Psychology of Social Shopping

A recent piece at Social Commerce Today raises some thought-provoking points on the psychology that drives shopping in general – and which bear implications for social shopping. Social Commerce Today decided to evaluate Dan Ariely‘s book on behavioral economics, Predictably Irrational, to understand some of the irrational reactions that drive us to consume – and their potential implications against social commerce (conspicuous consumption, magnified among our social networks). We’ve highlighted some of the key notions below, for consideration and discussion:

  • The Cost of Social Norms: We are happy to do things, but not when we are paid to do them. Financial rewards or penalties create a market norm, a paid-for transaction that legitimizes behavior – even when undesirable. Social norms and market norms (business, financial rules) are not the same – recognize the difference between the two, and don’t attempt to turn a social norm into a market norm.
  • The High Price of Ownership: We Overvalue What We Have. We don’t like to lose things – so once we own them, we tend to overvalue them. This may explain why influencer strategies can work – once someone owns your product, they’re likelier to advocate it.
  • The Cost of Zero Cost: We often pay too much when we pay nothing. Consumers will trade-up, wait in line, and pay more just to be able to get a free gift or bonus, such as free shipping. Free is valuable.
  • The Power of Price: More expensive is perceived and expected to be better and more effective.  Price has an effect on experience. Consider how price is presented and how prices are compared in your product presentation/UX strategy.
  • The Influence of Arousal: In a state of excitement or arousal, people think and behave very differently.   Emotional states trump rational thinking; it’s easier to sell to consumers when they are excited.  Social Commerce suggests using social commerce for live event shopping – rather than simply adding a retail layer to social platforms and a social layer to your retail platform.

In closing, behavioral economics tells us that consumers are less rational in their purchase decisions than other marketing models predict. But those irrational behaviors aren’t random – they are rather systematic and predictable (as is human nature). For instance, we will oftentimes sacrifice personal pleasure for public image – sometimes going against the current simply for the sake of being viewed as ‘different’, even if we prefer what most are doing. Behavioral economics can offer insight into consumer behavior, which should be considered in social commerce strategies and programs to present things in the most desirable, compelling manner.

Gen X, Gen Y, Gen C?

From P&G’s VP of e-commerce, Alex Tosolini…

He referred to today’s emerging generation as “Generation C,” which he described as “always connected, always computerized.” The “C” also describes consumers’ desire to have “everything happen at the speed of a click.”

“For a company like Procter & Gamble,” he said, “this is an amazing change in how we go to market.” Retailers, consumers and marketers alike can change course “in one click,” he said.

Cost of Being Boring

As Andy Sernovitz says, “Advertising is the cost of being boring.” On the other hand, advertising is a lot cheaper and easier than changing a company’s culture to focus on customer experience. If you’re an advertiser, sure, you can keep hammering the message of how great you are, even if your customers think differently. If you’re an agency, companies like this will support you for years to come. But in the end, people will find out the truth — and with social technology, that happens more easily every day.

Or, you could put your money and effort into improving the experience. That’s an effort that will take a couple of years, but with buyers coming back and seeking value as the recession lifts, you’ll attract the leaders. They’ll talk. You could end up like Zappos, where the customer word-of-mouth is most of the marketing. Or, you could just develop a customer experience that resonates with consumers, which is a whole lot easier to advertise.

Thanks, Josh Bernoff.


The Right Mix in a Social Media Agency

As brand marketers gain more experience running social campaigns, they’re becoming more sophisticated about choosing social media agencies. Head marketers at Pepsi, Ford, and Microsoft shared their thoughts on working with social media agencies last week during an event hosted by Huffington Post in New York’s Times Square.

“We haven’t figured out the right mix,” said Shiv Singh, head of digital at PepsiCo Beverages North America at PepsiCo, when asked about how Pepsi picks social agencies. “They all come to social media from different places from different starting points…. No one has the whole picture.”

The comment is particularly poignant considering Singh’s history on the agency side, as social media strategist with Razorfish. Singh (pictured above) moved to Pepsi in June, and works with the company’s burgeoning consumer engagement group, which is heavily focused on social and emerging media.

“Depending on the agency and the need, we leverage them and their strengths,” said Singh of the social agencies Pepsi works with, noting that he has yet to find one agency that fulfills all his social marketing needs. “We shop by skill on the agency side,” he added.

Scott Monty, Ford Motor Company’s pioneering head of social media, told the social marketing panel’s audience, “We’re very methodical and very aggressive about our social media” efforts. He said Ford has a social media agency at the corporate level and works with Team Detroit – a joint venture of WPP agencies including JWT, Mindshare, Ogilvy, Wunderman, and Y&R – in crafting social campaigns.

Ian Schafer, CEO of Deep Focus, an agency that handles social media strategy for companies and brands including HBO, Diageo, and Bing, suggested that social agencies have varying approaches. Some, he said, are more focused on scale, reach, and frequency, while others are focused on engagement.

Microsoft is also learning as it goes when it comes to integrating social agency services. “We’re really starting to blend the ideas of our agencies and our media partners,” said Eric Hadley, general manager, for Microsoft’s online services division. He said the company typically writes quarterly or annual briefs, and brings in its agency partners to help decide who should handle specific projects.

Hadley continued, “If you have the media agencies in silos it doesn’t work.”

Taking a Cross-Channel Approach

One takes it for granted these days that all marketing professionals are up to their analog ears in digital projects. But a new report from the CMO Council and Accenture indicates that serious engagement with digital channels — while more the rule than the exception — is considerably less than universal among top-level marketing executives.
In a survey for the report, 78 percent of CMOs agreed that “digital channels are important to their organization” — which, of course, leaves a sizable minority who don’t feel that way. Just over half the CMOs (55 percent) agreed that “Access to customer intelligence is critical to competitive advantage”; 50 percent agreed that “Technology now underpins and shapes the entire customer experience.”

Such tepid numbers may help explain why barely more than one-third of the CMOs (35 percent) said they’re “heavily committed and invested” in interactive digital marketing strategies. (The polling was fielded June through September, with about three-fourths of the responses coming from companies based in North America. The report as a whole focused on the relationship between CMOs and chief information officers and the need for them to align their priorities.)

Many of the respondents conceded that their companies are laggards in use of digital marketing: Just 38 percent “believed their organization was prepared to exploit the opportunities presented by digital marketing channels.” Why are many unprepared to do so? Fifty-nine percent pointed to “insufficient funding”; 46 percent mentioned “lack of senior management understanding.” At least the CMOs aren’t overconfident about the strength of their digital efforts. A mere 27 percent subscribed to the statement, “We know what we need to know about customers’ usage of our digital channels.”

When asked to identify their “top technology priorities to improve business performance,” 52 percent of the CMOs put “more efficient customer interaction” on the list; 47 percent cited “improved customer insight.”

What Matters Most

Only people matter
They matter more than clients, more than teams, more than fancy buildings, smart suits or posh titles; they matter even more than the ideas. Great ideas are just what happen when the right people are put together and organized (or not) in the right way. The only role of agency management is to find, retain, organize and inspire others. If management is not doing this, they’re part of the problem.

None of us is as good as all of us
This is a classic Bogle-ism, one of his very best, and it’s never been more true than today. Avoid the Prima donna at all costs; as Calle Sjoenell (our ECD on Google at BBH) notes, ‘no egos, no drama’.

Ask forgiveness, not permission
The people that make a difference tend to be the ones that don’t seek approval first. They are often not the most popular. They’re rarely the most rewarded. But they’re the most valuable. If you can bring yourself to put up with them, they will be your secret weapon. And they’re way better on your team than on someone else’s.

Awesome is always scary
The vast chasm between really good and extraordinary is filled with fear. If you push yourself to the extent that you’re deeply uncomfortable, you’ll be fine; if you’re comfortable, you’re not pushing hard enough.

Give *everything* away
Be generous with ideas, with credit, with opportunities, and most important of all, with time. Although it’s not the real point, be reassured that this generosity *always* comes back.

Do less, but do it better
We try and do too much because we’re not honest with ourselves about what we’re best at and we’re not honest with our clients about what we’re really capable of. One of the unheralded roles of planning is to distill, simplify and encourage focus; to eliminate nonsense, or the chance that nonsense might occur. Strategy is, indeed, the art of sacrifice.

We can’t be friends *all* the time
If we’re not passionate about what we do, we should pack up and leave. If you’re not upsetting someone, somewhere, most of the time, you’ll end up with ‘average’. This includes clients, but perhaps more importantly applies internally.

Build & love your network
You don’t have to share an office with the best people around to work with them, or learn from them. If you’re lucky, you’ll share an office with some of them (I’ve been lucky many times over). When Mel & I launched Labs we had no idea we’d develop such a strong group of supporters and advisors. We still have no idea how we have. But they – not us – have built Labs.

PowerPoint is the enemy of awesome
There’s an inverse relationship between the quantity of PowerPoint produced by a team and both the quality of work produced by that team, and their level of happiness.

Make sure it’s fun
It’s all just a gigantic game.

So, summing up this already tediously over-long account, this is the deal:

The Story and The Brand

1) The story is more powerful than the brand: When crafting a message, the story should come first, and the brand second. Ideally, the brand should BE the story – if there is no story worth telling in the brand’s vision, practices, or past – then the brand must create it.

2) The best story wins: Focus on the quality of your story first. Turn that complex idea you’ve concepted into a story you can recount more simply.

We appreciated Peters’ message for the simplicity of its implications to brands – as human beings, we communicate by telling stories – these become the most memorable messages. If a brand wants that same recognition and place in consumers’ minds and hearts, they must learn to speak in the same way – even if what they perceive to be as the ‘brand message’ takes a backseat to a more interesting, compelling brand story that consumers will actually want to recount.

6 Digital Trends

My colleague Steve Rubel and I wear many hats at Edelman. One of those hats is keeping an eye on the trends unfolding in real time and deriving meaning from them as they pertain to organizations and brands. Attached to this post is a slideshow where we identify what these trends are and at a high level how your organization needs to plan accordingly for them. They are:

  1. Marketing in the age of streams
  2. Your customers, consumers and employees are no longer only visiting static Web pages but participating in conversations which increasingly occur off domain in “streams” flowing from Facebook, Twitter and even apps. In order to catch them, you must be highly relevant in their streams.

  3. The Googleization of media
  4. Quality Content and potent social connections in addition to traditional keywords are influencing how visible you are to the search engines. Everyone is media.

  5. The data decade
  6. Data is increasingly becoming available to anyone and everyone. From it we can derive insights into behaviors. We must become “data junkies” to fully harness this trend.

  7. Business becomes social
  8. Moving from designated spokesperson to employee engagement at scale—business itself is beginning to look more social as organizations start to engage all stakeholders in open and mutually beneficial ways.

  9. Location, location, location
  10. Where you are is becoming the new what are you doing as multiple platforms begin to adopt the new geolocation status update generating new kinds of data.

  11. Private becomes public
  12. Despite privacy concerns, applications and behaviors which support social sharing are still going strong as what is considered private becomes re-defined as we continue engaging in networks.

We believe these trends are not future gazing but what’s happening at this very moment and that they will cause organizations to adapt to change, adopt new practices and innovate accordingly. For more industry insights, ideas and perspectives you can visit our newly created “branded channel” on Slideshare.

Burt – Four Ad Feedback Loops

We were struck by a few of the notions captured in the presentation slides fromBurt, a start-up in Sweden that was invited to speak at Cannes this year. Burt is – at a most simplistic level – a digital ad measurement software company. But they are also one of the few that simultaneously focus on data-driven ad technology, while still earning credibility among creative shops. It also doesn’t hurt their credibility that the founders have previously worked with creative shops like CP+B – one of them (Gustav Martner) is actually the Executive Creative Director at CP+B Europe.

Burt’s presentation at Cannes elaborated on their experiences working with some of the world’s top agencies to change how they make and measure large scale, digital advertising – and how drastic improvements in ad effectiveness can be achieved using existing, proven technologies. Some of the key points that resonated with us include:

  • A workflow should be optimized for adapting to change, not following a plan
  • Agile advertising refers to the process of being quick to learn, adapt and improve
  • Agile advertising follows the same loop as ‘build, learn, measure’,  but instead of waiting to apply the learnings on the next campaign, they’re used to change and optimize existing campaigns
  • An agency’s focus should be on measuring the underlying metrics that DRIVE profit, rather than on auditing the ROI; it’s a KPIs vs. ROI question for agencies vs. brands
  • Examples of good KPIs: Audience reach and relevance (people), ’soft’ metrics (branding), direct user behavior (clickstream) and sales (not the same as profit)
  • Banner best practices: media/creative integration as biggest driver, show the logo all the time, show the product (if applicable), static outperforms rich (think print, not tv) and be direct, simple and obvious
  • Compare your campaign metrics to yourself – not to others (self-diagnose)
  • Using the best combination of creative executions for each different context/exposure can create enormous lifts
  • Start out with a minimal execution to test your idea
  • Agile advertising puts four feedback loops into play: 1) Self-diagnose 2) Split test 3) Optimization and 4) Cross-Campaign

Burt has learned that, while all agencies recognized the need for and abundance of ad-tracking data, few front-line agency business folks understood the full implications of that data, or how to act on it. Burt addressed this opportunity by developing Rich – a free digital ad analytics tool. The analytics and guiding methodology employ the four feedback loops, and centers users around key data that will facilitate one byproduct of agile advertising: real-time, dynamic advertising content, or ‘personalized ads’.

We like the idea of simple, focused analytics that those in the immediate position to apply those learnings – agency creatives and front line business folk – can actually understand. Actionable insights and data can inform and improve creative, rather than constrain it, if defined, interpreted and applied correctly.

Unilever Increase Digital Spend

Keith Weed at Cannes: ‘Unilever Will Increase Digital Investment’

Ad Age: You’ve said you’re going to double digital spending this year, which is really very ambitious. Why?

Mr. Weed: At the end of the day we are a mass marketer. Every day, 2 billion people use our products. So what dictates what we do is those consumers, and I want to be where consumers are. The truth of the matter is we’re seeing this huge migration across the world to digital. We need to be ahead of the consumer, so when the consumer arrives, we’re already there.

Ad Age: Is it hard to find a place in digital to spend all that money?

Mr. Weed: “Digital” itself as a catch-all [word] is as unhelpful as “advertising” was when it describes TV, cinema, poster, painting your brand on the side of the house. I look at our investment in the buckets of paid, owned and earned. [Our investment in owned] is the smallest part. The biggest part is going to be in earned, and there are going to be two parts. One is the social area, but also moving into digital and gaming.

In digital, we’ve had a runaway success for the Axe wake-up call in India [putting a ring tone into alarms on mobile devices.] Lipton in China also did a thing around the New Year where you upload a photo and put little crosses where your eye and mouth were and then with the wonders of technology, you superimpose your face on the bodies of people doing a music video. This went to over 100 million people.

On the social side, we’ve agreed to a step-change increase in our spend with Facebook. I’ve just been spending some time with people from Microsoft. We’ve also signed with Apple on the iAd.

Why Market in Facebook?

Why do any marketing in Facebook?  …because that’s where the people are.  You go to where the people are, you don’t make them come to you.  Take a look at the time spent metric.  People stay logged into Facebook, they conduct their social life there, their business there… go where the people are.