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08.10.11 C O N N E C T I N G T H E D O T S SOCIAL NETWORKS AND MOBILE THE COLLECTIVE FACTORY LLC

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There has been a rush by brands in the last 24 months to embrace Facebook as the primary destination to connect with their consumers. The belief has been that consumers with their ever increasing network of friends represented an opportunity to disseminate their message in a cost effective manner. Recently however there have been a number of research reports indicating a decline across the board of engagement levels on social networking sites around the globe. This decline is concentrated in the key 18-29 YO demographic or post college but younger than 30 age set. This document will try to shed some light on: What are the actual social networking trends? Are their basic human drivers behind these trends? What are the technological drivers enabling these human drivers? What are the implications for brands and agencies? How do we exploit these changes on behalf of clients?

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Page 1: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

08.10.11

C O N N E C T I N G T H E D O T S

SOCIAL NETWORKS AND MOBILETHE COLLECTIVE FACTORY LLC

Page 2: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

Gene Keenan - The Collective Factory LLC

Page 3: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

SUMMARY

3

There has been a rush by brands in the last 24 months to embrace Facebook as the primary destination to connect with their consumers. The belief has been that consumer with their ever increasing network of friends represented an opportunity to disseminate their message in a cost effective manner. Recently however there have been a number of research reports indicating a decline across the board of engagement levels on social networking sites around the globe. This decline is concentrated in the key 18-29 YO demograhic or post college but younger than 30 age set. This document will try to shed some light on:

• What are the actual social networking trends?

• Are their basic human drivers behind these trends?

• What are the technological drivers enabling these human drivers?

• What are the implications for brands and agencies?

• How do we exploit these changes on behalf of clients?

Page 4: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

SOCIAL NETWORKING MYTHS AND REALITIES: A SUMMARY

4

BELIEF REALITY

Social networking is a new phenomenon Only the mechanic is new

Digital allows humans to maintain large reciprocal networks Despite the advent of digital the actual size of intimate reciprocal networks are small (20-40 people) and a maximum of 150

I just need to create a Facebook presence Brand pages are generally a waste of money & time unless they are executed well with a marketing plan behind them

Brands can reach a large network of people using social Most consumers will never see your message

Facebook transforms marketing The same old marketing rules apply

Mobile is still new Mobile will over take online in a year

Over sharing of information is a new consumer behavior driven by social networking Only the mechanic is new

Page 5: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

SOME MARKET NUMBERS

Page 6: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

FACEBOOK REMAINS DOMINANT PLATFORM

180,000

160,000

140,000

120,000

100,00

80,000

60,000

40,000

20,000

0

Jun-20

10

Jul-2

010

Aug-2010

Sep-20

10

Oct-20

10

Nov-201

0

Dec-20

10

Jan-20

10

Feb-20

10

Mar-20

10

May-20

10

Apr-201

0

Jun-20

10

Facebook.comLinkedin.comMyspace.com

Twitter.comTumblr.comGOOGLE+

Source: Comscore Media Metrix, U.S., Jun-10-Jun-11

U.S. Visitor Trend for Leading Social Networking Sites

FACEBOOK IS STILL WINNING

5

Page 7: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

BUT GLOBAL DECLINE IN SOCIAL NETWORKING USEAGE HAS BEGUN

7

Decline is seen in the key 18-29 Year

Old User

But:Middle age groups

continue to grow and are the fastest

growing

Source: http://globalwebindex.net / August 2011

Page 8: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

DECLINE IN FB USEAGE BY ACTIVITY

8

10.0%

5.0%

0.0%

-5.0%

-10.0%

-15.0%

-20.0%

Global US US College Educated < 30

Sent a

digital p

resen

t/gift

Sent m

essa

ges to

frien

dsJo

ined a

groupSea

rched

for n

ew co

ntacts

Instal

led an

applic

ation

Joine

d a mus

ician

/artis

t group

Instan

t mes

saged

with

frien

ds

Uploaded

photos o

n your

profile

Over time Facebook usage contribution

drops off and

involvement becomes more

passive

July 2009 -> June 2011

Page 9: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

THE MAJORITY ABANDONING FB ARE YOUNG ADULTS

9 SOURCE: http://www.gartner.com/DisplayDocument?ref=clientFriendlyUrl&id=1724424

1/4OF YOUNG ADULTS (18-29YO) LEAVING THE SOCIAL NETWORK

Page 10: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

WHY THIS DECLINE IN USEAGE?

10

“boredom” and “getting tired” of the services

Page 11: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

WHERE ARE THESE YOUNG ADULTS GOING?

Page 12: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

FIRST A QUESTION:WHAT FACEBOOK ACTIVITY HAS INCREASED?

Page 13: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

MOVE TOWARDS HYPER PERSONAL, HYPER LOCAL ACTIVITIES

13

US College Educated < 30

Played a game

Started a group

Online dating

Joined a branded group

Uploaded videos on your profile

5.0%

0.0%

INCREASED

MOVE TOWARDS:HYPER LOCAL

HYPER PERSONALENGAGEMENTS

+LOW ENGAGEMENT HIGH

IMPACT ACTIVITIES (video - analogous to a form letter)

Source: http://globalwebindex.net / August 2011

Page 14: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

FACT:Activity is down and they are “leaving” FB.

WHERE:They are moving towards Tumblr, Instagram, Path, Color, and GroupMe: Passion groups with more authentic experiences.

Total Users

Per Day

0 12500000 25000000 37500000 50000000

Tumblr

Total Users

Per Day

0 2000000 4000000 6000000 8000000

Instagram

Source: http://www.gartner.com/DisplayDocument?ref=clientFriendlyUrl&id=1724424

Page 15: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

RICHER ENGAGEMENTS WITH FEWER PEOPLE

Page 16: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

WHAT DOES THIS MEAN? (are there basic human drivers?)

Page 17: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

Because social was largely a activity done online it was used to fill in the time between other tasks.

As mobile has freed us from being tied to desktops it has made us more terrestrially focused creatures with mobile acting as the tether to our virtual lives.

As these terrestrial experiences become more deeply personal, physically managing large networks of “friends” becomes “boring” and “tiresome.”

Page 18: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

THERE IS A HISTORICAL PRECEDENCE FOR THIS

18

150DUNBAR’S NUMBER

Dunbar's number is suggested to be a theoretical cognitive limit to the number of people with whom one can maintain

stable social relationships. These are relationships in which an individual knows who each person is, and how each person

relates to every other person.

There is debate about the exact number but it is somewhere between 100 and

250

BACKGROUND: Dunbar's surveys of village and tribe sizes also appeared to approximate this predicted value, including 150 as the estimated size of a neolithic farming village; 150 as the splitting point of Hutterite settlements; 200 as the upper bound on the number of academics in a discipline's sub-specialization; 150 as the basic unit size of professional armies in Roman antiquity and in modern times since the 16th century; and notions of appropriate company size.

Page 19: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

The average 22-year-old has over 1,000 Facebook friends

source: http://www.intersperience.com/ May, 2011

Far beyond the carrying capacity of Dunbar’s Number

Page 20: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

BUT THE AVERAGE

USER HAS ONLY 130 FRIENDS DUNBAR’S NUMBER

source: http://www.facebook.com/press/info.php?statistics August, 2011

Page 21: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

FRIENDS BY AGE: LIFE STAGE

21

0

250

500

750

1000

13-16 YO 17-22 YO 30+ YO 40+ YO 50+ YO

450

1,000

15075

20

Jr High/High School

College

Early Adult Life Middle Age

Group Acceptance Self Actualization & Intimacy

The social networking life cycle is to move from one of seeking

group acceptance to one of self identity and intimacy.

As we get older we move towards smaller more intimate

groups and individual passions.

Older users will never have large networks because they

have moved beyond the group acceptance phase of life.

source: intersperience, gene keenan

Page 22: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

SO, SIZE DOES MATTER: SMALLER NETWORKS GET MORE LOVE

22 source: http://overstated.net/2009/03/09/maintained-relationships-on-facebook

40

30

20

10

0

0 100 200 300 400 500

NETWORK SIZE

# O

F PE

OPL

E

Despite large network sizes. Reciprocal communication

remains with a small intimate group

Established Relationships

One-Way Communication

Reciprocal Communication

Page 23: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

Q: WHAT IS THE NATURE OF THOSE HIGH REACH ONE-WAY CONVERSATIONS?

Page 24: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

ERIC BERNECreator of

Transactional AnalysisPastime Conversations

A pastime is a series of transactions that is complementary (reciprocal), semi-ritualistic, and is

mainly intended as a time-structuring activity: Small talk.

Pastime conversations are low engagement but of high value from a ritualistic standpoint

Example (while running into someone on street):Talking about the weather

Headline news

http://en.wikipedia.org/wiki/Transactional_analysis

Page 25: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

THE RITUAL IS THE SAME TODAY BUT THE CHANNELS HAVE CHANGED

25

Talking about the weatherGeneral small talk

Content from analog

Twitter updatesFacebook updates

Content from digital+

BUT BOTH ARE LOW ENGAGEMENT

LOW REACH HIGH REACH

YESTERDAY: IN-PERSON TODAY: VIRTUAL

Page 26: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

26

Average User* “Sharing Information”

source: http://overstated.net/2009/03/09/maintained-relationships-on-facebook

Low Engagement “announcements”

Broadcast out but typically not read, commented or synthesized*

The primary difference between analog and digital ritual

conversations: digital are typically not reciprocal (because they are not

in-person)*You can most easily see this in twitter where information is

broadcast and forwarded but rarely analyzed for accuracy. At the end of the day it’s not the content that matters but the ritual of sharing it.

MOST SOCIAL INTERACTIONS ARE “PASTIME” CONVERSATIONS

Page 27: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

BUT BASED ON THIS RESEARCH THEN FACEBOOK ADVERTS SHOULD NOT BE EFFECTIVE

27

0.011-0.165% 0.4-0.7%

source: http://bit.ly/mYPZ9k

but... conversions

were practically non-existent

FACEBOOK CTR GOOGLE ADWORDS CTR

Page 28: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

Q: WHAT DOES WORK?

Page 29: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

FIRST: WHAT ARE CONSUMERS PERCEPTIONS OF MEDIA?

29

4%

2%

2%

19%

17%

46%

52%

52%

12%

19%

20%

3%

7%

9%

2%

2%

15%

14%

53%

51%

18%

23%

11%

11%

3%

2%

2%

22%

11%

13%

52%

50%

48%

17%

22%

24%

6%

15%

13%

36%

Emails I signed up for Ads in magazines

Ads served in search engine results Products shown embedded in TV Ads on mobile devices

Online video ads Online banner ads Ads on social networks

3%34% 49%

11%4%

Editorial content such as a newspaper article

4%31% 49% 11%

4%

Brand websites

3%26% 45% 19%

7%

Ads on TV

3%24% 51% 16%

6%

Ads in radio

Trust Completely Trust Somewhat Neither Trust nor Distrust Don’t Trust Much Don’t Trust At All

Nielsen, Global Online Survey, Q1 2011

universal in lack of trust

Page 30: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

INDIVIDUAL relationships and collective wisdom however DO WORK

30

Trust Completely Trust Somewhat Neither Trust nor Distrust Don’t Trust Much Don’t Trust At All

Nielsen, Global Online Survey, Q1 2011

1%18% 58% 21%

2%

RECOMMENDATIONS FROM PEOPLE I KNOW

2%4%

45% 38% 10%

CONSUMER OPINIONS POSTED ONLINE

#1 #2note drop off

between friends and

just consumers

Page 31: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

FACEBOOK REALIZES THIS WHICH IS WHY THEY DO THIS:

31

Facebook attempts to be a “friend” by selling ads based on friend likes

Page 32: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

GE STUDY PROVES CONSUMERS RESPOND TO SHARED CONTENT

32

Research proves that close

relationship recommendations is the best way to win

source: http://adage.com/article/digital/ge-study-proves-consumers-respond-shared-content/232324/

Page 33: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

WHAT ABOUT FANS?

Page 34: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

MEASURING CORE FANS ON FACEBOOK

34

CORE FAN:Any fan whose comment count is higher than the average is a “core fan”.

This number ranges from 1.14 for Bob Marley to 2.03 for Bob Marley.

WHY THIS IS IMPORTANT:Unless a fan actively participates in a brand’s Facebook Page and their activity on the Page has been continuous, the brand’s status updates will cease appearing in the fan’s Facebook news stream.

source: http://bit.ly/mYPZ9k

Page 35: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

Q: WHY ARE CORE FAN COUNTS SO LOW IF BRAND X OR ARTIST Y IS A PASSION POINT?

Page 36: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

Campfire Versus Fireworks Theory

Close intimate lasting conversations

Group experiences, exciting but not intimate

Brand X or Artist Y might be a passion point but when that

interaction takes place in Facebook it becomes less authentic because it’s not

close and intimate

source: Sam Huston

Page 37: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

IMPLICATIONS

37

FACT:Young users are moving to mobile at an accelerated rate

RESULT:Mobile allows casual connections to be maintained in a one way “shout out” (pastime conversation) using video posting

while engaging in deeper connections with “true friends” and personal passions through smaller more intimate networks

Facebook moves from ‘Passion Point” to “Utility”

Page 38: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

IMPLICATIONS FOR FACEBOOK

Page 39: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

FACEBOOK

39

FACT:Young users activity already mirrors that of older users once you

strip away the “Maintained and One-Way” relationships

RESULT:Young users will maintain large networks through pastime

conversations but will have a smaller group of close connections (either through FB or a another third party passion site/app).

Page 40: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

IMPLICATIONS FOR BRANDS

Page 41: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

THE PATH FORWARD

41

INSIGHT SOLUTIONBrands need to move beyond Pastime type conversations with consumers and into deeper more meaningful relationships with them This means:• Understanding your consumer• Knowing their passions• Relating to those passions• Being where they are• Providing value

For social this means • Being mobile which means understanding where

mobile is going• Going smaller by focusing on passions like:• Instagram• Tumblr• Path• etc.

• Providing services instead of advertising. The best way to do this is with mobile

• Creating opportunities to share instead of advertising to

Page 43: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

ADDITIONAL DATA POINTS

Page 44: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

MOBILE INTERNET IS NOW FREE AND EVERYWHERE

44

Observation:Smartphones are now “free”

Implication:Acceleration of the mobile

consumer

Source:AT&T / August 2011

Page 45: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

IN 12 MONTHS MOBILE WILL OVERTAKE ONLINE

45

12%1%2%

77%

7%

1%

11%7%

19%

42%

18%

3%

E-Reader Mobile Phone Personal PC/LaptopTablet Device Through my TV Work PC/Laptop

NOW 1 YEAR FROM NOW

One year from now mobile devices

combined will match PC/Laptops as

people’s preferred internet access device

WHICH OF THE FOLLOWING IS YOUR FAVORITE DEVICE TO ACCESS THE INTERNET

Source: http://globalwebindex.net / August 2011

Page 46: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

MOBILE DRIVING SOCIAL NETWORKING GROWTH

46

0%

125%

250%

375%

500%

Social Networking Search

218%

412%

CategoryApril 2008

# of Unique Users(000)

April 2009# of Unique Users

(000)

April 2010# of Unique Users

(000)

Social Networking 5,270 13,905 27,007

Search 11,817 24,846 35,573

Entertainment 9,687 17,330 25,791

source: nielsen - april 2010

Page 47: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

MOBILE SOCIAL NETWORKING APP USEAGE IS SOARING

47

240% since last year.

source: comscore - June, 2010

Pastime social networking activity is quickly moving to mobile

Page 48: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

LARGE MOBILE COMPANIES

48

Mobile = 50% of total active users,

vs. 25% Y/YMobile = 40% of all tweets

100MM mobile users vs. 50MM Y/Y 50% of all users subscribe on mobile

2x more active than desktop-only users

200 MM mobile active users vs. 50MM in 9/09

Source: KPCB / June 2011

Page 49: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

60%Of all Smartphone owners have used a

location based service

source: Pew Research Center’s Internet and American Life Project

Page 50: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

HOW CAN BRANDS REACH

50

CRM for those users who “Like” the brand can be used to generate the “friend recommendation” (most effective) brands want.

EXAMPLE:

LaurenBanana Republic sends Lauren a

coupon for shopping and tells her she can bring a friend: She brings her friend Mary.

Mary

They go shoppingLikes Banana

Republic

Like WorksIt leverages a brand advocate to act as a sales person on the

brands behalf

Page 51: Connecting The Dots: Social & Mobile (Facebook Marketing, Social Media, Online Communities, Mocial)

Title Line OneSecondary title line

51 http://dealbook.nytimes.com/2012/02/06/those-millions-on-facebook-some-may-not-actually-visit/

Facebook counts as “active” users who go to its Web site or its mobile site. But it also counts an entire other category of people who don’t click on facebook.com as “active users.” According to the company, a user is considered active if he or she “took an action to share content or activity with his or her Facebook friends or connections via a third-party Web site that is integrated with Facebook.”

Come again?

In other words, every time you press the “Like” button on NFL.com, for example, you’re an “active user” of Facebook. Perhaps you share a Twitter message on your Facebook account? That would make you an active Facebook user, too. Have you ever shared music on Spotify with a friend? You’re an active Facebook user. If you’ve logged into Huffington Post using your Facebook account and left a comment on the site — and your comment was automatically shared on Facebook — you, too, are an “active user” even though you’ve never actually spent any time on facebook.com.