Foursquare – the next goldmind !

Big brands are checking in on Foursquare. Pepsi, frozen-dessert chain Tasti D-Lite and cable network Bravo are all attempting to harness the power of the mobile game/social network.

The question is whether they’ll pay for the privilege. Or whether Foursquare, which has 500,000 users now voluntarily “checking in” at locations, and broadcasting that to their followers, will transcend its current “it” status among the technorati and become a lasting consumer phenomenon — and a marketing tool.

In December, Pepsi made a small bet on the startup as part of its Refresh Everything community-giving push. For every point earned in New York, Pepsi donated 4 cents to inner-city youth center Camp Interactive. After one week, New Yorkers on Foursquare earned 225,000 points, and nearly $10,000 for the organization.

‘Huge opportunity’
It was a small deal with a big brand that generated little if any revenue for Foursquare. Still, it got Pepsi excited about the possibilities.

“From a broad strategy point of view, there’s a huge potential with the ability to connect people to promotional experiences,” said Bonin Bough, PepsiCo’s global director of digital and social media. “We know where people are and can talk to them from a geo-located perspective — that’s a huge opportunity.”

That’s exciting, also, for Foursquare, which in this deal and others is starting to build the foundation of a revenue model on location-based marketing services. Foursquare is planning paid services for three tiers of businesses: small, privately owned stores and restaurants; brands with retail chains, such as Tasti D-Lite; and huge multinational marketers such as Pepsi.

For bigger brands, Foursquare is developing an analytics dashboard so businesses can track who’s coming into their stores. Then, deals could be sold against impressions such as web ads, clicks such as search ads, or a completely new model: cost per check-in.

Moving beyond early adopters
But before it can do any of that, Foursquare must prove it can expand beyond early adopters and educate marketers on how to use the service in ways its fickle users won’t hate.

“We’ve been hesitant to just shoot ad copy through our system,” said Tristan Walker, Foursquare’s head of business development. “Once we start to put in generic specials, we’re just another channel to distribute promotions.”

For now, marketers are availing themselves of Foursquare’s free tools, and some are liking the results. Checking-in in the vicinity of a Tasti D-Lite shop? You may get served a coupon from the Tennessee-based chain, which is testing a free service from Foursquare called “specials nearby.”

“Preliminary data is showing that this is driving foot traffic in stores,” said B.J. Emerson, director-information and social technologies for the 50-store chain. “We’ll most likely pursue this where we can measure effectiveness and return.”

The company also launched a loyalty program that’s synched with Foursquare and Twitter, so customers earn points for making purchases and for checking in. When visits are published to customers’ Twitter stream, Tasti D-Lite gets in front of all their friends, and a customer earns extra points toward free dessert.

Using, not paying, Foursquare
Right now, Specials Nearby — there are nearly 700 since Foursquare launched the feature in summer — are free to businesses. So is the API off which Mr. Emerson built the loyalty program. Likewise, Foursquare’s Bravo deal gives the company TV exposure, if not revenue.

“I think marketers will be interested in Foursquare, assuming the audience keeps growing,” said David Berkowitz, director-emerging media at digital agency 360i. “The lasting value will be from the smaller deals Foursquare will find ways to monetize.”

It’s a difficult balance: Foursquare’s ability to continue to grow depends on its users accepting at least a bit of marketing along with the badges, or honorifics, they earn, such as “mayor” (for most visits), “newbie,” “bender” (for consecutive nights out) and, yes, even “douchebag” (for checking in at places like Barneys).

Zero to 500,000 isn’t bad for an app that launched less than a year ago. It took more than three years for Twitter to reach its current fever pitch. But even as it grows, Foursquare will have to answer the same questions. Research firm Sysomos estimates that 5% of Twitter users generate 75% of activity.

Online applications cause Twitter dramatic decline

According to data provided to eMarketer by Nielsen, traffic to Twitter.com was down a dramatic 27.8%, falling to 18.9 million unique visitors. Nielsen is the latest in a list of research firms reporting declines at Twitter.com. comScore said unique visitors were down 8.1% in October, while Compete reported a 2.1% decline.

It has not been unusual to see wide shifts in Twitter traffic readings among Web measurement firms, and different methodologies likely account for the varying visitor counts. But one thing is clear: traffic to the Twitter.com Website is declining month over month after a period of huge gains.

The decrease in visitors could mean either falling interest in Twitter or simply migration to other platforms, such as third-party applications and mobile access.

Crowd Science data from August 2009 indicated 43% of Twitter users accessed the service through third-party applications, and 19% through SMS. RJ Metrics noted a drop in share of tweets for the Website versus other sources between June and July 2009.TweetStats reports that around 30% of daily tweets come from the Website in mid-November 2009.

Rising smartphone adoption and the popularity of mobile Twitter clients is another point in favor of migration. The Nielsen Company reported that Q4 2009 was the first quarter in which more than one-half of mobile Internet users were accessing the Web via smartphone.

For lifestyle brands social networks are a great opportunity

Lately there has been quite a bit of discussion around lifestyle brands and how they must adapt and innovate in this challenging economy by embracing the new media landscape. Up until now, luxury brands and their relationship with consumers has been built solely around highly controlled communication and interaction through the store, PR and advertising efforts. But today with the high end market sector facing an economic downturn, evolving luxury consumer landscape, and suffering traditional media outlets, luxury brands must embrace social media as a new way to reach consumers or risk continued falling sales. 

The Situation

The reality is in this economic climate, obsessing over “living the life of luxury” is becoming less and less relevant to people’s lives and there are fewer people willing to use credit to pretend they can afford it. And for those that can actually afford it, they’re also feeling the effects of the economic downturn, at least enough for them to question some of their unnecessary purchase decisions. Luxury and high end brands are being forced to come up with new strategies that make both the upper and middle class desire their exclusive and elite offerings.

This is combined with the fact that there are more and more affluent, active internet users than ever and their shopping habits are changing because of the internet. Welcome to the digital shopping revolution where high end shoppers have shifted online out of convenience and are looking to digital channels to shape how they are inspired by brands. Nowadays, you don’t have to buy a magazine or tune into a trendy TV show to find out what is new and hot right now. People can go straight to the internet to get information on the latest in trends, style, technology, and fashion, and they can share their opinions and taste with their online network. Brands have to change their consumer approach by reinventing the shopping experience and their relationship with consumers through innovative uses of technology, communication, and entertainment. 

The Dilemma

Even with the state of the current economy, changes in consumer purchasing behavior and the fall of traditional media, luxury brands have been hesitant and slow to embrace social media. A large concern is that the internet is for the masses, and therefore participating in social media opens up the brand to everyone. How can a high end brand guard its exclusive brand image and identity, which they have worked so hard to create, while also opening up the brand to consumers online. Luxury brands need to remain highly relevant and desired to their target audiences but, in today’s media and economic landscape, this can no longer be achieved by solely approaching these challenges the traditional way.

The Approach

While the concern of being able to protect your exclusive brand image in the Wild West of social media is understandable, luxury brands can successfully maintain – and in fact strengthen – their image and reputation through participating in online dialogue. Social media platforms give brands the opportunity to be a leader of discussion about their products online, allowing them to shape their image, tell their brand story, convey what they represent, clarify misconceptions, and respond to negative chatter. Placing a brand in the middle of two-way communication with their consumers, builds meaningful relationships that foster loyalty and promote advocacy. Uplift the voice of consumers, not just your own.

Beyond participating in conversation, brands have the unique ability to create exclusive experiences for their fans and loyal consumers. Investing in campaigns that harness innovative platforms, applications, and partnerships creates real value to the end user and fosters a mutually beneficial relationship with brands. The key is to draw fans into a deeper experience with your brand and a community that matches their current or aspired lifestyle and embraces long-term brand related social identities. 

The fact of the matter is, luxury brands offer products that generate hardcore fans and consumers that identify themselves with the brands they buy. The consumers that shell out money to own an exclusive product often connect their own personal identity with that item and what it represents. It becomes something that defines them and they are proud to publicly share with their friends, fans and followers. The key is to use social media to reinforce that emotional attachment to the brand.

The Benefits

Engaging with fans and consumers online is a significant investment in both time and resource for a brand, especially one of a luxury nature who must carefully articulate and maintain their brand equity, and therefore it’s important that the anticipated payout is as equally significant. A brand that puts forth effort to connect with people online, establish authentic consumer-brand relationships, and launch platforms that entertain consumers, can expect to see returns in the form of boosted daily brand mentions, positive brand sentiment, increased website traffic, heightened brand-based consumer loyalty, rise in retail traffic, and an increase in consumer awareness of, and interaction with, in-store promotions, sales and events. When done strategically and thoughtfully, brands can reinforce purchase drivers and make their brand identity and products a highly sought after, desired indulgence that feels exclusive as well as perceived as an online status symbol.

Often overlooked, and even feared, is the ability to get real-time feedback from consumers that can be used to gain insight and research into consumer sentiment. Don’t fear consumers – trust them and respect their views and opinions. If a brand’s target consumer views a new product or in-store experience differently than the brand was expecting or hoping for, they can learn and adapt to better market and engage them in the future. Similarly beneficial to the brand is the opportunity to provide instant customer-relation support, through availability and responsiveness within online social communities, in a way that seamlessly extends the customer’s brand experience beyond the initial purchase. Think about it, a truly elite and exclusive luxury brand experience is when a brand is constantly and consistently available to you, pays close attention to your concerns, addresses your needs quickly, and provides you with convenient solutions without hesitation.  

Luxury is defined by quality, an aspired lifestyle, and a reputation for perfected products and services. Translating the quality, lifestyle, and reputation of a luxury brand to the online social space can further cultivate and extend the brand’s identity and capture the close attention of new and existing fans and followers. Luxury brands can make potential and existing customers their very own taste-makers, taught and trained by their articulated brand beliefs and elevated to help shape the future evolution of the brand through two-way, mutually beneficial conversations.

Which luxury and high end brands do you engage with online? I’ve provided a few examples below but would love to hear your thoughts and experiences. Who do you think is doing it right?

• Mercedes Benz, Generation Benz: An invite only branded social network where consumers can give feedback on vehicles.
• American Express, Open Forum: An online resource and networking site for business owners designed to forge meaningful business connections between its influential members.
• Diesel, The Heidies: A 5 day Diesel.com homepage takeover, where two girls who locked themselves in a hotel room and live-streamed their shenanigans 24hours a day. Viewers could chat and change the camera angles.
• Coach, Design a Coach Tote: A contest where participants designed, shared and rated consumer created Coach bag designs. The winning tote sold as a limited edition item.
• MAC Cosmetics, Makeup Artists on Twitter: During Fashion Week in NYC, MAC makeup artists were tweeting from backstage and engaging the community in dialogue around the latest in beauty trends.

Branded social networks – only the begining… case studies.

At their core, branded social networks are used by firms to keep you interested in their products. Some of them are doing as great job enabling people  to join a community  with similar interests.

Branded social networks

Disney Disney’s social-networking efforts provide a unique experience by appealing more to children than adults.

After you sign up for the social network, you’ll be given the opportunity to create your own “page.” There, you can add videos, audio, games, widgets, and a variety of other elements to make your page your own. Think of it as a custom home page. As you might expect, most of the elements you can add to your page are Disney-branded. So, you can have a “101 Dalmatians” background or play a “Pirates of the Caribbean” game. Once complete, you can check out other users’ pages, chat with friends, or join groups. It’s a powerful service and it’s well-designed.

eBay Neighborhoods eBay Neighborhoods is a collection of groups of eBay users who communicate, review products, upload content, or just discuss the topics of their choice.

After signing up for eBay, you can easily join one of the company’s neighborhoods. Those neighborhoods range in size from a few members to thousands of members that center on topics ranging from coffee to sports. The members in each group engage in discussions on those subjects. They can also review products and post blog entries. Some of the bigger neighborhoods have a lot of activity, while others have little activity. Either way, eBay Neighborhoods isn’t a bad place to communicate with people who share your interests.

My Starbucks Idea My Starbucks Idea is a community of coffee lovers who have the opportunity to share their ideas for improving Starbucks with the company.

After you sign up for My Starbucks Idea, you can view ideas or share your own idea. Once you decide to share your thoughts, you’ll only need to input a title and description. From there, it will be posted on the site’s home page. Ideas can be “favorited” by other users. They can also comment on the idea.

Once Starbucks’ employees pick some of the better ideas, they’ll present it to the company’s key decision makers. If it’s implemented, users won’t get compensation, but they will get credit on the site.

Social Networks, Metrics and ROI

Return on Investment (ROI) is a simple concept: You set aside something of your own, be it time or money and expend it with the hope of getting something in exchange. ROI measures the profitability of your returns, when compared against your costs.

Many people have talked about ROI in relation to social media and one usually examines the performance of a social media marketing campaign using specific metrics like traffic, links or comments.

Some measure ROI in an more abstract way, by monitoring the amount of buzz or conversation in a community and the opinions of the public.

What you choose to measure is dependent on your goals, or what you want to receive as a return. If you’re purely interested in building links, your costs and investment should be measured alongside how many links you receive.

If an activity does not efficiently help you to procure links, you should reduce your investment in that area. Conversely, if a specific activity maximizes your efficiency in getting links, you should increase your investment in that area.

However, things are a little different when it comes to social media and specifically, the process of networking with others through various social media channels such as Twitter,Linkedin, Stumbleupon or Facebook.

ROI for Social Media Networking: Four Main Goals and Benefits

Social media networking is the process of interacting with other individuals through the specific social media tool or community. For example, you could talk to people with similar interests in a forum or communicate with them through a more fragmented platform like Twitter.

Whatever method you choose, there are usually four main goals:

1. Increased brand awareness. You’re interacting with others on the social media channel in order to build awareness for your personal and business brand. You’re increasing your visibility in the right areas and trying to stick in the minds of others through active interaction on many different levels. From this perspective, networking also works to drive traffic back to your website.
2. Improved reputation. You want to improve how others think about your website so you hang out in forums or networking sites, in order to respond to feedback. You want to keep the communication channels open on all social media fronts. You may also want to improve your reputation as an expert by being consistently involved in discussions on topics that are relevant to your business or website.
3. 
   Personal Development. Networking with the right people will keep you in the loop on industry happenings and will also improve your knowledge levels. A big part of networking is observation. Seeing how others reflect or participate in conversations is a great way to improve your own experience in the field.
4. Relationships with benefits. One can network with others with the aim of extracting future benefits such as testimonials, links or recommendations. Others are more likely to provide you with a benefit when you’ve taken the effort to interact with them. Networking is a way to build relationships that can be mutually beneficial.

Social Networking ROI is Difficult to Quantify

Measuring the ROI for social networking can be a little difficult because the returns you’ll get out of networking via social media are not direct and immediate. Chatting with another person on Twitter does not always give you an immediate benefit: however, you are building a relationship which you can leverage in the future.

It is also difficult to track the origin of a purchase or visitor, even although you may have information on the referring web page. How did the visitor first know about your website? What influenced them to subscribe to your newsletter or hire your services?

And how much of all the visible results you see stem from social networking? Did the hours you’ve spent on Facebook lead to a greater readership? How much did your forum posts contribute to your increase in subscribers or links?

It’s not easy to correlate the returns you receive with social networking. Any attempt at measurement will be inevitably incomplete. You can’t pin down every visitor and know how if networking has enhanced the way they feel about your brand.

What you can do is to focus on improving your ROI efficiency, which means improving the rate of benefits you’ll get from the time or money spent networking. It’s okay to have vague or broad goals for social media networking as long as you maximize the value you’ll get when compared to the cost you’ve invested.

How to Maximize Your Social Networking Efficiency

As I’ve mentioned above, networking is done for several benefits, some of which are not immediate or direct. Since the returns you’ll get may contribute to future instead of current results, you should maximize efficiency by first focusing on cost management.

Record the amount of time you spend on each social website. Use tools like RescueTime orMeeTimer (firefox extension) to track time spent in a week. Do not restrict yourself for one week in order to estimate your level of interest in each social media channel. You’ll naturally find yourself spending more time on the social channel which interests you. Record these figures and split them up in terms of percentages.

After which, determine how much time you want to spend on social networking in general and portion that time according to the amount of time you naturally spend on each site. For example, if you only want to spend 2 hours everyday on social networking and have previous natural rate of 20% for StumbleUpon, you should probably spend 24 minutes on StumbleUpon everyday.

Operate with this time system initially and adjust the time spend on each individual social channel according to your level of interest or the benefits you receive. This is one way to limit your time cost and make sure that your ROI stays efficient, even if the returns may be vague.

After which, you need to focus on the networking process itself.

1. Start by determining what you can offer in a mutually beneficial relationship with an influencer, community or individual. This may come in the form of a link, feedback, a social news vote, a recommendation or a specific skill. This is the value you can offer from your end, irregardless of the benefit you will get. Build relationships by offering value and assistance before extracting a specific benefit. This is an efficient way of networking.
2. Make a list of questions you have for the community or individual. Use them during your conversations in order to extract specific knowledge. The keyword here is specific. You want targeted, relevant information you can use for specific purposes. Chit-chat is perfectly fine, but sometimes you need to structure the conversation in order to get the information you require.
3. Focus on specific benefits you want to receive from an individual or group. The best and most meaningful relationships occur when you genuinely respect the other party. Aim for benefits but do not do emphasize them at the expense of harming your reputation with the other individual or community. Keep the benefits you want to get in mind and obtain them within context: do not go out of your way to force specific returns.
4. Share Networking Duties If you’re working in a group blog or own a company, split up the focus by assigning a specific community to a specific person and get him/her to focus on it. This is more efficient because you’re making sure that each business is represented on all of the major websites. Nurture experts that can give you input on each social media channel.
5. Cross-leverage your social media profiles. Some people use multiple social media websites while others usually stick to one or two. It is always helpful to set up social media profiles even for sites you don’t use, because you’ll increase your points of possible interaction. Connect your social media profiles to each other via links and send users for one site to another. This is useful when you want to initiate discussions or promote content on another channel.

This whole process of networking via social media should be performed naturally and not mechanically. Authenticity in interpersonal interaction is important and the more you enjoy the process, the more it works to bring you returns.

I’m spending most of my free time on a social media service like Twitter because I find that it’s an excellent way to connect with both Dosh Dosh’s readers and other people with similar interests. But not all feel the same: some have suggested that sites like Twitter are a waste of time because they do not give a profitable ROI.

But then again, social networking is not a means to acquire any direct/predictable ROI. I feel that networking is more akin to domain name investing: you’re more likely to get a higher returns in the future than the immediate present.

Social networking allows you to maintain light and more in depth contact with both acquaintances and established friends. This consistent contact and the development of relationships will lead to both short and long term benefits, some of which are unexpected. For example, it’s quite common for someone to recommend your website to another person without any suggestion on your part.

A word of advice: Don’t try too hard to quantify the ROI for social media networking. It’s difficult and it doesn’t really work that way. Instead make your ROI efficient by managing your costs and streamlining your expected returns.