Markets and Economy Slog Through Fortnight of Tests

New research points to impact of social media and ‘digital natives’ on your brand.
Despite last Thursday’s stomach churning “flash crash” in the financial markets, most U.S. stock indices are clawing their way back to positive territory for the year. This resiliency, in the face of the European debt crisis, the Time Square Bombing, the Staten Island Ferry crash, the BP/Gulf of Mexico oil spill, flooding in the South and tornados in the Midwest, is encouraging.

U.S. payrolls rose by nearly 300,000 in April, the largest monthly jobs gain in over four years. Most experts are ignoring the fact that the squishy “official” unemployment rate rose to 9.9 percent from 9.7 percent. Experts say it’s a sign that once-discouraged Americans have returned to the job market – not a deluge of layoffs from corporate America.

The construction and manufacturing sectors also showed signs of life in the latest economic report, raising hopes of an improving job market. The Institute for Supply Management Monday said the manufacturing barometer had improved 60.4 percent in April, the highest level June 2004. A Commerce Department report said consumer spending rose 0.6 percent in March – the largest increase in five months and households saved less, socking away 2.7 percent of their income in March down from 3.0 percent in Feb. Again, we see the gradual reduction in consumer savings as a confidence indicator, not a return of the conspicuous consumption that marked the latter part of the previous decade.

Is the worst over?

“The worst of the economic impact on Internet advertising is over and the seeds of growth have been planted,” said PricewaterhouseCoopers’ David Silverman in a statement following the release of a new study his firm did in conjunction with the Interactive Advertising Bureau. Forrester Research, Zenith Optimedia and other media forecasting groups have generally revised their 2010 and 2011 ad spending projections favorably in recent months, with most of the upside going to growing sectors (Web, online video, social media, television, outdoor) with a modest slump to continue in out of favor sectors (newspapers, magazines and radio).

Social media and your brand

Though slightly more than 50 percent of regular users never post status updates on Twitter; 70 percent do so on social networking sites like Facebook. Experts say Twitter acts more like a broadcast medium than Facebook does, but users are more than three times as likely to follow brands and companies on Twitter as others users of social networks do, with over 40 percent using Twitter to learn about and provide opinions on brands, according to a recent Edison Research study.

So will social media deliver measurable results for marketers? Well, more than half of marketers surveyed by Datran Media in its fourth annual Marketing & Media Survey say they’re confident it will, and only one in eight (12%) say they’re confident it won’t deliver results. Researchers said social media continues to be a wildcard, but it’s getting easier to measure the impact of a tweet or an update on LinkedIn on the final conversation.

Social media is not as effective at building search engine rankings as it is for building brand awareness and reputation, says a recent Marketing Sherpa study of over 2,000 marketers.

Social media IS effective for:
• Increasing brand or product awareness 49% agree
• Increasing brand or product reputation 45%
• Increasing public relations 43%
• Increasing Web site traffic 41%
• Improving search engine rankings 35%

The future?
Anti social networking of teens, i.e. your future consumers

Last week, the Pew Research Center found that half of American teenagers — defined in the study as ages 12 through 17 — send 50 or more text messages a day and that one third send more than 100 a day. Two thirds of the texters surveyed by the center’s Internet and American Life Project said they were more likely to use their cell phones to text friends than to call them. Fifty-four percent said they text their friends once a day, but only 33 percent said they talk to their friends face-to-face on a daily basis. The findings came just a few months after the Kaiser Family Foundation reported that Americans between the ages of 8 and 18 spend on average 7.5 hours a day using some sort of electronic device, from smart phones to MP3 players to computers — a startling number,

The question on researchers’ minds is whether all that texting, instant messaging and online social networking allows children to become more connected and supportive of their friends — or whether the quality of their interactions is being diminished without the intimacy and emotional give and take of regular, extended face-to-face time.

Gary Small, a neuroscientist and professor of psychiatry at U.C.L.A. and an author of "iBrain: Surviving the Technological Alteration of the Modern Mind," said in a New York Times interview that so-called “digital natives,” a term for the generation that has grown up using computers, are already having a harder time reading social cues. “Even though young digital natives are very good with the tech skills, they are weak with the face-to-face human contact skills,” he said.

While many parents and educators fret that the ease of electronic communication may be making teens less interested in face-to-face communication with their friends, we think marketers and employers need to adjust their communications strategies for the crowdsourcing nature of today’s digital natives.

Will young people still be able to sell and communicate?

“Teaching new sales people how to ask good questions and how to listen and keep the intelligence gathering dialogue going in a face to face setting is an absolute ssential,” said Eric Wynne, President of Wynne Media Company in a recent panel discussion I moderated. “It doesn’t come naturally to many of them as they’ve been attuned to communicating by screen in a very truncated fashion.”

Molly Sargent, Principal of Professional Impressions Consulting concurred. “Younger sales people just haven’t been trained the right way. You can’t just do your due diligence on the Web. There’s more to researching a company than Google and Hoovers. They’re not trained in how to pick up the phone, how to ask those critical questions, how to find the internal champion, how to sleuth ahead of time before the call.

At the end of the day, people want to do business with people they like and trust. With all the new technology tools available for reaching, tracking and micro-targeting our prospects, let’s not forget the most important part of selling and marketing successfully -- human interaction.

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It’s Official. Internet Ad Revenue Surpasses Print

Keep your eye on digital video and rich media.

The tipping point has finally tipped. Marketers spent more on Web advertising in 2009 than they spent in magazines according to a new ZenithOptimedia report. Zenith researchers predict that online ad spending – now the third largest advertising medium – is rapidly closing ground on newspapers, too. Cynics will point out that online advertising revenue actually declined 3.4 percent in 2009, the first year-over-year falloff since 2002 and it would have been worse, had it not been for a record-setting $6.3 billion fourth quarter. But, the loss in ad spending across all media sectors was quite a bit worse -- 12.3 percent for the year and two percent for Q4.

For some perspective, consider that 2009 ad revenue at major magazines plunged to $19.5 billion (minus 17.5%), according to Publishers Information Bureau (PIB) data and PIB reports ad pages are down another 9.4 percent for the first quarter of 2010. Fortunately for publishers, a share of those missing ad dollars are “migrating” to publishers’ Web sites and other digital properties, but the media landscape has now changed to the point that the heady days of “buy or audience, let’s go have lunch” are barely visible in the rear-view mirror.

Keep your eye on digital video

The Interactive Advertising Bureau and PricewaterhouseCoopers recently reported that search ads posted a slight uptick from 2008, accounting for nearly half (47%) of all Internet ad spending. Display ad spending rose a similar amount. Revenues for online classifieds and e-mail advertising plummeted, but digital video ads climbed an astonishing 38 percent. Thanks mainly to search, display and video, eMarketer predicts that online ad spending will grow a healthy 5.5 percent this year, to $23.6 billion and will increase its share of the overall ad pie to 17.1 percent in 2012 from 12.6 percent today.

When it comes to online ads, it pays to get moving
Rich media ads outperform standard banner ads

If you use banner ads for marketing (or sell them to your clients), consider adding rich media to get more bang for your online buck. Here’s why. According to new findings from research firm eMarketer Web users were more than 2.6 times as likely to click on a rich media ad than they were on a static banner, and conversion rates were also up, by 198 percent, eMarketer said.

As we’ve mentioned numerous times in this blog, video is growing by leaps and bounds on the Web because consumers want to view a story rather than read it. It doesn’t matter whether you’re selling hammers, airline tickets or multi-million dollar enterprise resource planning software. You’ve got to show it to sell it.

Organic search results still generate 7 out of 8 clicks online

A recent Marketing Sherpa study shows conversions for organic (i.e. natural, unpaid) search results still outperform others. Why? Because researchers say prospects trust organic search results more than they trust paid, or guided-pay, search results. You can buy the space to reach target customers, but you can’t buy their trust. Like all entrée’s on the savvy marketer’s menu, paid search deserves a seat at the table. But if feel your diet is heavy on search just because it’s cheap, then you need to re-think your marketing strategy and overall value proposition.

Conversion Rates
Organic search*************7.2%
Shopping engine********6.6%
Pay per click*******5.0%
OVERALL************6.1%
Source: MarketingSherpa.com 2010

B2B sales pros increasingly turn to LinkedIn

Companies are relying more and more on their corporate Websites and social networking to bring in customers, according to new research from eMarketer. Social networking, while still gaining adoption at many organizations, recently passed direct mail and Webinars in terms of generating qualified leads for business and professional organizations. As of late March, social networking was closing in on live events and trade shows for lead generation.

The most effective social network for prospecting, says eMarketer, was LinkedIn, by a wide margin. The business-oriented site was rated 3.1 out of a possible 5, compared with ratings of 2.0 for blogs, 1.9 for Facebook and 1.8 for Twitter.

Research firm, Outsell sees it a little differently. A recent Outsell poll found that B2B marketers in the U.S. considered Facebook the most effective social media site, at 51 percent, followed by LinkedIn (45%) and Twitter (35%). That poll focused on effectiveness in general, not necessarily lead generation.

LinkedIn’s effectiveness in this area has translated into significant increases in usage. Nearly half of respondents (47.8%) told eMarketer they were using the site more for prospecting and research than they were a year ago. Around one-fifth of those polled were also upping their prospecting efforts on blogs (21.8%), Facebook (20.8%) and Twitter (17.3%) and one in 12 (8.4%) on YouTube.

January 2010 data from HubSpot showed nearly half (45%) of North American B2B companies using LinkedIn for marketing had acquired a customer through the site. Company blogs were effective for 43% of respondents, while 38% and 33%, respectively, got customers from Twitter and Facebook.

Macro-economy: cautious optimism becoming more optimistic than cautious

We’re not commenting on the overheated stock market today. More on that next week. Meanwhile, government data released Friday showed a nice increase in big ticket manufacturing items. Sales of new homes surged 27 percent in March. Despite persistent long-term (26+ weeks) unemployment, households are replacing cars, upgrading home furnishings and stocking up on gadgets. Many economists estimate that consumer spending — which makes up some 70 percent of American economic activity — jumped by four percent during the first three months of 2010, which was about twice as fast as the experts anticipated.

Our view is that month and months of pent up consumer and business demand will finally be unleashed sometime after mid-year. Technology companies are reporting strong sales and earnings. Intel (www.intel.com), reported its highest first-quarter revenue in history. Google (www.google.com) added about 800 jobs this year, and Amazon (www.amazon.com) has added 1,800. Manufacturing is slowly adding jobs. Retail sales surged 9.1 percent in March according to Thomson Reuters, marking the seventh consecutive month of growth. And U.S. exports are running about 15 percent ahead of last year, according to the Commerce Department.

OK. The wet blankets who compile The University of Michigan Consumer Sentiment Index said their benchmark plunged to a preliminary level of 69.5 in April compared with 73.6 in March. But that’s better the record low of 55.3 back in November 2008. And the American “savings rate” (long considered an oxymoron) climbed during the recession but has recently fallen, according to an analysis of Federal Reserve data by Economy.com. We view that as a sign of confidence, not recklessness.

Victor Ghassemi, sales manager for a Los Angeles Porsche dealership may have summed it up best in a New York Times interview today. “People get tired of holding on to their money, or just sitting at home and not doing anything,” he said. “People love to shop. And you take that privilege away from somebody, it lasts about a year. Eventually, people want to come back. They want to buy new merchandise, a new product, to make them feel really good about themselves.”

Victor, let’s hope you’re right and the economy keeps it in gear.

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