Thursday, February 23, 2012

HBS research on viral ads - must-read for Marketers

It’s the holy grail of digital marketing: the viral ad, a pitch that large numbers of viewers decide to share with family and friends.

Several techniques derived from new technology can help advertisers attain this. In our research,">two colleagues and I use infrared eye-tracking scanners to determine exactly what people are looking at when they watch video ads. We also use a system that analyzes facial expressions to reveal what viewers are feeling. These technologies make it possible to isolate elements that cause people to stop watching and to find ones that keep them engaged. In addition, they make it possible to determine what kinds of ads are most likely to be shared and what types of people are most likely to share them. Here are five big problems online advertisers face, along with solutions that have emerged from our research.

Problem 1: Prominent Branding Puts Off Viewers

When people watch ads, they focus on a few things, such as the actors’ mouths and eyes. They also focus on logos. This isn’t the boon it might seem: The more prominent or intrusive the logo, the more likely viewers are to stop watching—even if they know and like the brand. Why? People seem to have an unconscious aversion to being persuaded, so when they see a logo, they resist.

The solution: Utilize “brand pulsing.” Smart advertisers unobtrusively weave the brand image throughout the ad. Experiments have shown that this can increase viewership by as much as 20%. One of the best examples of the technique is Coca-Cola’s animated “Happiness Factory” ad. (Like all the other videos referenced in this article, it’s available on YouTube.) It depicts a fantasy version of what happens inside a Coke machine when someone inserts money. A Coke bottle is shown repeatedly, but each appearance is quick; you can almost imagine that the story would work without the bottle. In fact, a good question to ask when conceiving an ad is: If I removed the brand image, would the content still be intrinsically interesting? If the answer is yes, viewers are more likely to keep watching.

Problem 2: People Get Bored Right Away

After recording viewers’ expressions with video cameras, we use automated technology that measures the distances between various parts of the face to identify smiles, frowns, and other expressions that correlate closely with emotions. (Previous research relied on human coders; automating the process improves accuracy and allows for a much larger sampling.) After analyzing thousands of reactions to many ads, second by second, and tracking exactly when people stop watching, we found that keeping viewers involved depends in large part on two emotions: joy and surprise. To maximize viewership, it’s important to generate at least one of these responses early on. Traditionally, though, advertisers have constructed narratives that escalate toward a dramatic climax or a surprise ending. Such commercials may have worked on TV decades ago, but today’s online viewers need to be hooked in the opening seconds.

The solution: Create joy or surprise right away. Two videos stand out for eliciting these emotions at the start. In one, the familiar Apple spokesman is joined by Mr. Bean, who dances crazily for the remainder of the spot. (The video, it turns out, is not an official Apple ad but a well-crafted parody of Apple’s “Get a Mac” series.) Bud Light’s “Swear Jar” ad opens with a surprise: When an office sets up a jar that workers must pay into as a penalty for profanity, one employee immediately curses because he knows the money will be used to buy Bud Light. Both videos hook people instantly.

Problem 3: People Watch for a While but Then Stop

Although the Mr. Bean video initially succeeds in attracting viewers, it doesn’t keep them watching. That’s because the joy the video creates is delivered at a fairly constant level. We’ve found that ads that produce stable emotional states generally aren’t effective at engaging viewers for very long.

Videos that deliver constant levels of joy or surprise don’t engage viewers for very long. Advertisers need to build an emotional roller coaster.

The solution: Build an emotional roller coaster. Viewers are most likely to continue watching a video ad if they experience emotional ups and downs. This fits with psychological-research findings about human adaptability. When we come into a warm home on a cold winter day, or when we receive a pay raise, we experience pleasure, but the feeling is transitory; the novelty soon wears off. So advertisers need to briefly terminate viewers’ feelings of joy or surprise and then quickly restore them, creating an emotional roller coaster—much the way a movie generates suspense by alternating tension and relief.

Great to finally see some research on what drives "engagement" and willingness to share in video ads. Key conclusions: make'em interesting, no blatant branding and try to trigger emotional responses to the ads - as easy as 1-2-3!

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Social Ads 2.0: Facebook introduces cool new formats

Facebook appears ready to launch a new set of premium ad units, and, based on a review of documents which purport to describe them, the social network would seem to be doubling down on two core principles that mark fundamental departures from traditional advertising.

First, Facebook is making the new ads social by default, meaning they will automatically show users when their friends have already Liked the advertiser. And the new formats will draw their content exclusively from posts to brands' Facebook Pages, rather from advertising copy written independently.

Combined, these features make two statements about where Facebook believes the future of online advertising lies--at least in its particular universe. It is saying that ads based on content, rather than messaging, have a better chance of hitting home, and that ads involving tacit endorsements from the people you know have a better chance of capturing your attention.

"When people hear about you from friends, they listen," the Facebook materials say. "We'll expand your ad with stories from friends who have already connected." ("Stories" is Facebook's shorthand for a wide varitey of interactions on the site. In the case of ads, it seems to refer to the fact that the ads will display which of a viewer's friends have Liked the brand.)

Facebook has not commented publicly on the new ads (presumably they will discuss them at a marketing launch event in New York next week). But the materials describing the new units were posted to Scribd earlier this week. The news was first reported on GigaOm. The documents are below.

Facebook Premium Ads Guide Facebook Premium Ads Overview

In the documents, Facebook says it is scrapping most of the display ad units it has offered until now, replacing them with the new formats. The previous ad units incorporated some of the social and interactive elements, but the new ones are implementing those features in a more comprehensive way.

Each of the new units will include Like buttons and places for viewers to comment on the ads. When viewers click the Like button or enter a comment, those activities will be posted to the user's  friends' News Feeds. They will also be posted to the brand's Page. 

Similarly, each ad will include pictures of friends who have already Liked the brand. The Facebook documents say this will happen automatically, instead of as an add-on.

While Facebook had already been moving in these directions with its previous ad units, the decision to draw ad content from Page posts is the most significant new feature--and a potentially radical departure from conventional notions of advertising.

The ads don't simply repurpose content from brands' Pages. By giving users the ability to respond to the content inside the ad, just as if they had seen the content on the brand Page itself, and then by posting those responses to the user's friends' News Feeds, as well as on the brand's Page itself, the ads are acting less like traditional broadcast advertisements and more like viral mechanisms to expand and perpetuate the conversation off into the far corners of the social network, effectively giving the brand visibility in places it might not otherwise have reached and in a much more organic way than if it had simply plastered the site with a bunch of banner ads.

"Everything starts with great content from the Page," says one of the Facebook documents. "Paid, owned, and earned work seamlessly together."

Facebook believes that this ultimately will pay greater dividends for brands than conventional advertising. According to tests the company said it performed internally, the new ads produce 40 percent more engagement (usually meaning they get more Likes, comments, and clicks) and are 80 percent more likely to be remembered.

The company documents also claim the ads produce "signficant increases" in purchase intent, and it claims that viewers of an ad are four times more likely to purchase when they "see friends interact with a brand."

If the ads truly do deliver the results Facebook claims, that could mean the social network is slowly but surely finding the marketing holy grail of "word of mouth"--at scale. And if that's the case, it could have profound implications for the advertising industry as a whole.

The six new units are based on the type of content a brand would post to their Page. The Facebook documents label them as Status (a text comment), Photo, Video, Question (which replaces the old "Poll" ad format and which allows viewers to answer the question right in the ad), Event (ad viewers will similarly be able to sign up for the event right in the ad itself), and Link (which points viewers to content outside of Facebook).

The Facebook documents say that brands will continue to be able to target their ads as they do today, choosing to place their ads in front of any of Facebook's 845 million users who fit demographic and interest criteria selected by the advertiser.

E.B. Boyd is's Silicon Valley reporter. Twitter | Google | Email

Facebook is upgrading social ads significantly: they will be using brand content from the somewhat neglected pages to create shareable stories that are enhanced with user actions (e.g. likes/ comments) - will be interesting to see engagement on these and whether they will clutter the feed even more than current brand content.

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Saturday, February 18, 2012

Pinterest is growing like a weed, and people are sticking to it

Geek-alert: this article is pretty quant but heavenly for math/ marketing geeks. Pinterest is truly on fire and it's not losing steam/ attention. Very sticky, Twitter - watch out!

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Tuesday, February 14, 2012

Content/ Commerce Conversion: Fab goes from zero to two million registered in seven months

Fab’s insanely rapid ascension to popularity is fast even for these heady days of social commerce. It took Gilt two years to get to one million users, ditto One King’s Lane. Fab got to two million users in just seven months, adding 450,000 people in just the last thirty days. The site expects to do more than $100 million in revenues this year.

The rise was so quick that I’d barely heard of them when I went on maternity leave, and when I came back to work it was all anyone was talking about.

How did it blow up so fast? One theory is that social commerce is such a known category that users are hungry for more and more verticals. Another is that the mix of products is simply better than what competitors offer.

My take is that Fab didn’t scale like an ecommerce company, because it isn’t one. Sure, ecommerce is how they make money, but what drives the love for Fab is the content. Co-founders Jason Goldberg and Bradford Shellhammer are essentially magazine editors masquerading as etailers. Day-after-day, they are designing a gorgeous, aspirational life for you one item at a time. From the $5 wine cozy to the several thousand dollar Swarovski-crystal-encrusted animal head. And it’s a fabulous life millions of consumers want.

What’s more: This is a company no one in the Valley would have built. I had lunch with the co-founders Monday, and as they described their business I was struck by just how un-Valley the approach was. There’s no real brick-and-mortar analog for what they are building, and no quantifiable data set to determine the objects they pick. They simply look for beauty and color and style.

They drive the selection based more on emotion than data. They refused to make any decisions around what sold well for the first three months of the business, trusting their guts that if they love what they’re selecting, shoppers– or “readers”– will too. That isn’t an etailer. That’s Anna Wintour. “We needed to just let it develop,” says Goldberg. “We wanted people to look forward to opening the email and reading the site, no matter what they bought.”

Added Shellhammer, “We do what a good editor does. We take stuff and put it together in a way that creates something new.” They’re selling a lifestyle that cuts across categories.

The difference was pronounced in a recent meeting Goldberg had with a Valley-based recruit for a technical position. Within in ten minutes of the interview the two were fighting. Goldberg asked what he’d do with the Fab homepage, and the recruit gave the usual spiel about A/B testing the layout to see which products made people click more, and how the data said they should be laid out on the page. He called the product placements on the front page “ads,” and Goldberg balked. They aren’t ads, he said, they’re editorial. “We aren’t trying to make people buy certain things, we want to guide them through a story,” he says.

The approach is clearly resonating. One million of Fab’s users came through social media referrals. That’s a lot of people excited about throw-pillows. And customers are getting more rabid: Up until January the single biggest traffic driver was emails, but last month that switched to more people coming directly to the site. It was a sign to Goldberg that people couldn’t wait for their emails to see what the daily finds were.

As Shervin Pishevar of Menlo Ventures said when he first met with them about investing: “You’ve proven taste can be a differentiator.” At the time they hadn’t launched, but already had 170,000 sign ups, based mostly on photos of Shellhammer’s apartment on the landing page.

Of course there’s a huge downside to this approach: Media companies are only as valuable as that core talent. Remember when Martha Stewart went to jail? Not a pretty time for her company or its investors. And even the massive star power of Oprah hasn’t been enough to buoy up a whole network so far. I asked the two how they planned to mitigate the reliance on them, and Goldberg didn’t try to sidestep the issue. “We’re unabashedly saying its reliant on us, the question is how does it scale?” He’s betting on a shared aesthetic among the staff and increasingly user-curated designs.

And really, when he says “their” aesthetic, he means Shellhammer. Shellhammer still approves every single item sold on the site. I asked what his house looked like and he said, “You can see it. It’s been photographed quite a bit.” Said Goldberg, “My job is to run a business around Bradford’s taste and sensibility.” Shellhammer pretty much has the dream job– going to work at a company built around who he is.

That’s almost exactly the same as how Martha Stewart built her media empire with one major difference: Fab’s business model is so much better, thanks to the Web.

In the magazine days, we had to look at an index for stores and prices. Lucky changed that dramatically by accepting that people are reading fashion magazines to look at stuff they want to buy, and putting prices and store information right in the editorial. But the Web makes it instantaneous. And the tablet is even better. People purchase four times as often when they are looking at Fab on a tablet than the Web, Goldberg says.

It’s the same reasons I was bullish on Jetsetter early on. It’s somewhere between a highly curated travel site and a travel magazine. It was one of the first ecommece sites I ever encountered that was a joy to “read” everyday, and their iPad app took that up a notch. And interestingly through Jetsetter’s reviews and premium travel service, the site is increasingly employing out-of-work travel writers throughout the world. Where is the distinction between Jetsetter and Conde Nast Traveler? It’s increasingly blurred, except, of course, Jetsetter has a far better business model. I can pay them when I decide to take a trip they suggest, and pay their journalists for personalized recommendations.

At an emotional level, it’s the next step after Zappos. “Reading” Zappos was nothing like reading a magazine. It wasn’t beautifully designed, or even very easily searchable. But by investing so heavily in customer service, Zappos continually delighted customers. It may not have delighted them the second they came to the site, but it delighted them around the point of sale and in the case of problems or returns. And that turned customers into evangelists.

Ten years ago, the fear of ecommerce was that there was no stickiness on the Web. That people would flit between sites, far easier than they could walk out of a store, without loyalty looking for simply the vendor with the cheapest price. Zappos and Amazon proved that wrong by offering better customer service and ease-of-checkout. And now companies like Jetsetter and Fab are offering something more than price or ease. They are offering the business buzz word of the year: “beauty.”

This trend is bad news for glossy lifestyle magazines, and don’t think they don’t see what Fab has built in their own backyard. It was hard enough for newspapers to compete with the speed, immediacy, low-cost and interactivity of blogs. But competing with the ecommerce, instant-gratification of these sites will be all but impossible for the Conde Nasts of the world.

This is an exciting story, because it isn’t the Valley reinventing the business of New York. This is New York reinventing New York.

(Zappos CEO Tony Hsieh and Shervin Pishevar are both investors in PandoDaily.)

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Very insightful article about the growing convergence of magazines and e-commerce players; Fab is essentially a home decoration/ furniture magazine with lots of sponsored listings that happens to sell the actual products. Congrats to the team and more power to curation!

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Monday, February 06, 2012

HuffPo launches an online streaming channel - will anyone be watching?


This is a bold move by AOL/ Huffington Post: launching a daily livecast of content on the web is costly and definitely unproven. Let's imagine they get 5% (optimistic) of their existing HuffPo readers to start watching this channel, we're only at 1-2MM monthly viewers, but those might be watching for 30 seconds at a time. I applaud the effort, curious to see the viewership/ results and appetite by sponsors to endorse lean-back in a lean-forward environment.

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Saturday, February 04, 2012

Google+ as an elegant mashup of maps, places and a store homepage

In the half year since its launch, Google has acquired 90 million users, the company says, opened brand pages and integrated with third-party social-media management systems like Hootsuite and my firm, Hearsay Social.

As an example of how rapidly its clout has grown, the new Android OS (nicknamed "Ice Cream Sandwich") prompts new users to sign up for Google with the personal info they've already entered on the phone. As for business, if you type something like " burberry" into Google search, you will be instantly redirected to the Burberry Google page.

But there's something even more massive that Google could be doing with business pages that would transform the online business space. Google, through its Maps and Places services, already has information on millions of businesses. If the information on each of those business's pages, complete with address, phone number, photos and customer reviews, were put into a Google page, Google could become a local-business powerhouse.

Consider that Google Maps is not just a popular option for directions and location search on the Web, but also the default maps app on iPhone and Android devices. And most local businesses, from a taqueria in the Mission district of San Francisco to a taqueria in Austin, already have business pages on Google Maps. What if Google converted every business page on Google Places into a Google page? Where both exist, what if the two were combined? Let's take Nordstrom as an example. It has both.

Nordstrom San Francisco Google Places

The Nordstrom San Francisco Google Places page, above, has business information, while the Nordstrom San Francisco Google Page, below, offers interesting social posts.

Nordstrom San Francisco Google

The benefit of a fused Google Place page to the social-media manager is obvious: maintaining one page beats maintaining two. Continually updated, the page would benefit the local user as an authoritative source of information about the place, like its address and phone number. The fused page would be engaging, with photos uploaded by users and the manager alike, along with user reviews and comments. In addition, we would find conversations occurring between business owner and customers in a consolidated place. 

Google began integrating Google into Google Maps last September, to allow users to share information embedded with the maps. With the launch of brand pages, it only makes sense to similarly tie Google to the business listings on Google Places. And Google Places, though it may not be branded that way, is in the pipeline. In late November, the official Google Your Business page hosted a real-time Q&A in which a user asked, "I'd like my Google business page to be linked seamlessly with my Places page, people who check in on my Place page should be able to find my Business page." Google's response? "I think you'll be thrilled with what we're planning for Google and Places."

One doesn't have to think very long to take this idea further. Google Offers, the company's Groupon knockoff, would integrate perfectly with Google Places. Imagine a user, planning to buy drinks for a party, searches for directions to the nearest BevMol. Along the route, Google Offers surfaces a $199 value deal on a crash course for making mix drinks, obviously something the user would find interest in. The possibilities are endless.

Google knows it has this ace up this sleeve, and the social-media savvy among us know that it will go live with it sooner rather than later. With Twitter flexing its influence over social businesses with new brand pages, Google could use something of this proportion to turn attention back to its site. Google Places could change everything. It could kickstart the social-local revolution.

Clara Shih is CEO of Hearsay Social.

Some good thinking here by Clara Shih from Hearsay on how Google+ mashed up with maps and places could become a de-facto homepage for millions of small business (yellow pages, anyone?) - there's a clear path to that and I'd be surprised if google isn't already testing this.

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