When Social Media Promotions Go Awry

One of the hardest lessons that marketers and retailers can learn in social media is when a promotion goes awry. You launch with the best of intentions–certain that a coupon or a discount will get you a whole bunch of fans–but somewhere along the line, something goes wrong. And it doesn’t take long for your new fans to become not-so-friendly.

Walgreens last week offered a free 5×7 photobook to anyone who becomes a Facebook fan by Oct. 2. As of today, Walgreens has over 200,000 fans. But when it told its new fans in an update on its Facebook wall that the free photobook actually will come with a $1.99 shipping and handling fee, the fans were not amused. They didn’t hesitate to voice their complaints on Walgreens’ Facebook page.

Sara Lee Deli, meanwhile, has been offering its new Facebook fans a $3-off coupon. But scores of them have had problems receiving the e-mail coupon, or printing it, and again, they have not been shy about expressing their frustration on Sara Lee’s Facebook page.

A similar thing happened to Starbucks a few months ago, when the company promoted its new line of pastries with a coupon offer on Facebook and other social outlets. Some stores ran out of pastries, and some consumers didn’t realize they needed to bring the coupon with them. They vented their frustrations on Facebook, Twitter and Starbucks’ own social media site.

The lesson to be learned here is that marketers and retailers must make sure a social media promotion is completely synced, both online and offline. It doesn’t take much for things to go awry. And if things do start going south, it is critical to respond positively–and quickly–and turn the negative energy back into goodwill.

Facebook: $300 million or $500 million … or somewhere in between?

I’ve been getting the question a lot lately: If Facebook says it will increase revenue 70% in 2009, and if board member Marc Andreessen publicly says revenue will be at least $500 million this year, then why is eMarketer’s estimate only $300 million?

I’ll take a moment to explain.

Our estimate covers only ad spending on Facebook, and does not include any other form of revenue. Facebook currently gets some revenue from virtual goods (as much as $75 million, according to one estimate I saw recently). In addition, I expect that Facebook will launch other revenue streams this year, such as payments/e-commerce.

Our estimate for worldwide ad spending on Facebook in 2009 is $300 million. That breaks down to $230 million in the US and $70 million outside the US.

So if you add our estimate of $300 million in worldwide ad spending, plus about $75 million in virtual gift revenue, that equals $375 million. Assuming Facebook launches a payments system, that could bring in several million more in revenue (I don’t have a specific estimate on that).

The end result would still be lower than $500 million, and the reason for the difference is that while I am optimistic about Facebook, I am not as confident as Facebook is on its ability grow revenue 70% this year. With total US online ad spending slated to rise just 4.5% this year (according to eMarketer’s most recent projections) it will be an immense challenge for Facebook to increase total revenue 70%.

I will continue to watch the numbers, so we’ll see how things shake out.

Is Mark Zuckerberg crazy, or can he boost revenue 70% in ‘09?

Yesterday, Facebook announced a $200 million investment from Digital Sky Technologies, a Russian-based investment group that I am sure 99% of the Internet business had never heard of before yesterday. But DST is the company behind some of Russia’s biggest Websites, including Mail.ru and social network VKontakte (an amazing clone of Facebook, by the way).

During the conference call announcing the deal, Mark Zuckerberg reiterated a statement, first made in March, that Facebook’s revenue will increase 70% in 2009. Sheryl Sandberg, in a follow-up interview with PaidContent yesterday, also said:

“Our revenue is doing incredibly well—70 percent year over year (growth) this year means that the ad products we’ve built are working, it means that all of our sales channels, all of our markets international and domestic are very healthy, and it means that our ad models are working.”

The 70% figure first came out in a March 2009 New York Times article on the departure of finance chief Gideon Yu:

Regarding its financial state, Facebook said that in the quarter ending Tuesday, it beat its own internal projections and is on track to increase revenue by 70 percent this year.

Can Facebook actually achieve this goal? I’m doubtful. My eMarketer projections estimate 20% growth in ad spending on Facebook this year, to $300 million. Advertising forms the vast majority of Facebook’s revenue. I said as much to Businessweek in an article about the new funding:

“Where is that [70%] going to come from? I can’t see it coming solely from advertising. Either he [Zuckerberg] has some new revenue stream up his sleeve or he is crazy.”

Investment bank Cowen & Co., in a new report on online ad spending, believes the growth will indeed come from advertising and estimates that Facebook’s ad revenue will increase from $258 million in 2008 to $428 million in 2009. Cowen is one of the few companies aside from eMarketer that estimates Facebook revenue.

But Facebook’s future growth, however large or small, will not be solely from advertising. Facebook already generates some revenue from virtual gifts those little icons that people buy with credits and give to friends) and has been rumored to be considering a raft of other revenue streams, from a developer “tax” to ecommerce to virtual currency. New investor Alexander Tamas, of DST, has experience with payment systems and virtual goods at his other Internet companies.

One wild card: the rumor that Facebook is getting ready to launch an ad network based on Facebook Connect. Such a network would be very, very interesting, but also very, very tricky from a consumer privacy perspective. And, as Business Insider points out, advertisers are more focused on performance networks these days than on targeted brand advertising. The business climate for a Facebook ad network may not be right this year, but it could be the perfect temperature in 2010.

Facebook’s European Takeover

Just last month I wrote in an eMarketer report that Facebook in 2009 would take over markets that had once been dominated by regional social network sites. Today, comScore reports that Facebook has become the dominant social network in 11 of the 17 European markets comScore covers.

Most recently, it overtook local favorite Tuenti in Spain. And in three of the 17 countries, Facebook ranks second. The only places it trails other social networking sites are Germany, Russia and Portugal.

So much for the idea that a homegrown site could capture the nuances of local culture.

Social Media Podcast with Smallbiz America

I was interviewed recently by David Wolf of Smallbiz America about social media marketing. In the interview I answer these questions:

1. You’ve been in this space since 1993—-has anything totally surprised you in terms of the ways internet advertising and marketing has unfolded?
2. At eMarketer—-you’ve got a birds-eye view of how the world of social media is changing the landscape of marketing. What does social media do that traditional media simply cannot do?
3. The issue of brand control has certainly been a concern for many companies as they make their entrance into social media. How are you seeing companies manage their brands in a world that’s all about letting go of control, and harvesting authenticity from the consumer?
4. How do you see strategic possibilities evolving for companies that want to participate in social networks as advertisers—-how are they looking to approach the challenge?
5. Do you think it’s more effective for companies to create their own social networking platforms—-or is it a better idea to leverage the existing platforms that have huge traction?
6. How is search marketing evolving—-and what can we look forward to in terms of changes there?

Why Gen X Loves Facebook (Hint: It’s not because their kids are there)

Inside Facebook has a new set of stats (culled from Facebook’s ad system) that detail the enormous growth in Facebook’s over-25 membership. As of March 2009, 41% of US members were between the ages of 26 and 44, compared with 35% between age 18-25. The fastest growing demographic is women over 55, Inside Facebook says.

In fact, women outnumber men as Facebook members in every age group. For example, of the 9.7 million US members between the ages of 35 and 44, 56% are female. In the 45-54 group, 60% of members are female.

For a while now the going theory was that older generations were signing on to Facebook to keep track of their kids. But Facebook has a wide appeal beyond parents of teens and college students. I’ve been a member for some time now for professional reasons, but over the past few months I have seen dozens of college friends, high school friends and people in my town sign on. Very few of them have kids who are older than pre-teens.

It’s true that some of the appeal of Facebook is to reminisce about the good old days, or simply the voyeuristic tendency we all have to see what our old classmates and friends look like now. No more waiting for the class reunion to discover that your high school homecoming king gained 40 pounds and lost all his hair. His picture is right there for you to see. (And just a few clicks away are the requisite pictures from 20 years ago, showing him with all his hair, posted by some other high school friend.)

Some of that usage will fall away; connecting with friends from 20 years ago is often no more than a “hey what are you up to these days” kind of conversation. But even if I don’t interact on a regular basis with old friends, it’s still fun to browse their profiles and read their news feed items every so often. One friend bragged about her son’s success at a regional swim meet. Another posted that her employer is making her take two weeks off this spring, unpaid. Yet another had the utter embarrassment of being asked if she was pregnant (she’s not).

Before Facebook, none of this would have ever crossed my radar. You may argue “Who cares?” but the reality is, a lot of people care. And they are people from Generation X and above who are quickly realizing how fun it is to get updates on the lives of friends they haven’t thought about in years.

Facebook’s Stream of Consciousness

Today Facebook unveiled new changes to profile pages and also to the Pages (yes with a capital P) that marketers and public figures can maintain.

The changes are complex but essentially boil down into allowing people to have more control over what information they see from their Facebook friends, and to make it easier for people to post whatever they want to and spread the word to both friends and fans. For marketers, the changes mean closer integration into the News Feed that people see when they use Facebook.

One of the biggest changes is to the status update box, which will simply say “What’s on your mind?” instead of “What are you doing right now?” It’s a nod to the fact that people no longer use the box to say what they’re doing, but what they are feeling, thinking, reading, watching, interacting with.

The net net of all of this is that Facebook wants to capture and disseminate the ongoing bits of information that people, companies and public figures say, and the actions that they take. Said Mark Zuckerberg in a note on the Facebook blog: “People will no longer come to Facebook to consume a particular piece or type of content, but to consume and participate in the stream itself.”

It’s a bold, philosophical statement, but it also says a lot about where Facebook thinks it should participate in the stream of discussions and activities of the social Web. And that position it aspires to is right smack in the center.

What does all this mean for social network marketing? I’m honestly unclear at this point. In one sense, the changes Facebook is making to Pages will effectively put a more personal face on a brand. As Zuckerberg describes in his blog, “You can find out that Oprah is reading a book backstage before a show, CNN posted a breaking story or U2 is working on a new song, just as you would see that your friend uploaded new photos from her trip to Europe.” All this information will be pushed to your News Feed, if you are a fan of the brand or person.

This gets into obvious Twitter territory, a place where Facebook very plainly wants to be. Much to pay attention to here.

Where Social Networks Are Going

I’ve been in PowerPoint h*** the past several weeks (with a vacation to Cabo in between). I envy the way some people crank out slides with no effort … the same way I envied my husband for being able to write an entire college essay in one sitting, while I struggled and thought and rewrote and rewrote over the course of several days.

But I digress. Sort of.

For a while now I’ve been saying, in my eMarketer reports, in presentations and in media interviews, that social networking will eventually transition from being a destination (I go to Facebook or MySpace, I visit my profile page, I chat with friends or download apps…) to an activity. It will become more diffuse, and part of  of our Web browsing experience.

Well, all of that is starting to happen. Facebook’s new Connect feature lets sites add connections back to Facebook, seamlessly. Say you post a comment on a blog or a news site. If that blog or news site uses Facebook Connect, you will have the option to sign into that site with your Facebook credentials and then, if you choose to, tell all your friends about the comment that you just wrote. The notification would appear in their News Feed. Or, you could tell just some of your friends, by clicking on their pictures (their Facebook pictures) that pop up when you sign in to the blog.

The New York Times covers this idea in its basic form this week. But there’s a lot more to it. Others are doing similar things — such as Gigya’s Socialize product. And while there’s a lot that’s compelling about sharing your Web activities with your friends, I have a hard time believing this will ever become a common activity. I’ll fully admit that those words may come back to haunt me someday so I reserve the right to change my mind.

But think about all the Websites you’ve visited so far today. How many of your activities there do you actually want to share with your friends? For example, I’ve been to CNN.com several times. At one point I read an article about volleyball player Misty May-Trainor’s achilles tendon injury on Dancing With the Stars. Would I want to share the fact that I read that article with friends? Or what about the article about John McCain’s health. If I commented on it, I might be able to tell my Facebook friends about my comment. Do I want them to see it? Which friends? All, or some? Does this extra layer of questions add anything or make it more difficult to decide whether I want to comment or take an action in the first place?

Another example. I just uploaded pictures from my Cabo trip to my Shutterfly account. Here, I might want an easy way to let my friends know about the pictures. But only a few of my Facebook friends would probably want to see my Cabo photos. And other friends who might want to see the pics aren’t even on Facebook.

I recognize that young people may not share my attitudes toward sharing and privacy, but I also wonder if all this sharing will make anything easier or just add to the clutter of things that come at us every day.

More thoughts on this as I continue to ponder the socialization of the Web. Like I said at the beginning, I don’t always have all of my thoughts in order when I start to write.

Dell and Microsoft on Facebook

Dell and Microsoft’s Be a Campus RockStar promotion on Facebook

Earn points toward a One Republic concert on campus by watching sponsored videos, inviting friends and taking other actions. Ends Aug. 31

Stats: 139,000+ monthly active users (per Facebook).

Agency: Mr. Youth

Kohl’s Back to School app on Facebook

Kohl’s Rock Like a Star video contest

429 entries as of Aug 19. (Not sure how many are actually videos – looks like a lot of people took the easy route of submitting a photo and written story instead.)

Agency: Votigo