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6 months in review: Digital's biggest trends

6 months in review: Digital's biggest trends Jim Meskauskas

Yes, ladies and gentlemen, it's that time of year again. That time when we stop for a moment to look back on the last six months of the year and wax philosophical, poetical, nostalgic, or quixotic about those trends that have emerged during the first half of the year that appear poised to dominate the advertising and marketing landscape. Or are they? Following are four of the biggest trends we've seen since the dawn of 2011. We examine what they are, their perceived value, and whether or not they are fads or foundational. So what do you think? Are these emerging trends ripe? Or just hype?

Social shopping
You've heard the big names: Groupon and LivingSocial. How about Half Off Depot, Plum District, Kactoos, Little Birdie, and BuyWithMe? Did you know that sites like Snooth (a wine site) and Yelp (a locally focused review site) also offer crowd-sourced shopping? Have you heard of ShopSocially, Blippy, Yeay.me, and Swipely? Did you know what Google has gotten into the space, with Google Offers, currently in beta?

The proliferation of social shopping sites is testament to the strength of this growing trend. It's kind of like the ad network space not 10 years ago: Every time a truck goes by, another daily deal site is born. It is the online business model du jour.

And there's good reason.

According to BIA/Kelsey research, the estimate is that what was an $873 million market in deal-a-day e-commerce in 2010 will rise to $1.24 billion in 2011 and increase to $3.9 billion in 2015.

It is no wonder there are so many entrants to the field. The challenge is that more cattle in the pasture do not mean more grass. More mouths to feed with the same amount of food can lead to everyone being malnourished.

According to a study from a professor at Rice University's Jones Graduate School of Business, "How Businesses Fare with Daily Deals: A Multi-site Analysis of Groupon, LivingSocial, OpenTable, Travelzoo and BuyWithMe Promotions," a key finding was that the recidivism rate for businesses was too low to allow the industry to sustainably scale in the long run. Other challenges include "the relatively low percentages of deal users spending beyond the deal value (35.9 percent) and returning for a full-price purchase (19.9 percent)" -- which the researcher notes are symptomatic of a structural weakness in the daily deal business model.

Aside from the first real academic study reporting on this, the evidence of social shopping's long-term weakness is borne out in the books of the social shopping businesses themselves. In the wake of Groupon's IPO filing, with a valuation of upwards of $20 billion, a cavalcade of analysts indicated the math for such a valuation simply doesn't hold up.

Groupon lost $102.7 million in the first quarter of this year, on top of nearly $400 million in losses last year, and over a half a billion dollars in losses since its inception. That said, the company has grown its gross revenues from $30 million in 2009 to $713 million last year, and it is looking at $2.6 billion now. Of course, the bulk of this goes back to the merchants. Merchants who, by and large, aren't coming back, and some of whom are losing money.

Prognosis for next six months
The field will continue to crowd exponentially until the smaller cows start to die off (either attrition or acquisition). The market as it stands now doesn't look pretty for the long term. The model is built on the old chestnut that "we lose money on every seat, but make it up in volume." We're likely to see the evolution of a model that is based on crowd-sourced product desire married to suppliers with excess who are willing to offer it at a discount.

If you use Twitter, you've likely seen the "#" preceding certain words or phrases. It's called the hashtag. By placing it in front of a word or phrase, the word or phrase becomes easily searchable. It also makes those words or phrases more easily categorized. They are a great way to monitor visibility. They are also a great way to establish it.

The ubiquity of the Twitter hashtag has been growing since 2009, but it's only been this year that we've seen the advent of aggressive use of the hashtag in marketing.

Though there might be some debate as to who was truly first, current conventional wisdom gives Audi the "first mover" moniker when it comes to using a Twitter hashtag in its marketing.

The company's Super Bowl spot for the new positioning surrounding the A8 sedan, "Luxury has progressed," was sniped with the hashtag "#ProgressIs." People who used the hashtag and the URL www.audi.us/ProgressIs in their tweets were entered into a contest where the grand prize was a trip to Sonoma, Calif., where the winner gets to test-drive the Audi R8 supercar.

Since then, Twitter has introduced -- though still technically in beta -- the ability for an advertiser to promote a trend called out by a hashtag. Think of it like keyword targeting -- only the trend is that word or phrase that follows a hashtag.

Prognosis for next six months
This trend is only just now getting off the ground. Conversational marketing and its synonym, social media advertising, are continuing to grow. This is yet another consumer touch point. Twitter is largely mobile, so it lets the advertiser get close to the advertised, potentially getting closer to where members of the target audience live throughout the course of their days. Its efficacy is far from concluded, but that's never stopped some advertisers from trying new things. When the metrics for social and conversational marketing are settled on, and the means by which we collect and read them are made standard, hashtag marketing might prove to be quite valuable.

Speaking of social media metrics...

It's not that the quest of meaningful social media metrics has only come upon us in the past six months. Rather, in the past six months there's been a definite push on the part of advertisers to focus on one metric in particular for determining the success of their social marketing efforts: the Facebook "like."

Clients are desperately interested in building their communities. The lesson of the "Cluetrain Manifesto" -- that all marketplaces are conversations -- has finally become an axiom. Accordingly, advertisers want to create communities where either they are the conversation, or they can be insinuated into it. The Facebook fan page, where users can indicate that they "like" a brand, product, TV show, performer, or just about anything else, has become the place a lot of marketers look toward for doing that.

The challenge, of course, lies in what the advertisers do with the communities they create (or discover). The metrics that can be teased out of Facebook, as of now, are fairly anemic. Yes, one can pull reporting on engagement -- essentially "likes" -- and uniques and demographics (age, gender, geography, for example). But things like influence of certain groups of "likers," or ways to target the community within the environment, are not very robust. Social listening tools like Sysomos, Radian6, BuzzMetrics, Trackur, or myriad others can be deployed to collect and process data that can be used to draw a picture of what's going on in the conversational marketplace as it pertains to a brand. But what is a meaningful metric?

The BuzzMetric methodology funnel

Prognosis for next six months
There's already some grumbling about the value of a Facebook fan. Quantifying it has been the query du jour for some months now. It was a year ago that Syncapse released a study declaring that a Facebook fan on average spent an extra $71.84 they would not otherwise spend on products they are fans of, versus those who are not. The company estimated a Coca-Cola fan at the high end was worth something just shy of $400. But we've come a long way since then, and now there are early signs that more fans might yield less engagement from the collective community (which isn't a surprise; we see the same thing as customer email databases grow).

In the future of social media metrics, it's going to become important to distinguish the product or service category to which a particular brand belongs. Not everything lends itself to the kind of conversational marketing that Facebook can help facilitate. I mean, really -- I challenge you to name one person you know who is seeking a deeper relationship with his or her mayonnaise. And yet, Hellman's thought it important to have a Facebook page. At this writing, it has 107,910 "likes." And I have no doubt that someone at Kraft responsible for this brand is desperate to see those "likes" numbers improve. Do these almost 108,000 people influence their friends' mayonnaise-buying behaviors? I bet nobody knows, but without doing the research, I bet you the "likers" of Hellman's have no influence at all on whether or not others in their social network buy Hellman's. (Full disclosure: I like Hellman's, but I have not "liked" Hellman's).

Some products and services are perfect for this kind of thing. I'm referring to "instant brands" that the entertainment industry -- TV, music, movies, video games -- need to create in order to generate the kind of steep take-off these kinds of products frequently require to be successful. But Charmin? I'm not sure that the brand needs to have an "enjoy the go" Facebook team to have success as a toilet paper.

Let's hope that the Facebook "like" does not lead us into the same cul-de-sac of broken dreams that the click-through rate has.

One would be hard pressed to say that concerns about privacy are an emerging trend. They've been of concern for online advertising, in one form or another, since DoubleClick bought Abacus in November 1999. It's been over the last year that privacy concerns have really spent a decent amount of time in the news, starting in earnest with the Wall Street Journal's "What They Know About You" series that started running last July.

Questions about Facebook's privacy controls, the potential uses of data the network has on its members, concerns about Apple Inc. tracking iPhone owners' movements, or what kind of picture Google can put together of a user based on search queries have all seen daylight in the last six months. Accompanying that, the government has paid lip service to the issue, to the point where The Personal Data Privacy and Security Act has been introduced in the U.S. Senate for the fourth non-consecutive year since 2005.

The industry itself has spent a great deal of time over the last six months talking about what it's going to do about privacy, putting together a conglomerate organization of organizations called the Self-Regulatory Program for Online Behavioral Advertising, borne of the tenants of the "Self-Regulatory Principles for Online Behavioral Advertising." The document is a list of seven principles (I guess having eight spokes would make it look too much like Buddhism) by which advertisers and media companies that employ behavioral marketing or use targeting data must abide -- things like education, transparency and data security. There have been articles written, speeches given, and conferences held about issues surrounding privacy and use of consumer data on the web. The outcome?

That's right. The little logo above. And for the low, low price of $5,000, it can be yours. Of course, you do have to be in compliance with the seven principles. But even if you are, you've got to kick down the bucks for the right to use the logo. A logo that signifies being in compliance with the seven principles. And a logo that, by the way, consumers -- those people whose privacy is of concern -- have no clue about.

Prognosis for next six months
The same ol', same ol'. The media will make noises about privacy from time to time. The online advertising industry will continue to talk about how it's going to regulate itself. But in the same breath, the industry will espouse the "value" that marketers' pursuit of consumers brings to them: free content (getting less and less free all the time), auto-fill of fields in sites that you visit often, not having to remember your user name every time you go to Amazon.com, etc. And the consumer will continue to not understand just what's going on, and whether or not the fuss is something to fuss about.

Marketers will continue to argue, "Would you rather get an ad that relates to you or more mindless drivel cluttering your page?" They will continue to complain that politicians who have no understanding of technology shouldn't talk about how evil it is.

But that's like asking whether I would rather have a broken leg or cancer. If those are my only two choices, I'll go with the broken leg. But I don't like either, really. If targeting makes a turn toward what roboticists call "the uncanny valley," you have a different kind of phenomenon on your hands. (Wikipedia's definition: When facsimiles of humans look and act almost, but not perfectly, like actual humans, it causes a response of revulsion among human observers. The "valley" in question is a dip in a proposed graph of the positivity of human reaction as a function of a robot's lifelikeness.)

All the tools we bring to bear in the targeting enterprise attempts to get the message to the audience based on a set of variables that can be read right now, in the moment, based entirely on a collection of data points that are mistaken for intelligence but are really just -- data points. Jaron Lanier gave a speech at the iMedia Breakthrough Summit in March, the content of which caused a great deal of ambivalence among the audience. He said that in order to satisfy the algorithm, we are all making ourselves dumb so that the machine can look smart. If advertising ever hopes to have a future, it has to get out of the targeting ghetto and into the light of seeing people as people, with a complex set of histories.

Nothing will happen with privacy until people suffer from it enough. People aren't suffering enough as a result of targeting and its methods. But it will only take a few examples of geolocational or social targeting methods leading to a kidnapping, or a stalker-related murder, or a timely ad for Vagisil served to a woman when she checks in on Foursquare at her local bar (the "uncanny valley" of targeting, if you will), to get the masses to demand action. And then? Well, it took Congress less time to pass the "do not call" legislation than it did for it to declare war on Japan in the wake of Pearl Harbor.

Jim Meskauskas is co-founder and partner of Media Darwin Inc.

On Twitter? Follow Meskauskas at @mediadarwin. Follow iMedia Connection at @iMediaTweet.

Jim Meskauskas is a Partner and Co-Founder of Media Darwin, Inc., providing comprehensive media strategy and planning.  Prior to that, Jim was the SVP of Online Media at ICON International, an Omnicom Company, where he spent nearly five years.

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to leave comments.

Commenter: Lily Lee

2011, June 28

Thank you. Good info. Although am yet to use Groupon. And I should do that 'hashtag' on my tweets.

Commenter: Spencer Broome

2011, June 27

Not terribly confident in the future growth of a sector that believes in this: "we lose money on every seat, but make it up in volume." Especially with some of the money small businesses are losing with Groupon: http://techcrunch.com/2011/06/09/groupon-single-worst-decision/