Facebook buys Instagram for $1 Billion

Valuation
The billion dollar acquisition triggered a lot of discusion about another tech bubble. One billion dollars for a two-year old company with 9-13 employees (roughly $100 million per employee) does seem lofty. But when you think about the number of current users, and factor in the rate of user adoption, the $28-$33 dollars per user acquisition price seems more digestable and in-line with other social media valuations.

This post does a nice job breaking down the numbers and comparing the acquisition to other notable tech deals: Instagram’s Buyout: How Does It Measure Up?

A few more good reads about the valuation.
WSJ: Instagram Valuations for the Social Media Crowd
Guardian: Instagram and Facebook: the next tech bubble?

Backlash
The acquisition has caused some discontent in the Instagram community. Not only have they seen their once iPhone-only app launch on Android, but now it has been bought by Facebook — all within a week’s time. As of this post, Instagram has been downloaded more than 5 million times already from Google Play.

Reading about the backlash calls to mind one of my favorite quotes.

“If you are not paying for it, you’re not the customer; you’re the product being sold.”

Here are a few links to posts covering the backlash.
Instagram Users Fail to Welcome Their New Overlord
Instagram fans backlash on $1bln Facebook deal
The Instagram-Facebook backlash

Rationale
So why did Facebook acquire Instagram? The rationale covers some broad territory: buying a competitor as a defensive / threat elimination play; a knee-jerk response to Instagram’s rapid adoption on Android; acquiring talent; fortifying its position and capabilities in mobile; and even helping Facebook penetrate China.

The following posts provide a good roundup of the rationale.
Why Instagram Was Worth $1 Billion to Facebook
Did Facebook panic?
Will Instagram Help Facebook Crack China?

And of course, The Daily Show provides a thorough analysis of the deal. Happy Friday!
Google Glasses and Facebook’s Instagram Deal Explained

The talk included an overview of the group buying landscape and several of the key players and revenue models being used. It also covered the key factors that have driven adoption and continued use of group buying services from the consumer’s viewpoint.

Groupon Cupcake Offer. Image credit to Uptown Update.

The main portion of the audio conference was walking through an approach that marketers and merchants can use to determine whether running a group buying offer is a good decision. The approach centers around calculating the net deal cost, a process we’ve outlined in detail in this blog post. The highlight of the decision-making portion of the talk was a break-down of a Groupon deal that, seemingly, went bad for the merchant – a UK bakery’s cupcake calamity.

Looking at the cupcake case, determining whether using a group buying offer was a smart marketing decision depended on how many repeat customers the Groupon campaign generated. This is not a unique factor to the cupcake world. Whether group buying deals attract quality, repeat customers is often the key issue in determining the profitability of a deal, as well as determining whether a merchant will try a group buying offer again. According to a white paper released by ForeSee earlier this month, 44% of offer redeemers had already done business with the company again, and another 47% planned to buy again. These levels of repeat purchase and intent are the highest I have seen reported to date. This is not only good news for the cupcake bakery, but for the group buying service category as a whole.

For further reading on the topic, check out Foresee’s Daily Deal Commentary (2012) published earlier this month. Forrester’s Myths and Truths About Daily Deals, published in November 2011, is also informative.

If you’d like to talk about group buying services, or any other form of digital marketing, please feel free to reach out to us. We’d love to hear from you.

For the Orkin Pest Project we wanted a visually rich environment to serve up interesting insect facts and information.  As the user interacts with the site, three chapters of content are easily accessible: Pests in Nature, People and Pests and Finding a Balance.  We feel the parallax scrolling allows us to present powerful imagery that helps tell the story of the importance of insects in or every day life.

Parallax is a difference in the apparent position of an object viewed along different lines of sight. The term derives from the Greek word parallax is, meaning alteration. The parallax effect has been used in media for many years, first appearing in cartoon animations to simulate movement of characters across the field of view.  Parallax was also used in early video games like Defender to achieve the same effect.

A pest is just a bug that's in the wrong place

In web design, the parallax effect allows the same sense of motion, objects “closer” to the viewer appear to move against a background.  The parallax design framework can work in either a horizontal or vertical view. It allows information to be presented on one large page without the need for additional navigation that can often take the focus away from the presentation of the main information. There are many good examples of parallax in brand web design, one of the most recent being Nike’s Air Jordan site which launched in February of this year.

Parallax scrolling adds layers of depth to the presentation

For Orkin, pests are something that need to be kept in there place, but that still have a place, especially as they fulfill many important roles in nature.  The Pest Project provides numerous examples of the importance of insects in the natural world and shows Orkin’s commitment to the larger discussion of how insects contribute to the overall health of our world.

Please visit the Orkin Pest Project and let us know what you think of the parallax scrolling technique!

It’s not surprising to me that Apple’s small iterations tend to disappoint Apple’s fanboys. The technology consumer clamors for rapid iteration. Apple’s approach is incremental and long-term.

Ambient Display in a wall

I can imagine a long-term goal of Apple’s being voice or gesture controlled ambient computer interfaces, hidden in wall paint (pdf) — only displayed when electrically charged and not when not charged. In conclusion,  ”the internet of things” is here and ambient computing is coming. Faster than you think.

 

Visuals credit to Smart Future, Ambient Agoras Project

Many B2B companies have not embarked on social media projects because the ROI of such activities has been hard to quantify.  As it turns out, that may not be a bad thing.

Customer experience management (CXM)

B2B marketeers need to know they are creating communications pieces that drive real world results like increasing revenue or decreasing customer service costs. As such, many social and mobile projects have fallen outside of the to do lists because they are hard to quantify against typical B2B metrics.

Brian K. Walker, Forrester

A new type of solution is emerging on the commerce technology landscape that promises to help eBusiness leaders drive customer targeting, content relevancy, and personalization on their sites and across digitally enabled consumer touchpoints.

Customer experience management (CXM) solutions aim to support these personalized experiences across digital experiences such as websites and mobile sites, as well as mobile and tablet apps. In the era of agile commerce, more eBusiness leaders will look to take advantage of CXM solutions to drive optimized experiences and increase sales.

With the advent of Customer Experience Management, B2B marketeers now have a new set of tools and procedures to link social channel communication with traffic to central websites and the actions performed by users once they get there.

A strong central digital hub connects other marketing initiatives like paid media, search engine marketing, social media and mobile apps. Making this connection allows marketeers to develop sophisticated digital lead generation strategies that keep pipelines full with high value prospects. Coupled with advanced listening and  analytics tools, B2B brand marketers can now define, refine, track and optimize against KPIs in real-time.

TAKE CONTROL OF YOUR DIGITAL CHANNEL

At THINK we specialize in helping clients look at their whole digital ecosystem. We work to develop engagement models that can be measured across channels.  We develop content strategies that allow marketeers to quickly and effectively communicate their brand message to existing and potential customers.

No matter where you are in the process of improving your digital customer experience, THINK can help. Give us a call today to find out how you can get the most out of your digital properties.

THINK specializes in helping brands understand their customers and then finding ways to break through the cluttered marketplace to make meaningful connections with them. We’re skilled in the creation of compelling experiences with sustainable models that drive ongoing ROI for businesses. Please feel free to reach out to us; we’d love to hear from you.

Executive Summary: Consumers expect any brand communications to happen as quickly as communications in social networks.  With the ultimate goal of increasing customer engagement, new tools and practices calle Customer Experience Management are emerging to help brand marketers observe, orient, decide and act in the digital channel. Taking advantage of these new developments will help brands increase sales and satisfaction in a fast paced, multichannel environment.

Many companies are beyond thinking of CRM as a solitary outbound messaging tool. As social networks reached mainstream usage, companies were forced to develop faster communication strategies to accommodate clients’ and consumers’ expectations for personalized, rapid attention.

Not only have social channels sped up expectations, they have also become the trusted source of news, information and product recommendations. According to Eldelman’s , “Social media, which consists of social networking sites, content-sharing sites, blogs, and microblogging sites, saw the biggest percentage increase (75 percent) in trust among media sources.”

Social media is more than marketing communications… Social media is really about engaging communities in new ways to achieve otherwise impossible business value. It is about strategy. It is about thriving, surviving or disappearing in a new age of human behaviors fueled by mass collaboration.

Carol Rozwell,
Gartner, VP Distinguished Analyst

The Age of the Customer & Splinternet

Empowered buyers demand a new level of customer obsession.

As companies grapple with the speed of social, one thing emerges across all category segments: we have entered the age of the customer.  Today’s empowered customer can communicate brand likes and dislikes at an alarming speed, and the potential reach of one well-connected individual can be in the millions.  Today’s brands must meet consumers in the stream of social conversations. Brands must find ways to connect with and engage their customers in ways that build trust, delight and evangelism.

Forrester’s Josh Bernoff defines this level of relationship as “customer obsessed.” A customer obsessed company invests in four areas:

1. real-time customer intelligence;
2. customer experience and customer service;
3. sales channels that deliver customer intelligence;
4. useful content and interactive marketing.

If this seems pedestrian and obvious it is, but not when viewed against our second dimension, Splinternet.

In May 2011, Webtrends commissioned Forrester Consulting to study the phenomenon frequently referred to as the “Splinternet.” Forrester’s study yielded three key findings:

• The Splinternet disrupts the marketing landscape. Technology and channel fragmentation are a very real phenomenon; marketers know that adapting to a multichannel environment is critical and are racing to understand the effect of the Splinternet.
• Marketing strategies need a reboot. Firms must take a fresh look at their foundational strategies to evaluate how they will create mutually beneficial relationships with customers in light of new channels, technologies, and the expectations of sophisticated consumers.
• Multichannel success requires mastery of multiple disciplines. Firms must take a multidisciplinary approach to harnessing the opportunities that the Splinternet presents. Technology, organization, process, and measurement are all interrelated contributors to a marketing organization’s effectiveness.

The age of the customer and the challenges of Splinternet combine to present marketeers with a host of new technical challenges but also offer the hope of attaining a new level of understanding, dialog and influence with their consumers.

Customer Experience Management

Finding success in digital marketing initiatives has always been a cross-discipline effort. With the requirements of social speed and the vast array of digital channels the challenge continues to grow, simply staying on top of each channel can be a daunting task. Managing campaigns across channels and measuring individual customer needs may seem out of reach.

“In response, a new concept in marketing has appeared. It’s called Customer Experience Management (or CXM for short). And while it may be a new concept, the principles behind it have existed for a long time. Now, however, the tools and techniques to deliver on the promise are new and powerful, and rapidly emerging and evolving, making CXM truly possible for the first time.

CXM requires web content management, on-site search, commerce, customer service interaction management, marketing automation, analytics, testing, optimization and personalization to deliver Forrester’s vision of CXM. To truly deliver a strong customer experience that maximizes business results, you need to understand what your customers want, and deliver them a one on one experience and relevant offers across channels and touchpoints, when they want it.”

CXM components as defined by Forrester

The New Rules of Engagement

The term engagement first found its way into the mainstream in a Forrester article from August 8, 2007 called “Marketing’s New Key Metric: Engagement,” by Brian Haven. Haven called for a new method for analyzeing customer interactions with brand communication pieces. He stated, “We believe that marketers need a new approach to understanding customers and prospects. This new type of measurement — engagement — encompasses the quantitative metrics of site visits and transactions, the qualitative metrics of brand awareness and loyalty, and the fuzzy areas in the middle best characterized by social media.”

“Engagement goes beyond reach and frequency to measure people’s real feelings about brands. It starts with their own brand relationship and continues as they extend that relationship to other customers. As a customer’s participation with a brand deepens from site use and purchases (involvement and interaction) to affinity and championing (intimacy and influence), measuring and acting.”

The four parts of engagement build on each other to create a holistic picture.

• Involvement: an individual’s relationship with a company or brand, visits to a site or a physical store, time spent per page, and pages viewed. Often the first point of interaction an individual has with a brand.
• Interaction: individuals contribute content about a brand, provide contact information, or make a purchase. Interaction measures actions. ·
• Intimacy: the affection an individual holds for a brand, likes, shares, opinion or perspective. Intimacy can be tracked in real time, providing the opportunity to correct a problem or seize an opportunity.
• Influence: individual’s likelihood to encourage a fellow customer to consider or buy a brand, product, or service.

Take control of your Digital Channel

THINK specializes helping brands satisfy consumer expectations across multiple communication channels.  In leveraging CXM, brands can confidently navigate today’s fragmented communication channels and ultimately create a higher, more profitable level of customer engagement.

Thinking about apps?

Should you build a smartphone app? I don’t know. What I do know is if you haven’t asked yourself that question you need to do so very soon. Here are some stats to digest…

• Smartphone penetration as of June 2011 reached  38%
• 55% of new phone sales are smartphones
• Nearly 50% of smartphone owners are 25-44
• Mobile application downloads are expected to reach 48 billion (uh huh, that’s a B) in 2015

So it’s fairly obvious that you need to ask the question. How to get to an answer is a little more difficult. We would, for most businesses, recommend that a base level of customer facing information (e.g. product, about us) and tools (e.g. store locator) be made available in mobile friendly formats (more on apps versus mobile sites coming up in the next post).  For this discussion let’s assume you have that base level covered. If you don’t have it covered, you probably want to do that first.

To get closer to an answer on the app questions, ask your self these questions

1. Does your target customer fall into the smartphone user demographic?
2. If so, are there brand or product related tasks that they would potentially use their phone for on a semi-regular (e.g. not one time or rarely) basis?
3. If the answer to question two was no, then would it make sense to use an app to sell (e.g. think about helping then shop) to your customers?
4. If the answer to number two and three are no, then ask yourself this: would it make sense to use an app to inform or entertain them?

To help you think in general terms about what people are using their mobile phones for the most, here are the top activities of US smartphone owners: email, games, social networking, instant messaging, mapping and directions, music and radio, and weather apps – these are the growth areas.

Vintage ratings on mobile anyone?

With this this data in mind, let’s think about an example of a case where we would and a case where we wouldn’t consider using a smart phone app…

Would

• A brand with lots of valuable data that their customers access frequently
• The customers like to search and sort the data
• This may be a great opportunity for a branded app
• Examples: IMDB, RedBox, Wine Spectator

Wouldn’t

• A brand has a commodity CPG product that competes on price and reach advertising (e.g. loss leader)
• Customers do not research the product category much if at all
• This is probably a good case for not doing an app
• Examples: Brawny, Tide, Clorox

Of course no two business situations are identical and these are very simple examples. THINK specializes in helping brands understand their customers and then finding ways to break through the cluttered marketplace to make meaningful connections with them…some times through mobile sometimes in other ways. Please feel free to reach out to us, and of course do comment below!

j

References
http://www.pocketgamer.biz/r/PG.Biz/Nielsen+news/feature.asp?c=31117
http://blog.nielsen.com/nielsenwire/?p=25901
http://www.comscoredatamine.com/2011/06/us-smartphone-owners-by-age/
http://www.mobiletechnews.com/info/2011/06/08/113514.html
http://www.marketingprofs.com/charts/2010/3952/seven-types-of-smartphone-apps-driving-mobile-market

Facebook introduced Timeline, a radical new way of organizing and presenting “wall” information.  With large format images and content widgets Facebook page owners, both people and brands, can take advantage of the new freedom of expression as they tell their story in a visual, time based, scrap book.

Paul Papadimitriou's Apple Timeline mock up

Facebook further extended the importance of its Open Graph feature by adding Custom App actions.  In his presentation, Mark Zuckerberg said that if 2010 was the year of the noun, 2011 was the year of the verb.  With Custom App actions users can now go beyond liking something and instead talk about watching, cooking, flying or reading something.  These actions can be enhanced with more information: instead of saying “I am cooking,” a new Facebook action may say, “I am cooking chicken for dinner.”  Of course for brands the idea would be to have a custom app action that said, “I am making Kraft macaroni and cheese for dinner.”

A new activity ticker at the top right of the Facebook page alerts user to other people’s “light weight” media consumption activities.  Working with a host of media partners,Facebook now shows your friends (and friends of friends) when you are listening to a song on Spotify or watching a video on Hulu.  The stated purpose is for users to be able to discover new entertainment based on what their friends like. The ticker is also another place that custom app actions can appear.

These updates may seem like more features updating in the lifecycle development of a product but for brands they represent a significant opportunity.  Having amassed the largest group of connected user ever assembled, Facebook’s new features offer brands a better channel for telling their story and engaging users in an ongoing conversation.

Credits and Commerce were not areas covered in the F8 conference but represent huge opportunities for brands to add teeth to any marketing communication and use Facebook as a direct sales channel.  As the Facebook credits program continues to grow and integrates both psychical locations and Groupon like redemption models, brand will have a new tool to drive product purchases.

Direct commerce via the Fabebook platform also represents a real opportunity for brands to sell products.  At THINk we have seen success through offering a curated product selection or bundle on Facebook as a virtual pop up store to drive additional sales around specific popular items.

While Project Spartan has not been officially announced it is well known that Facebook is working on a major enhancement of its mobile offering.  Facebook mobile is currently used by 350 million of its users and has significant advantages for brands, particularly brands that operate physical retail environments or sell in brick and mortar locations.  Consumers are relying more and more on their mobile phones to do in store price comparisons and take advantage of coupons and offers at the point of purchase.

This is Project Spartan?

Over the course of the next few weeks we will look at each of these features sets in greater detail and explore the opportunities for brands to directly improve sales via Facebook campaigns

THINK specializes in helping brands understand their customers and then finding ways to break through the cluttered marketplace to make meaningful connections with them. We’re skilled in the creation of compelling experiences with sustainable models that drive ongoing ROI for businesses. Please feel free to reach out to us; we’d love to hear from you.