Are you Ready for Web 2.0 Marketing?

A must-read for anyone with a stake in the future of consumer behavior

By Arthur Stern and Chie Wakabayashi

Are you ready for Web 2.0 Marketing

“Telling and selling” is dead and there is the potential for “complete irrelevance of what we call traditional media”. These provocative statements came in a recent advertising convention keynote speech by Procter & Gamble’s Global Marketing Officer, Jim Stengel, as he called for a “shift in mindset.”

A Nike iD promotion campaign in Japan recently used blogs and SNS as key media channels. Nike iD allows customers to customize shoes, clothing, etc. to match their personal style; and the campaign centers on a humorous video called “Nike Cosplay.” Nike downloaded the video on YouTube and advertised the video using a blogs-base ad service provider to build word-ofmouth. To date, the video reportedly has over 1 million views, with over 750,000, of which were via YouTube. Unlike a broadcast media buy, an SNS campaign depends on grassroots conversations among interested consumers to spread the message. Something different is happening in the marketing world, and it is often fashionably labeled ‘Web 2.0.’ Online word-of-mouth, social network services (SNS) and communities are threatening traditional marketing practices and media; and it is happening around the globe.

Web 2.0 marketing call-to-action

‘Web 2.0’ was coined by O’Reilly Media in 2004 to note “some kind of turning point” for the Internet. As with any popular buzzword, the definition of Web 2.0 is often both vague and contentious and most discussions center on enabling technologies and new business models. We believe that these discussions do not address the implications for brand marketing, even though there is an unambiguous call-toaction for marketers

• Web 2.0 is about fundamental changes in how people are using the Internet
• Web 2.0’s impact on consumers and, by extension, on brands is considerable and pervasive
• Web 2.0 marketing requires, as Mr. Stengel stated, a “shift in mindset”

Traditional marketing is one-way publication of a brand message to customers. All communications to a target ‘audience’ should be ‘on point’ and ‘consistent’ with the branding strategy. ‘Controlling’ brand identity and ‘managing’ the customer were key concerns for ‘brand managers’. Mr. Stengel is clear about his proposed shift, “the smart money is on building relationships” and this means building brand experiences with, not just for, customers. He points out that control is not an attribute of a “healthy” relationship.

What gives this message urgency is how quickly Web 2.0 is enabling very large, self-defined, global-reach communities and a different mode of communication. A snapshot of the top SNS sites, started a few years ago, indicates how quickly pervasive Web 2.0 is becoming:

• MySpace: 65 million members; recently signed up 270,000 members in one day – the 3rd most trafficked site in the US tops the charts for some weeks; 5th most popular site in the world
• Mixi: over 8,000,000 members; more than doubled in the last year – the 3rd most trafficked site in Japan ahead of Rakuten and Amazon

People on the Internet are not only sharing information, they are also putting an increasing amount of trust in ‘people like me.’ For example, the top rated shampoo at the @cosme e- Commerce web site for women in early April was designed for and advertised only to men. The source of this surprising crossover success was solely customer word-of-mouth, which endorsed the product and overwhelmed the male-oriented marketing message.

Brands are conversations

The 1999 Cluetrain Manifesto presented a vision of the Internet that seems prescient:

"A powerful global conversation has begun. Through the Internet, people are discovering and inventing new ways to share relevant knowledge with blinding speed. As a direct result, markets are getting smarter — and getting smarter faster than most companies."

Brands are conversations, and the promise (or threat) of Web 2.0 is a reinstatement of the primacy of grassroots, marketplace conversations that existed before mass media. Web 2.0 technologies and services are enabling a fundamental shift back to sharing information based upon ‘connections’ and ‘community.’

For marketers, there are brand conversations that you are not controlling and in which you are probably not even participating:

• What brand experience is shared in the 35+ ‘fan’ sites for Volkswagen in Japan?
• What is the buzz about BMW in almost 4,000 blog entries per day?
• Why does Nike have twice as many blog entries per day as Adidas?
• Should Shiseido be concerned about a blog entitled the “Secrets of Shiseido” (Shiseido no himitsu)?
• What is said in 5 Guinness-named groups on Mixi or the 692 communities that mention the brand?
• Are Cartier-named groups on Mixi with some 18,000 members contributing to the brand image? How do their interests link with groups who like, import brands, shopping or celebrity lifestyle?

Who are these people and how big is their influence? Does the marketer ignore the brand community conversation or maybe try to drown it out? Or does the marketer decide, as Mr. Stengel has, that developing a twoway relationship and “making it personal is how we will grow the bottom line”?

Lessons from Web 2.0 marketing in Japan

To start, government studies in Japan give a profile of how the Internet has changed people’s behavior. Internet is the consumers’ information media of choice and often has a purchase impact second to or comparable to in-store shopping. The change in the media pecking order has been well established. Except for news where TV may still be slightly ahead, the Internet is the primary source of information for lifestyle, shopping, fun, and so on. As a result, 80% of Japanese consumers research products and travel online and over 90% have made online purchases.

Unsurprisingly, leading companies in Japan are trying to keep up with their customers. Web 2.0 marketing has started with companies as diverse as MUJI, Honda, Gulliver, Mitsukoshi, Yamaha, and Nike actively building online communities.

MUJI’s WEB 1.5

MUJI’s e-commerce site, which they call a “portal community”, offers a stellar example that could be labeled Web 1.5 marketing. MUJI produces and sells household goods, apparel and the like. Their image of innovative, quality design even extends to supplying selected products to the Museum of Modern Art in New York City.

E-Commerce was started in 2000, and in the last fiscal year MUJI.net revenues grew about 50%. MUJI’s online shopping growth was almost twice the average gain for all retail e-Commerce in Japan and far outpaced MUJI’s samestore growth of 1.3%.

From the beginning, MUJI.net e- Commerce included a community section, and since 2002 MUJI has featured product development with customers on the web. MUJI’s reported results include selling 1,000 cars in collaboration with Nissan, but these incremental sales activities seem secondary to building relationships with MUJI fans.

Early this year, MUJI added a new customer design and evaluation feature in conjunction with Cuusoo Seikatstu. The intention is to interactively engage a new customer group that shares related interests in new products and product design.

Labeling these activities as Web 1.5 is to note that the dialogue is ‘monitored’ or ‘managed’ by MUJI. Individuals are not free to interact with each other or to create special interest affinity groups. In other words, this isn’t the Web 2.0 open community conversation.

GULLIVER’S TRAVELS

Gulliver, the largest used car distributor network in Japan, pioneered an online shopping experience better than the offline version. Their used car transaction site provides a car selection process that is completely transparent and does away with the ‘used-car salesman’ hassle.

In addition, Gulliver has developed three community sites within a brand portal to extend their relationships with customers. “CORISM” is an information site featuring news and expert reviews for consumers interested in cars, without either ‘marketing’ or a sales ‘call to action.’ Another site, “Laboo!”, is an entertaining interactive aid for selecting a car. Based on lifestyle, visual or color sense, feelings, and so on, clusters of cars are recommended for the consumer’s review.

With one set of content oriented toward the expert and another at the ‘novice’ or lifestyle-oriented, Gulliver is a broadly positioned as the car-buyers’ resource and friendly face. Both information sites are content-rich and complement the transaction site.

Gulliver’s SNS community site “GAZZ!” takes one step further. The content is from consumers in the form of blogs, reviews, groups, and features such as “my beloved car.” Interestingly, according to independent tracking the SNS community receives 10-15 times as many visitors as the retail transaction site.

YAMAHA’S MUSIC WORLD

Yamaha is supporting a music community, but their sponsorship is played down. They believe a manufacturer’s community is generally viewed as less interesting and, in addition, fans of competitive products would be reluctant to join. Therefore they’re developing “Music e-Club” as a user-driven SNS.

Web 2.0 marketing calls for engaging consumers in a two-way brand conversation and for entering into the grassroots, marketplace conversations.

“Music e-Club” is a community portal “supporting music in your life”. 13 sites within the portal target different interest groups. Player’s Kingdom, for example, is oriented toward wannabe and unknown musicians. The key features include music upload, visitor recommendations, information exchange and a regular online contest.

In these brief case studies, we believe there are some valuable web marketing lessons:

1. The importance of more compelling online communications – i.e., richer content that goes beyond ‘tell-and-sell.’
2. The need to engage consumers and give consumers a public voice.
3. The focus on expanding the brand community, continually reaching out to related customer segments.

The online content and features will necessarily vary by category. Sites in the apparel category might offer interactive ‘virtual fitting rooms’ while consumer electronics may make use of rich-media product tours.

To support greater customer engagement, companies should be planning more aggressive online advertising budgets. Internet ad spending in Japan has been increasing almost 50% annually and surpassed radio ads in 2004. However, online media spend still represents only 5-7% of the total ad budget on average. Internet ad spending, along with spending for brand and campaign sites, still doesn’t come close to matching the web’s purchase influence.

A Web 2.0 marketing model

A lot is said or written about Web 2.0, without real agreement about what it is or even whether it really exists. There is similar lack of clarity about what marketers should actually do. Among the reasons may be that Web 2.0 encompasses rapidly changing behaviors and a very broad set of practices. However, the examples presented suggest a general model for marketers.

MUJI’s “portal community” offers a mind-set for getting started: 1) an outside-in, consumer-oriented approach; and 2) a diverse set of content and features that includes customer interaction. Gulliver, Yamaha and Honda all follow this model, adding more varied content and content deliveries to attract different affinity groups.

Gulliver, Yamaha and Honda also offer user interaction facilities with open forums for people to interact and share content. The SNS-style collaboration positions them in the Web 2.0 realm. Yamaha reports that their user base only began to take off when they added user interaction features in late 2001 and growth accelerated again when they began adding SNS features in 2004-2005.

Nike shows the potential of the ‘really new media’ – communicating via the uncharted territory of blogs and SNS. Of course, the basic principle of viral marketing leveraging existing social networks has been around for a while and is not limited to the Internet. What’s new is the size and interactive capabilities of the new social networks.

Within the potential for viral outreach, there is an imbedded opportunity to find and interact with natural brand advocates. Recently, for an Ashley Associates client, notice of a campaign event was added to several brandidentified SNS-site groups. In a two-week notice period, approximately 25% of the brand-identified members, as well as a lesser number from the other groups, visited the campaign site. In addition, a disproportionately high percentage of event registrations came from these brand-identified visitors. Web 2.0 marketing calls for engaging consumers in a two-way brand conversation and for entering into the grassroots, marketplace conversations. Our general marketing model includes:

• rich content that goes beyond “tell and sell”
• content organization and delivery with increasing levels of customer interaction and control
• community development with a social network outreach program

When building a brand community portal and, especially, when participating in social networks, we can suggest some useful guidelines:

1. Be remarkable and think creatively: This is a viral environment. People quickly recognize and reject ‘advertising.’ Editorial and advertorial can work, but only if it is genuine and authentic.
2. Remember that it is a perpetual beta: There is a place for publishing the brand message, but the two-way dialogue will be organic. Consumer interests will evolve, and the company must be in a continual see-learn-do mode.
3. Measure engagement: More detailed data mining about which content, what breadth and intensity of interaction, and so on, will be necessary to monitor engagement and to identify new interests.
4. Respect that it is a community: People’s interests have to come first. Be generous about building a community and sharing content. The benefits are the added reach and credibility of customers’ endorsements.
5. Be prepared for a long-term commitment: Web 2.0 marketing will require active, on-going updates and evolution of both content and concept. The mindset and budget need to match

Web 2.0 marketing wrap-up

In reality, we side with the group that says there is no Web 2.0, only the Internet. For us, ‘Web 2.0’ is a signpost that something new is happening, that the ‘brand conversation’ is growing in a way that challenges traditional marketing. In this regard, Japan consumers’ Internet usage is on par or ahead of Western trends, especially in the area of information sharing and social networking.

On the other hand, Japanese companies overall seem slower to respond, and the communications gap between consumers and brands is greater. ‘Web 2.0 marketing’ is a call to action to integrate fresh ways of reaching and engaging consumers into the marketing plan.

Some notable companies in Japan, as well as elsewhere, are early adopters. They’ve overcome concerns that “others aren’t doing it” and this is “playing with fire,” as well as the worry that the message can’t be “controlled.” De facto, they’ve accepted that the traditional advertising model of attention–persuasion–action is no longer sufficient; and they’ve followed their customers by incorporating the Web components of search–share.

The term ‘Web 2.0’ will someday disappear, and it may again just be the Internet but now is the time to build the Web 2.0 marketing foundation and to consider how to join the consumers’ brand conversations. You can’t control the message, but you can find ways to contribute to the broader conversation and to engage consumers.

Contact Details:

Arthur Stern
arthur@ashleyassociates.co.jp

Chie Wakabayashi
wakabayashi@ashleyassociates.co.jp

Website
www.ashleyassociates.co.jp