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Proximity Research Report

The Use of Social Media Marketing in order to Target Gen-Y and How to Successfully Utilize It
 * Social Media Marketing: The New Vehicle of Advertising **

by Truc Phan

Spring 2010


 * Table of Contents **

Executive Summary Introduction: Why Market on Social Networks Utilizing Social Networking as a Vehicle for Advertisement Starbuck's Success in Social Media Marketing Recommendations Attachment 1: Social Media ROI Video References


 * Executive Summary **

Traditional media is still a large presence in marketing, but users such as Gen-Y, are reducing their consumption of such media. With the dramatic increase of users of social networking sites such as Facebook, it demonstrates how many people are online and how much opportunities are available. Social media marketing allows the company to personally interact with their customers and potentially attract the younger consumers. This helps companies better understand the wants and needs of the end users and possibly improve their existing product or services. Even if the company is not on the web, people are still talking about them or their offerings so by having a presence, the companies can address the comments. If a company is willing to put in the work and respond to consumers, it will more than likely elicit a favorable response. One company that has had a successful campaign is Starbucks. They are very interactive with their customers therefore generating a large amount of responses and followers. Proximity clients should consider developing a social media marketing strategy that will be interactive, unique to the company, and well managed.

**Introduction: Why Market on Social Networks**

The number of users of traditional media is still high, but it is decreasing each year. For major network TV news, consumption decreased from 71% to 65% from 2006 to 2008. One of the indications of the decline in old media is the fact that many major newspaper companies are going out of business. Broadcast television is having a hard time attracting Gen-Y because they spend more time on the web watching videos and connecting with friends. With the increasing number of sales of ipod, itouch, and other mp3 devices, radio listeners are decreasing as well.

Over the recent years, blogs, videocasts, and social networks have increased substantially and are changing the face of media consumption. Blogs increased by 11% and social networks by 9%. Facebook generates about 130 million unique visitors a month and had announced that they reached 400 million members as of February 2010. The second largest social networking site, Myspace, has about 240 million users. Youtube is the largest video website and serves about 1 billion views a day. Youtube has been able to promote a company's message or image very effectively through images and videos about their activities. There are also many social networking sites that are popular to different regions of the world that targets a niche market such as Hi5, BlackPlanet, and Cyworld. Niche markets allow for better understanding of the users' beliefs, attitudes, and values system and in doing so, advocate marketers in creating a more exclusive and intimate message. These sites are growing every day at an astonishing rate worldwide and continue in providing businesses with new media strategies.



Source: http://mashable.com/2009/01/29/stats-old-media-decline/
 * Table 1:** Media Used by Internet Users 2006-2008

Social networks have become a major source of traffic to retailers. In December 2009, the upstream traffic to Retail 500 from social networks increased by 37% from the year before. A good measure of the correlation between social networks and retailers is what the users are searching within the site. The companies in the figure below are the results from the searches users generated during the holiday season on Facebook. This clearly shows that users are actively using social networking sites to search for brands and their offerings.



Source: http://weblogs.hitwise.com/heather-dougherty/2010/01/social_network_impact_for_reta.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+hitwise/us+(Hitwise+Intelligence+US)
 * Figure 1:** Downstream Traffic from Facebook

**Utilizing Social Network as a Vehicle for Advertisement**

Many companies are using social media along with the traditional media by mentioning that the company is also on Facebook, Twitter, Myspace, or any other site they are a member of. Advertising on social networks costs little compared to other media channels. At the same time, it faces the challenge of capturing the audience's attention therefore it needs to be managed in a way that is interactive and positive.

Some steps needed in order to have a successful campaign
 * **Engage the Clients:** This allows the users of the specific site to express their feelings and ideas about a product or service
 * **Be Responsive:** By responding back to clients, they know that the company is listening to them. It also makes the company aware of what is posted and deal with problems and negativity as they arise.
 * **Use Multimedia:** People like seeing pictures and videos. It could be photos or videos of new products or demonstrates what kind of activities the company is involved in outside of the usual business operations.
 * **Be Accessible:** There are many social networking sites so don't limit the effort on only one. Each site is different so don't duplicate them.

People are more likely to trust friends and peers about a certain product. A recent research done by Nielsen suggests that when the advertisement has a social context, the user is more likely to recall and be aware of the brand and possibly make a purchase. Their research was done on 800,000 Facebook users in response to more than 125 Facebook ad campaigns from 70 brand advertisers. Compared to the engagement ad, the ad with social context increased from 10% to 16% for ad recall, 4% to 8% for awareness, and 2% to 8% for purchase intent. The organic ad generated a higher response by increasing to 30% and 13% for recall and awareness respectively.

Source: http://blog.nielsen.com/nielsenwire/online_mobile/nielsenfacebook-ad-report/
 * Figure 2:** Types of Facebook Ad Campaigns


 * Starbuck's Success on Social Media Marketing **

Starbucks has had one of the most successful campaign across social medias. They are actively on Facebook, Twitter, and Youtube. They have 7 million fans on Facebook and 870,000 followers on Twitter. They also have their own social networking site and blog, My Starbucks Idea and Ideas in Action. They allow the users to express their feelings and ideas on all these websites and even their own employess on their blog, Ideas in Action. They answer questions and address problems and issues that customers have presented. They also post events and promotions that are available.

Their social networking site, My Starbucks Idea allow users to improve the "Starbucks experience". The users can post ideas and suggestions and others can vote on them. This makes the customers feel a part of the decision making process and a part of the company. The counterpart to this is the Ideas in Action which consists of Starbucks employees and their response to the ideas presented by the customers.

They post photos, blog posts, and videos on Youtube and Facebook. The videos are about new products, the origins of certain coffee blends, and their contributions to charitable causes. Their videos can be embedded, making it available for people to use them and increasing exposure.

A campaign that they are currently running and have had immense media exposure is the "Frappucino Happy Hour". Starbucks has recently changed their Frappucinos and has been promoting the customization of the new recipes. They made an event on Facebook inviting everyone to come to the half priced Frappucino hour. Whenever a friend has joined, the user can see it on his/her minifeed and in doing so, spreading the word. They have a separate Fan Page for the Frappucinos where fans can talk about the new recipe and how they like their drinks. Also, on their Frappucino website, people can interactively customize their own drinks by clicking on the drink and adding options then they can share this with their friends on different social networking sites. This makes the customers feel special because they have their own unique drink and at the same time, they are promoting the product without realizing it.

**Recommendation**

Traditional media is not going away anytime soon, but the use of social media marketing can boost sales and capture a wider range of audiences. This report recommends Proximity clients to consider the use to social networks as a marketing vehicle. It would be a great tool if it is done correctly by engaging the users' interests. It is easier to measure the success of social media marketing than traditional media by looking at the number of visitors to the site, the amount of followers or fans, and the responses generated by them.

**Attachment 1: YouTube Video about Social Media ROI**

This video demonstrates the success and return on investment from social media marketing. It shows businesses that are utilizing social media and actively engaging their customers yield higher sales and profit. The world of social media is not about how much money a business puts into its marketing campaign, but about how much effort.

media type="custom" key="6144309" Source: http://www.youtube.com/watch?v=ypmfs3z8esI&feature=PlayList&p=B9FC3F203351E6F6&playnext_from=PL&index=0&playnext=1


 * References **

Banning, D. (2010, April) Social Media & Marketing. //Nevada Business//. Retrieved April 19, 2010 from http://www.nevadabusiness.com/issue/0410/1/2214

Dougherty, H. ( 2010, January 29) Social Network Impact on Retailers. //Hitwise Intelligence//. Retrieved April 19, 2010 from http://weblogs.hitwise.com/heather-dougherty/2010/01/social_network_impact_for_reta.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+hitwise/us+%28Hitwise+Intelligence+US%29

Gibs, J., & Bruich, S. (2010, April 20) Nielsen/Facebook Report: The Value of Social Media Ad Impressions. //NielsenWire//. Retrieved May 13, 2010 from http://blog.nielsen.com/nielsenwire/online_mobile/nielsenfacebook-ad-report/

Gray, M. (2009, May 14) Starbucks Recipe for Social Media Success. //Directory Journal//. Retrieved May 13, 2010 from http://www.dirjournal.com/articles/starbucks-social-media/

Noff, A. (2010, Januarry 11) The Starbucks Formula for Social Media Success. //Next Web//. Retrieved April 19, 2010 from http://thenextweb.com/2010/01/11/starbucks-formula-social-media-success/

Ostrow, A. (2009, May) Stats: Old Media's Decline, New Media's Ascent. Mashable. Retrieved May 13, 2010 from http://mashable.com/2009/01/29/stats-old-media-decline/

Qualman, E. Social Media ROI: Socialnomics. 2009, November 12. Online Video Clip. //Youtube//. Retrieved May 16, 2010 from http://www.youtube.com/watch?v=ypmfs3z8esI&feature=PlayList&p=B9FC3F203351E6F6&playnext_from=PL&index=0&playnext=1