Take A Peck

Even though social networking is such a hot topic right now, we’re still trying to figure out what the best way to monetize them is. So I wanted to explore some ways I’ve seen that social networks are being monetized.

1) Advertising supported - This is the main way social networks are trying to generate revenue. It’s good for the users as they get free access in exchange for seeing a few ads. This has the potential to be great for advertisers, too, as they can often target users based on various demographic info and interests. But here’s a dirty secret–click-through rates on social networks (especially Facebook) are horrible. Last I saw the CTR was about .04% …. This actually makes sense, because people go on social networks for specific purposes—they want to check out their friends profiles, pictures, videos, etc. Social network users aren’t in a shopping mindset and so aren’t likely to be looking for information about products or services. But, social networking is still a good option for increasing brand awareness as Disney found out with its MySpace page for “Step Up” and “Step Up 2 the Streets.”

It doesn’t look like ad spending on social networks will be decreasing any time soon. eMarketer says that about $2.1 billion will be spent on social networking advertising this year, with the number rising to $4.1 billion in 2011.

2) Subscription Model - This involves charging users a fee to use a site. Dating sites have been very successful with this model, but outside of this space, I’m not sure who’s operating this way. People are so used to getting things for free, that its hard to convince them to pay for social networking. There would seem to be an opportunity to offer free services and upsell people on something that includes exclusive content, access, etc…In a way, some of the college sports recruiting/news websites operate this way–gives some basic content for free and charge for premium content and message board access.

Something to think about is whether there will ever be other niche or local social networks that people will pay to be a part of…sort of like online country clubs, where membership is seen as a privilege and a status symbol. What do you think?

3) Data mining - This model involves collecting data about a group of people and selling it to an advertiser. So say Nike wants to learn more about what kind of music and movies guys 16-19 like, they would be able to purchase data from a social network that tells them what they need to know. I’m not sure if any sites are currently doing this, but it may be something to think about. Do you know any sites doing this?

4) Sponsorship - Instead of just having advertisers, it would seem to make more sense to have sponsors who are invested in helping the site grow and adding value. Sponsorship could be something as simple as giving Brand X complete ownership of a contest or section of the site, or a sponsor could take things further and partner with the site to bring users something unique and valuable.

5) Affiliate Marketing - Affiliate marketing is basically selling an outside party’s goods/services and getting a commission or fee for each sale that is made. In my opinion, this is an under-utilized method of monetization. Instead of putting up some Google ads that no one clicks on, why not offer a relevant product or service to your users? While we’ve seen that most people aren’t in a shopping mode when they’re social networking, it never hurts to test offers, especially on niche sites.
It would be pretty easy to add a “store” to the site and feature relevant products. A couple sites are currently utilizing this method:

• Go211- They are using their status as an Amazon Associate to sell products and get a commission off of each product sold in their “store.”
• SkiSpace - It looks like Bode Miller’s site has a partnership with Backcountry.com to sell items in the “gear” section of their website

That’s all I’ve got for now. I’d love to hear your thoughts on this stuff.

Have a great weekend. Hopefully the Heels can pull out the W against Kansas for a shot at the National Championship. Let’s go boys!

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I’m going to go ahead and warn you that this post doesn’t really have a theme or singular focus.

Forbes has a great piece on Nike that discusses its evolution from mass marketing and organizing the company by products (shoes, shirts, hats, etc) to micromarketing, focusing on the consumer and organizing the company by sports. The article also talks about how Nike really focuses on testing and getting the details right, in addition to touching on its expansion into China (Nike is outfitting 22 of 28 Chinese Olympic teams for the Beijing Games). Definitely check out the article if you’re interested in sports business and one of the most popular brands in the industry.

Another thing the article briefly mentions is Nike+. From both a technology and community perspective, Nike+ is a great idea. The Nike+ system requires an iPod Nano and shoes with a special chip that allows runners to track their times, distance, and calories burned. Runners can upload their stats to the Nike+ website and compare them with other runners. The website takes advantage of runners’ competitive natures and allows people to join or issue challenges to their friends or other Nike+ runners. It’s also got a link to the Nike Running Blog, which features interviews, reasons to run, and other running content. Best of all, it’s regularly updated (though it’s not exactly a true “blog” because it doesn’t allow people to comment or discuss posts).

It still amazes me how ingrained Nike is in our sports culture–and just about every sport. Just a few years ago they didn’t have any presence in golf. Now they design shoes for Tiger Woods and sell them for $220. Spending $2 billion a year on marketing helps…

It will be interesting to see how Nike handles the Under Armour challenge. It seems they are both competing intensely for high school sports athletes–especially football players. Under Armour has Click-Clack and Nike has its Leave Nothing commercials. See the links below for a comparison.

Nike

vs.

Under Armor

Which commercial do you prefer?

Things should get even more interesting later this year when Under Armour releases its Prototype shoes, which I’m sure will be heavily promoted. Will UA’s new shoes be a hit with athletes? What do you think?

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InterContinental Hotels Group’s Crowne Plaza has done a great job of aligning itself with golf and reaching golf travelers in the first year of its sponsorship of the PGA TOUR Crowne Plaza Invitational.

Crowne Plaza launched its first ever national ad campaign in April with golf-themed ads featuring national golf commentator/journalist David Feherty attempting to moderate an unscripted conversation among TV personality George Lopez, rocker Alice Cooper, golf legend Lee Trevino, LPGA star Natalie Gulbis and outspoke golf scribe Dan Jenkins. Not a bad crowd to hang out with. The commercials focus on the spontaneous dialogue of the group around topics such as golfing secrets, putters, and rules. According to USA Today, footage for the ads came from 18 hours of the cast ad-libbing. Crowne Plaza’s tagline is “the place to meet,” and golf has long been a great social activity for people, so it is a good vehicle for this message.

Up until recently, Crowne Plaza never even entered my mind when I thought of hotels, but now it stands out as one of the best brands that connects with golf fans. My favorite spot is the one that talks about golfing with wives. The spot opens with Natalie Gulbis talking about going on a golf date. Eventually George Lopez says, ” I think my wife would understand that I’d rather play golf with Lee Trevino than my wife.”

David Feherty responds, “I think my wife would understand that I would rather sleep with Lee Trevino than play golf with her. But that’s not a negative comment against my wife.”

You can see all six of Crowne Plaza’s golf-themed ads, plus some nice bonus footage, at its golf site.

In addition to sponsorship of its PGA TOUR event, Crowne Plaza is sending 72 average golfers to play in a pro-style tournament called the Crowne Plaza Amateur Inviational at Colonial in Ft. Worth, Texas. It also sponsors LPGA golfer Natalie Gulbis, and has some presence in Major League Baseball through InterContinental Hotels Group’s larger deal with MLB. Intercontinental Hotes Group also has deals with some MLB teams and Richard Childress Racing, in addition to some cause-related sponsorships, such as UNICEF and Big Brothers Big Sisters.

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Check them out here. There are definitely some good ones I’ll be adding to my RSS reader.

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Found this interesting podcast from Chad Stoller of Three Minds @ Organic. While this isn’t a super complicated look at social media, it does have some of the basics of whats working/not working, where social media may be going, and what companies should do to measure ROI.

Twitter, which I’m currently experimenting with, is one of the things Chad talks about. He sees it basically as an RSS feed for his friends’ lives. Even though, he may not have spoken to someone in 6 weeks, Twitter allows him to feel like he knows what’s going on without actually being in contact with the person. I can see how this can be a time-saver and a good thing, but I can also see how this can be a bad thing. If you can’t make time to talk to someone every so often, chances are they aren’t that good of a friend.

Other than the Twitter stuff, see below for a couple other good quotes. For more, check out the podcast.

“If you’re going to be innovative with your media plan, be innovative with your metrics.”

“It’s not always about the volume, it’s about the quality of the participation.”

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Looks like I wasn’t off my rocker after all. In case you missed it, I previously posted about trouble with Dove’s YouTube strategy as well as their Pro-Age ad that featured naked grannies. You can see the ad here. Basically, I said that while everyone should be allowed to feel good about themselves, Dove was taking the whole thing too far.

TV networks felt the same way, and spokespersons from Fox and NBC admitted their networks had rejected the ad. I don’t know if the ad should have been banned, but I still think it was too much. While Dove may have been hoping to get some buzz going for their banned commercial, Ad Age says the ad (posted in German) has received only 600 views on YouTube, and traffic to Dove’s website hasn’t increased that much.

I still need to show my mom this ad to see what she thinks. While I’m sure it does appeal to some baby boomers, most people saw through this as a publicity stunt. Dove wanted the ad to be viral and build buzz; instead it repulsed people.

Related link: Ad Age: Why Dove Oldies Aren’t on the Nets…or YouTube 

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