Archive

Archive for July, 2009

• Internet as a game-changer for business: some hard data

The following was previously posted as part of a running argument in the comments section on The Ad Contrarian. Having gone to the work of finding and putting together the statistics, I figured I might as well share them here as well. (First rule of a writer: recycle material whenever possible.)

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An early ad proclaiming the benefits of internet marketing

An early ad proclaiming the benefits of internet marketing

Has the internet “changed everything” to do with retail sales?

Since 1999, the Department of Congress (DOC) has been keeping figures for online sales separate from those for catalogue and mail order, making the tallies more accurate. From these we find that in 2000, total online retail sales accounted for 0.7% of the total $747.8 billion in retail sales.

To put that another way: in 2000, less than a penny from every consumer dollar was spent online. Read more…

• After reaching an audience of tens in Second Life, Coke expands its social marketing plans.

Now, can anyone see a problem with consumers making their own ads?

Now, can anyone see a problem with consumers making their own ads?

The World Advertising Research Center (WARC) reports that Coca-Cola is stepping up its social marketing.

Coca-Cola, the soft drinks giant, plans to increase its use of social media around the world, as it seeks to put consumers “at the heart” of its business, according to Jonathan Mildenhall, the company’s vp of global advertising strategy and creative excellence.

Just what, exactly, is the “heart” of Coke’s business? Will they be bringing in consumers to bottle the product in their plants? Invite them to sit in on strategy sessions? Put them in scuba outfits and dump them in tanks of the secret formula? Read more…

• What does Dell’s $3 million in sales from Twitter really mean?

 

The smaller the dog, the more incessant the barking

The smaller the dog, the more incessant the barking

Dell recently announced that over the past two years it has made $3 million in sales on Twitter, one third of that during the last six months when the Twitter population grew by 1,000%.

Predicatably, the news media and social network proponents are ecstatic. Sky news calls it “the latest example of how brands are generating profits from social media,” while Clive Maclean Consulting calls it “Another social wakeup call for ad agencies.”

According to Dell, they created their own tracking software for the project, and issue six to ten Dell specials a day. That is a not-insubstantial allocation of resources being used for a following of 779,010 people — although the initial outlay for creating the software is a one-time cost. Upkeep, however, will be continuous.

And what have they got? $3 million sounds like a lot, but their quarterly intake was $12.3 billion, which makes their two-year Twitter take equivalent to 0.024% of what they’ve made through three months of sales procured through the boring, traditional methods.

To put it another way, in two years they’ve earned 0.006% of their sales for a single year.

While the social media pundits may be fooled, there’s no doubt that Dell is aware of the marginality of this experiment. PC Magazine says that the Twitter sales figure “further bolsters Twitter’s case for charging businesses,” but Dell is quick to disagree. “If it becomes complicated and costly,” the magazine quotes a Dell representative as saying, “our instinct would be to move elsewhere.”

Translation: “For free, we’ll be happy to pick up 0.006% of our yearly sales through a social marketing ploy — but if we’ve got to put out any money, it ain’t worth it.”

Is it a failure? No. Dell is using Twitter the way another company might put up posters on telephone posts: it’s cheap, and any resulting sales are pretty much pure profit. But Dell is definitely not fooling themselves into believing that the experiment is worth any real outlay on their part. If Twitter collapsed tomorrow Dell would barely notice — although a couple of their employees might be yanked away from the Internet and have to go back to real work.

Clive Maclean suggests that Dell’s two-year involvement with Twitter probably “did not happen as a result of an agency recommendation.”

He means this as a knock at agencies, but I hope he’s right and no agency recommended this endeavour — at least not as anything more than an extremely low-priority experiment. The real wakeup call here is for the clients, not the agencies: if your agency is pushing social marketing in a really big way — get another agency.

Don’t believe me? Just take another look at the latest social marketing “success” figures from Dell.