrong

—–Sixty percent of U.S. adults who use social media say that social media sites have no influence on their purchase decisions and only 5% say that they have a great deal of influence

—–Technology changes fast – look at MySpace and Friendster

I would like to address the points raised by the author of the HBR blog in light of historical changes, context, and data.

Is social media adding to the bottomline? #YES

Social Media
A tweet does not maketh a purchase. Here I would like to quote, John Wannamaker – considered the father of advertising – who said “I know I am wasting half of my advertising dollars, I just don’t know which half.” You do waste some of your dollars or viewership of posts in social media. The difference though, as in all digital formats, is that you can measure how much you are wasting and how much you are gaining. The number of followers or likes or retweets is certainly not a measure of direct addition to the bottomline. It is a measure of awareness and level of gained attention. There is an entire psychological process that the customer goes through before awareness turns into purchase. How many times do you check out a product before you decide to purchase, especially one that you have never purchased before?

Is there an opportunity cost to NOT using social media?

Social Media Tradeoffs
Absolutely. Like any other channel, there is an opportunity cost to using or not using any media. The fact of the matter is that customers are spending more time at digital venues, including social media channels. The amount of time on social media sites is increasing across different demographics. There are always tradeoffs involved when choosing different media. These tradeoffs are between how much to spend between traditional and digital, how much to spend between different digital channels, and how much to allocate in resources between different social media channels/efforts (blogging is generally placed in the same category as social media, although it is technically content). However, as I said in my book, content – timeless and timely – is the currency of social networks. These tradeoffs are no different than what has always been the case when deciding on optimal allocation (optimal being the word of consideration here) between traditional channels of Television, Radio, Print etc. The choice of channels needs to be strategic, as does the combination of channels. Social is a long-term customer relationship building strategy as much as it is about creating awareness and facilitating social discovery – in other words, increasing reach.

The metrics for evaluating social media are not wrong but need extension to attribution, and….

The metrics for evaluating social media need to be extended (not necessarily wrong) – mainly to extend it to attribution. If the choice is between spending time and /or dollars between only email and social, there is a way in which you can integrate the two by providing something of value so you receive something of value (i.e. email address). This continues the relationship building process and of course, measurement, that connects the different stages of the sales funnel for better attribution. Email is still checked more often than social media channels, but social offers reach that can extend beyond your current audience.

What you gain from investment in social media is not always purely about numbers (structured data). It is also about what you gain in terms of unstructured data that could turn into valuable information. While a product rating of 1 or 5 tells me that a certain customer is happy or unhappy, it does not tell me why. Social media conversations can yield insights that reflect lack of internal checks and balances in place. Historically, sociologists recognized the role of word of mouth communication in the spread of products and ideas. This was captured by Everett Roger’s model of product diffusion to show how early adopters of products tend to be different and lead the way to an early majority of adopters. Social word of mouse is no different except it can be tracked (an advantage) better than word of mouth communication. On the other hand, to measure word of mouth communication, researchers needed to turn to surveys of self-reported behavior. Email does not give you this rich resource of information that social media conversations do due to its lack of easy interactivity.

Forty percent of U.S. adults using social media are influenced in their purchase behavior by it

The author says that 60% of U.S. adults using social media are not influenced in their purchases by social media conversations. This means that 40% or 4 in 10 are influenced in their purchase decisions by social media sites. In fact, 68% percent of survey respondents responding to a survey by Nielsen said that they trust consumer opinions posted online, up 7 percentage points in 2013 from 2007. As we all know, data needs to be always evaluated in the context of the respondent population and the phrasing of the question. Depending on who is reporting the data, anywhere form 37% to 53% of Television viewers reported being influenced in their purchase decisions by Television advertising. Given that social media is a new medium, an influence rate of 40% is remarkable.

Technology changes fast – Look at time shifting

Technology does change fast and marketers need to keep moving along with that, while investing in channels that are likely to last longer, channels that still have a wide reach, and emerging channels that are likely to grow. Television, while claiming a larger audience, is not a growth medium in its current form. Instead, paid for – advertising free media – like Netflix is gaining an audience. Cable television services are now being replaced by online services. Time shifting is adding another element of challenge as well. In such cases, it is valuable for companies to develop their own audience that they can actually communicate with, while continuing to widen their reach. Unlike traditional broadcasters, Netflix knows who is watching what program at an individual level. That should change as traditional networks enter streaming entertainment as well.
Television did not make companies successful. Their creative strategies in using the medium did. Social media is the same way. It is a channel. Success depends on fundamental marketing principles. These are to create awareness, interest, and desire to bring prospects to the Website, make them purchase, re-purchase, and make recommendations to others. These fundamentals should still be driving your social media strategy and your investments in social media.


Marketing in a World of Digital SharingSujata Ramnarayan, Ph.D. is a Marketing Consultant focused on improving performance  through data-driven insights and strategy. She is a former Gartner Group Analyst/Professor, and the Author of Marketing in a World of Digital Sharing. Her writings have been published at and other publications. Follow Sujata on Twitter @mktgnugget and check out other articles by her here.

Marketing in a World of Digital Sharing



Are you drowning in social media noise and chaos?

Authored by Sujata Ramnarayan, Ph.D.

Like most marketers, you are drowning in social media noise and chaos.   Businesses have simply jumped in without tying social media outcomes to any business objectives.
The purpose of this book is to help you:
– See how social media fits into your overall marketing strategy
– Understand how best to develop social media with allocation among different tools
– Figure out the extent to which social media is relevant to your business or department, and how best to implement it given an increasingly digital world of sharing and an empowered customer voice

Publishers Weekly says “Ramnarayan provides a detailed, contemporary primer that illuminates the promise and peril of the brave new world of social media. Ramnarayan herself acknowledges that social media is no panacea—her crisp presentation, with chapter summaries to highlight the main pointers, confirms that companies that choose not to listen to customers stand to lose ground to competitors who do.”


“Sujata Ramnarayan’s excellent book does several things that I have not seen in other treatments of this subject. She takes a reasoned perspective on a topic that is often full of hyperbole. The book is filled with advice for the marketer that is both practical and strategic. It helps the marketer to leverage social media where it can best impact business performance. I highly recommend the book.”
– Gordon Wyner, Editor-In-Chief, Marketing Management

“This practical guide to social media marketing cuts through the noise with clear advice on how to turn strategy into practice. With the help of effective charts and analysis, the reader can gain real insight into social media’s influence in corporate marketing. By showing how building quality content in social media is no longer an option for corporations, this is also a lesson in building a brand by listening to your customers. ”
-Rajesh Subramaniam, SVP, Global Marketing and Customer Experience, FedEx Services

Which Half of Your Google Search Advertising is Being Wasted?

Which half is being wasted – branded vs non-branded keywords

We all know the 19th century adage “I know half the money I spend on advertising is wasted; I just don’t know which half.” Online click trackable advertising promised to change that. It seems it has. It turns out that “branded keyword” advertising is not effective for well-known companies. Companies with known brand names would do well to re-allocate the money they are spending on search engine marketing to other areas. In a recent HBR blog, Professor Fisman referred to a preliminary study by eBay that calls into question the effectiveness of Google advertising for big well-known brand names. In an elaborate and controlled experiment conducted by eBay, its researchers found that when Google (or Yahoo! or Bing) search advertising was discontinued for a sample of its potential audience, traffic to the site continued to perform as well as it did in areas in which Google “brand keyword” (defined as any keyword that is simply the company or product name or includes the name of the company such as “eBay shoes”) advertising was still being used. This study underlines

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Why marketers need to lead with data and insight

Marketing tech dataGartner Group predicts that by 2016, 80% of marketing technology spending will come out of the marketing departments. What are marketers spending on? It falls in three areas:

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Are you passing the Customer Qualification Process?

Businesses continue to think of the funnel as a sales funnel with leads entering and being qualified, and hopefully reaching the end-point of becoming a customer. A recent study shows that this process is changing. Companies need to change their perspective because it is the potential customers that are qualifying suppliers. So, are you in the “Customer’s Buyer Funnel?”

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Pay $7 for a cup of coffee? – Very Likely!!!

Starbucks is going super-premium. The company that got people to pay $4 for a product they had paid less than a dollar for is adopting a new long-term strategy. It has introduced a $7 cup of coffee in 50 of its Northwest stores made from a hard to grow coffee bean -the Costa Rica Finca Palmilara. It plans to roll out this product nationally next year. Starbucks might be on to something here again!

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How to Use Gamification to Build Digital Loyalty

Using  Gamification to Build Digital Loyalty

ENGAGE2012 is a conference hosted by Badgeville, the company that provides a solution for behavior gaming. It was a great conference with some interesting perspectives. Most CEOs today acknowledge the importance of social in their overall strategy even as the world seems to be taken over by social fatigue. Badgeville’s conference hinged on the next step of increasing social engagement. As Chris Lynch, Director of Product Marketing at Badgeville said – the intersection of social plus gamification is a powerful combination.

 What is Gamification

In case you are new to the concept of gamification, it refers to a set of specific feedback based processes designed to encourage specific behaviors.

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Why Social Media is NOT free

Social media has become popular as a communication channel for companies partly because of its low barriers to entry, along with its popularity among target customers.  Social media channels are free to enter, but associated costs and problems become apparent later. That is also one of the reasons why the return on investment is hard to measure. To download the article, please login.

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How Chobani did it with Social Media and More….

How Chobani Got its Start

When I saw the television advertisement for Chobani yogurt, I thought to myself – who needs one more yogurt and that too with a silly name?  The name did stick in my mind though, and the advertisement did leave its mark on me.  Chobani’s rise to fame before I caught its name on television advertising happened through social media – through blogs and more; through its customers who tasted it and vouched for it. The reason it got stocked on retail shelves was the taste test.  Once retailers tasted it, they found it hard to refuse to stock.  Its taste was great because, its founder and CEO Hamdi Ulukaya, Turkish by origin, spent a lot of time perfecting it. He felt the US could do with a better tasting yogurt.  I have to admit here that I am partial to European yogurts myself (in Europe though, where I have found them tasting a lot better, so much that I actually looked forward to eating it every day!).

Chobani’s Taste and Social Media

Chobani’s taste was slowly derived through focus, use of more milk than its competitors, and hiring a yogurt expert from Greece.  The success of this new entrant in a mature market dominated by big names such as Yoplait and Dannon was because of two reasons – making a better product than its competition and pleasing its customers so much that they would be your product spokespeople.  The third reason that helped Chobani’s rise to success is the access to “free” social media channels that makes its easier to scale word of mouth.  For a young and unknown company with few resources it evens the playing field (somewhat) to go up against its behemoth competitors who had grown comfortable with their success despite a weakness – not such great taste in the Greek yogurt category.  See Figure below.

Frequency of Social Media Mention of each Yogurt Brand

Chobani’s Socially Savvy Strategy

Chobani’s website is quite social savvy.  Their social strategy is well integrated with a community oriented marketing strategy that involves sponsorship of fitness events in which they are using their product and Chobani branded t-shirts for additional name recognition.  Their website features a series of “guest bloggers.”  These are other bloggers who write about nutrition and fitness, again using this as a way to engage influencers and their prospects/customers directly.  For its Facebook page, the company uses mostly delectable photographs of Chobani yogurt infused end-products that are hard not to “like” and thus spread the word.  The sentiment is generally positive with people from U.S. west coast to Brazil wondering where or when they can get their product closer to home.

 Chobani and Competition

Ironically enough, Chobani’s well entrenched and incumbent competitors have European origins as well.  Dannon yogurt is owned by a Spanish-French multinational based in France.  Yoplait which also has a French origin is actually owned by General Mills with a 51% controlling stake in it.  Social media mentions of Chobani compared to the leading competitors Dannon and Yoplait should be a cause for concern for these other well known brands.

As the Figure above shows, Chobani’s competitors have cause for concern, Dannon more so than Yoplait, for its share of mind among consumers. Granted, social media research reveals that not everyone likes the tangy taste of Greek yogurt.  I tasted Chobani myself and have to say that Greek yogurt is not for me, although I love yogurt in France.  However, I could tell that Chobani’s yogurt has great taste and texture for those who love slightly tangy yogurt. So it is no surprise that those who do are passionate about it.  Add to that the fact that this is a segment of young, well-heeled, and educated and a cup of Chobani as one of the tweets put it  “has 16 grams of protein and its like 6 oz holy cow #mindblown,”…packing a protein punch and low calories with taste.

 Lessons from Chobani’s Success

There are several lessons for companies around Chobani’s success:

• Social media evens the playing field a lot more for smaller competitors – provided they have a superior product (Chobani is only five years old)
• Chobani’s use of social media is very effective – using mostly fantastic photographs on Facebook, Instagram, and community engaging and oriented blogging.
• Social media metrics can tell you a lot more about the competition quite quickly.  Chobani’s competitors have cause for concern when they are losing share of mind in a category that is growing – Greek yogurt.

•While Chobani might have got its start and acceleration from social media, its television advertising led to so much demand that it had to stop advertising.  That says how much television too still has a role to play.



iPad At Your Service

iPad At Your Service

iPad At Your Service

Many customers today depend on their smartphones heavily for local shopping decisions.  As of January 2012, 29% of U.S. consumers own an iPad or an e-reader and 46% own a smart phone.  Some retailers have stepped in to cater to this trend by providing personal touches using technology rather than humans.  As Apple
pushes into the retail industry, retailers are responding by offering iPad stations for consumers to research and
compare the products they are shopping for.  Nordstrom has found itself surprised to find that customers are using its app inside its store to do research.  It introduced the app to help customers shop online and order online while they were watching television.  Based on my research using Social Media, customers have become disappointed with customer service and salespeople that are not knowledgeable about products.  They have also become extremely comfortable with doing their own research online, interacting with computers that seem more knowledgeable than the salespeople at stores.  Many of these customers do not want to be approached by a salesperson, however they all would like to find one when needed.  That is not the case as many of their experiences and my own illustrate.  I was at Orchard Supply Store over the weekend looking for a particular Hibiscus plant.  First of all it was difficult to locate someone to help me.  Finally when I did, all the person could do was to say he does not know what color the flower was going to be.  I finally took out my iphone to do my research.

Young and old, have both become accustomed to having their smartphones and tablets answer their questions through web pages and customer commentaries.  Many also still like to experience the touch and feel of products.  Retail stores are in fact becoming the showroom for many products that are bought online.  The things that will help them survive are:

1. Providing smart technology that is currently helping better than salespeople
2. Recognizing that they are acting as showrooms for their Manufacturer’s products and asking the Manufacturer for a higher fee to stock in return for offering the product at the same price as the online price
3. Changing the product in some way so direct comparison is made more difficult for the consumer
4. Having a few salespeople that are knowledgeable, trained, and ready to help when needed as a way to differentiate
5. Train salespeople to arm themselves with online intelligence on products so they can counter negative, biased, or inaccurate reviews.  Equip them with ipads if they cannot answer the question themselves.  An in-store app on products is another way to help customers, whether it is used by the customers or the salespeople or just placed within the stores as help stations.
6. Loyalty awards for repeat purchases.  Even membership cards that gives them discounts and free shipping on
products online.

Zappos is an online store.  However, it does not have shoddy customer service.  Its customer service is always
accessible on the phone for questions without being put on hold.  Based on all the negative comments about unhelpful and ignorant salespeople at retail, it seems that retail could use investing in a few good accessible salespeople as a differentiator.  After all Apple stores did make retailing cool using its cool products, great looking store focused on design, and knowledgeable and helpful salespeople (although that has received mixed reviews).  Use technology itself to help customers let salespeople know that they are needed.  After all what use is location based technology if you cannot locate a salesperson when needed within a store.  With point of purchase payment systems such as Square attached to an iPad, scannable coupons on cell phones, the role of salespeople as mere cashiers is also getting moot.  Similar to how social media is being used to connect consumers and give them something of value that represents the brand personality, brick and mortar retailers need to find their own way to connect with their customers through the feeling of community.  For brands like Nike, it has been through the online communities it has built around sports categories such as running.  For bookstores, its the story reading or author signing events.  Wholefoods does a wonderful job both online and offline in personifying its brand around the themes of sustainability, organic and local focus, and demanding a higher price for its products.  All retail stores need the equivalent of these events to build their brand around such events that are useful to their customers.  I have yet to see a clothing retail store partner with a fashion show or a designer.  These are things that online stores can emulate (or already do through reviews) but cannot come close to as in a live setting.