International Digital Marketing

A recent analysis by Goldman Sachs Investment has estimated Facebook’s value to be 50 billion dollars. Twitter’s estimated value reached 4 billion dollars in January 2011 and the business network LinkedIn is worth more than 2 billion dollars.

But these three are not the only social networks that have reached astronomical values. There are more members in the billionaires’ social club such as Zynga and the most recent Groupon.

What all these companies have in common is their youth. All these platforms are less than 10 years old, which demonstrates how incredibly fast they have grown and obtained their high stock value. While many investors have got rich betting on them, it might well be that the next bubble to burst is social networks. Why?

Unfamiliar business model

The social media companies have surely known how to build an empire formed by hundreds of thousands of users all over the world. Only Facebook has more than 500 million users, Twitter is close to 200 millions of users and LinkedIn has already more than 80 million valuable business contacts. Zynga on the other hand receives daily millions of online players and Groupon has a database of more than 35 million users happy to receive offers of the day to their inboxes.

However, in spite of these unusual figures, the majority of the social media companies are still investigating how to receive economical benefits of their large user base and with different results. LinkedIn gets benefits from its own users who agree to pay the premium access with bigger functionalities than basic account, while Groupon gets a commission for each client who buys. But Facebook, Twitter, Zynga and most of the other social networks trust in their advertising income.

Return of investment: Advertising

But is targeted advertising in social networks that effective? According to Jeffrey I. Cole, the director of the Center for the Digital Future at USC’s Annenberg School for Communication & Journalism, “users express strong negative views about online advertising, but they still prefer seeing ads as an alternative to paying for content. Consumers really want free content without advertising, but ultimately they understand that content has to be paid for — one way or another.”

So it is not wanted, yet tolerated. There are also various apps for users to remove advertising completely from the social media platforms. Yet effective or not, it seems like at least Twitter and Facebook do not have a choice. According to the 2010 USC Annenberg Digital Future Study on Twitter, a whopping 0% of the interviewed users said they would be ready to pay for the platform. And it is not difficult to imagine that a similar percentage would be ready to pay for Facebook (and their current slogan on sign up page is effectively “Sign up. It’s free and always will be!”).

Question is: will companies keep investing on the social network ad space in the future, if these advertisements are blocked or ineffective?

Return of Investment: Users

How to measure social media? Unlike in any other business area: no one really knows. People say they do, but to be honest…if you want a straight answer what your ROI on social media campaign or Facebook group is or will be, you are likely to get a following conversation:

“There are so many different ways and tools to measure social media, it really depends what your goals are.”

“Yes but how many leads and sales this campaign is going to create?”

“Human interaction is so difficult to estimate… Right now I can’t tell you the exact figure you will have, but  in the end of the campaign we can tell how many more people “liked” your brand or talked about you”

“Yes, but will I know how many of these people actually bought my product?”

“Well…”

Do not get me wrong, social media is a very effective communication and customer service tool yet very, very difficult to measure. Without a clear idea of ROI, it will be harder to convince investors or companies to stay if they lose confidence on the platform and want to abandon the sinking ship.

Dot com – fever?

Previously mentioned social networks are the biggest ones with the largest number of users, yet creation of different types of social networks has boomed all over the globe, waking up interest of investors of all sizes. They are investing on a new virtual business model, living in some way the dot com company fever, in which the big investments that promised fantastic ROI turned into nothing when the bubble exploded.

Constantly changing virtual world

This kind of risks could happen in social networks, because there are already examples how big virtual companies can fall quickly when new concepts and improved versions of the same model arrive.

Examples of this are the AOL and MySpace, companies who were in their time the little favourites of the Wall Street and “going to conquer the virtual world”. Now their current economical value is just a fraction of the value they had in their moments of glory. The brand lost its value, then the confidence of the investors then the market to new comers such as Facebook. MySpace France office close down already few years ago and now even German office is shutting down, even if the platform is trying to re-launch itself with a new image.

At present, almost every marketer “likes” Facebook, however there was a time when also Second Life was supposed to become “a must” and brands invested great amount of money to get on board. Where is it now? I am not saying brands should not use Facebook and Twitter or other social networks, in the contrary they definitely should. It is just a word of warning to potential investors to not to get too excited on new virtual business models without certain amount of caution. Many social media companies can for sure be easily substituted by new concepts or new technologies in the constantly changing virtual world.

Right now Facebook, Twitter and other social media platforms are powerful tools, but let’s give the new generation some time and – POP.

“As we look across markets, dramatic differences in mobile media consumption, brand adoption and user behavior become evident…For brands seeking to establish a multi-market presence, understanding usage dynamics across geographies is essential to implementing a successful global mobile marketing strategy.”

Mark Donovan, comScore senior vice president of mobile

ComScore published in October 2010 a very interesting comparative report on mobile usage and behaviors in Japan, the United States and Europe. To find out how consumers interact with mobile media across these three markets, the study gives a detailed picture of the mobile content consumption, demographic comparisons and top social networking brands across markets.

There are considerable differences between the three: Japanese use mobile to access mobile media, U.S consumers use it for Social Networking and Europeans love texting.

Connected Media

In Japan more than 75% of the mobile owners use connected media (browsed, accessed applications or downloaded content), while only 43.7% are using it in the U.S. and 38.5% in Europe.

Japanese mobile users also show stronger preference of applications and browsers compared to mobile users in the U.S. and in Europe.

Messaging

What comes to the messaging, the biggest difference of user behavior between the markets is that 81.7% of the Europeans use text messages, while Japanese prefer sending emails. The American mobile users were more likely to use instant messaging services on their mobile than the other markets.

Social Media/Entertainment

While 21.3% of the American users use the mobile for Social networking/blogs, only 17% of the Japanese and 14.7% of the Europeans get connected & blogging through their mobile.

However, 63% of the Japanese like to capture photos and 22% watch TV/video on their mobile. Europeans capture videos more than other two and 24.2% of them is listening to music and 24.1% is playing mobile games.

Finance/Retail/Travel/Others

Quite few people accessed their bank accounts, the percentage staying under 10% in all markets, yet 16.1% of the Japanese accessed financial news or stock quotes through their mobile. Online retail and travel services were also low in all markets; most of the numbers not reaching even 7%.

Maps, traffic reports and weather are another story. 16% of the Americans and 15.7% of the Japanese access maps, 12.6% of the Japanese access traffic reports, and 34.1% of the Japanese and 22.3% of the Americans access weather forecasts through their mobile. In Europe these areas are not popular, the percentage varying from 5.9% to 13.7%.

Demographic Segment

The study measures also the mobile media consumption across the genders and age segments.  The usage rate is more balanced across age segments in Japan than in the U.S. and Europe.

* Index = % demographic segment / % demographic base*100

In Europe, 18-24 year olds are 54% more likely to access mobile media than an average mobile user, while persons aged 25-34 are 35% more likely to get connected.

In the U.S., 25-34 year olds are 44% more likely to use mobile media, while 18-24 year olds are 39% more likely to use it.

Another interesting fact was that females in the U.S. were 9% less likely than males to get involved with mobile media and European females were 16% less likely than males to use mobile media.

Top Mobile Social Media Brands

Across markets the top mobile social media brands were the same ones as the social media brands generally. Facebook leads the way in the U.S. and Europe and local social media brands ruled Japan with Mixi, Gree and Mobage Town. The Twitter fever in Japan raised the brand on 3^rd position in the market. In Europe considerable preference for Youtube might explain partly Europeans preference on video capturing.

Looking through the statistics from these three complex markets, I think Mark Donovan is right. To create a successful International mobile marketing strategy, it is essential to know how the consumers use their mobile in each of these markets. For example, SMS marketing and games might work in Europe, email or interactive marketing might be more effective in Japan and in the U.S. social media and blog marketing might be a success.

Everything depends of course of the target audience, which makes the demographics handy, and the relevant content/message/advertising. Good thing to remember here is also the emerge of the Smartphones, which change the user behaviour considerably allowing the mobile user access to different applications and faster connection among the other benefits. The high mobile media use in Japan makes sense since the market is more advanced than the others on this aspect, but I have a feeling that at same time next year the results could be very different in the U.S and Europe.

Great comparative snapshot of Japan, the U.S. and Europe anyhow!

Social networking is exploding in Eastern Europe. A study by the Interactive Advertising Bureau shows that of all internet users surveyed in 16 European countries, Hungary was in top rank with 65% participation, followed by Romania at 61% and Poland at 56%. Most users are 18-34 year olds, yet older people have started creating their profile. Indeed an interesting audience to catch!

According to Facebook statistics, in 2008 the social network increased their users by 180% in the region and has now more than 1.8 million “active” users (once a week or more) in 19 countries. In the Czech Republic, the quantity of Facebook users doubled in 2009 to more than 1.3 million, 10% of the country’s population. The phenomenon has increased in the country the number of advertisers on Facebook by 30% in 2009, according to Ataxo, In Serbia and Croatia it has more than 300 000 users in each country. In end of 2009 the network had obtained 271 000 users in Romania, but its competitor Hi5 gathered more than 2.3 million users (more than 10% of the population). The lowest figures appeared in Moldova and Belarus with under 10 000 users.

Is it all about Facebook? No. Foreign social networks are facing rough competition from local social networks that are increasing rapidly. For example, in Poland the largest social network, Nasza-Klasa is adding 20,000 new accounts daily. At the end of 2008 it had already more than 11 million active users and nearly 90% in Poland have heard about it.  An interesting detail is that it is also the 6th largest social networking site in the U.K. ahead of Twitter, according to Hitwise UK, since the “British” Polish community consists of about 500 000 people. Foreign networks are less known and popular in Poland: My Space.com is known by around 12%, Facebook only by 5%.

What comes to the Polish social media habits, 37% of Polish people create their own content on the Internet. According to the study by moje-ankiety.pl, social media is mostly used to talk with messenger and to find old friends (75.1% respondents). 68.7% likes publishing pictures and 50% write “on the wall”. Only 25% likes to play games.

In Romania, Twitter gathered 11 000 Romanian users, with 1 000 users creating over 80% of the content.  It is not seen as a social network, but as an interaction zone used in integration with other platforms by bloggers and other social media readers/contributors. Youtube obtained 2, 000, 000 monthly unique visits, WordPress has 11 430 active users. These blog readers/writers are mainly 20-35 year olds (73,7%). They have higher income and education than the average internet user and 50% have finished their university studies. They interact considerably with the blogs they read, 44,7% has commented at least once. Of the foreign brands, Puma has already used blogs in its marketing and communication strategy.

The new, fast and free way of communicating, long distances and the increasing internet penetration in Eastern Europe might have their part on the recent boom. Or maybe it is the freedom of expression and individualism that result so attractive to the region. Time to throw the traditional media in the carbage? Maybe not yet, but it is surely time to add Social Media to the marketing strategy.