social media strategy - the rise of social apponomics

Booz & Company

This document is confidential and is intended solely for the use and information of the client to whom it is addressed.

Social Media Round Table

Amsterdam, November 3, 2010 Discussion Document

2Booz & Company3 November 2010

Social Media Breakfast Meeting

Does Social Media Really Matter?The Trend - “Rise of Social Apponomics”Creating & Capturing Value in this New Era



Social Networking has evolved from “keep in touch” to a means to “accomplish life’s tasks together”

Specific GeneralPlatform Focus

Friend

Meet

Pla

tfo

rm P

urp

ose

Social Media spectrum



26%Brasil10%USA14%Australia9%France

15%Spain17%Italy18%UK10%Germany11%Switzerland13%Global

Member Community Share of Time Sept-10

Social media cannot be ignored

Source: Quantcast, Forrester Interactive Advertising Outlook, eMarketer, Booz & Company analysis

63

90

360

86

180

357

-1%

+37%

+100%

VideoSocial NetworksPortals

2009

2007

CAGR

Monthly Unique Visitors 2007 - 2009(Mn Users/Month Global)

Share of Time on Member Community Sites, by CountryDec, 2007/2008

(1%) 41% 17%



60%

51%

79%

67%

5

Media usage is shifting, followed by consumer behaviour

1) Estimated spend on social networking sites is based on top ad-supported member community sites as ranked by unique visitors in Aug 2009Source: Nielsen OnlineComscore; Interact Conference Berlin; Analisim Booz & Company analysis

Social Networker

Non Social Networker

-16%

-18%

+11%

+25%

+33%

+26%

Video game

2.52.0

Magazine

2.73.2

MP3

4.83.6

Mobile

5.14.6

TV

9.4

11.5

Online

11.0

8.7

Media Mix - “Social Networker” vs Others(Hours/Week)

Social Media Impact on Purchase Intentn = 1,500 consumers

Are you more likely to buy since

becoming a fan / follower?

Are you more likely to recommend

since becoming a fan / follower?



This offers the opportunity to “leapfrog” traditional websites

Source: eMarketer.com

# of mobile SN users increases rapidly….

…so does the time share of SN in mobile internet

usage

...while overall penetration is still low

…offer large potential for leapfrogging

Trends in mobile SN usage….

Mobile SN Users (Mn)

Mobile SN Users % of All Mobile Phone Subscribers

% Time Spent on SN by

Mobile Internet Users

760

22376

2008 2010 2014

34.0%

2010

45.0%

20142008

19.0%

1.9%

2008 2010

4.6%

2014

13.3%



Source: Booz & Company Analysis2000-2009

Stages

“The race for scale”

Generating web traffic

“The race to commerce”Turning traffic into sales

Traffic

.com Sales

Reviews

Social CRM

Apps

Social Commerce

Marketplaces

Mobile

Network Weighted Customer Metrics

A new era in digital: “Social Apponomics”

8

2010+1990-2001

“Social Apponomics”Creating new commerce

channels& brand touchpoints



Prepare for direct monetization and a blurring of the funnel…

9

Driving repeat visits

Converting the funnel

Feeding the funnel

None Brand-Building & Energizing

the Base

Social Sites as Commercial

Portals

E-commerce Hosted on

Social Sites

Commercialization

Mo

ne

tiza

tio

nT

hro

ugh

Cu

sto

me

r Life C

ycle



…although so far most companies focus on brand building

� Interest of ~50.000 potential buyers who do not drive Ford at present

� 4.3 million YouTube views, 540,000 flickr views and 3 million Tweets

� Ford selected 100 active in Social Media Agents from Generation Y that all received a car for 6 months

� Sales more than doubled YOY� Realized #1 body wash in € and

volume� Traffic: >100Mn brand views

� P&G launched an interactive web-based marketing campaign for Old Spice with spokesman Mustafa

� Instead of investing in the annual Superbowl Ads, Pepsi invested 20 mln in a Social Media campaign

Social Media Action and Response

� 42Mn votes reaching >10Mn people� 1.6Mn “likes” on FB� 922,000 Google pages to date� Free advertising: 6-12 reports/day

ROI

Effective Social Media Engagements

Source: Booz & Company analysis, Nielsen, Youtube, Forbes.com



Today, some social apponomics examples achieve real monetization

Facebook App“In the Wall”Social Stores Social Commerce Apps

11



The social commerce market and mobile market is a multi billion dollar opportunity in consumer alone

+39%

‘15

$7.7

‘14

$6.5

‘13

$4.5

‘12

$3.1

‘11

$2.1

‘10

$1.5

$6.6

$4.5

$3.2

$2.2$1.5

+44%

US

‘15‘14‘13‘12‘11

$12

$8

$5

$3

$1

+76%

‘15‘14‘13‘12‘11‘10

Social Gaming$Bn

Mobile Commerce $Bn

S-Commerce Market$Bn

12

Source: Booz & Company research & analysis


Social Media Breakfast Meeting 13

Dell Swarm combines social networks and group buy into interactive buying experience

• Time sensitive: builds excitement and buzz for participants

• Social buying experience : more people that buy, the cheaper the price

• Social media link: follow on Twitter, share via Facebook



Nike example: social content annuity + shoes

Non-shoe products

for runners

Nike Has Seized the Rise of Social Apponomics

� Integrated into all store, web, mobile, app marketing

� Online community of professional coaches and athletes

� High value subscription content ($99 USD/year)

� Sharing and syndication to social sites (e.g. Facebook, twitter, etc.)

� Connected to team brands

� Organized local events created by the community with a shared community blog

� Read “triumph” stories to stay engaged with brand/communityTraining and

skill building content

Athlete Stories

Product Features & Shopping

Social Networking &

Local Communities



32%

39%

42%

42%

50%

58%

58%

67%

72%

80%

81%

90%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Digital / Interactive

Consumer Insights

Behavioural Targeting

Brand Strategy

Customer Marketing

PR

Partnerships

In-House Digital Production

Field Marketing

Event Marketing

Entertainment Marketing

Sponsorship

Marketers are being challenged to innovate operating models, capabilities, and develop new paradigms

Key Challenges Facing Marketers

Pace of Media Innovation Faster

than Marketer Skill Development

Lots of “Data” But Not Enough Consumer Insight and Big ideas

Desire for Consumer Engagement and

Relationships, Not Just Impressions

1

3

4

Fragmentation Increasing

Complexity of Marketing Communications

2

Source: Marketing & Media Ecosystem 2010 survey, Booz & Company Analysis

Relative Importance of Key Marketing Capabilities (Booz & Company Survey Results)

16



Although returns can be significant, understanding and managing risks of social media is as important

Source: Booz & Company analysis

� Greenpeace launched a successful You-Tube campaign to stop the building of new power houses

� Complaint song by music band was viewed by millions in 3 days

� United market share went down by 8% only 5 days after release � $180Mn in market cap

Business Cases

� Gap launched a new logo� Due to online disagreement by consumers,

Gap recalled the change

Risks in Social Media

Viral

HOT

Power with the People

Privacy

Competitors



The opportunity for value creation and value capture through social media occurs across the value chain

Social Media in the Value ChainFMCG Example

Source: Booz & Company analysis

Customer Service

SalesMarketingLogisticsSourcingManufacturingInnovation

Open innovation platform

EXAMPLES

Users produce the product

Online market place for freelancers

Platform where logistics professionals can connect

Social media marketing campaign

Online Friend’s store connected to Facebook

Peer to peer help through community

Innovation:

>11% Improvement in NetflixAlgorithm

Marketing:

Forum users are brand advocates - 58% recommend

Sales:

Social actions increases purchases 4x

ROI EXAMPLES



For a previous client we created an ecosystem to support a flexible and modular marketing analytics platform …

Dash-boarding

CustomerRelationshipManagement

CustomerFacing

Marketing Tools

Data Collection & Storage

Analytics

&Measurement

CLIENT EXAMPLE

19

Flexible & ModularInfrastructure



–––––––––––––NARatings/Reviews View Rate

–––––

–––

–

––––

––

–––––

––––––

Total

–––––

–––

–

––––

––

–––––

––––––

Lounge.com

Own Channels

–––––––––––1000Opex Avoided (000’s)–––––––––––ZViews of Answers–––––––––––XApproved Answers–––––––––––80%Issue Resolution Rate–––––––––––3Issues Resolved (000’s)

OPEX/Cost–––––––––––Etc.–––––––––––13%Contest Entry Rate–––––––––––4Contests and Promo Count

–––––––––––10Rev from Last 6 Months New Products (000’s)

Innovation–––––––––––50%MultiChannel–––––––––––2%Conversion–––––––––––2000Leads (000’s)–––––––––––.01$Cost/Lead

–––––––––––20%Ratings/Reviews Collected–––––––––––30%Net Mention Score

Customer

–––––––––––35%/$160Attach Rate/AOV

–––––––––––5%Coupon Redemption Rate–––––––––––400Units–––––––––––420Margin–––––––––––600/400Sales/Units (000’s)

Sales––––––––––––––––––––––15%Opt in Rate–––––––––––25%Viral Effect–––––––––––15 Sec.Time Spent w/ Assets–––––––––––TBDCost/Impression–––––––––––10000Impressions (000’s)

Brand

Own.comEtc.Best BuyAmazonEtc.Spotif

yRhapsod

yiTune

sEtc.

Our World

FacebookTwitter

Established ChannelsPlatformsSocialMonthly DashboardJune 1–June 30 2009

Example: Social analytics linked to a multi-channel dashboard to track key metrics and change behaviors

% of Customers making it to next part of funnel in 14 days - 60% of impressions became inactive after 14 days. First 14 day curation process

(content changes only) increased revenue by 50%

Instant Proxy for Net Promoter Score - Caught Brand Damaging Customer Service Issues and

Addressed

Channel specific estimate of multi-channel relationship/shopping based on data matching

(email, address, handle, etc.)

CLIENT EXAMPLE

14-day Action Rate 45%

Net Mention Score 30%

Multichannel 50%



Total Influenced Revenue* $2B $8B

Total Incremental Revenue $200M $1B

Total Incremental OpInc $50M $500M

Incremental Investment, --Capabilities: $30MHeadcount: $20M

Example: Leapfrogging can have 4-5x of potential impact

21

Status QuoOperating Income in $MM

LeapfrogOperating Income in $MM

0

10

20

30

40

50

60

70

FY11 FY13FY12

0

10

20

30

40

50

60

70

FY11 FY12 FY13

Segment 1

Segment 2

Segment 3

Segment 4

Note: total influenced revenue does not equal social commerce, but revenue that I influenced by social media; Total incremental revenue is social commerce



Social Media Does Matter

To stay ahead of the curve, keep in mind the following takeaways

It’s not just about brand building, there is a serious

business potential

Future competitors may leapfrog into your market

There are potential benefits across the value

chain

Integrated (marketing) analytics are key

1

2

3

4

5



Contact information

Matt Anderson

Partner

[email protected]

Tel:+1-713-894-8641

Behdad Shahsavari

Partner

[email protected]

Tel: +31622807702

Coen de Vuijst

Partner

[email protected]

Tel: +31613743895

Tamara Obradov

Associate

[email protected]

Tel: +31610905406