ImaginativePRO Blog

A MANIFESTO ON NEUROMARKETING, OR HOW TO GET INSIDE THE MIND OF TODAY'S CONSUMERS AND WIN THEM OVER

 

It takes more than a fancy logo, fancy catch phrase or brand character to connect with today's consumers.  Today, what counts far more than a puma, a monkey, or a snarling aardvark is the cross-sensory experience your brand offers.  It's not just the emotion, beliefs, personality and desires your brand evokes, but its feeling, touch, view, sound and smell, of which the logo is just one small part. 

When marketing to today's Generation Y (a.k.a. Millennials) and Generation X consumers it's very important for marketer's to use a sensory marketing approach that appeals to the five senses:  sense: hearing, sight, touch, smell, and taste and fulfills their social needs or values.

The sensory marketing approach has given rise to the science of neuromarketing, a new field of marketing that studies consumers' sensorimotor, cognitive, and affective response to marketing stimuli.  In effect, getting inside the head of the consumer.  Neuromarketing has often been equated with brainwashing, an evil concept if there ever was one, which results in the forced modification of human behavior by repeatedly exposing individuals to the same stimuli over-and-over again.  

Neuromarketing has been used very successfuly in the political arena, where candidates for public office use "negative" advertisements that paint their opponent as "soft" on a popular political issue (e.g. national defense, crime enforcement, etal) or "for" an unpopular political issue (e.g. abortion, universal healthcare, etal).  If voter's are continually told that Barack Obama is not a legal American citizen or is a muslim, a lot of people will eventually believe that as true.  Both parties are guilty of using negative ads, but I won't get into political issues.

Without reallly realizing it, marketer's have been using neuromarketing for quite some time. When you come to think about it, a firm's brand equity, is really the sum of all the influences, both sensory, emotinal and social that consumer's connect with a brand.  No where is this more importan5t than when marketing to Generation X and Y.   This is based on my observance of human behaviors especially among Millennials and Gen-X because they are both sensory and social animals.  They are very susceptible to sensory stimulation and place very high value on social interaction and relationships.    In fact, I have developed a manifesto or marketing strategy built on two pillars:  

• Sensory Approach - A marketing approach that involves the five senses: sight, hearing, smell, taste and touch. 
• Social Approach - A marketing approach that involves the social needs of the individual.

It has been my experience that employing only a sensory approach will not prove as successful, and that marketer's must integrate a social approach into the equation.  Trust me, you do not want to get this part wrong.  

In developing my manifesto, I discuss the general marketing principle's I have employed in marketing to Gen-Y and Gen-X,  and the best and least successful advertising and promotions strategy's that should be used for both demographics.         

Marketing To Gen-Y and Gen-X 

GENERATION-Y MARKETING APPROACH
Gen-Y consumers are the most ethnically diverse of all demographics.  Gen-Y’s are interested in pop culture, being part of the latest fad, things or activities that are trendy, hip and cool, experiencing new tastes, listening to the latest music, wearing the trendiest clothes, playing the latest online games, interacting and communicating with their friends, expressing their opinions and showing off.  Their friends are very important and part of their social DNA.  They ignore traditional advertising and rely more on word-of-mouth.  Gen-Y’s are the “we want it now” generation and interested in immediate gratification.  Gen-Y’s work hard until they get bored.  Gen-Y’s are less brand loyal and always looking for a good value.  These qualities require a marketing approach that is both sensory and social.
The Sensory Approach	The Social Approach
The sensory  marketing approach involves the five senses: sight, hearing, smell, taste and touch.	The social  marketing approach involves satisfying a Gen-Y’s need for social interaction and being part of social groups or communities.
Marketers must be aware of the importance of the five senses in reaching Gen-Y’s.  Gen-Y’s must be sold on the great taste, texture, aroma, look and quality of a food product (taste, smell, sight and touch).  By the same token, Gen-Y’s would be attracted to a new electronic music gadget by its overall design, sound quality and features (sight, touch and hearing).  The Internet with its compelling digital imagery, video and sound is a natural media channel for Gen-Y’s as it offers elements of all five senses.  Gen-Y’s are among the heaviest users of the Internet for news, information, entertainment and interacting with others.	Gen-Y’s are social animals so marketers must incorporate social elements into the design of a business whether it is a website, retail or eating establishment.  Businesses are no longer solely for shopping, eating or drinking, but places to meet friends, hangout, read a book, surf the Net, socialize and exchange gossip.  Facebook, MySpace and YouTube are excellent examples of social networking sites that appeal to a Gen-Y’s need to network and interact with others.  Starbucks, Abercrombie & Fitch, Borders, Steve Madden, American Eagle and Best Buy are excellent examples of retail establishments that incorporate social design elements like cool and trendy store interiors, the latest in fashion and electronic gadget’s, piped in music, visual displays, and in-store food and beverage facilities.
In the case of a business establishment, whether brick-and-mortar or digital, Gen-Y’s must be sold on the convenience, product selection, atmosphere and total experience that the business establishment offers (sight, hearing, smell and touch).  The success of eBay, Starbucks, Facebook, Myspace and Borders are excellent examples of brands that have capitalized on the importance of the five senses in developing successful products and services.	Gen-Y’s are notorious multi-taskers who communicate with their friends and relatives by telephone, text messaging, instant messaging (IM) and mobile devices like smartphones and iPhones. They interact by sharing video’s and music, rating products, services and business establishments and posting comments over the Blogosphere. Gen-Y’s have an insatiable desire to interact with others and are the driving force behind online social networks like YouTube, MySpace and Facebook and Starbucks.
GENERATION-X MARKETING APPROACH
Gen-X marketing requires elements of high perceived value, quality, purity, less hype, more facts and a marketing message that is honest and straightforward.  Gen-Xers are cynical about advertising.  Less likely to be taken in by fads or product hype, and more likely to say, “show me”.  Their tastes and preferences overlap with both Gen-Y’s and Boomers, making them an elusive target.  They are less brand loyal that boomers, and more likely to experiment with other brands, new drinks and foods.  Gen-Xers are very technologically savvy.  They tend to be first adopters of the latest electronic gadgets like iPods and iPhones.  Gen-Xers support social causes like the environment and world hunger.  They enjoy social events, leisure activities and get-togethers with family and friends.  They are known as the “family-first” generation because they value their family over their jobs.  Success with Gen-Xers requires a marketing approach with less hype, more facts and a social approach centered around quality of life, social causes and importance of friends and family.
Less Hype, More Facts Approach	The Social Approach
Gen-Xers are interested in less hype and more facts and figures.  They are interested in knowing the nutritional value of a food product: How many calories, how much fat, cholesterol and nutrients a product contains.  Gen-Xers look for products with high perceived value and quality like the fuel-efficiency of Japanese cars and durability of German-made automobiles. Gen-Xers take delight in experiencing new foods, beverages, films and products.  It is best to deal with Gen-Xers in an honest, respectful and straight forward manner.  Gen-Xers seek products and services that are relevant, solve a problem or fill a real need in the marketplace and offer a high value-added component: Superior quality, design, durability, features and convenience.	Gen-X have a social need that is grounded in placing a premium on quality of life, leisure activities, social causes, strong parental and family values and spending time with family and friends. They enjoy family get-togethers, activities and socializing with their friends.    Marketers must incorporate social elements whether they are an online, retail, eating or entertainment establishment.  Businesses that have succeeded in doing this include McDonald’s (children’s playgrounds), Las Vegas Hotels & Casino’s (electronic games, rides and attractions), Disneyland (family-oriented rides and attractions), Gymboree (early childhood development programs), Target (family-oriented merchandise and refreshments), DisneyOnlineForFamily.com (Disney entertainment for the entire family) and BabyCenter.com (Young mothers with infants),    Advertising that works with Gen-Xers include ads depicting the crash safety of Volvo cars and high performance of Michelin tires fit in perfectly with Gen-X’s strong parental values.

Advertising & Promotions Strategy

Although there is some overlap between Gen-X and Gen-Y, they differ in lifestyle and are difficult to reach through traditional media channels, requiring: 1) commercial messages and content that is relevant to their social and psychological needs, 2) selecting the appropriate media channel for each group and 3) carefully targeting our advertising and promotions to insure we reach them most cost-effectively.   

REACHING GENERATION-Y

MOST EFFECTIVE MARKETING CHANNELS
Internet Advertising - Gen-Y’s spend more time online than watching television, reading publications or newspapers.  62% of Gen-Y’s watch TV programs episodes online. Gen-Y rank the highest in joining social networking communities, viewing and uploading online videos, downloading music, playing online games sending instant and text messages and reading online blogs.  Popular Gen-Y sites include: Online Social Communities:  MySpace , Facebook and Bebo Video Sharing: YouTube, Veoh, Break, ManiaTV, Hulu  and MetaCafe. Online News and Information: Diggs, Technorati and StumbleUpon. And a large broad array of Blogs.  Marketers can achieve success reaching Gen-Y’s by targeting websites where they are likely to congregate and socialize.	Viral Marketing - Gen-Y’s go online and rely on word-of-mouth to obtain product and information, so it is vital that firms have a great website that is fully-optimized for search engines and listed in all the major search engines. Firms should have a promotional page on popular social networking sites like MySpace, Facebook and Twitter and video sharing sites like YouTube. Street Marketing – Gen-Xers enjoy new experiences and street marketing is a great way to create marketing buzz and reach them face-to-face. Street marketing include neighborhood promotional stunts, free product samplings, and rollouts in specific venues (street fairs, music festivals, concerts, college campuses, bars and clubs, etc).  This is also a great way to pass out flyers, free offers and discount coupons.
Contests and Sweepstakes – Gen-Y’s are wild about winning a contest or receiving a gift, especially something meaningful like an iPod, concert tickets, vacations, cell phones and FREE sample servings.  This is a great way to increase store traffic, create brand awareness and get them to try a product.    Flyers and Discount Coupons – These should be incorporated into a firm’s street marketing as a way to create excitement, interest and additional traffic. “ONE FREE PIZZA” and “BUY-ONE, GET ONE FREE” coupons work the best.
Paid Search – Nearly 90% of Gen-Y’s use online search engines like Google, Yahoo and MSN Live Search  to find online information, news and entertainment sites.  Radio Advertising – Radio ranks third for Gen-Y’s in hours per week behind the Internet and TV as their preferred media.  Marketers should incorporate targeted radio into its media mix picking stations with the largest reach and most effective CPM’s.
Mobile Advertising – Gen-Y’s are the biggest users of iPhones, Smartphones and portable multimedia devices like iPods. Gen-Y’s prefer text message over email and this is a great way to reach them through one of their most preferred methods of communication.
LEAST EFFECTIVE MARKETING CHANNELS
Television, Direct Mail, Publications and Newspapers – Gen-Y’s cannot be reached effectively through traditional marketing channels.  Direct mail, magazine ads, newspaper ads and television advertising does not work well with Gen-Y’s.  They do not respond to he marketing messages that appeals to their parents and grandparents.  A Gen-Y’s favorite TV programs  include sitcoms Friends and Seinfeld, reality TV shows Survivor and Project Runway, Animated TV shows The Simpsons, Music contest shows like American Idol, music video programs like MTV and TV comedy shows like The Daily Show With Stewart., just to name a few.

REACHING GENERATION-X

MOST EFFECTIVE MARKETING CHANNELS
Internet Advertising - Gen-Xers are No 2 behind Gen-Y’s in spending time online than watching television and reading publications or newspapers.  57% of Gen-Xers watch TV programs episodes online. Gen-Xers are just behind Gen-Y’s in joining social networking communities, viewing and uploading online videos, downloading music, playing online games sending instant and text messages and reading online blogs. Gen-Xers over forty represent the largest segment online gambling. Popular Gen-X sites include: Online Social Communities:  MySpace , Facebook, Twitter and Bebo Video Sharing: YouTube, Hulu, Veoh, Break, ManiaTV  and MetaCafe. Online News and Information: Diggs, Technorati and StumbleUpon. And a large broad array of Blogs. Viral Marketing - Gen-Xers trust themselves and the opinion of their friends and rely testimonials and word-of-mouth on product and services. It is important that firms have a great website that is fully-optimized and listed in all the major search engines. Firms should have a promotional page on popular social networking sites like MySpace, Facebook and Twitter, and run online ads on popular video sharing sites like YouTube and Hulu.	Street Marketing – Gen-Xers enjoy new experiences and street marketing is a great way to create marketing buzz and reach them face-to-face. Street marketing include neighborhood promotional stunts, free product samplings, and rollouts in specific venues (street fairs, music festivals, concerts, college campuses, etc).  This is also a great way to pass out flyers and discount coupons.
Contests and Sweepstakes – Gen-Xers enjoy winning a contest or receiving a gift, especially something meaningful like an iPod, iPhone, concert tickets and FREE sample servings.  This is a great way to increase store traffic, create brand awareness and get them to try a firm’s products.    Flyers and Discount Coupons – These should be incorporated into a store’s grand opening and street marketing as a way to create excitement, interest and additional store traffic.  Women with children, in particular, are attracted to discount coupons if there is high perceived value in the offer. Offers that work most often include “ONE FREE DESSERT”, “BUY-ONE, GET ONE FREE” and “BUY-ONE-ADULT serving and receive ONE-FREE child serving.
Direct Mail – Direct mail works best for older Gen-X (Over 35) men and women, especially with children.  The offer must be compelling, without a lot of hype, and sold on the basis of high perceived value or in support of a social cause.  Some offers that work best include “FREE AIR FARE” or “10% OF PROFITS GOES TO SAVE-THE-WHALES”.                            Paid Search – Nearly 90% of Gen-Xers use online search engines like Google, Yahoo and MSN Live Search to find information, news and entertainment sites.  Paid search is an effective way to reach Gen-Xers and drive traffic to a firm’s website.
Radio Advertising – Older Gen-Xers (Over 30) rank the highest in listening to the radio for music, news and information.  Marketers should incorporate targeted radio into its media mix, selecting stations with the largest reach and most effective CPM’s. Mobile Advertising – Young Gen-Xers (25-30), like their Gen-Y counterparts, are the biggest users of iPhones, smartphones and portable multimedia devices like iPods. Younger Gen-Xers prefer text message over email and this is a great way to reach them through one of their preferred methods of communication. Marketers should incorporate mobile advertising into its media mix.
LEAST EFFECTIVE MARKETING CHANNELS
Television, Radio, Direct Mail, Publications and Newspapers – Gen-Xers are stuck in the middle between Gen-Y’s and Boomers so there are some overlaps with both generations, making them an elusive target.  Younger Gen-Xers cannot be reached effectively using traditional marketing channels like direct mail, print ads, newspapers, radio and television advertising.  Older Gen-Xers (over 35) can be reached through direct mail, radio and television as their media tastes are similar to Boomers in many respects. Gen-Xers are impervious to the marketing messages that appeals to Boomers, who they treat with some resentment.  Favorite TV shows of Gen-Xers include prime-time shows like ER, CSI, Friends, reality TV shows like Survivor and The Apprentice, animated shows likeThe Simpsons, music video shows like MTV  and TV comedy shows like The Daily Show. With Stewart., and late night talk shows like David Letterman and Conan O’brien just to name a few.

I first developed my manifesto for marketing to Gen-X and Gen-Y in 2006/2007, at about the time that social networking really began to take hold, and I realized then that in order to successfully market to these two generatioins, a social approach was also needed.   So far those observations have proven to be correct.   Although my manifesto is albeit a bit dated, the basic concepts of neuromarketing work for all demographics.     

If you are marketing to Millennials or Gen-Xers you might be interested in reading some of the following blog articles:

• 9/24/10 - "IN ORDER TO ENGAGE WITH TODAY'S GENERATION Y YOU MUST MAKE IT AN EVENT"
• 10/1/10 - "GENERATION-Y IS QUITE LITERALLY A "WIRED" GENERATION OF TECH SAVVY AND SOCIAL NERDS"
• 12/18/10 - "MARKETER'S NEED TO CUT THE CLUTTER TO ACHIEVE SUCCESS WITH TODAY'S COLLEGE STUDENTS"

Courtesy of Tommy Toy, PBT Consulting

HOW TO BUILD A CROWDFUNDING COMMUNITY TO SUCCESSFULLY FUND YOUR CROWDFUND CAMPAIGN AND SERVE AS BRAND ADVOCATES

In today’s economy, many people are launching new businesses, services and products with the help of crowdfunding platforms like Kickstarter, Indiegogo and even Patron. When using these platforms, community building for crowdfunding is essential; obviously, a big userbase means more funding and a higher chance of success.

But crowdfunding community other benefits, too. Your community can:

• Advocate your brand, business and products to their networks
• Provide a base for future marketing
• Provide a base for future crowdfunding

With so many benefits to cultivating a crowdfunding community, you’ll want to be prepared before launching a campaign.

PREPARING THE FOUNDATION OF CROWDFUNDING COMMUNITIES

Keep Focus on the Community

Your pitch shouldn’t just “sell” your brand, product or service to prospective investors and customers. It should do that while focusing on user benefit. You want to create a community to fund your venture, so deliver a bold vision of what the world could be—and how your community will play a role in bringing it about.

Basically, you don’t want to just focus on self-promotion. What’s in it for the user? Once you’ve established a vision, you can target like-minded users in your community building for crowdfunding efforts. Your pitch might also include suggested tweets, memes and content that funders can share to their own networks to further spread the message.

Identify Key Community Members when Building Your Online Community

Before you launch your campaign, you must lay the foundation for your community by identifying key community members. These individuals will support and boost your campaign from day one, ensuring it gets off to a healthy start. As far as community-building goes, they will be the first advocates to invite others in. Your friends, family and colleagues are good starting points. Consider giving them a list of goals and actions so they know how and where to support. These might be:

• A quota on users to engage per day, online or off
• On-brand community hashtags to use
• A quote on posts per social network promoting the campaign
• A list of key dates with their amount goals

In addition to this first-level network, you’ll want to seek out key stakeholders, notable investors and community leaders. Essentially, these are influencers you’ll want to enlist who can support your campaign and share it with their communities. You’ll want a small handful of these—about two to four—and they should also be on-board before your campaign launch.

By assembling this initial community, your campaign can start off with a bang. Having a substantial amount of money pledged from the beginning increases your optics; you’ll also have a dedicated team that will help community building for crowdfunding as they spread the word.

If your business has an established community already, you might lead up to the campaign with teases of exciting news. This builds enthusiasm so you can leverage the community for funding.

Online Communities for Crowdfunding Should Strike a Real Connection

Building crowdfunding communities is about forming relationships. Therefore, your campaign rewards should give supporters a tangible sense of playing a role in the brand or community. Media companies, for example, often offer producer credits to their supporters.

You might even allow backers to become a part of the production’s process. For example, a game company might offer a reward in which a supporter can design a character. A business might arrange for a supporter tier to meet the team or tour the company. Think of how you can truly involve your community—don’t just offer cool gifts, products or tokens of appreciation.

Using Social Media for Building Your Online Community

Choose a handful of social networks you’ll spread your campaign and message on. Once you’ve done this, tailor your message to those networks. For example, LinkedIn skews more professional within certain industries; Twitter, meanwhile, favors brevity and big thinking.

CROWDFUNDING COMMUNITIES DURING AND AFTER THE CAMPAIGN

Host an Event to Launch Communities for Crowdfunding

Events are a great way to build enthusiasm, expand your reach and grow your community. At your campaign’s launch, or throughout the campaign, host an event online or at a venue to attract attention. These events are celebratory and make your campaign more memorable. Seeing others in-person can encourage your supporters to put their money where their mouth is—and give your campaign public validation.

Push news of events and invites to your social channels and existing online communities. You might also consider a calendar of events and content which you can post. For example, try an “ask me anything” on Reddit half-way through the campaign to drive community engagement and address prospective backers’ concerns.

Stretch goals also provide an opportunity to engage your community. Tap into the userbase to ask for ideas they’d like as stretch goals. Provide incentives for backers to share the campaign with their friends to further keep them invested and expand your reach.

Stay Communicative & Show Appreciation for Your Crowdfunding Communities

Always be communicative! Don’t leave your community in the dark; keep them in-the-know every step through the process. Otherwise, you risk betraying their trust. Crowdfunding platforms commonly offer a blog where you can make announcements and show progress, but you should do this on social media and your website as well.

Finally, show appreciation for your online communities. This humanizes your brand with the community, but also provides an opportunity to strengthen your message. Highlight messages from community members, write about who inspires you or your idea, or share a heartfelt story about who helped you get where you are today. Whatever you do, bring it back to your campaign’s original vision and community’s shared values.

Keep Your Community Inviting

Finally, don’t forget to use comment moderation to make your community as inviting as possible. With a tool like Smart Moderation, you can unify comments across all your social platforms. You can also automatically moderate comments in accordance to your brand’s moderation approach.

With automated moderation, you can keep your community free from trolls, spam and abuse around the clock. Having such a system in place lets you respond more quickly to engagement. Because it’s important that you answer essential questions and respond to criticisms to gain support, you’ll need comment moderation to increase your focus on converting users.

COMMENTARY:   I have stated in previous posts about crowdfunding that one of the most important steps required for a successful crowdfunding campaign is developing a crowdfunding community or crowd.  Your crowd should consist of loyal supporters who have bought into your crowdfunding offering and are likely to serve as brand advocates who will spread the word concerning your crowdfunding campaign. 

It is vitally important that you develop a network of loyal supporters who love your product or invention and believe in your vision of the future.  This must be done early (four-to-six months) before you launch your crowdfunding campaign.  Remember, you may have a great product or invention, but without a crowd you are setting yourself up for failure.  I created a self-running slideshow about reward-based crowdfunding listed below.  You may enlarge or stop the slideshow at any time by clicking the screen.

Courtesy of an article dated January 30, 2018 appearing in Smart Moderation

HOW SOCIAL MEDIA HAS CHANGED THE AD GAME [INFOGRAPHIC]

Where consumers go, advertisers will soon follow, and the world of social media is no different. Nearly every area of business has been disrupted by social media’s rise, but perhaps none has been impacted more than the advertising industry. Over the past several years, what began as a space for people to gather and connect has become an ideal landscape for advertisers. With social media, advertisers can reach a bigger audience than ever before.

When social media advertising first arrived on the scene, marketers used it to simply connect with their audiences. However, today’s marketers have had to change many traditional ad approaches to keep up with consumer behavior and technological trends. Social media is here to stay, and advertisers must adapt in order to engage customers.

So, what are the key factors influencing the shift toward social media advertising? MDG Advertising’s newly updated infographic, How Social Media Has Changed the Ad Game, will help you answer that question. We’ve refreshed the stats and approaches to include those that truly matter in 2018. Here’s what we discovered:

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How Consumers Spend Their Time Online

Currently, Americans spend an average of 23.6 hours online every week, and most of that time is spent on social media accounts. The reality today is that social media is dominated by consumers. Brands and marketers are welcome in this space, but only if they can remove the hard sales pitch. A friendly, conversational brand voice tends to resonate with social media users. And most consumers want brands to be accessible—especially when they have a customer service problem.

The growing popularity of social platforms is why most brands are increasing ad spend toward social. Just over one-third of consumers spend their online time using social media sites. However, other platforms still see a steady flow of visitors, including music and video streaming sites and online news outlets.

What Social Platforms Do Consumers Use?

When it comes to the social platforms consumers use, YouTube is tops: 73 percent of adults spend their screen time on the video-sharing site. Social networking giant Facebook ranks second, with 68 percent of consumers spending time on the platform. Other sites included in survey data include Instagram (35 percent), Pinterest (29 percent), Snapchat (27 percent), and LinkedIn (25 percent). Last place belongs to Twitter, with 24 percent of consumers spending time on the site.

Changing Ad Spend Priorities

The impact of social media on advertising is part of a larger shift: consumers are moving away from traditional channels and toward digital channels. When you compare the total U.S. ad spend in 2014 to 2018, the shift is clear. This year, brands are devoting 33 percent of ad spend to digital platforms—up from 25 percent in 2014. However, television’s ad spend is decreasing slightly this year.

Advertisers are also decreasing ad spend when it comes to print media. Ad spending for magazines is down to 11 percent, and only 6 percent of spend is being allocated to newspapers. Radio and out-of-home spending, however, remain steady at 4 percent and 2 percent, respectively.

Increasing Social Spend

With marketing dollars being shifted toward digital, and social media becoming ubiquitous, advertisers are increasingly moving spend to social platforms. Over the next five years, CMOs expect to raise their social media spend by a significant 71 percent.

These changes are already taking place as marketers make adjustments to their budgets. Currently, social media spend accounts for 12 percent of marketing budgets, on average. Over the next five years, CMOs expect social to account for nearly a quarter of marketing budgets.

Brands of all types are expected to increase social spend over the next five years. Brands marketing B2C products are expected to boost spending by 61 percent, while those promoting B2C services are projected to increase spending by 82 percent. B2B brands also will see significant increases in social spend—89 percent for products, and 58 percent for services.

Evolving Goals

Marketers first used social media to connect with audiences, building relationships by interacting with customers. However, today’s social media channels serve multiple purposes. Brands now look to social media to fulfill a variety of objectives, including:

• Brand building and awareness: One of the most effective ways to use social media is to boost brand awareness. Plus, social media gives marketers the opportunity to target certain demographics and niche markets.
• Engaging new customers: Brands often look to social media when reaching out to new customers, whether it’s through sharing popular hashtags or implementing targeted ads.
• Introducing audiences to new products and services: Social media is an excellent tool for spreading the word about a new product or service.
• Maintaining interest among current customers: Well-crafted social media content allows you to keep your audience interested while potentially creating brand ambassadors.
• Sharing brand promotions and coupons: Social media provides brands with a cost-effective, simple way to share information about upcoming deals and specials.

Evolving Challenges

While social media provides many benefits, it also presents new challenges for marketers. Some of the obstacles social media marketers face include:

• Measuring ROI: Quantifying the success of social media initiatives remains a struggle for many marketers. While social shares and impressions can mean success, it’s hard to tell how they influence revenue.
• Developing content, ads, and a comprehensive strategy: Consistently creating relevant content can be difficult for marketing teams, who often face limited resources and time.
• Tying social to business goals: Many brands are unable to develop a clear picture of how social media impacts business objectives.
• Tracking results easily: While there are many social media tracking tools available, not all of them produce reliable results. Plus, many teams lack the expertise needed to make sense of the data.
• Understanding performance across social media channels: How does each channel contribute to an overall promotional strategy? This question remains unanswered for many brands.

As social media continues to evolve, successful brands will adapt their strategies to accommodate an ever-changing audience. Keeping track of the latest technological and consumer trends will ensure that your brand maintains awareness and improves ROI in 2018 and beyond.

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Courtesy of an article titled "How Social Media Has Changed The Ad Game" by MDG dated July 12, 2018

MARKETING TO MILLENIALS: SUCCESSFUL STRATEGIES AND TACTICS

Why should you market to Millennials?

If you are asking yoursef why should I care about the Millennial generation and why should I consider spending my marketing dollars, time and effort targeting Millennials.

I have the answers for you….

The millennial generation represents the largest generation consisting of approximately 80 million people with over $170 billion in purchasing power.

The millennial generation with its large influence is shaping the way that brands send messages, forcing businesses to change or suffer the consequences.

Millennials marketing and an understanding of how to reach the millennial generation is critical and will enhance your organization’s brand and integrated marketing communications strategies. Implementing these millennial elements will help your organization reach its business and marketing objectives.

Millennial Characteristics

Let’s start out by giving the definition. The Millennial Generation is typically defined as individuals born between 1980 and 2000.  According to the U.S. Censur Burean, as of April 2015, Millennials now number 92 million or 20% of the total U.S. population, and are now the largest generation, even bigger than Baby Boomers. 

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A comprehensive understanding of millennial characteristics is critical in creating an integrated marketing communications (IMC) plan.

There are concepts, values, and characteristics unique to all millennials that include:

Concepts

• The use of a variety of media
• They view brands as a partnership and form of self-expression

Values

• Honesty
• Authenticity
• Value

Characteristics

• More technologically advanced than previous generations
• More educated than previous generations
• The most racially and ethnically diverse
• Encumbered with student loan debt, which continues to grow each year
• Have different priorities like putting off marriage, buying a house or automobile

Millennials also take action on behalf of brands based on loyalty and give significant brand loyalty to brands and products of preference. In addition, the millennial generation likes music and events and requires authenticity, two-way communication, social responsibility, and connection with a personal touch.

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Other important concepts of millennials marketing involve the millennial generation’s value systems that include altruism and a predisposition to support social and environmental causes they care about. As a result, millennials purchase and support companies with environmentally and socially responsible products (brands).

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Millennials Marketing Strategy and Tactics

A two-pronged generic millennial strategy and a subculture marketing strategy are critical to an organization seeking to achieve its objectives. Using a homogeneous millennial culture and subculture marketing strategy based on addressing the different ethnic subcultures provide a method to reach the target audience effectively.

The combination of the two marketing strategies will be used in the areas including logo design usage (affect), events, social and digital media, television, radio, and sponsorship (cognition).

The other elements included in marketing to millennials should also consider product or service content options and pricing (environment).

A combination of promotional strategies is required when marketing to millennials. Think in terms of the sum of the parts when influencing the millennial.

The marketing mix (product, place, promotion, and price) also heavily influences the millennial consumer stimulating trial and creating brand loyalty based on leveraging the brand assets.

Marketers are challenged with addressing two diametrically opposite considerations to reach millennials effectively. On one hand, millennials communicate asynchronously (i.e., via text). Conversely, the millennial market segment wants face-to-face interactions and a personal touch.

The key takeaway is for marketers to address the millennial generation using an IMC approach.

Market Research Drives Strategy and Tactics

Market research was the most important step in the approach used by Mercedes-Benz and Amazon. The essential driving force behind the development and launch of the CLA from Mercedes-Benz and the Fire TV from Amazon is market research.

Market research was the basis that determined product development and the corresponding marketing strategy and tactics resulting in both organizations reaching and exceeding organizational objectives.

The list included is not an exhaustive list of marketing elements used in strategy and tactical development, but a representation of the most important and how they fit together to address a diverse generation. The elements listed provide an organization with a framework from an IMC perspective to take into consideration when forming strategies and tactics to reach the millennial consumer.

Event Marketing

IMC messaging strategies with a millennial target audience must use a dual approach. The IMC strategy must incorporate event or experiential marketing offering a personal one-to-one relationship required by the millennial generation based on the statistic that 78% of millennials prefer a brand experience that is relevant and gives them information.

An example of a relevant and simple marketing tactic to reach this audience is Federal Express providing South by Southwest festival attendees charging stations to charge mobile devices. The charging station example demonstrates a marketing tactic that builds an emotional connection with a brand, especially with the millennial generation that does not like to be without the use of its mobile devices.

Digital and Social Media 

Another critical element in an IMC strategy focused on millennials requires a company to use Internet marketing and social media which is in stark contrast to the face-to-face interaction desired by this generation. Event marketing provides the ability to begin a conversation with the millennial consumer supported by the internet and social media.

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The internet and social media allow a company to continue to engage this generation to gain brand awareness, stimulate trial usage, repeat usage, and ultimately  loyalty. The social media channel must consider the product or service offered by the company and target where this generation spends most of its social media time (Facebook, Twitter, YouTube, Pinterest, Instagram, Snapchat).

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For example, using Facebook and Twitter to engage craft beer consumers would be a good social media choice and LinkedIn would be a poor media choice. Training consulting services or customer relationship software provides examples of a product and service that offer a better fit with LinkedIn’s target audience and purpose.

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Millennials are early adopters of different social media channels, and marketers must keep track of the social media consumption patterns and trends adapting marketing tactics to reach this generation.

Millennials Seek Lower Prices, Loyalty and Reward Programs and Discounting and less on product quality

Millennials are forcing brands to become more participative by subtly engaging by offering discounted prices and loyalty and reward programs while relying less on product quality.  77% of the millennial generation reported participating in loyalty and reward Programs

Millennials thrive online, researching product choices online, then placing orders online.

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In addition, 78% of millennials reported to being more likely to buy from a brand with a rewards program than one without.

Millennials have the highest percentage of word-of-mouth marketing, electing to share feedback about a product or service both on-line and off-line.  The implications of these millennial statistics support the social media tactic of engaging using online channels to support the event marketing high-touch required by this generation.

Corporate Social Responsibility (CSR)

A critical statistic for marketers is the fact 75% of millennials donate to charity and 60% volunteer for a worthy cause.

The millennial generation coming of age is one of the most important components influencing marketing and the messages brands send. The millennial generation with its demonstration of purchasing power and brand support for companies that are environmentally conscious has caused a seismic shift in business.

Here is a quote from Simon Sinek that provides a paradigm shift for marketers and how they communicate:

“PEOPLE DON’T BUY WHAT YOU DO, THEY BUY WHY YOU DO IT.”  – SIMON SINEK

Companies must infuse environmentally responsible practices into the core of their business strategy using an IMC approach. As a result, marketing strategy provides a core element in business strategy to promote a company as an ethical entity with genuine concern for social issues and the environment. Marketers must create authentic messages that can be supported with actions regarding the environment and social issues or risk suffering the consequences of the millennial consumer.

CSR Examples from the Automotive Industry

Companies such as General Motors and Ford have had to change significantly over the last six years. It is not enough to provide vehicles that are environmentally conscious, but the millennial generation demands a more significant effort from a brand. GM and Ford have implemented programs across their entire supply chain supporting environmental and social initiatives. GM and Ford now use a sustainability report a common marketing tool in business to provide information regarding the environmental and social practices of the company.

The sustainability report used by many companies across all industries provides evidence of the changing nature of business and marketing influenced by the millennial generation. However, if companies do not provide the millennial generation with authentic evidence of support for the environment, they could face significant brand and company damage.

The key takeaway is to include corporate social responsibility into your business and marketing strategy in an authentic manner.

Benchmarks for Millennial Marketing

There are a few companies out there that I think are really getting it right and setting the bar for marketing. The companies that are in the best position to take advantage of the largest generation include:

• TOMS donate a pair of shoes to someone for every pair of shoes sold. Giving and aligning the millennial generation with a cause allowing them to participate in the story. Blake Mycoskie, the founder, has found a way for philanthropy and profit to coexist in perfect harmony.
• Netflix continuously keeps pulse with the millennial generation exceptionally well and uses social media with shareable content to attract and engage.
• Uber with its unique app focused on convenience and the needs and wants of the millennial generation. Uber provided a disruptive business model that simply works with marketing campaigns focused on the millennials and shareable social media content.
• Dollar Shave Club has disrupted the personal grooming market with a business model that is uniquely suited to millennials. The two critical things marketers can takeaway from Dollar Shave Club is their unique, disruptive pricing model and creative marketing. Dollar Shave uses multiple media specifically targeting millennials with relevant, shareable, and entertaining content.

COMMENTARY:

The focus of this post is dedicated to targeting millennials using an integrated marketing communications (IMC) framework. In other posts, I discuss brand building that must take place before developing the IMC plan.

The millennial generation is an important generation for marketers to target for almost every industry. Forming strategies and tactics to reach the millennial consumer based on solid market research provides the best opportunity to target them effectively and achieve success.

Omnichannel Experiences: Creating Online And In-Store Moments That Matter To Millennials

Mobile marketers, take note: Millennials already live in an omnichannel shopping mindset. In fact, they were living in this mindset years before most businesses realized they needed to adjust operating models accordingly. These young shoppers carry with them the central expectation that a spectrum of seamless and consistent online and offline engagements will be the norm across their shopping journey. 

The goal of omnichannel marketing is not to create multiple experiences across multiple channels — that’s multichannel marketing — it is to build a unified brand-to-consumer interaction across all channels. Omnichannel experiences are not simply coordinated, and not simply integrated, they become continuous. A consumer can begin an experience in one channel and complete that interaction somewhere else. And, with the Millennial demographic set to spend some $200 billion in coming years, theimperative for brick-and-mortar to focus on omnichannel to reach them is more critical than ever. 

Success begins — and begins only, as there are many ways to inspire Millennials in the omnichannel space — with close attention to social-media interactions, live support, and real-time surprise and delight.

• The Social Experience: Based on our recent research, more than 1 in 4 young consumers, aged 14 - 29 (including both Millennials and Gen Z), said they use a mobile phone while browsing in a physical store, seeking guidance, input, and validation from friends and family on their screens. Engaging organically with Millennials as they share these experiences requires nuance and a sense for strategic delicacy, adapting to the distinctive “dialect” of each platform in positive and relevant ways. Taco Bell has earned notice by using Snapchat, for example, challenging young consumers to “Doodle Wars” that can be shared and saved for later, piping more attention to the brand-related drawings via Twitter, and all the while steering diners toward fresh brand-focused engagements. 

• Mobile-to-Live Support: Some 60% of Millennials recently told Radial that they want online chat and communications as part of their in-store shopping segment. A key opportunity for brick-and-mortar, then, is to seamlessly match a conversation that starts on mobile to a moment when an expert in-store representative can pick it up, further prompting the anticipatory inspiration that Millennials say they crave. The hospitality industry has become a superb example of this kind of handoff, with staff having all the immediately preceding information available on desktop and/or mobile device at the moment of the switch.

• In-the-Moment Inspiration: Brands that commit to omnichannel experiences can plug into Millennials’ openness to new ideas in the moment — specifically the kind that arise during otherwise-occupied segments of their shopping journey. Advertisers can prompt or seal the deal around restaurant visits, for example, giving users a chance to skip a seating line by donating to a social cause on their smartphone. This aligns with Millennials’ affinity for purchases that leverage philanthropic outcomes — 70% of them will spend more on brands supporting what they perceive to be worthy causes. It’s an omnichannel solution with in-the-moment meaning, driving sales and loyalty.

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In an omnichannel world, opportunities are free to emerge in seamless and consistent ways at any time, in any space … if these moments match the expectations and values of the Millennial consumer. Each of the above approaches fosters increasingly meaningful moments and, when it comes to Millennials, each instance represents a prime way to tap into the generation’s spending power as it reaches its peak.

Courtesy of an article dated December 3, 2014 appearing in Stephen Zoeller blog, a blog post by Goldman Sachs, and an article dated May 9, 2017 appearing in MediaPost Engage:Millennials

 

SNAP'S Q1 2017 EARNINGS UNDERWHELM INVESTORS, REVS $150 MIL, BELOW WALL ST EST, USER GROWTH SLOWS, STOCK TANKS

 

Snap reported quarterly financial results for its first time as a public company on Wednesday, posting revenue that missed estimates and slower-than-expected user growth.

Shares plummeted more than 20 percent on Thursday. The company spent $2 billion on stock-based compensation expenses after its initial public offering, widening net losses for the quarter to $2.2 billion.

CEO Evan Spiegel got a $750 million bonus for taking Snap public. He told analysts on a conference call that the company was focused on improving quality for users during the first quarter, especially for those with Android mobile phones.

Despite the steep loss during the quarter, Snap is "still in investment mode," the company's chief financial officer, Drew Vollero, said on a conference call with analysts.

The Numbers

• Revenue: $150 million reported vs. $158 million expected by a Thomson Reuters consensus estimate.
• Global DAUs: 166 million reported vs. 167.3 million expected by StreetAccount.
• ARPU: 90 cents reported vs. 90 cents per share expected by StreetAccount.
• Loss of $2.31 a share including compensation expenses.
• Analysts at Thomson Reuters estimate an adjusted loss of 20 cents per share, wider than the 19 cents expected.

That's compared with revenue of $38.8 million in the year-ago period.

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Amid trouble at Facebook and Google, unprofitable underdog Snapchat aims for engagement

As the company behind the viral ephemeral messaging app and Spectacles glasses, Snap's IPO was the biggest technology offering since Alibaba.

And it's growing at an extraordinary rate: Revenue rose 286 percent year over year in the first quarter. Daily active users rose 36 percent from the year-ago period, and average revenue per user grew 181 percent.

More than 3 billion Snaps were made daily in the first quarter, the company said, up from 2.5 billion in the third quarter of 2016. Users spent an average of 30 minutes a day on Snapchat, the company's chief strategist, Imran Khan, said on the conference call, and cited Nielsen data showing that many Snap users could not be reached by traditional TV channels.

Khan told CNBC.  

"We made good progress this quarter improving the performance and quality of our Snapchat application, especially on Android, which has helped result in increased net user adds and engagement.  We still have a lot of work to do, and are excited about the potential from continued performance improvements."

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But since its IPO in early March, Snap has faced an uphill battle to convince Wall Street it can make money with advertising, even with Facebook and Google dominating the market.

Spiegel said that automation will help the company make more money for advertisers.

Khan said.  

"People are going to copy your product if you build great stuff.  Just because Yahoo has a search box doesn't make it Google."

Facebook, in particular, has pushed aggressively into Snap's turf. Boss Mark Zuckerberg told analysts that Instagram Stories has 200 million daily active users, and WhatsApp Status has more than 175 million daily active users.

As a whole, Facebook has 1.28 billion daily active users, nearly eight times as many as Snapchat.

Other revenue sources, like Spectacles, have hardly made a dent in the company's business. Analysts surveyed by Thomson Reuters expect Snap to post a per-share loss through the end of 2018.

Snap has not made great gains in the markets, trading mostly below the high of $29.44 in its first week of trading. Indeed, the stock fell as low as $17.07 after hours, just 7 cents above its IPO price, as shares changed hands in heavy volume.

When Facebook, Yelp, Twitter and LinkedIn reported their first quarterly results as public companies, the stocks fell by an average 14.1 percent the next day, according to Jim Strugger, derivatives strategist at MKM Partners.

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Snap should have set its expectations lower, Art Hogan, chief market strategist at Wunderlich Securities, told CNBC's "Closing Bell" on Wednesday. He explained that a company's first earnings report as a public company is "really dependent" on executives giving realistic guidance. But that's just part of the growing pains of becoming a public company, Hogan said.

COMMENTARY:   I won't lie to you,  I am not a fan of startups with unproven or unsustainable business models and no evidence of profitability.  In my opinion, Snap Inc has many similarities to Twitter:  1) user growth slowing down at time of IPO filing, 2) lack of profitability and 3) small market focus (primarily Millennials).  Snaps has positioned itself as a "camera app" that allows Millennials, its core user demographics, to share photos that automatically disappear.  

In a blog post dated October 10, 2016, I commented on Snap Inc's proposed $25 billion IPO.  Like Twitter before it, I had a lot of reservations about the Snap IPO, because there were already strong signs that user growth was slowing down, and many analysts like myself, felt that Snap's business model, which depended almost entirely on advertising, was unsustainable. Furthermore, Snap derived the majority of its ad revenue from the U.S., so in order to sustain growth, this required expanding its user base internationally.   

Snap is very slow in providing advertisers with the tools they need to target potential customers, and this is the same thing that plagued Twitter's ad revenue growth.  On May 4, 2017, Snap announced a suite of tools to help advertisers market to its users more effectively.  If you ask me, they should've done this much sooner.

For those of you who like reading the minutes of Snap Inc's Q1 2017 earnings conference call with investors, you will find it all below:

Snap Q1 2017 Earnings Conference Call Notes from Tommy Toy

Snapchat is opening itself up to advertisers of all sizes with new buying tools

According to an announcement on May 4, 2017, starting this June, Snap is going a step further by flinging wide its gates to advertisers of all sizes and budgets with a new suite of self-service tools. The move could help considerably grow Snap's fledgling ad business, which is expected to reach $1 billion in revenue this year.

Releasing a self-service ads manager is intended to erase any friction that may be keeping advertisers off Snapchat, a company spokesperson told Business Insider. Snap expects larger buyers to still go through one of its auction partners, which offer more custom targeting like timing ads to run alongside TV campaigns or during specific weather conditions.

Snapchat's new ads manager will let any advertiser buy, manage, and view reporting for their campaigns. All ad formats, including app install ads, sponsored geofilters, and fullscreen video, are available alongside existing targeting capabilities like goal-based bidding. The manager is free to use and requires no minimum ad spend.

A new mobile dashboard will also allow marketers to see their ads like a normal user, view analytics, and get notification updates about their campaigns directly from the Snapchat app. Over 20 brands are testing these new tools now as part of a private beta, and Snap plans to make them available to everyone in June.

Below is the Snap Inc Q1 2017 Earnings Report Press Release: 

Snap Q1 2017 earnings report from Tommy Toy

Courtesy of an article dated March 13, 2017 appearing in MedaPost MoBlog, an article dated May 10, 2017 appearing in MediaPost Social Media & Marketing Daily, an article dated May 11, 2017 appearing in CNBC and an article dated May 4, 2017 appearing in Business Insider

FACEBOOK REPORTS Q1 2017 EARNINGS, REPORTS REVENUES OF $8.03B, AND 1.94 BIL MONTHLY ACTIVE USERS

Facebook had another strong quarter, beating estimates to start 2017. It scored $8.03 billion in revenue and $1.04 GAAP actual EPS in Q1 compared to $0.87 EPS estimate. It earned that from 1.94 billion users, up from 1.86 billion last quarter, growing at a faster 4.3 percent compared to 3.91 perecent last quarter.

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Steady Growth, Strong Profits

At this rate Facebook should hit 2 billion total users in Q2. Daily active users reached 1.28 billion, up from 1.23 billion last quarter. While fake news, video violence, and copying Snapchat have all been fixtures of the Facebook news cycle, its user growth actually grew during the time period. Facebook added 3 million monthly users in the lucrative but saturated US & Canada market, though the Asia-Pacific region was the big driver, where Facebook added 43 million users.

The company told investors that “Facebook is no longer reporting non-GAAP expenses, income, tax rate, and earnings per share (EPS).” That means it will be more prominently disclosing stock-based compensation in its expenses, which is important since tech companies like Facebook pay employees lots of stock that vests over time to keep them from leaving.

[Correction: TechCrunch and several other publications wrongly compared the new GAAP actual EPS with the non-GAAP analyst estimate, since Facebook no longer reports non-GAAP financials. Since Facebook’s GAAP actual EPS was $1.04 compared to the analyst estimate of $0.87, Facebook actually beat the street this quarter, rather than having mixed results as we originally reported.]

Facebook beat analyst estimates on revenue, which were $7.83 billion. Facebook had closed the market earlier today down 0.68 percent at $151.80. Shares dropped 2.37 percent in after-hours trading. Today’s report shows that running out of News Feed ad space hasn’t prevented Facebook from continuing to grow its revenue.

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Mobile now counts for 85 percent of Facebook’s ad revenue, compared to 84 percent last quarter, accounting for $6.7 billion in ad revenue. Facebook earned $3.06 billion in profit in Q1, up 76% year-over-year while revenue grew 49% year-over-year. Facebook managed to slow the decline of its games payments business, with it earning $175 million in Q1 compared to $180 million last quarter and $195 million in Q3. Facebook stopped reporting mobile-only users.

Headcount grew to 18,770 people, up 38 percent YOY. Facebook’s total costs were $4.7 billion, giving it a 41% operating margin, down from 52% margin last quarter.

Facebook’s focus on the developing world with apps like the 200 million-user Facebook Lite, recently rolled-out Messenger Lite, and new Instagram offline mode are paying off. Average revenue per user in the Rest Of World region hit $1.27, up 40% in a year.

Zuckerberg On Leapfrogging Snapchat

During the earnings call, Mark Zuckerberg gave an overview of Facebook’s work on its new mission to “build community” that the CEO described in his humanitarian manifesto in February. Progress includes getting people to join community groups, launching Community Help for organizing disaster and crisis relief, and launching Townhall to connect people to their elected representatives.

One important piece of news from the call was the first indication of the performance of WhatsApp Status, the Facebook-owned messaging app’s Snapchat Stories clone. Zuckerberg said WhatsApp Status now has 175 million daily users just 10 weeks after launch, making it larger than Snapchat as a whole.

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But Zuckerberg’s most electric comments came when he characterized Facebook’s progress in visual communication and augmented reality versus competitors. While he didn’t name Snapchat, the comparison was implied when he said (emphasis mine):

“I think we were a little bit late to the trend initially around making cameras the center of how sharing works. But I do think at this point we’re pretty much ahead in terms of the technology that we’re building, and making an open platform I think is a big step forward. A lot of people are using these products across our family of apps. And I would expect us to continue leading the way forward on this from this point on.”

The CEO seems bullish on outside developers helping Facebook to produce a wider ranger of AR content than Snap can itself. When asked about monetizing AR, Zuckerberg brought up how object recognition could enable floating Buy buttons on real world things.

Another significant point from the call was Facebook’s growing emphasis on long-form video and purposeful viewing, rather than the short-form video people spontaneously discover in the feed today. Efforts to thwart ad blockers have also succeeded, with CFO David Wehner saying Facebook served 32% more ad impressions in Q1 2017 versus Q1 2016.

Scandals Don't Slow Facebook

eMarketer estimates that Facebook will generate $36.29 billion in net digital ad revenue in 2017, up 35% from last year. That would give it the second largest share of the global online ad market with 16.2%, behind Google’s 33%.  45% of Facebook ad revenue is expected to come from the US.  While Facebook doesn’t break out Instagram financials, eMarketer expects it to earn $3.92 billion in global ad revenue, or 12.3% of Facebook’s ad revenue.

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eMarketer analyst Debra Aho Williamson is bullish about Facebook as an advertising platform but says.

“Advertisers continue to report positive results from their ads on Facebook, but they remain concerned about things like fake news and the measurement glitches that Facebook has revealed. How the company addresses these and other concerns will be a key factor that determines whether revenue growth continues as strongly in the next few quarters and years as it has in the recent past.”

Q1 saw Facebook spin up several new products that could turn into serious money-makers for the social network. Following the success of Instagram Stories, Facebook continued its efforts to clone Snapchat with the launch of Messenger Day, Facebook Stories, and WhatsApp Status. These clones could dampen growth for Snapchat while eventually sucking in marketing dollars from the ads it will likely insert between Stories as it does on Instagram.

Competing with LinkedIn, Facebook launched job opening posts that can be turned into ads. Facebook began testing ad breaks inside of recorded videos as well as Live broadcasts, and will keep 45% of the ad revenue while paying creators 55%.

But Facebook saw trouble with Oculus, paying $300 million (plus $200 million from Oculus founders) to Zenimax after losing a lawsuit about stolen intellectual property. Co-founder Palmer Luckey left the company, and Oculus reduced the price of its Rift headset amidst slow sales of tethered VR hardware across the industry.

The biggest story of the quarter was Facebook’s on-going struggles to fight fake news and offensive content. It’s begun working with outside fact checkers, hired a former New York Times product manager to run news product, made banned content reporting easier, and today announced it will hire 3000 people to speed up vetting of flagged content. Yet even that controversy hasn’t seemed to slow down the social juggernaut.

COMMENTARY:   In a blog post dated May 21, 2012, I had predicted that Facebook's IPO had been over-hyped by investers in the pre-IPO secondary market, and that this could result in a further erosion in the share price, and possible share price collapse.  This in fact happened, and by August 17, 2012 (see my Blog post), Facebook shares had dropped to new low of $19.87 from their IPO closing price of $38.23.  I made jokes about Facebook, calling the social giant "Faceplant."  It wasn't until August 23, 2013 that Facebook shares slowly creeped back to exceed their closing IPO price $38.23, by reaching $40.55.  A lot of pre-IPO investors waited over nine months to recover their investments.  Many investors, like yours truly, bailed out of Facebook and took a loss.  I lost over $1,200 myself.  I thought at the time that Facebook was one of my worse investments, and I was probably not the only one.  

Facebook went into their IPO without a detailed strategy and sustainable business model for generating advertising revenues from mobile users. So the month before the IPO, Facebook acquired Instagram, a mobile photosharing app, for $1 billion.  The strategy was to use Instagram as a platform for mobile advertising.  However, it wasn't until Q4 2012, that Facebook was able to deliver on its promise to investors, that it could monetize mobile users.  In Q4 2012, mobile ad revenues were $305 million or 23% of total ad revenues.   The rest is history, of course, as Facebook now dominates all social media sites in mobile ad revenues.  For the year ending December 31, 2016, mobile ad revenues constitute 84% of Facebook's $27.6 billion total ad revenues for the year 2016.  

If you woul like to read the complete transcript of Facebook's Q4 2016 earnings conference call with investors, you can find it at Seeking Alpha

 Courtesy of an article dated May 3, 2017 appearing in Tech Crunch

MARKETING TO BABY BOOMERS REQUIRES ENDING STEREOTYPES AND UNDERSTANDING THEIR BEHAVIORAL TRAITS

Our Understanding of the Baby Boomer Consumer

Mark Twain wrote, “The problem isn’t the things that we don’t know; it’s the things we ‘know’ that ain’t so.” His comment is simply a reflection of a common-sense reality. Today, marketing and selling draw on a lot of things “we ‘know’ that ain’t so.” 

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For instance: Marketers once “knew” (and many still do) that people 50 and older rarely change brands. Everybody “knew” that once consumers settled in on a brand or a company, they became more resistant to switching to another brand or business as they got older. Research shows that to be wrong. We also learned that consumer behavior is pertinent to the subtleties of marketing, advertising, and sales practices. Here is some of what we’ve learned:

1. As we age, our individualism increases - Baby Boomers are less subject to peer influence than are younger consumers. Marketing Implication: Keeping up with the Joneses is not as important as it once was; thus, advertising that invokes social status benefits does not play as well in Baby Boomer markets as it does in younger ones. Largely freed from worrying about reactions of others, Baby Boomers tend toward greater practicality in buying decisions than younger consumers. 
2. We develop an Increased demand for facts - Baby Boomers tend to be less responsive to sweeping claims in marketing messages as they age.  Marketing Implication: Hyperbole turns them off. If Baby Boomers are interested in considering a purchase, they want unadorned facts. Years of buying equip them with knowledge of what to look for and what information they need for an intelligent purchase. However, they often don’t get to the point of asking for facts until a product has emotionally intrigued them.
3. Our response to emotional stimuli increases - Baby Boomers tend to be quicker than younger consumers to reflect a lack of interest in or negative reaction to an offered product that doesn’t make an emotional connection.  Marketing Implication: Such “first impressions” are more likely to be permanent than among younger people, who are more apt to give a marketer a second chance. On the other hand, you can embed a positive first impression especially deep in the emotions of the Baby Boomer — so much so that he or she is often more disposed to be a loyal customer than the younger consumer.
4. We become less self-oriented, more altruistic - Baby Boomers tend to show increased response to marketing appeals reflecting altruistic values.  Marketing Implication: This tracks with shared middle-age shifts toward stronger spiritual values in which concern for others increases. As their altruistic motivations grow and become more powerful, narcissistic and materialistic values wane in influence. Marketers to Baby Boomers must rethink their traditional egocentric appeals in marketing communications.
5. As we age, we spend more time in making purchase decisions - People experience changes in their perceptions of time, and also the meaning and role of time in their lives as they grow older.  Marketing Implication: For example, Baby Boomers often ignore time-urgency strategies in marketing — such as: “Offer good until —,” “Only three left in stock.” Generally, “time is not of the essence” is a common attitude among Baby Boomers, especially those who have retired.
6. We often project what seems to be contradictory behavior - Sometimes we characterize Baby Boomers as selfish and selfless, penurious and profligate, spontaneous and deliberate, and so on. These different attributes lead some to describe Baby Boomers as contradictory — or at least, confusing in their behavior.  Marketing Implication: Baby Boomers are not different in their conduct; they are sensitive to the context in their behavior. For example, a Baby Boomer may use coupons in a grocery store, after which she drives off in a Mercedes.

This activity is not evidence of conflicting behavior, but an example of the rules of thriftiness applied to basics, and the rules of full value applied to discretionary expenditures. In the first case, the price is the common denominator in consumers’ interest, in the second, there is no common denominator because each person calculates the whole value in a unique manner.

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How the human brain processes information and consumer behavior is very relevant to the dynamics of marketing practices.  

Here's what we've learned:

1. There are material differences between males and females in the architecture and functioning of their brains - This difference often leads to different responses to the same experiences. Women make greater use of right-brain functions in thinking processes, making them more subject to emotional arousal than males. However, research indicates that in later life, the gap between men and women in emotional sensitivity narrows. Men become more sensitive and depend on emotional reads of a situation to determine if it warrants further attention.  Marketing Implication: Logic in product messages works better with males than females. However, this doesn’t mean qualitative differences in accuracy of perceptions because women make more efficient use of intuition, a right brain, and emotionally based function. However, once a woman experiences a favorable insight, she may become as rational in further processing a matter as a male. It’s just that her right brain is a more formidable gatekeeper to the left-brain than male brains are.
2. Our motivations do not originate in the conscious mind. - The conscious mind is the executive officer that, like a corporate CEO, makes decisions on needs that have been framed at lower levels. Neurologist Richard Restak states in The Brain Has a Mind of Its Own, “We have reason to doubt that full awareness of our motives may be possible.” Adds brain researcher Bernard Baars in In the Theater of the Brain, “Our inability to report intentions and expectations just reflect the fact that they are not qualitatively conscious.”  Marketing Implication: Answers consumers give researchers about their motivations are often incomplete or off the mark just because people can only speculate about their motives at deepest levels of the psyche. Creators of product messages need to become more intimately familiar, than is typical, with the “hidden drivers” of consumers’ behavior that consumers, about which they have little explicit knowledge.  These drivers tend to be stage-of-life specific. For example, young people have stronger outer-directed motivations relating to social status than older people. Older people’s motivations tend to be qualitatively more experiential and less materialistic than younger people’s motivations.
3. We use different brain sites and mental processes in answering researchers’ hypothetical questions than they use in real life situations - Research respondents tend to draw more heavily on the objective sequential reasoning of the left-brain than on the subjective emotional right brain in answering researchers’ questions. This left-brain bias is reversed in reacting to product messages and making buying decisions.  Marketing Implication: We can improve research results by techniques that are more useful in defining consumers’ implicit testimonies that have not been distorted by undue influence from left-brain processing. The recent trend toward studying consumers in their natural living and shopping environments is justified by the finding that people process hypothetical information differently than they do real life information. Researchers need to make more use of indirect techniques to get behind the curtains of consciousness.
4. Brain development is lifelong, and how we mentally process information changes from one decade of life to the next - This finding alters how people view and connect with the external world (worldview). Language style preferences also change over time. For example, youth and young adults have a more aggressive language style than older people.  Marketing Implication: Product messages will be more efficient and effective when expressed in the stage-of-life language style of the core market to which you primarily address the message.
5. Adolescent brains are significantly inferior to adult brains in reading facial expressions - The older people are, the more skilled they are at reading facial expressions. Marketing Implication: Product messages depicting people should reflect awareness the core audience’s ability to read facial expressions. For instance, older people’s greater sensitivity to facial expressions means that facial expressions should bear an authentic connection to the product and product message in Baby Boomer and older markets. Younger consumers will typically be more concerned with what people are doing than with what their faces are saying.

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We believe we can roughly divide Baby Boomer behavior perspectives into two approaches. The first emphasizes the objectivity of science and that the customer is considered a rational decision maker. In contrast, the subjective or emotional approach stresses the customer’s individual experience and the idea that Baby Boomer behavior is subject to multiple interpretations rather than one explanation only. 

1. When making discretionary-purchase decisions, Baby Boomers tend to have:  1) A decreased sensitivity to price; 2) Increased sensitivity to affordability; 3) Sharply increased sensitivity to value. Marketing Implication: Older consumers have more sophisticated ways of determining value than younger consumers. Value determination by older consumers tends to be an existentialist exercise whereby they combine soul (spiritual) values as well as mind (intellect) and body (tangible) values into the value determination process.  Not only does an item purchased symbolize some aspect of the consumer’s being, but the entire purchase experience can also be a projection of the consumer’s whole being.  For example, a person with a passionate concern for the homeless may more likely buy a product from a company with a program benefiting the homeless. To that consumer, the product has a high Meta values index, which is, an element of value unrelated to the product performance. 
2. As we approach midlife (40+), we increasingly draw on right brain functions -They begin relying less on left-brain sequential and rational reasoning and more on emotions — a.k.a. “gut feelings” or intuition.  Marketing Implication: Product messages for Baby Boomers should have more affect (emotional toning) than product messages for younger people. Younger people tend to have a stronger reasoning bias. Thus product messages generally should implicitly or explicitly promote concrete reasons for purchase.
3. Information entering the brain’s cortex (outer layers) is first processed mostly in the right brain - The right brain processes information as sensory images rather than as words and numbers. The left-brain focuses on figures and words.  Marketing Implication: Product messages should be rich in sensory stimuli to increase customer attention. Even though the right brain can’t process words, words can create sensory images, as every storyteller knows. The older a market, the more important it is to present a product in story form.
4. Emotion, not reason, is the final arbiter in decision-making. - Initial responses to information entering the brain are visceral. Changes in body states (e.g., pulse, hormonal flow, saliva flow, body temperature, etc.) generate emotions. When a matter fails to create emotions, a person will not take action on it. (Brain patients who have lost their emotional abilities while retaining full powers of comprehension and reasoning cannot make advantageous decisions in which they have a personal stake in the outcome.) Marketing Implication: A cardinal rule for developing effective product messages is go with the grain of the brain or “Lead with the right; follow with the left.” The only way to get into a person’s conscious mind is via the right brain. Again, the use of sensory images is a key to getting into the right brain.
5. Gender tends to predispose responses to voice-overs in broadcast advertising - For example, research tells us that male voices are more knowledgeable when describing technical attributes of a product, while female voices are more knowledgeable when describing a product with references to love, relationships, and caring.  Marketing Implication: Choose the voice to match the content and delivery style of a product message.
6. Pictures of people in motion arouse the brain more quickly than posed pictures. Marketing Implication: Avoid posed pictures like the plague. Motion conveys vitality. Posed pictures convey lifelessness. We should mostly avoid posed pictures in marketing to Baby Boomers, although when they do market to them, marketers commonly use posed photos.
7. Our sensitivity to price in nondiscretionary spending typically increases - As they age, many consumers develop higher economic “literacy” and skillfully apply it to get the best price — an objective not to be confused with “getting the best value.” Marketing Implication: Bargains primarily reflect cost factors while implicit in the term “value” are all attributes of the product, the purchase experience, and the expected ownership experience. In purchasing “need” items, older consumers tend to be more bargain-minded, whereas in purchasing “desire” items, they tend to be more value-minded in a holistic sense.

Research has shown that customers' final decisions are not the direct product of the reasoning process; in fact, emotions drive Baby Boomers in their purchase decisions. The reasoning process will confirm their decision, but it doesn't start there. 

Your messages should resonate with the values and motivators of Baby Boomers. Although we all have core defining attributes and motivators that drive us, we manifest them differently as we move through the spring, summer, fall and winter of life. Selling to Baby Boomers is different primarily because of this shift in the manifestation of human values. Our need for autonomy, relationships, purpose, gaining knowledge/growth, rejuvenation and recreation are always with us. However, as we age, we manifest our values differently.

1. Each experience we have prompts the brain to create clusters of neurons (brain cells) with predisposed responses to new but similar experiences. - As the population of these dispositional clusters or Defining Attributes increases, a person becomes more habituated and reflexive in his or her responses. This activity decreases sensitivity to external influences, like advertising, making a person more autonomous.  Marketing Implication: Defining Attributes are the marketer’s equivalent of “hot buttons.” The older we are, the more hot buttons we have. This change is good news and bad news for marketers.  First the bad news: It’s harder to change people’s patterns after the early adult years. Now, the good news: When a marketer hits a consumer’s hot buttons, the deal is almost done. The challenge is learning what those hot buttons are. Fortunately, there is remarkable consistency in the general nature of hot buttons among people in the same season of life. Knowledge of the Defining Attributes of consumers in the fall and winter of life will guide you to connect with their hot buttons.
2. The initial determination of information relevance occurs unconsciously. - When a person sees an ad or a TV spot, the right brain initially determines if it has personal significance. The subsequent reasoning processes of the left-brain-only go to work on the ad after it has reached consciousness. The right brain conducts a process called information triage to reduce data flow to levels the conscious mind, with limited working memory (RAM) can handle. The primary criterion is relevance to a person’s interests.  Marketing Implication: Imagine having a conversation in your office or at a social gathering when you hear your name come up in another conversation not far from you. Your brain was hearing the other conversation all along, but only when you heard your name did it see fit to alert your conscious mind to the other conversation.  That’s what information triage is all about. Creating product messages that survive information triage is the biggest challenge in marketing. It has become fashionable to complain about advertising clutter. However, the clutter problem is in the brain, not on a television screen or in a magazine. When a message has relevance to a person’s interest, the right brain will take note. When we talk about having a “double take,” we acknowledge the right brain’s ability to pick up in a nanosecond something that has relevance to our interests.

Some Final Thoughts

The differences in consumer motivations and decision processes between consumers in the first and second half of life perplex many marketers who have yet to figure out how to market to older customers. The young are easier to analyze and sell. Now, with adults over the age of 45 in the majority, marketers are being compelled to figure out their values and behavior.

We’ve learned that it’s about new rules, new mindsets, and new processes. In short, it is a new, authentically customer-centric paradigm. New models challenge the mind because the mind has a natural bias toward preserving the old ways; even when old ways cease working as they once did. But when pain caused by an old paradigm’s breakdown exceeds peoples’ threshold of tolerance, they begin warming to new alternatives.

Finally, we’ve learned that today’s marketplace is unlike any before faced before. Most of its adult members are in the years when the influences of what Maslow called self-actualization begin to show up in behavior. Until the growth of 50+ customers, these forces had a little noticeable impact on the marketplace at-large. Now, however, such attributes of self-actualization oriented behavior are widely evidenced in your markets:

• Perceptions – more conditional, less absolutist (shades of gray vs. black and white). Experiential Segmentation/Conditional Positioning approaches are effective in branding
• Relationships– more autonomous, less dependent on sources (such as advertising) in making decisions. Honesty and authenticity leading to trust are essential.
• Social behavior – more individuated, less subject to “herd behavior,” less easy to pigeonhole into segments
• Decision making – more emotional (as in “gut feelings” or intuition), less “rational” in decision processes.

COMMENTARY:  Information on marketing to Millennials can be found virtually anywhere these days, but what about Baby Boomers? Once a prime focus of marketers’ advertising strategies, Boomers are now being overshadowed by the newer, younger, and more technologically-savvy generations like Millennials and Gen Zers. In fact, according to Nielsen, less than five percent of advertising budgets are put toward Baby Boomers nowadays. Yes, this audience may be older, but they’re also massive in size and have significant spending power, which means you shouldn’t count the Boomers out of your media plans just yet. Born between 1946 and 1964, this generation (comprised of Americans ages 50 and older) account for nearly a quarter of the total U.S. population, with 76.4 million currently existing in the United States. That’s a lot of Boomers – and potential benefit for your brand.

But that’s not the only reason why you should put Baby Boomers at the top of your media plans. They’re also:

• Affluent
• Have substantial buying power
• Spend a good portion of their time online

In fact, digital marketing firm, Immersion Active, reports that Boomers have an annual disposable income of $2.4 trillion (or 70 percent of the nation’s disposable income) and account for $230 billion in sales of consumer packaged goods like coffee, diet soda and magazines (Nielsen). Additionally, Baby Boomers are becoming increasingly tech and internet savvy. Surprisingly, younger Boomers (ages 47 to 55) spent an average of 39.3 hours online per month in 2010, according to the Pew Internet & American Life Project. Older Boomers (ages 56 to 65) averaged only slightly less, at 36.5 hours. More significantly, over one-third of all tablet owners in the U.S. are over the age of 45, while 66 percent regularly purchase from online retailers. For marketers, this means the Baby Boomer market is very lucrative – increasing sales or gaining share with the right set of tactics.

That being said, marketing to this older and more brand loyal generation can be tricky. Getting to know and understand what drives their attitudes and behavior is the first step toward efficiently reaching and targeting them. Here is some insight to help get you started:

BOOMERS USE SOCIAL MEDIA, BUT IN A DIFFERENT WAY

Despite stereotypes, Baby Boomers aren’t living in the Stone Age when it comes to social media. Yes, the average age of a user may be young, but a large percentage of social media profiles belong to people over the age of 55 – 27 million active users to be exact! (Immersion Active). In fact, Boomers are among the fastest growing groups on social media. Younger generations prefer Instagram or Snapchat to post photos of their nights out and weekend trips, whereas Boomers are more likely to use Facebook to engage with family and friends. Other common activities Boomers partake in on social sites include following groups/organizations (55 percent), posting/watching videos (40 percent), supporting causes (26 percent), and joining groups (23 percent). Diving even deeper into the numbers, Boomers strongly prefer Facebook over Twitter: 49 percent of online Boomers have a Facebook account, while only 18 percent use Twitter. As older Boomers become less active and moveable, social media is the ideal way for them to keep in touch with family and friends. This means that developing the right social marketing strategy is crucial if you want to reach Boomers during the moments that matter to them.

OFFER REAL, RELEVANT, AND RELATABLE CONTENT

Here’s the bad news: Baby Boomers don’t trust marketers. And as this generation continues to age, their skepticism toward advertising grows. A recent study conducted by Insights in Marketing revealed that Boomer men (26 percent) and women (21 percent) are the least likely of any generation to believe what advertisers and marketers say about their products and services. But their skepticism is warranted. This generation grew up during the nascency of television, watching advertising grow from its inception to where it is today. In fact, Boomers have spent pretty much their entire lives inundated with advertisements, so they’re used to seeing marketers use tactics without strong content plans to back them up. Many Boomers have bought products in the past that didn’t live up to their own expectations or the marketing hype in terms of messaging as well as in quality. To gain Boomers’ trust, marketers must focus on offering them information that will resonate based on significance and candor, which means ads should reflect relevant, real-life situations so that consumers can relate. Communicating with Boomer consumers in a simple manner, with compelling, clear and concise content is also crucial. This will help marketers attract and retain loyal Boomers today and in the years to come.

SLOT SEARCH INTO YOUR MEDIA PLANS

Search Engine Marketing (SEM) is a Baby Boomer’s best friend. In fact, a study conducted by the DMN3 Institute, a digital and direct marketing agency, found that the top online activity of Boomers was utilizing search engines (96 percent). Likewise, the top online destination for Boomers is Google Search. When respondents in the DMN3 study were asked about actions taken as a result of performing online activities, search drastically outperformed social media and viewing online videos in getting Boomers to take action, including making a purchase. The top referral result of search engine use? Boomers looked for additional information online 82.4 percent of the time, with visits to a company website coming in at a close second (77.5 percent). More significantly, over half of Boomers who use social networking sites will visit a company website or continue their search on a search engine as a result of seeing something on social media. This just goes to show how interconnected and vital search and social are in successfully reaching the Baby Boomer audience.

No matter which marketing tactic you choose, providing content that meets Boomers’ needs for information in a thought-provoking, strategic, and timely manner is critical. Because the fact of the matter is, you’re not going to get the eyeballs, action, call, or purchase if your audience isn’t interested in you or what you have to offer. To learn even more about Baby Boomers, check out the infographic below.

Courtesy of an article dated January 3, 2017 appearing in MediaPost Engage:Boomers and an article dated February 6, 2017 appearing in MediaPost Engage:Boomers and an article dated March 6, 2017 appearing in MediaPost Engage:Boomers and an article dated April 2, 2017 appearing in MediaPost Engage:Boomers

To view my PBT Consulting blog click HERE

SNAPCHAT PREPARES FOR A $25 BILLION IPO, BUT THIS COULD BE TOO EARLY AND THE BUSINESS MODEL MAY NOT BE SUSTAINABLE

 

Snap, Inc. is reportedly preparing an IPO that will value the company formerly known as Snapchat at around $25 billion.

The social darling is shooting for a March offering, The Wall Street Journal reports, citing sources. A company representative declined to comment on the report, on Thursday. 

Standing in stark contrast to struggling social networks like Twitter, Snapchat is presently making more money than it can count.

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Indeed, despite direct competition from Facebook and other tech giants, the company is positioned for “explosive” growth in ad revenue over the next few years, according to a recent forecast from eMarketer.

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The research predicts that the playful messaging app will generate $366.69 million in ad revenues this year.

That figure is expected to jump to $935.46 million, next year.

Cathy Boyle, principal analyst at eMarketer, recently said Snapchat’s bright outlook has everything to do with its young user base.  Boyl notes in a report.

“Advertisers are attracted to Snapchat for its broad reach among young Millennials and those in Generation Z, which are valuable demographic groups for many businesses.” 

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To its credit, Snapchat has also tailored its ad strategy specifically for this easy-to-alienate demographic.

According to Boyle.  

“To engage those often hard-to-reach consumers, Snapchat has expanded its advertising portfolio over the past year to include a wider array of video ads and more sponsored geo-filters and sponsored lenses.”

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Stateside, Snapchat’s Discover feature generates 43% of ad revenue, which is its largest single share, according to eMarketer.

Next year, however, the research firm expects Stories to overtakes Discover as the dominant ad revenue source -- by generating 37.8% of the company’s domestic ad revenue.

Having launched its ad platform in mid-2015, Snapchat still only captures 2.3% of social-networking dollars, eMarketer estimates. That’s despite the fact that it now commands 36% of the market in terms of domestic users. 

Approaching its would-be IPO, Snapchat continues to experiment with new categories.

Bounding into hardware and physical fashion, the company recently unveiled Spectacles -- stylish video-recording sunglasses that are expected to retail for $130.

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Set to hit shelves later this fall, the shades can record 10-second video snippets, which are designed to approximate one’s natural field of vision. That's thanks to a 115-degree lens, which records circular video. If Spectacles are well received, Snapchat would become the first company to convince consumers to wear connected gadgets on their face.

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Google notoriously spent millions of dollars in development and marketing dollars, before giving up on its Glass initiative. Yet Snapchat -- which just rebranded itself as Snap, Inc. -- seems to have learned a few things from Google's failure.

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Spectacles’ $130 price tag is far more reasonable than the $1,500 that Google tried to charge people for Glass. Snapchat’s glasses are also being sold as a single-purpose device, which is historically much easier to market.

like Google, Snapchat currently enjoys a strong bond with young consumers -- the ideal demographic for starting trends and popularizing products.

Although bold, Snapchat’s move into hardware should not come as a complete surprise to industry watchers. The social darling recently joined the industry group that runs the Bluetooth wireless standard, which followed several hires and smallish acquisitions in the arena of consumer electronics.

COMMENTARY:  I have to confess that I have not followed or even taken the time to use and evaluate Snapchat because I am most definitely not in their demographics.  The idea of posting photos that dematerialize is something that just does not interest me.  I ask the question:  Why do I need this? I could not bring myself to come to a practical answer.  On the other hand, I wasn't in Facebook's demographics either, but now everybody seems to be using the social giant site to connect and engage with users throughout the world.  

Now comes the news that Snapchat is coming out with Spectacles, their first foray into cnsumer electronics.  Didn't Snapchat's founders realize how intrusive taking someone else's picture without their permission can be?  Google found this out when they introduced Google Glass, their augmented reality glasses.  The cost for a pair of Google Glass was also prohibitively expensive.  Maybe Snapchat will have better luck.  Millennials are pretty impulsive, and love trying the latest in consumer electronics devices. They make the lions share of early adopters.  The price is just right for Millennials, who are strapped for cash and carry a lot of debt, mostly from student loans.  The glasses look "retro cool," but they don't rock my world from a designer standpoint.  On the other hand, Spectacles differentiate the company from Instagram and Twitter's Vine and Periscope which also allow users to exchange video content via mobile devices.  However, it still comes down to a sustainable business model, and Snapchat only began running ads in mid-2015.  In my opinion, this is not a very long time to prove the sustainability of their business model.  

The big news of the day is that Snapchat is planning a $25 billion IPO.  I smell another Twitter IPO in the making.  A startup that just began making money from ads in md-2015 is not reliable proof of a sustainable business model.  Snapchat relies exclusively on Millennials, and that market although large, and soon to be the largest demographic segment in the US, is not broad or mainstream like Twitter or Facebook.  Another question:  How profitable is Snapchat?  If they are anything like Twitter at this stage of their development, they are probably not profitable.  Both Twitter and LinkedIn (recently acquired by Microsoft) were never profitable, so I would be very cautious about investing in a startup with such a narrow demographic focus.

I am dying to review Snapchat's S-1 filing.  It should help answer a lot of investor concerns, and validate my own suspicions and doubts.      

Courtesy of an article dated October 6, 2016 appearing in Social Media Marketing Daily, and an article dated June 6, 2016 appearing in AdvertisingAge, and an article dated September 6, 2016 appearing in AdWeek, and an article dated September 24, 2016 appearing in The Verge, and an article dated October 10, 2016 appearing in Profit Confidential

TWITTER CEO JACK DORSEY'S REPORT CARD AFTER COMPLETING HIS FIRST YEAR AS CEO OF THE TROUBLED SOCIAL NETWORK

Happy Twitter-versary (for the nth time around this time), Jack Dorsey. Things haven’t been going well, it seems, but there’s a light at the end of the tunnel — Twitter may be acquired by someone somewhere in the tech (or entertainment) industry, perhaps.

To be perfectly fair, the company Dorsey inherited from his predecessor(s), including an array of former product leads as well as CEO Dick Costolo, wasn’t in that great of shape to begin. But Dorsey’s return was heralded as a return to form for Twitter, in the hope that he might come in and shake things up to the point that the company would finally turn around and make Wall Street Happy.

So in the last month or so, a lot has been made as to whether the company should remain independent or whether it makes sense as part of a larger empire that can devote more resources into growing it. There are natural arguments for each — Twitter is one of the go-to sources for news (and also sports!), but a company like Salesforce could pump additional life into it to get that user base growing more broadly. And perhaps the company once again needs new fresh blood.

Dorsey’s tried to make the service less confusing during his tenure, such as shifting around the way tweets are presented and removing some contributions toward the character limit for types of media. But the company still suffers from being confusing, being difficult to get on-boarded, and of course harassment.

So, the turnaround still didn’t really happen. Let’s take a quick look at a few charts of what’s happened at Twitter under Dorsey.

Twitter stock price chart since Jack Dorsey became CEO through today (Click Image To Enlarge)

For some reference, here’s a one-year chart of the S&P 500:

S&P stock price chart during Jack Dorsey's tenure as Twitter CEO (Click Image To Enlarge)

And let’s look at the user base the company reported last quarter, which has been the main sticking point for Wall Street and Twitter:

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So, barely any growth whatsoever (and even a small drop-off at one point). Hmm. What about revenue growth? Under the leadership of Adam Bain this wasn’t a huge problem for a while, though everything still stems back to user growth.

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And Twitter’s still losing money:

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One last quick one, which isn’t exactly a chart — how much it’s paying for stock-based compensation:

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Let’s cap this whole thing off with a some recent headlines:

• Twitter’s User Growth Goes Nowhere As It Meets Revenue Expectations Of $710M
• Twitter’s woes continue on Q1 sales of $595M, a sluggish 310M MAUs and weak guidance
• Don’t feed the trolls — tackle their abuse of platform power instead
• Twitter launches on Apple TV, Fire TV and Xbox One
• Twitter will livestream weekly games from MLB and the NHL
• Twitter adds former Facebook CTO Bret Taylor to its board
• Twitter dives after mixed Q2: $602M sales, $0.13 EPS, MAUs up 3% 313M
• Twitter is introducing a quality filter to clean up your notifications tab
• Twitter partners with CBS News to live stream convention coverage
• Twitter targets extremism, suspends an additional 235,000 terror accounts

So, you may be sensing a little bit of a trend: a big shift to live video, some attempts to combat harassment and other problems (though it hasn’t worked), and of course lackluster results under Dorsey.

It’s been a tough run for Dorsey, which may eventually be capped off with a final sale to a company. Anything can change at the last minute, of course, but for the time being it seems like Twitter needs to right itself — whether that’s through increasingly drastic internal changes or bringing in new leadership under new ownership to do just that. And there’s always next year!

Twitter’s third-quarter earnings come out later this month, and it’s kind of hard to believe that this may be the final time we see the guts of the company for the foreseeable future. It may end with a final sign-off like LinkedIn:

“In light of the pending merger, LinkedIn will not be updating its outlook for fiscal 2016 and will not be hosting a conference call for its second quarter 2016 business results.”

COMMENTARY:  If you've followed my blog posts about Jack Dorsey and Twitter's performance, you know that I have not been very complimentary towards Jack Dorsey, and have been just as critical about Twitter's performance.  Not to be forgotten is the number of key staffers who have chosen to leave the company since Dorsey took over as CEO.  In addition to the exits, revenues have failed to meet investor expectations, with the stock price dropping to near lows, and Monthly Active Users (MAU's) stalling just over 300 million users since he took over the helm.

Although Twitter has aggressively moved towards more video content (Vine and Periscope), including live sporting event streams, at its face, the overall Twitter experience has remained about the same. The homepage is still an endless torrent of tweets, without any organization or personalization. It is very time consuming to review this mountainous torrent of tweets.  The result is that users are missing out on news and information that is important to them.

Twitter now allows users to attach images and videos to their tweets without affecting the 140 character limit. This is a good thing, but only a superficial improvement that a lot of users don't even notice.  This is not enough to improve the overall user experience and serve as an inducement to increase user engagement and attract new users.  

Twitter requires radical changes not just superficial improvements.  It's a huge product design problem that must be resolved.  You literally need to go back to square one and introduce an entirely new Twitter with a user interface (UI) that is unrecognizable from what you see today, and that is simple, user-friendly and intuitive.  Here are a few changes that I think are greatly needed.

To combat the avalanche of tweet traffic, users should be required to classify their tweets by type (example: politics, social media, big data, legal, sports, games, fashion, personal, etc.).  Users should be able to select a type before they can post it.  I follow political tweets a lot, so I should be able to view all political tweets and see what's trending within that type (example: #VPdebate, #presidentialdebate, #potus, #trump, #clinton, etc.).  

Live streaming event tweets should be separate from other tweets so that they clearly stand out.  They should also be classified by type, and users should be able to see which live streaming events are trending (example: #presdentialdebate, #sundaynightfootball, #spaceXlaunch, #liveearthconcert, etc.).

An idea that I have proposed before includes classified ads.  Twitter could be a great classified ad site, but classified ads are lost in the torrent of tweets.  Classified ads would appear separate from regular news and information tweets, and would be classified by type (example: rentals, autos, household, garage sales, personals, etc.).  Classified ads would be a great way for Twitter to generate additional revenues that could rival those of Craigslist.  I don't know why this hasn't been done before.  If I don't want to see ads within my tweet stream, I should be offered the option of paying a small fee for that privelege.  Another potential revenue stream.         

There you have it.  If you have other ideas, don't hesitate to post them in the comment section.

Courtesy of an article dated October 5, 2016 appearing in TechCrunch

 

INSIDE THE TEST FLIGHT OF FACEBOOK'S 'AQUILA', THE FIRST INTERNET DRONE

It's 2:00 am in the dark morning hours of June 28th, Mark Zuckerberg woke up and got on a plane. He was traveling to an aviation testing facility in Yuma, AZ, where a small Facebook team had been working on a secret project. Their mission: to design, build, and launch a high-altitude solar-powered plane, in the hopes that one day a fleet of the aircraft would deliver internet access around the world.

Zuckerberg arrived at the Yuma Proving Ground before dawn. Zuckerberg said in an interview with The Verge.

“A lot of the team was really nervous about me coming.”

A core group of roughly two dozen people work on the drone, named Aquila (uh-KEY-luh), in locations from Southern California to the United Kingdom. For months, they had been working in rotations in Yuma, a small desert city in southwestern Arizona known primarily for its brutal summer temperatures.

 

On this day, Aquila would have its first functional test flight: the goal consisted of taking off safely, stabilizing in the air, and flying for at least 30 minutes before landing. Zuckerberg says.

“I just felt this is such an important milestone for the company, and for connecting the world, that I have to be there.”

For Facebook, Aquila is more than a proof of concept. It’s a linchpin of the company’s plan to bring the internet to all 7 billion people on Earth, regardless of their income or where they live. Doing so will lift millions of people out of poverty, Zuckerberg says, improving education and health globally along the way. But it will also enable the next generation of Facebook’s services in artificial intelligence, virtual reality, and more. This next era of tech will require higher bandwidth and more reliable connections than we have today, and drones can help deliver both. The road to a VR version of Facebook begins where Aquila leaves the runway.

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As the Sun rose over the desert, a crane lifted Aquila onto the dolly structure that would propel it into the sky. The drone has a tremendous wingspan: 141 feet, compared to a Boeing 737’s 113 feet. And yet Facebook engineered Aquila to be as light as possible to permit ultra-long flights. Built with carbon fiber, the latest iteration of the drone weighs around 900 pounds — about half as much as a Smart car.

A remote control operator activated the dolly, and Aquila began rumbling down the runway. The plane is attached to the dolly with four straps. When it reached sufficient speed, pyrotechnic cable cutters known as “squibs” cut through the straps, and Aquila lifted into the air, where it floated up its test altitude of 2,150 feet and stabilized. On the ground, Facebook’s employees were elated; some wiped away tears.  Zuckerberg said.

“It was this incredibly emotional moment for everyone on the team who’s poured their lives into this for two years.” 

Watching from below, Zuckerberg was struck by Aquila’s deliberate, unhurried pace.  Zuckerberg said two weeks later, at Facebook’s headquarters in Menlo Park, CA.

“It flies really slowly.  Most times when people are designing planes, they’re designing them to get people or things from place to place, so there’s no real advantage to moving slowly. But if your goal is to stay in the air for a long period of time, then you want to use as little energy as possible — which means going as slowly as you physically can, while not falling out of the air.”

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FLIGHT MANUAL

Okay, but why a plane?  There are lots of ways to bring the internet to people that don’t involve designing your own drone.

There are satellites, which are good at delivering internet access to wide geographical areas. But they’re only effective in areas with low population density — too many users can gobble up the bandwidth in a hurry.

There are cellular towers, which excel at connecting dense urban populations. But building enough cellular towers to cover the entire Earth is considered too expensive and impractical, even for Facebook.

In 2014, Zuckerberg wrote a paper analyzing various methods of internet delivery. High-altitude drones, he said, could serve a huge audience of people who live in medium-sized cities or on the outskirts of urban areas. They fly closer to the ground than satellites, meaning their signals are stronger and more useful to larger populations. And they fly above regulated airspace, making them easier to deploy.

If Facebook could build a drone that gathered most of its power from the Sun, Zuckerberg reasoned, it could fly for 90 days. A laser communications system could deliver high-speed internet to base stations on the ground, connecting everyone within 50 kilometers. The planes would be easier to maneuver than, say, balloons — a method embraced by Google, which has embarked on its own global connectivity crusade with Project Loon. (Last year Google challenged Facebook more directly with Project Titan, a solar-powered internet delivery drone of its own.) If the drones could be built cheaply enough, they would one day dot the skies, and become a critical piece of the global internet infrastructure.

And so 26 months ago, Zuckerberg set an ambitious goal: to release a functional version of Aquila in just a couple years. He personally recruited experts from NASA’s Jet Propulsion Laboratory and MIT’s Media Lab, among other places, to bring his vision to life.

As part of the project, Facebook spent nearly $20 million to acquire the team behind Ascenta, an aviation consultancy led by Andy Cox. Cox is a mechanical engineer who previously worked on a team that kept a solar-powered drone in the sky for two weeks — still a world record. After Facebook acquired his consultancy, Cox became Zuckerberg’s top lieutenant on the Aquila project. The team works out of a warehouse in Bridgewater, 150 miles west of London.

As recounted in Wired earlier this year, building a working model of Aquila put the team in daily battle with the laws of physics. Early on, it attempted to launch Aquila with a hot-air balloon. A planned test flight date of October 2015 was pushed back, and then pushed back again. Attempts to fly a 27-foot scale model of Aquila were hampered by El Niño storms.

But by June 28th of this year, the team had overcome those hurdles. At cruise altitude, Aquila was using just 2,000 watts of energy — the equivalent output of five strong cyclists, Zuckerberg says. The company hoped Aquila would successfully remain aloft for half an hour. But it was so stable that they kept it in the air for 90 minutes before landing it safely.

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THE HARD PART

In it's first flight, Aquila exceeded engineers’ expectations for its energy efficiency. More test flights are planned, aimed at flying Aquila “faster, higher, and longer,” says Jay Parikh, Facebook’s vice president of engineering, in a blog post today. And then Aquila will have its next big test: flying with the “payload,” as Facebook calls the laser communication system that a team is building in Woodland Hills, CA. In July 2015, the team announced that its lasers could deliver data at tens of gigabits per second, about 10 times faster than the previous standard. And the lasers are quite precise, able to target an area the size of a dime from 10 miles away. (The lasers connect with base stations on the ground to supply internet access.) Facebook says the system has performed well in independent tests.

When will a fleet of Aquila drones bring data to the world? Facebook won’t say. There are several technical challenges remaining in getting Aquila to reliably fly 90-day stretches. The team hasn’t yet implemented solar panels on the prototype — the test flight plane ran using batteries only. The team is still working out how to build batteries with a density high enough to sustain lengthy missions. Then there’s the cost — Facebook says Aquila needs to be much cheaper if the world is going to deploy a fleet of them. Cox wrote in a blog post today.

 “We need to develop more efficient on-board power and communication systems; ensure the aircraft are resilient to structural damage to reduce maintenance costs and able to stay aloft for long periods of time to keep fleet numbers low; and minimize the amount of human supervision associated with their operation.”

Aquila is also likely to face regulatory obstacles, which could rival the laws of physics in terms of the challenges they present. Facebook and Google have teamed up to work with authorities, such as the Federal Aviation Administration, to get permission for test flights and obtain access to the spectrum they need to serve data.

Facebook says it doesn’t plan to use Aquila to build its own cellular network. Instead, Zuckerberg says, it wants to license the technology — or even give it away to telecommunications companies, governments, and nonprofits. In emergency situations, he says, Facebook could direct its fleet to troubled regions to bolster internet access for hospitals and nonprofit centers.

But it remains unclear how governments will receive Facebook’s latest idea for connecting the world. The company’s efforts at diplomacy have sometimes been clumsy; Indian regulators banned Free Basics, Facebook’s effort to provide some internet services for free, on the grounds that giving the company control over the included services violates net neutrality. Bringing more people onto the internet, after all, is a way of bringing more people onto Facebook — and regulators have worried that the company’s end goal is to simply replace the open web for most users, while reaping the rewards in advertising dollars.

Zuckerberg says the company has learned from its failure in India — one he hopes is temporary.  Solar-powered planes will raise additional regulatory issues, he says.

“We’ve learned a lot about how we need to interact with governments and the political system and regulators, and build support in order to have these things work. And I think we’ll take those lessons forward.  But when I meet world leaders, a lot folks are really excited about this, because you want your people to be online, and you want more opportunities. And connectivity is one of the biggest ways that people get access to opportunities.”

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The path forward for Aquila isn’t totally clear, and it’s bound to encounter more bumps along the way. But Zuckerberg is resolute: billions of people who can’t access the internet deserve it. And for Facebook to achieve his long-term vision, everyone is going to need access to more bandwidth than they have today. A single test flight represents a tiny step toward getting there. But it also gives Facebook a dramatic success to rally around.

Zuckerberg says.

“I think the future is going to be thousands of solar-powered planes on the outskirts of cities and places where people live, and that’s gonna make connectivity both available and cheaper.  And, I think, can help play an important role in closing this gap of getting more than a billion people online. This is an early milestone, but it’s a big one.”

Zuckerberg smiled and said.  

“It’s not something you necessarily expect Facebook to do — because we’re not an aerospace company. But I guess we’re becoming one.”

 

COMMENTARY:    Zuck's strategy to fly internet drones over poverty stricken geographical areas, like those in Africa, where the internet penetration is only 9.8%, or the cost of WIFI connectivity is prohibitably high, is really a ploy to get more Facebook users.   At its core, it sounds like a noble and philanthropic mission of helping those in need, but it is solely about getting more eyeballs to connect through Facebook and sell them things through online ads.   If Zuck really wanted to help needy African's he should take some of those billions he has and give it to charitable organizations which are fighting to eradicate hunger, AIDS, Ebola, malaria and other diseases.  

Courtesy of an article dated July 28, 2016 apparing in The Verge

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