A few days ago, I heard about a top executive at a digital advertising agency who referred to Facebook "paid-per-reach campaigns" as "paid likes." You might think: "So what? What's the difference?" Let me tell you ... the difference is so enormous that is not even funny to see how Facebook has confused digital marketing executives with its algorithm changes extravaganza. The saddest thing is not that the term used by the ad executive was "paid likes" instead of "paid reach," but that the context in which the term was placed within the conversation implied that the likes were somehow fake. The confusion in the industry is understandable. It has been hard for many people in the industry to keep up with the perhaps too frequent algorithm changes. Just for the sake of all the social media strategists out there, let's clarify the madness to their bosses and clients, so nobody ever thinks that you are "buying social love." We do not "buy" the likes. We buy impressions to deliver your message to a relevant audience(s), and the users reached will decide whether they want to like/follow your page or not.
Let's go back to the digital advertising basics.
Marketers "buy" impressions so a particular online message reaches their target audience, right? The same exact deal applies to Facebook. Fair or not, it is what it is, and if advertisers want to keep playing in the Facebook sandbox, they will have to follow the rules or leave.
R.I.P. Facebook Organic Reach. This is actually the root of the problem. A post’s organic reach reflects how often a brand's message will be seen by its page's audience without a "pay to reach" effort, and according to the latest number reported by Social@Ogilvy, which tracked the drop earlier this year, that reach is currently close to 2% for pages with over 500,000 followers.
What to Expect
The Facebook free ride is over for marketers, and brands better start preparing for the day when the organic reach will be zero. Marketing teams will need to add this outlet to their paid channel list and their advertising budget in order to continue engaging their hard-earned audiences. "There's no such thing as a free lunch," someone said once, and Facebook listened. We should have known better!
The Groupon model may have hit a snag, but when it comes to online retail, there’s plenty in store for brands who think global, writes digital strategist Ivonne Kinser.
In 2012, e-commerce within the United States accounted for 28 percent of all global sales. It’s clear that Americans love to shop online, but “global” is the key word here.
In China, for example, the e-commerce industry is forecast to be worth $370 billion by 2015 – up from $74 billion in 2010. Over in Latin America, Forrester predicts that Brazil’s online retail sales will reach more than $25 billion by 2017, andeMarketer projects Mexican e-commerce sales will reach $7.98 billion this year and continue growing into 2016, when annual sales could reach $13 billion.
Meanwhile, in an interview with PandoDaily about the future of retail, American entrepreneur and web veteran Marc Andreessendidn’t sugar-coat his assessment of the traditional brick-and-mortar retail industry: “Retail guys are going to go out of business and e-commerce will become the place everyone buys. You are not going to have a choice.”
The rise and fall (and rise again) of group buying
There are plenty of e-commerce business models to choose from, including group buying and daily deals, subscription e-commerce, social e-commerce and more. One of the most popular business models is “flash sales” (also known as private sales clubs).
The success of this model can be attributed to the sense of urgency triggered by limited quantities of the desired item combined with the limited time customers have to decide whether to purchase the product.
Not only that, but flash sales sites also tend to benefit from the enthusiasm of the shoppers, who become brand advocates and help grow the popularity of the sites by sharing sales and links via their personal social networks.
One of the first successful flash sales models was launched by Groupon. After remarkable initial success, however, the startup encountered a problem that, in my opinion, had nothing to do with the model itself.
Despite growing competition, Groupon remains one of the more popular social buying sites.
The success of Groupon’s business model depended on the company’s ability to grow a substantial client-base and drive purchase repetition: Groupon needed a huge audience that would be happy with their purchases and return repeatedly to the site.
But price alone does not guarantee repeat customers; a great service or product experience is equally crucial. Unfortunately forGroupon, it had no control over the companies selling goods and services through its platform, which created serious problems for Groupon when customers’ expectations were not met.
Among the noteworthy companies to have successfully executed this model are Gilt (which in two years grew from no-name startup to e-commerce powerhouse worth almost $400 million),Rue La La (whose parent company was acquired by eBay in March 2011 for $2.4 billion), and Fab.com (which recorded more than $100 million in sales last year and is set to more than double revenue in 2013).
As one of the biggest privately held e-commerce properties on the web, its support of the flash sales model is proof that this e-commerce trend is here to stay.
Sites like Fab.com are jumping on the flash sales trend and are growing fast.
Crowd commerce
SouthWinston LLC (an investment holding and technology incubator company) announced recently that it has developed, incubated and led an investment round in Join’em, the world’s first crowd-commerce marketplace (currently in beta testing). That’s right, crowd-commerce.
Join’em turns the existing group-buying model on its head by allowing customers to initiate flash sales: Shoppers select the products, pick the price range, launch the deals and promote them through their networks. Reputable merchants and suppliers then compete in a “reverse auction” to fulfill those deals at or below the maximum price set by the shoppers.
According to Chief Marketing and Development Officer Darren Waxman, the platform offers retailers, manufacturers and consumers a next-generation e-commerce marketplace where massive crowd-sourced demand meets reverse-auction efficiency. The Join’em model is just one of many exciting changes coming to the e-commerce industry. As companies look to meet new challenges and figure out where e-retail is going, I look forward to watching the e-retail revolution unfold.