Sunday, 29 November 2009

SMEs Favour Social Media and Email Marketing over Banner Ads

Small & medium sized enterprises (SMEs) sometimes struggle with the efficient and effective utilisation of the increasing variety of online advertising channels and formats due to their limited budget, lack of human resources and lack of in-house marketing expertise. The entire range of Web 2.0 applications and services and in particular the growing popularity of social networking platforms have obviously further changed the patterns of budget allocations for marketing activities, according to the results of survey conducted by VerticalResponse and published by eMarketer.

The majority of the SMEs with less than 500 employees plan to increase the marketing spending for email marketing and social media marketing in the year 2010 whereas they budget for online banner ads will be cut down significantly. Nearly all SMEs will carry out email marketing campaigns in 2010 and three out of four SMEs will even increase their spending for email marketing (see table below, click to enlarge).

Similarly, almost 80% of the SMEs will carry out online marketing activities on social media platforms such as Facebook, Twitter or YouTube and two third of the marketing managers intend to increase the spending for those communications. Unfortunately, the survey does not shed light on how exactly and for what marketing formats the budget will be used on social media platforms, but since most of these websites offer cost-per-click advertising (e. g. the adverts bar on the right in Facebook) I assume that the budget will go there.

As far as search engine marketing is concerned, almost half of the surveyed SMEs will invest more in paid adverts in Google, Yahoo, Bing or other popular search engines.

If companies plan to increase the marketing spendings does this then mean that they have more financial resources available despite the economic crisis? Certainly not! The survey data gives clear evidence that online banner advertising is losing importance for SMEs. Nearly 55% of SMEs claimed they will not carry out any display advertising campaigns in 2010.

It is not stated in the survey how many of the 831 small & medium sized enterprises of the sample enterprises belonged to the tourism sector and thus generalisations for the tourism industry per se are not valid. However, the research outcome clearly indicates that banner advertising is losing importance in favour of social media, email and search engine marketing.

Display ads can be effective for certain marketing goals (e.g. branding) and there are without doubt design agencies that develop highly creative rich-media banners (I love the artistic banners on e. g. DoubleClick). However, the shortcomings of banner ads are also well-known. First of all the production and display costs for an appealing banner can be rather high. On the other hand the click-through-rates (CTR) are usually relatively low with an average of 0.5-3%. Further, many users consider banner ads as annoyance and turn a blind eye on them. The biggest problem for SMEs is, in my opinion, that successful banner advertising always requires the cooperation with an online advertising agency which causes additional costs.

Search engine marketing tools such as Google AdWords, on the other hand, have become relatively easy to use and are moreover very flexible and quick in terms of creating, tracking and adjusting a campaign. Further, it is possible to achieve very good results even with a rather small budget.

The email newsletter seems to be still the most popular online marketing tool among SMEs and many enterprises regard it as an inexpensive and effective way to reach new customers and to generate fast responses, according to the “2009 State of Small Business Online Marketing Survey” (see table below, click to enlarge).

However, compared with other online marketing tools (e. g. keyword advertising) email marketing obviously causes difficulties in terms of the implementation as well as the tracking and measuring of the performance. Besides these technical and organisational obstacles, email marketing campaigns often fail to generate good conversion rates because the content is not geared to and not relevant for the recipients. The lack of relevant and personalised content is the number one reason why users unsubscribe from newsletters, as revealed by a recent study (see chart below, click to enlarge).


One out of four users further complained that they had problems with managing the email newsletter flood. This is doubtless a big shortcoming of email communication, especially with the ever increasing spam that we receive every day.

There are, however, interesting and effective alternatives to traditional email marketing which can be implemented by SMEs without great effort, for instance RSS-feeds or Twitter-tweets. New tools such as Google Wave and Mozilla’s Raindrop promise to offer new forms of organising and bundling online communication by combining multi-media content exchange and chat-functions.

Maybe these new tools and services will have the potential to oust or at least complement the traditional email newsletter as a marketing tool in the near future. What do you think? Share your opinion with us!

Saturday, 21 November 2009

Inside Azerbaijan: an Eye-Witness Account of a Teaching and Cultural Experience

Hopefully some readers and followers of my blog have already started to miss my posts over the past days, and even if they did not suffer from withdrawal symptoms they might have wondered what has happened to me.

Well, I was on a lecturing mission to Baku, Azerbaijan, for one week and unfortunately did not find enough time to blog, because I was too busy with lecturing and absorbing the life and culture there as much as possible. I taught the “Introduction to eTourism” course at the Azerbaijan Tourism Institute (ATI) in Baku and I must say that was an interesting but at the same time very satisfying experience (see photo below with my nice students).

The IMC University of Applied Sciences Krems has established a co-operation with the Azerbaijan Tourism Institute (ATI) some three years ago which gives Azerbaijan students the opportunity to study for the first tourism double-degree diploma in the country. Azerbaijan students are taught the same curriculum as it is taught to students of the Tourism & Leisure Management degree programme of the IMC University of Applied Sciences Krems.

I am sure that some readers might actually have problems in geographically locating Azerbaijan in the first place or even imagine to ever go there on a holiday, although the country at the Caspian Sea has without doubt a lot to offer. Nine out of the world’s eleven climate zones can be found in Azerbaijan. In terms of the size and the number of inhabitants Azerbaijan can be compared with Austria. However, an organised tourism industry, let alone eTourism industry, does not exist in Azerbaijan or is at most in its nascent stages. There are approximately 1.5 million Internet users in Azerbaijan or 18% of the total population (Source: www.internetworldstats.com/).
The tourist arrivals show significant growth and amounted to nearly 1.5 million in 2008 (see chart below, Source: Azerbaijan Ministry of Culture and Tourism).

The major source markets are Russia, Georgia, Turkey and Iran. Barriers to tourism (just to name a few) are expensive visa regulations, the generally poor infrastructure (especially outside of larger cities), the lack of organized tourism products and activities and the low number of less than 400 hotel and accommodation establishments (see chart below, Source: Azerbaijan Ministry of Culture and Tourism).


Comprehensive online tourism and travel information on Azerbaijan is hardly available for interested tourists. There are a few websites that contain some basic information on Azerbaijan (e.g. www.lonelyplanet.com/azerbaijan, Wikipedia.org, wikitravel.org) and there are also a number of Facebook groups but not yet an Azberbaijan tourism fanpage.

A more comprehensive information about the history, nature and culture of Azerbaijan can be found on the Azerbaijan Tourism portal which is published by the Ministry of Culture and Tourism. However, the official tourism portal is only mildly attractive and does not really help a visitor to plan a trip or even find and book an accommodation apart from a few selected hotels which are listed on the website. From what I have seen myself during my one week stay I believe that Azerbaijan has potential in areas like cultural, historic and religious tourism but even more for nature and sports tourism.

Therefore, I am very happy and content that I might have been able to contribute to the positive future tourism development of Azerbaijan with my course on eTourism which I conducted for the future generation of tourism managers at the Azberbaijan Tourism Institute.

Inshallah!

Maybe you are interested in more impressions of Azerbaijan.

Wednesday, 11 November 2009

Google Invests in Mobile Ads and VoIP and Says, “That’s Good for All of Us”

No doubt, mobile Internet usage is a fast growing market which has been boosted especially by the new generation of smart phones such as the iPhone or Google phone. Hand in hand with this trend goes the search for additional revenues through mobile advertising.
Despite or maybe because of Google’s corporate motto “Don’t be evil” the Google strategists know that attack is the best form of defence and therefore Google announced only yesterday that they bought a mobile display ad technology provider called AdMob, based in California, for $ 750 million. Being in a shopping and spending mood, Google further acquired the Voice over IP (VoIP) company Gizmo5 for a bargain of $ 30 million, probably in order to challenge Skype. Does Google know that the future is mobile?

Mobile phones have become an increasingly indispensable part of our daily lives. eMarketer predicts that by 2013 nearly 50% of American mobile phone users will access the mobile Internet at least monthly (see table below).


As a result of this, mobile applications for the travel and tourism industry are mushrooming. Mobile devices with integrated GPS support location based services and open new perspectives for the tourism industry to serve the customers better on the trip by adjusting and personalising the services to the specific location and situation of an individual traveler.
SMS-based context aware information push services have been used by many advertisers but have not really generated the big revenues for various reasons. Firstly, in most of the cases customers need to opt-in to subscribe to the SMS service and secondly text ads are not really that attractive for the tech-savvy generation N.

Google offers already many forms of mobile advertising, however its focus to date has been mainly on mobile search ads which can be seen as analogous to Google AdWords for search engine marketing. Google’s new strategic partner, AdMob, on the other hand focuses on mobile ads and in-application ads (see examples below, click to enlarge).


Mobile Internet consumers, used to a largely ad-supported Web content, will expect free content on their phones as well. Hence ad-based mobile applications can provide users with more free and low-cost mobile content and with contextual mobile ads that deliver useful information. Google claims that for advertisers the deal will bring better, more relevant location-based ads and greater reach especially in combination with Google’s existing search engine marketing tools. It is also likely that we will see more innovative and engaging ad formats developed especially for mobile applications. The benefit for publishers of websites and content (e.g. a DMO) may be that mobile advertising can mean a more effective monetization of their content.

Related article:
A New Travel Buddy Called iPhone

Thursday, 5 November 2009

Say it with a Song: Customer Complaints in the Era of Social Media

It has become kind of state-of-the art that tourists share their travel experiences on holiday review platforms and post comments on the perceived quality and service of hotels, destinations, sights, transportation means etc. Platforms such as www.holidaycheck.com or www.tripadvisor.com are gaining in popularity among visitors who make their booking decision dependent on what other customers have to say about the service they received. And very often the comments turn out to be relentlessly honest indeed.

Review platforms literally have put the power into the hands of the customers and the tourism suppliers have become at the mercy of their guests in terms of meeting and exceeding customer expectations. This shift from passive users to empowered producers or prosumers has been fostered by both the active participation of the users themselves in the online communication as well as the still growing popularity of social networking platforms such as Facebook or YouTube which enable users to publish and spread content easily. A combination of written text, photos and videos of the visited site can be published in an instant by visitors and can be then viewed immediately by other interested visitors.

However, a creative Canadian musician took the biscuit when it comes to expressing the frustration of a bad customer experience. After baggage handlers of United Airlines broke the 3,500 US$ guitar of song writer Dave Carroll he tried for nine months to get a compensation of 1,200 US$ for the repair of his beloved instrument, but standard procedures were applied to poor Davy and his endeavours were in vain.

That did not sit well with Mr Carroll. Therefore, he satisfied his thirst for revenge by creating a music video titled “United Breaks Guitars” which has been viewed on YouTube more than six million times since July. Yes – 6,000,000 times!


Eventually, United Airlines executives were ready to meet up with Dave and offered him US$ 3,000 compensation which he decently donated to charity.
Encouraged by the success of his video message, Dave composed a follow-up video that he published on YouTube last August and which has been viewed by more than half a million users since then.



This rather unconventional form of a customer complaint on social media platforms did not only increase Dave Carroll’s popularity as a singer beyond the Canadian borders but also made him a wanted speaker on customer service matters at various conferences. On this mission, it happened that Dave travelled to Colorado Springs less than two weeks ago to give a keynote speech at a customer service and social networking conference, and of course also perform his song “United Breaks Guitars”.
Guess what airline he took? – United Airlines.
Guess what happened? – His luggage was lost.

This amusing but informative story shows us clearly that the voice of an unsatisfied customer can be loud in the era of Web 2.0 and a subtle irony or parody seems to be an ideal formula for attracting a big audience on social media platforms. Maybe tourism suppliers will be confronted with more sung customer complaints on review websites soon.

I am grateful to my friend Alex Rayner who informed me about this great social media campaign.

Related articles:
Welcome to my Blog
Danish Mother Video Erased from YouTube

Tuesday, 3 November 2009

How to Generate Revenue with Social Media Platforms

The visitor numbers on social media platforms have been growing exponentially in the year 2009 and this growth will certainly continue in the next couple of years. However, even the bigger social networking platforms still struggle to find viable business models in order to generate revenue. The majority of the social media platforms such as Facebook or Twitter are (still) free to the users. Other networking websites such as Xing or LinkedIn charge their users for certain content and services.

Although Web 2.0 has changed the way how we use the web, it has not spawn new revenue models. The main focus of social media monetisation has been on the advertising revenue model, however current developments give evidence that payment for content will become an equally important revenue source as a “Social Media Survey” revealed which was carried out by Abrams Research among 200 social media leaders from across the USA and Canada (see illustration below, click on graphic to enlarge).

More than 45% of US social media leaders regard the “freemiumpayment model as the best way to turn social media platforms into business. The “freemium” model allows users to access basic content and services for free but premium services or specific content can only be obtained when paying a fee (e.g. subscription or pay per use). One fifth of the participants in the survey consider targeted advertising as the best way to make revenue through a social media platform, whereas traditional online advertising is seen as the least profitable revenue source. It is also comforting to know that only 4% think that selling user metadata is the way forward. Does Facebook agree?

Certainly, most of the social media platforms show hybrid models when it comes to revenue creation. What does this all mean for the users? Is it likely that Facebook, Twitter & Co will sooner or later charge users for using the platform or maybe accessing their fotos? According to eMarketer, users are willing to pay for social network content as long as they can create value to the customers. How much would you be willing to pay for your Facebook?

Related article: Eight Ingredients to Brew your eCommerce Business Model