Oxford Dictionaries announced this month that their “Word of the year” for 2015 does not contain any letters in it. The “word” their editors chose to reflect what people identify most with is a pictograph, or more commonly known as an emoji:

Smile

Emojis have been around for quite some time; however it wasn’t until recent years that this practice grew exponentially into a culture phenomenon. For instance, if you opened any communication apps or text messages of a group of millennials, you will find yourself staring at an assortment of different emoji exchanges. This phenomenon might be the most popular in millennials but certainly exists in other age groups as well. Generally, in the U.S., the younger the user, the more frequent emoji he or she uses.

This phenomenon is also not restricted only to the English speaking population. In fact, some argue that it all started from a messaging app from Japan.  Currently, it has also taken all the Asian countries by storm. For example, the popular Chinese messaging app WeChat is observing emoji exchanges surpassing textual exchanges for a significant portion of their users. Interestingly, in China, Emoji use is not as closely linked to age. Due to the difficulty of typing Chinese language for older population on their phones, emoji communication actually tend to be even more popular with the older audience. (My parents only send me voice messages and emojis on WeChat).

Internet exists as a means to achieve more efficient communication and information sharing. Therefore is it not surprising to see that due to the power of internet, our most efficient means of communication – words and language is being challenged and evolved. Indeed, Emojis do have an advantage over words in several aspects: They add authenticity and an emotional layer; they are shorter, more convenient and sharable; they are also ubiquitous, easily recognized and transcend most language and cultural barriers.

It is no surprise then to see messaging apps taking advantage of this popularity to monetize emojis. After all, this is not so difficult. Many messaging apps, such as Line and WeChat, now have a freemium model that charges users for specialized emojis.

However, the money doesn’t just stop there. By nature, emojis have very strong network effects. The value of an emoji depends on the number of people installed and the frequency used. And through its nature of sharing, the network effect is even stronger as users want to be linked to other users and share the emojis which helps to turn them viral. Monetization does not have to follow the service function directly, and this is where it gets interesting – monetization can come through indirect benefits in creative ways.

In retail and e-commerce, brands have taken notice of this trend and have evolved their communications strategies to attempt to insert themselves into the daily conversations of both existing and potential consumers. In the past year, more than a dozen of brands have incorporated emojis into their marketing efforts to relate to their audience in a “more fun and no pressure way”.  This makes sense. Emojis are a powerful form of promotion because they enable and empower self-expression, and allows brands to enter customers’ lives while being organic and non-disruptive.

For example: Taco Bell created their taco emoji. Mentos created emojis faces on Mentos candies. Ikea created “emotictions” including  furniture, pets, and Swedish meatballs. Old Navy created a website that analyze your top used emoji, then gives you vacation suggestions. You can order pizza by tweeting a pizza emoji through Domino’s. WWF lets you donate to their cause based on how many of their emojis you use. Foot locker created a “Shoemoji” for every shoe style they have… The list goes on…

With the emergence of this new wave of communication methods such as Vine and Snapchat, we see the way of communicating rapidly changing and evolving. We have moved from voice, to text, to pictures and still emojis, and more recently, to animated emojis and videos. In this wave of rapid change lie significant business opportunities, especially for companies that benefit from brand awareness and network effects. Companies who can truly enter consumer’s everyday communication while being organic, authentic, and non-disruptive in making money will find themselves a very powerful competitive advantage.

By: Mark Feng


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With over 1.2 billion reported users and close to $200B in market capitalization, Facebook is undoubtedly the most ubiquitous social network today. For most users, the core value proposition of Facebook is simple – it is a means to stay connected with their friends (and acquaintances) and to share and learn about each others’ lives. And yet, over the years and over countless tweaks to Facebook’s NewsFeed algorithm (popularly known as EdgeRank), more and more users complain that they don’t get to see any updates from a majority of their friends. Indeed, the average user has over 300 ‘friends’ on Facebook, but thanks to Facebook’s determination of what’s relevant, they are likely seeing updates from only 20% (or less) of their network. What’s going on? Why is it that I have over 1200 ‘friends’ on Facebook, yet I never see anything from almost a 1000 of those? I used to believe they simply didn’t post as much, until I checked out several people’s profiles and saw major updates I would have liked to see, but never saw, despite logging in several times a day. Why is it that I see some stories over and over for days, and several never appear?

Keep it simple….

Several hours of tweaking Facebook settings, privacy controls and reading Facebook optimization controls told me one thing – it’s complicated by design. There is a lot on Facebook that’s simple and intuitive, but customizing your experience is definitely not. There is an option to sort your feed by ‘Most Recent’ but all it does is sort the pre-selected ‘Top Stories’ into reverse chronological order of any action taken by anyone, thus being not helpful at all as it doesn’t introduce new content and in fact increases repetition. You can unfollow or block users, you can tweak content settings for people and types of content individually, or you can organize your 1200 friends in lists you then follow (like really?). For the average user, it is too much to ask, but I’d venture to say that even for power users, it doesn’t really help much.

They have the edge

EdgeRank works in mysterious ways, and the best one can gather is that Facebook measures and ranks ‘edges’ connecting any one user to another user (or Page, Group, Brand etc) by the strength, time delay and frequency of their interaction. However, only active interactions count, i.e. liking, commenting, following or sharing. So if you passively enjoy reading someone’s updates but don’t actively ‘like’ them, chances are you’d stop seeing updates from them sooner than later. This is true for both your friends as well as pages you may have liked, unless of course they pay Facebook to promote the post. The problem arises when over time you see what you like becomes you like what you see, making your Newsfeed populated by the same subset of users and content types and effectively limiting the reach of content. And lest you figure it out, they tweak (and AB test) EdgeRank all the time. So you may not even realize that the reason some of your real world friends don’t comment on your exciting Facebook updates may be that they actually never got to see it, for no lack of intent whatsoever.

“Trust us, we know what you want to see”

Let’s face it, Facebook does know a lot more about us than we think. As long as you’re signed in, Facebook knows not just what you ‘like’ and who you stalk on their website, but also most likely what articles you’re reading and what websites you’re surfing for how long. Besides, information overload is a real problem. Between friends’ updates, activities, engagement content and brands, Facebook estimates they have thousands of news stories to show every user at any point. Surely some stories are better or more important than the other for every user. But by Facebook’s own estimate, only 0.2% of these stories are ever shown to the user. With no easy way to even access the remaining 99.8% and no straightforward explanation of how those 0.2% are determined, it is unsurprising that I see check-ins every time my dorm neighbour gets down to eat and I totally missed the news of wedding and first child of my high school best friend. And these were happy stories – considering Facebook doesn’t want users to not see many ‘negative’ emotion stories, I wonder what all I’ve missed that would have been relevant to know. Or not.

It’s all about the money, honey

All this brings me to the business of Facebook. It is not so hard to gather that the purpose of ‘optimizing’ your NewsFeed is as much to show you the most relevant updates from your friends as it is to show you ‘relevant’ sponsored stories by those that pay Facebook by creating real estate. Facebook marketing is, after all, a fast growing and rather effective (for now) channel for most brands’ marketing efforts these days. One can argue that, after all, it is a free service that Facebook is providing to the users and they deserve being compensated in some way for it by selling part of the user engagement it creates to the brands who want them. And these are brands the users want too, demonstrated if not explicitly by subscription then implicitly based on their behavior as Facebook understands. Perhaps the users shouldn’t complain so much, after all. Sure, they don’t get a perfect experience and sure, there are a few ethical questions because users don’t really understand how they are being manipulated. But what about the brands themselves?

Thousands of advertisers have spent precious time and money over the years building up reach on Facebook pages, but sometime last year they realized that all of a sudden their messages weren’t being shown to all the users who had ‘Liked’ and previously engaged with their page, never mind to new users. So unless they pay for each posting, or the user is a dedicated follower who actively engages with every piece of content posted since the beginning of the change, Facebook’s reach for most brands is basically a myth and the promise of building an engaged community with two-way communication hollow. I wonder how sustainable this is, in the long run, especially as Wall Street maintains earnings pressure on Facebook and non-advertising revenue on the website continues to slip.

Bottomline, friends are not really friends on Facebook. Fans are not really fans. Don’t like the Likes too much.


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Who is Honest?

The Honest Company (www.honest.com) was cofounded in 2012 by Jessica Alba and sells eco-friendly lifestyle and cleaning products including baby diapers, wipes, bath and body care products, and non-toxic cleaning products. It’s annual revenue is tracking to exceed $150 million in 2014, three times the revenue of 2013. Investors love Honest and have pumped $122 million into the company to date, with the most recent $70 million Series C in August 2014. Now, it is preparing for an IPO. Honest is the epitome of fast-track, sustainable startup success in Silicon Valley. It’s success is built upon a very deliberate marketing and branding strategy.

eCommerce Success = Design + Targeted Marketing

With so many startups popping up nowadays, it is more important than ever to stand out. One can do this by bringing in design early on and making it part of the core of a product, not simply an add-on. Honest entered a tough market. Launching a new, branded company in a crowded category is one thing, but launching an online, subscription-based brand in a crowded category is entirely another.  Successful e-commerce startups in today’s tech and consumer-savvy world, like Honest, exhibit a crucial similar characteristic: design is tied to targeted marketing and they are mutually reinforcing.

Let’s take a look at their email marketing strategy. All of Honest’s emails have colorful, dynamic images. This increases the ‘open rate’ for their emails by over 20%.

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Their email marketing campaign is also triggered by consumer browsing and purchase behavior. I signed up to receive Honest emails as two different people: H and Patti. As H, I spent 20 minutes only browsing through the website. After 2 days, I received an email inviting me to follow Honest on every social media channel. So I did, flipping through launch pics on instagram and watching Jessica Alba’s interviews on facebook.  After 3 days, I received another email offering a free trial of either baby products or personal care essentials. This targeted, proactive marketing strategy increases the conversion rate for Honest by 3x.

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As Patti, I placed several items in my shopping basket but never completed the purchase. The marketing campaign that ensued was frighteningly effective. After 1 day, I received an email saying I ‘honestly’ forgot something in my shopping cart. After 2 weeks, I received an email with a 35% discount off the entire purchase and 3 days to use the promo code. When I still didn’t make a purchase, I received another email in 7 days giving me 40% off. By this discount, I actually made my first purchase because it was all too tempting. Honest’s lapsed marketing campaign for abandoned cart consumers is one of their most effective, increasing conversion rate by 6x.

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Sure, all e-commerce startups can adopt this targeted email marketing strategy, but that is not enough to build a sustainable business model in today’s world (assuming you don’t want your business to be based on one-off sales hits or flash sales).  A strong web platform is undoubtedly important, with targeted and personalized emailing which encourages trial and prevents opt-out. However, this platform must be reinforced by an appealing and intuitive UX in order to brand-build.  With Honest, Jessica Alba’s celebrity appeal makes deploying its social-media strategy and getting followers easier. For the rest of us considering starting an e-commerce company, it’ll be more important than ever to budget for and lay out the groundwork for a comprehensive, personalized marketing strategy before starting.

Sources:

  1. Interview with Sloan MBA ‘15 who interned at The Honest Company in marketing.
  2. Honest emails

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Payment is probably the only area in tech that hasn’t had any major innovations in the past ten years.  By looking at recent startups, I strive to summarize a few trends in the payment and offline merchant space.

Your credit card will not be just a card (or whatever the next payment device is)

Today, your credit card is merely a way to pay, even though it contains an incredible amount of information about you and your consumption patterns.  And after the transaction, there is no good way for merchants to interact with their consumers again, because of privacy concerns.

A few startups are building out loyalty programs in their products.  These products aim to replace the punch cards that we get from cafeterias.  If you have a way to ID your customers (either via credit card or via a mobile app), then you can offer discounts or benefits to your most loyal customers.  Square and LevelUp have such functionalities in their broader product offerings, while FiveStars and Thanx are pure loyalty products.  Another startup, CardSpring, allows developers to pull data from each card transactions.  As a result, developers or card companies could do a lot of interesting things with the data.  For example, once I link my AMEX card with my twitter account, every time I twit about a certain merchant, I would be entitled to a coupon to that merchant and it is embedded in my card for automatic redemption in the future.

Offline merchants are in desperate need of sales and marketing services

As they say at Facebook, local is mobile, or vice versa.  The last wave of eCommerce companies aimed at helping merchants who sell physical goods to reach a wider customer base.  However, nothing much has been done in the service-oriented merchant space.  As a matter of fact, there is no real good way for these merchants to market and advertise themselves.  Daily deal sites (such as Groupon) provided a way, but the effectiveness of these programs is still under debate.  Moreover, these programs tend to attract a more inferior customer base that tends not to return in the future.

All these happen under the backdrop of decreasing interchange fee required by regulators.  The chunk of interchange fee (about 1.7% out of 2.5%) is earned by the issuing bank for putting up a 30-day loan.  However, when the whole economy deleverages including consumer credits, this fee will go away.  As a merchant, wouldn’t you want to spend the money saved on interchange for marketing and advertising?

However, the key should be to offer a strong incentive for consumers to join

While the demand is sizeable on the merchant side, I do think in order for such platforms to succeed, they have to create a strong enough incentive for consumers to join.  In the payment relationship, consumer is still the side that has more power.  Unless you have consumers on your side, it is very difficult and inefficient to acquire merchants.  And I am not sure if loyalty programs alone could do the trick.  Loyalty program is a nice-to-have, but I am not sure if it is strong enough.  So what could you provide as a strong incentive for consumer to join?

 


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The big shift: from 360 to 365

“There’s been way to much focus on [cross-channel] integration. I see the shift from 360 degrees of communication to 365 days of connection.” [1]

– Rei Inamoto, Chief Creative Officer of AKQA (at Cannes Lions 2012)

 Internet and 360 degree marketing campaign
Internet has changed the world of advertising, not only by introducing new types of online ads such as sponsored search, but also by generating a new trend of marketing campaign.  With the capability to store and provide marketing contents interactively, the web site plays a critical role as a “campaign hub” in today’s marketing communication. And with this “campaign hub” in their hand, advertisers are now trying hard to integrate their marketing activities across different media (TV, Newspaper, PR, Event, etc.) in order to maximize the effectiveness and efficiency of the campaign. Marketers call this “360 degree campaign,” and it has been regarded as the most appropriate response from the ad industry to the innovative online technology.

 Further evolution of technology
However, the evolution of technology has not stopped at this point, and therefore, the evolution of advertising/campaign also should go further along with it. Technologies such as big data, cloud computing and ubiquitous devices (smartphone) are especially important. They have been bringing three fundamental changes to the ad industry.

1. Targeting:
The scope of consumer data has been expanding from easy-to-analyze purchase histories to more difficult-to-analyze unstructured data such as emails, posts on Facebook, or even images and pictures on Pinterest.  These “big data” have clear advantages over traditional consumer survey data. First, the volume is huge. Recent technology could add even more detailed “lifelog” of consumers based on sensor data received from electronics. Second, the quality of the data is superior because they are more naturally extracted from consumer’s everyday life and thus less biased than setup surveys. The sensor data, for example, might reveal hidden preferences or behavioral patterns that even consumers themselves do not realize.

These data and the technologies of analyzing them dramatically increase the accuracy of targeting, almost to the extent that advertisers can firmly grab each one of individuals. While Traditional advertising uses segmentation methods in order to shoot the bullets as close to the targets as possible (and thus inevitably wasted some bullets), future advertising could directly reach out to the individual consumers with almost perfect accuracy.

2. Customer Relationship Management:
Until recently, the relationship between companies and customers had not been truly interactive, or at least, not interactive in a real-time basis. However, big data, cloud computing and ubiquitous devices realize this real-time interaction and thus change the way of managing customer relationship. Advertisers now can technically track every behavioral step that customers take from attention to purchase, and contact customers whenever they want.

 Traditional campaigns are basically one-shot and one-way, even though some marketing contents could be stored in the web site. Future campaign, on the other hand, should be continuous and truly interactive. Through smartphone, for example, advertisers can send customized messages to specific individuals on specific timing and situation. The relationship between companies and customers becomes more equal, and the communication between them becomes more conversational.

 3. Measurement of advertising effectiveness:
You can now imagine how accurately advertisers could evaluate the effectiveness of their marketing communication with recent technology. The quality of analysis on the causal relationship between customers’ behaviors and advertising exposures would be enhanced exponentially along with the accumulation of big data. Moreover, in addition to now prevailing action-based effectiveness analysis (based on click, search, purchase, etc.), increasing efforts are being made to find out subconscious effects of advertising on customers. For example, neuromarketing has been developing its analysis on the measurable emotional effects of the ads on consumers, based on the knowledge of neuroscience. [2] This would further broaden the portfolio of big data, and thus increase the accuracy of the measurement of advertising effectiveness.

 Implications for future online advertising/campaign
So, what are the implications of these three trends for future advertising/campaign?

First, the ad spending should be treated as an investment, rather than expense. Yes, I know that there are a lot of ad agencies that have been claiming this at a conceptual level for more than decades (just in order to increase the ad budget from clients), but this time, it is more at structural level. With their accurate targeting and data tracking capability, advertisers can now reasonably calculate its ROI and predict how many customers they would acquire for specific ad spending. In order to be considered as an investment, the ad campaign should be integrated not only across the different media, but also across the timeline. It should focus on the long-term, continuous maintenance of the company’s asset; its customers.

Second, the initiative of the communication should be shifted from advertisers to individual customers. Yes, I know that all the marketers have been saying “customers first” for more than decades, but again, this time the importance of customers is far higher than ever. Traditional marketing planning might start from individual customers, but end up with developing one-size-fits-all 4P strategy, which is delivered unilaterally to the anonymous customer segment. With continuous and real-time updates of individual data, the priority of future campaign should be shifted from “providing” anonymous customers with one-size-fit-all information to “following” individual customers and “connecting” with them through customized information. Delegation, rather than manipulation, is the key.

Overall, advertisers should shift from 360 degree to 365 days campaign, as the quote on the top says. Instead of surrounding customers and firing at them from 360 degree, advertisers should follow individual customers 365 days and develop the long-term collaborative relationship with them.

There is already a bunch of successful campaigns that reflect this strategy, but the recent IBM campaign called “Chief Executive Customer” seems to me as a symbol of major transition of the trend. Starting with a narration, “Meet the new boss, your customer,” the TV commercial emphasizes the importance of deep analysis of customers’ voice. [3]

 Well, advertising has long been relying on magical creativity to capture and manipulate customers. But if customers are no longer “target” and should be treated as allies, colleagues or boss, the most important skill in ad industry would be the solid management skills to listen, follow, support and delegate. Therefore, in a couple of years, the most sophisticated ad campaign could be developed by MBA graduates instead of creative genius. Yes, I mean YOU could be a next Don Draper if you want! Just keep your eyes on the ongoing evolution of the ad industry…

Sources:

[1] http://www.adexchanger.com/agencies/akqa-sale-to-wpp-cannes/

[2] http://www.adelaidenow.com.au/ipad/advertisers-trial-neuromarketing-to-measure-emotional-responses/story-fn6bqvxz-1226308617246

[3] http://www.youtube.com/watch?v=phvMEsLs-Hg

 


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