Social Media Marketing

Content

1. Introduction

2. What is marketing?

3. Online marketing
3.1. Banner
3.2. Google AdWords
3.3. Email marketing
3.4. Affiliate marketing

4. Social media as a consequence of Web 2.0

5. The benefit of Social media for enterprises

6. Facebook as an example for social network marketing

7. Advantages and disadvantages of Social networking marketing

8. Strategies for social media marketing
8.1. The Conversation Prism
8.2. The basic instruments of web 2.0
8.2.1. Blogs
8.2.2. Communities
8.2.3. Photosharing
8.2.4. Videosharing
8.2.5. Wikis
8.2.6. Podcasting
8.2.7. Microblogs
8.2.8. Social Bookmarks

9. Conclusion

10. Bibliography

Table of figures

Fig. 1: Members of social networks in Germany in March 2010 in millions

Fig. 2: The Conversation Prism

Fig. 3: Example for a profile at the online community facebook

Fig. 4: Structure of photosharing website Flickr

Fig. 5: Structure of videosharing website Youtube

Fig. 6: Typicial structure of a Wikipedia site

Fig. 7: Example for microblogging system Twitter

1. Introduction

The consumer’s buying decision is determined by information on the Internet. If the consumer is searching for the cheapest electricity deliverer, if he wants to buy a new camera or if he wants to know if a hotel is as good as the advertisement promises, he looks it up on the Internet. Although it is only 10 percent of a company’s marketing budget that goes into the marketing on the Internet, the value of supplier websites, comments by other users, product comparison sites and online marketing for the consumer has become more than twice as important as the medium television.^[1]

Recently, marketing in social media like Facebook, Twitter or Youtube became especially important for companies. They begin to realize that there is no other medium which is able to reach so many people in such a little time and if applied in the right way, marketing costs can be kept to the lowest. According to a studie of GfK, the percentage of companies using social media as a marketing tool has risen from 16 percent in 2008 to 56,7 percent in 2009.^[2]

This assignment deals with the term social media marketing and its different forms and impacts. To get introduced into the topic the assignment starts with the development of marketing from the beginnings in times of the ancient world until today. Afterwards there will be given an entrance to the world of online marketing and its common forms. Then the reader will be prepared to understand the development of social media as a consequence of web 2.0 and can learn about the benefits and risks of social media marketing. Because facebook is the social network which has the biggest influence of the world on the people at the moment, it is used in the assignment as an example for social network marketing. The next abstract helps to understand the strategies of social media marketing by precise and visual explanations of the basic instruments. The assignment ends with a summarising conclusion.

2. What is marketing?

To get a first understanding of what drives people to be willing to buy a product or service, the following abstract will describe the development and function of advertisement as an important measure of each company’s marketing process.

The beginnings of advertisement go back into times of the ancient world and are connected to the first production of goods and services, which exceeded the covering of own needs and were therefore offered on markets for exchange or sale. At this time advertisement was applied in forms of samples, market hawking and word-of-mouth advertising. But as archaelogical excavations prove, advertisement was also made in written form. The products on offer were listed on plates, walls and houses.^[3]

It was during the Roman Empire when people started to develop signs for the origin or firm to brand the first mass products. When paper was developed in the Middle Age it was possible to advertise the products not only at the places of their production but also at other places via flyers.^[4]

Finally, the invention of the letterpress in 15th century was a revolution and opened various opportunities for the advertisement. The first posters and small brochures were printed in the beginning of the 16th century and promoted the city’s events like the annual fair, exhibitions or horse runnings. A hundred years later, the first weekly newspapers „Aviso“ and „Relation“ were puplished in Wolfenbüttel and Straßburg. But the weekly newspapers as well as the daily newpapers later published commercials only seldomly. In case they did so, they promoted medicins or books. The reason for the weak presence of commercials was the low competition among the suppliers at this time.^[5]

Finally, the industrial revolution in the beginning of the 19th century made the way for modern advertisement. Technical progesses and important inventions led to mass productions and a majority of suppliers which tried to win market power through advertising.^[6]

2. The boom of E-Commerce

In the beginning of the 1990’s there happened a significant change. Germany started to discover the online-world. The company Telekom (former Bundespost) intensified marketing activities in online services which was called “Datex-J“ and offered applications like home banking or first shopping opportunities. The next step was the entrance of the american company CompuServe into the German market. CompuServe was structured into forums. Forums are closed areas which are dedicated and often were made by companies. In these areas it was possible to have discussions or to download data on personal computers. Furthermore every forum had a chat area in which there were answered questions or held discussion nights. Each member of CompuServe had his own e-mail adress, which was available worldwide by several systems. Huge marketing and PR-campaigns made the service popular and speeded up its growth. The success led to the entrance of many competitors, but only one of them was successful. American Online, in Germany known as AOL, presented itself simplier, easy-going and more fun-orientated. AOL focused more on showing events and communication. A popular example is the CD-ROM of AOL which was free of charge and which was send via mail with the aim of gaining new members. Shortly after AOL’s beginning they had more than 250,000 members and soon they adopted their competitor CompuServe which failed to get away from the image of a professional service.^[7]

At the same time, Tim Berners-Lee, developed a hypertext sytem which got the name “World Wide Web“. The sytem linked information in a smart way so that it became very easy to navigate between information. By the presentation of the first web browser Mosaic in 1993, the web became available for everyone and grew with a fast dynamic. This dynamic is present until today, but with a lower growth rate. The e-commerce boom was characterized by:

- A multitude of creative foundations of enterprises which wanted to sell own products and services via Internet
- Foundations of enterprises which had the aim to follow and advise other enterprises on the way into the Internet and to produce technical requirements
- A huge amount of Venture Capital: Investment advisers engaged their clients to invest in the new economic sectors before others will do
- Strong media observation with foundations of specialised titles which concentrated only on the new Internet industry, for example: NetInvestor, NetBusiness, Pl@net or Global Online^[8]

3. Online marketing

On the Internet, there are currently more and more species and forms with which companies try to transmit their marketing messages and influence consumers. In the following there are described the traditional forms of online marketing which have the huge significance for companies.^[9]

3.1. Banner

Although the online marketing developed only 15 years ago, there are already many different kinds and districts of online marketing. The progress in technology is responsible for improving attraction of marketing measures. New measures like targeting help to place advertisements in the right way. Media agencies identify target groups precisely and adress to them directly via targeting. That means for example banners for a soccer website are only delivered for soccer fans on the Internet to avoid distribution losses. Although the efficiency of banners concerning clicktroughs is not very high many companies still use banners in their media mix. They often use banners additionally in bigger campaigns. The standard advertising formats for banners are Super Banners, Medium Rectangles, Pop Ups, Sky Scrapers, Layer Ads and Pop Unders.^[10]

3.2. Google AdWords

Google AdWords is a fast growing marketing form. Website provider can place advertisements via integration of codes. Therefore they have to register at Google and are then delivered with individual texts related to their website. For example a website for mountain tours gets an advertisement for tracking shoes by google. Everytime a user klicks on the text, the mountain tour website gets a certain amount of money. The seller of tracking shoes can buy certain keywords at Google AdWords which appear together with the created text advertisements. Furthermore he can decide how much he is willing to pay for one klick.^[11]

3.3. Email marketing

Email marketing has the goal of customer acquisition and customer loyalty. Although sending marketing emails is a cheap way of advertising, companies should carefully use this mean. Receivers of advertising emails often feel disturbed by them and perceive those mails as spam. Spams are unsolicited sent emails that go indiscriminately to multiple mailing lists, individuals or newsgroups.^[12]

In Germany there excist strong guidelines and rules for sending of emails. The advertiser should have the permission of the receiver to send emails. The permission should

- Be voluntary, consciously and clear
- Be documented
- Be available for the receiver at every time
- Be revocable at every time^[13]

Nowadays the consumer often avoids to read advertising emails due to the mass of newsletters or information for lotteries even if there is a permission to send emails. Therfore it is important for companies to mind the subject heading of the mail.^[14]

3.4. Affiliate marketing

Affiliate marketing takes the third position in German companies right after traditional online marketing and search engine marketing. Affiliate marketing means that the company (the merchant) enters partnerships with website providers (affiliates) to who the company gives certain promotional products like banners or links. The affiliates can integrate these banners or links and gain in exchange a commission. The commission can be linked to different services of the affiliate.^[15] Typically the merchant and the affiliate use performance orientated payment sytems like

- Pay per click (PPC): the affiliate gets a payment for every click the user does
- Pay per lead (PPL): the affiliate gets a payment for every customer contact like an adress, the order of a newsletter or the request of a catalogue
- Pay per sale (PPS): the affiliate gets a payment for every sale which was made due to the promotional product. The amount of money can be fixed or a procentual part)^[16]

Agreements betweenmerchant and affiliate are often made via affiliate networks. Popular affiliate networks in Germany are affili.net and zanox.de.^[17]

4. Social media as a consequence of Web 2.0

The Internet has fastly developed into a “join-in web“. It became very easy for the user to create contents, to share contents, to comment on contents and to evaluate them. In that way the significance of the user increases. The user became an important part in various value-added processes. The focus of many enterprises has changed from only considering the technical progresses of applications and websites to also watching the user. The term „Social media“ more and more displaces the term „Web 2.0“. Social media describes all platforms, which can be used for creation and exchange of User Generated Contents.^[18]

User Generated Contents (UGC) are often also called „Consumer Generated Media“ (CGM). The type of an UGC can be versatile: Evaluations, links, bookmarkings or sharing of opinions, texts, pictures, podcasts and videos are common. It is also possible to generate contents with two or more users, for example via Wikis. Wikis have the function to develop contents, mostly in form of texts, in a community. The most famous example for a Wiki is the online encyclopedia “Wikipedia“. Wikipedia shows that users produce quality contents in a global cooperation. At the moment there exist more than 10 million Wikipedia articles in more than 260 languages which is far more than the 300,000 entries in Brockhaus.^[19]

[...]

^[1] Rothlauf, Jürgen: Total Quality Management in Theorie und Praxis, Oldenbourg, München, 2010, S. 38-39

^[2] http://www.seowelt.de/blog/aktuelles/die-zunehmende-bedeutung-von-social-media-marketing/, seen at 27/12/2010

^[3] Hogg, Florian: „For a better understanding – Englischsprachige Einflüsse in der deutschsprachigen Anzeigenwerbung“, Books on Demand, Norderstedt, 2004, P. 13-14

^[4] Ibid.

^[5] Ibid.

^[6] Ibid.

^[7] Lamprecht, Stephan: „Unternehmenserfolg 2.0“, FinanzBuch Verlag GmbH, München, 2008, pp. 9-10

^[8] Lamprecht, Stephan: „Unternehmenserfolg 2.0“, FinanzBuch Verlag GmbH, München, 2008, pp. 11-12

^[9] Eckardt, Gordon H.; Hardiman, Marco: „Marketing – Grundlagen und Praxis“, Göttinger Handelswissenschaftliche Schriften e.V., Göttingen, 2010, p. 323

^[10] Eckardt, Gordon H.; Hardiman, Marco: „Marketing – Grundlagen und Praxis“, Göttinger Handelswissenschaftliche Schriften e.V., Göttingen, 2010, p. 324

^[11] Eckardt, Gordon H.; Hardiman, Marco: „Marketing – Grundlagen und Praxis“, Göttinger Handelswissenschaftliche Schriften e.V., Göttingen, 2010, p. 326

^[12] Eckardt, Gordon H.; Hardiman, Marco: „Marketing – Grundlagen und Praxis“, Göttinger Handelswissenschaftliche Schriften e.V., Göttingen, 2010, p. 327

^[13] Ibid.

^[14] Ibid.

^[15] Ibid.

^[16] Ibid.

^[17] Ibid.

^[18] Eckardt, Gordon H.; Hardiman, Marco: „Marketing – Grundlagen und Praxis“, Göttinger Handelswissenschaftliche Schriften e.V., Göttingen, 2010, p. 332

^[19] Eckardt, Gordon H.; Hardiman, Marco: „Marketing – Grundlagen und Praxis“, Göttinger Handelswissenschaftliche Schriften e.V., Göttingen, 2010, p. 333