The Might of Online Communities
The explosive growth of online social networks and the rise of microblogging tools like Twitter and Plurk signal a new marketing revolution that challenges conventional advertising.
The Might of Online CommunitiesBy Benjamin Chiang
From CommonWealth Magazine (vol. 429 )
On Aug. 17 at around 11 a.m., Tainan County magistrate Su Huan-jhih was anxiously surveying a point in the dike along the Tsengwen River where a leak had developed, and the whole roiling, muddy torrent was about to break through. He was thinking, "If we don't fix this quickly, the consequences will be unthinkable."
Soon after Su walked down to the embankment, his cell phone received a message from a Plurk user notifying him that the road to the tribal village of Madoulan and phone service there were both cut off. He immediately updated his itinerary, and as he headed toward Madoulan on a bumpy mountain road, he slowly punched out a Plurk on his cell phone to let Internet users know he was on the way.
Fifty kilometers away in the Tainan County command center set up to deal with natural disasters resulting from Typhoon Morakot, two 20-somethings were busy verifying disaster situations reported by others in the online community. They carefully recorded the specific location of the reported flooding, the depth of the floodwaters and the area's material needs and passed the information on to disaster relief personnel from the fire department. At the same time, they called Su in his car to keep him up-to-date on the situation in Madoulan.
Within 90 minutes, Su had inspected Madoulan and arranged for supplies to be shipped there. He also immediately notified the 6,000 Plurk users in his online community that two trucks with relief supplies were on their way.
"Having the Internet is like having many more pairs of eyes and nerve endings, enabling messages to come in from everywhere," Su enthuses. Taiwan was fortunate, he says, to have had tens of thousands of surfers using the Internet to compile data on the disaster and mobilize volunteers during Typhoon Morakot, resulting in the rescue of more than 10 trapped people.
The Power of Social Networking
New social networking sites such as Facebook, PTT, Plurk, and Twitter, once thought of as fresh online toys for the young, have unleashed the power of the unseen masses during Typhoon Morakot and its aftermath.
Internet users from around the country spontaneously contributed to disaster relief efforts, with some mobilizing relief supplies for the needy and others reporting the latest situation in their areas. This online community formed a massive popular disaster relief team and established a "Typhoon Morakot Online Disaster Center" that tried to make sense of chaotic and urgent disaster information.
Taiwan's worst flooding in 60 years on Aug. 8 led people to a surprising new revelation: a massive media revolution is brewing online. Social media have become a force to be reckoned with in Taiwanese society.
In just one week in July, hugely popular Facebook, with 250 million users worldwide, added more than 88,000 new users in Taiwan alone.
The Consumer Is Now Truly King
Web 2.0 interactive applications have been the talk of Internet site building for many years, but only with the advent of microblogging has the Web 2.0 era really arrived. And speed is the beginning of all revolutions.
Online users are limited to sending text messages on microblogs, so the messages don't pose too much of a burden on readers. Users need only spend five seconds to check out the title of a discussion topic, and if they are interested or have a specific need, they can connect to the official website. The initiative is entirely in their hands. These microblogs supplement the marketing gap left by websites (considered too mass market) and instant messaging services (too personalized and limited to one-on-one conversations).
"Microblogging puts consumers in command, enabling them to obtain and issue information, which increases participation levels and loyalty," observes Frank Chen, the general manager of Yahoo! Taiwan's Sales Group.
Following on the heels of the worldwide blogging craze, fast and immediate microblogging, limited to short messages of just over 100 characters, is sweeping the globe.
The Chinese-language version of Plurk, for example, is giving Facebook a run for its money. In Taiwan, a surprising array of enterprises, from mutton hot pot restaurants to breakfast shops to Taiwanese opera troupes, are all "plurking." (Table 1)
According to a report by media consultant Nielsen Online, 66.8 percent of the global online population spends time every month at "member communities," a category that includes both blogs and social networks. Time spent on these sites is growing three times faster than the overall Internet rate, making them the fourth most popular online activity, ahead of personal e-mail, the report said. (Table 2)
Nielsen Online also found that one out of every 11 minutes spent online globally is accounted for by social network and blogging sites, and users are becoming more diversified in terms of age. The biggest increase in visitors to "member community" sites in 2008 came from the 35-49 age bracket, which contributed 11.3 million new users, a number nearly half the size of Taiwan's population.
Why has social networking captivated so many people in such a short amount of time?
"They satisfy human beings' desire to make friends, interact and share their experiences," says Fred Liu, the chief operating officer of High Tech Computer Corporation (HTC) and an avowed Facebook fanatic. He picks up the company's Hero handset model, dubbed the "Twitter phone" in the UK, and shows his latest message.
Aside from high-tech executives, even the 80-year-old Ming Hwa Yuan Arts & Cultural Group has taken the plunge. It began in May this year to use Plurk to introduce its new Taiwanese opera performances and survey audience opinions.
"The scope of performances is growing increasingly larger. Traditional questionnaires and forums can no longer adequately reflect the opinions of our audiences," says Ming Hwa Yuan Taiwanese Opera Co. president Sheng-fu Chen. He himself spends little time on the Internet, but every night before he leaves work at 2 a.m., he asks his online marketing team to print out the day's "plurks" related to Ming Hwa Yuan so he can read them at home.
Plurk has yet to generate tangible revenues for the performance troupe, but it provides a "low cost, high reward" communication model that has consolidated Ming Hwa Yuan's scattered fan base into a loyal following.
"We are able to predict ticket sales for every performance with 90-percent accuracy," says Chen proudly.
The Era of Earned Media
These ascending social networks are gradually disrupting existing advertising and media models.
"Companies are launching their own media and going further to create earned media," stresses K.F. Lee, CEO of Aegis Media Greater China. In the future, enterprises will find themselves increasingly reliant on recruiting influential people to help generate publicity – something for which the Internet is uniquely suited.
In the past, companies would market their products or services by buying space or time in mass media outlets. Over the past decade, however, these same companies have built their own websites and blogs and attempted to use their own media as a marketing platform in their pursuit of "earned media" – favorable publicity obtained through channels other than advertising. With the ascent of microblogging, enterprises now need to "earn" positive word-of-mouth from strangers through new media to boost their marketing efforts.
That's why mastering online social media has become the new hot discipline in marketing.
According to a survey in PQ media, a market consultant that tracks word-of-mouth advertising, spending by American companies on word-of-mouth online communities grew at an average compound annual rate of 108.8 percent from 2003 to 2008, going from US$3 million in 2003 to US$119 million in 2008. (Table 3)
Traditional word-of-mouth marketing relies on people spreading the word to their friends, but now, "young people tend to believe friends in online communities they have never met," says Freda Shao, the managing director of wwwins Consulting Taipei. Younger consumers would rather believe the evaluations of strangers than companies' advertisements.
The Nielsen Online survey found that when consumers purchase goods, they tend to believe the posted reviews of consumers and expensive TV commercials more than magazine advertisements and newspaper ads. (Table 4)
Thus, to companies, earning positive word-of-mouth in social networks is nearly as important as effectively investing money in advertising.
Taipei-based China Motor Corporation, for instance, devotes 20 percent to 30 percent of its marketing budget to online social media, "almost equal to the amount spent on television commercials," asserts Chinamotor advertising director Jessica Kao .
In the past, China Motor would launch a new model with a television advertising campaign, but today new cars are promoted simultaneously on the Internet and on television, with online ads sometimes hitting the market even earlier than the TV commercials.
For many top corporate executives and marketing people, the rapid pace of the Internet's constant innovation has been dizzying.
"They haven't even established the KPI (key performance indicators) for blog marketing, and microblogging has already emerged," sighs BenQ Corporation Brand Management Center project manager Luke Chen, feeling the pressure from the Internet's lightning pace of change.
Private enterprises are both in love with and terrified by microblogging and the huge number of people social networks draw, but they know they cannot ignore this growing social media channel.
Big Vendors Join the Fray
Taiwan's two big branded computer vendors, Acer Inc. and ASUSTeK Computer Inc., have extended their competitive rivalry to the social networks. Acer has actively organized a Facebook community that is 2,690 strong and growing. "You would have to spend a lot of money to find that many Acer notebook PC fans," says one Acer marketing executive.
By using Facebook to test the reaction to a variety of notebook specifications, Acer discovered that consumers really liked smaller notebooks, markedly different from the specs originally drawn up by the company, and it immediately adjusted its sales model.
ASUS has also established a social media presence. It mobilized Plurk users to vote for the new company spokesmodel, triggering widespread discussion of and anticipation for ASUS' new items.
HTC has made an even more conscientious effort to plunge into social networking, using Facebook to post videos of tests run on its latest handsets, and updating pages of product information on a daily basis. Its Facebook following has grown into a community of 6,890 fans, who enthusiastically share their feelings about using smartphones.
From 'Talking to' to 'Talking with'
The growing influence of online communities has made contacts between vendors and consumers friendlier and faster. Instead of "talking to" each other, they now "talk with" each other, explains Freda Shao, who helps clients develop digital marketing strategies. Companies should build brand recognition together with consumers rather than making publicity a one-way street, as has been the case in the past, Shao says.
For brands just entering the market, social networks offer a golden marketing opportunity to challenge the big players, by capturing consumer "mind share" – the amount of time an individual devotes to or thinks about a brand, company, or product.
Competitively squeezed between many well-established domestic household appliance brands and big Japanese and Korean vendors, Chi Mei Optoelectronics has resorted directly to online social media to promote its LCD TVs and monitors, using the Internet as a weapon to deepen its brand image.
Targeting its LCD TVs at the 35-49 age bracket, Chi Mei created a blog called "I Live on a Lane of New Luxurious Happiness." Using emotional marketing, Chi Mei appealed to the more than 600,000 Internet users who clicked on the blog to discover a feeling of well-being that suited them and encouraged them to express their own views on the subject. "More than 1,000 users participated, and they produced all the content," says Chi Mei Group executive vice president Ben Cheng.
This year, Chi Mei's investment in online social media marketing accounts for 20 percent of its overall spending on brand marketing. According to a survey by the Institute for Information Industry, Chi Mei's mind share rankings were No. 2 in Taiwan's LCD TV market (behind Sony), and No. 1 in LCD monitors.
Seizing consumer mind share is directly reflected on the bottom line. Last year, Chi Mei became the top LCD TV brand in Taiwan, with a 14-percent share of the market, and Taiwan's second-leading monitor brand, with an 18-percent market share.
Although the power of interactive communications through social networks is boundless, companies have to be careful in dealing with the networks' relaxed communication style.
"They have to open their minds and let their brand's assets loose on the Internet, and generously give online fans the chance to use the brand. They can't lock their brand in a safe," Freda Shao advises. Only that way, she says, can enterprises more clearly understand consumers' true behavior.
Translated from the Chinese by Luke Sebatier