Archive for the ‘ Business Tips ’ Category

Groupon’s fall to earth swifter than its fast rise


NEW YORK (AP) — Only a few months ago, Groupon was the Internet’s next great thing. Business media christened it the fastest growing company ever. Copycats proliferated. And investors salivated over the prospect of Groupon going public.

Today, the startup that pioneered online daily deals for coupons is an example of how fast an Internet darling can fall.

Groupon is discounting its expectations for the IPO that in June was valued as high as $25 billion. In a regulatory filing Friday, the company said that it expects a valuation that is less than half that at between $10.1 billion and $11.4 billion.

It’s the latest twist for Groupon’s IPO, which was one of the most anticipated offerings this year. In June, after Groupon filed for the offering, the SEC raised concerns about the way it counts revenue. Then the stock market plunged.

Now Groupon faces concerns about the viability of its daily deals business model. The novelty of online coupons is wearing off. Some merchants are complaining that they are losing money — and customers— on the deals. And competitors are swarming the marketplace.

“Groupon is a disaster,” says Sucharita Mulpuru, a Forrester Research analyst. “It’s a shill that’s going to be exposed pretty soon.”

Groupon shows what can happen when a startup experiences steroidal growth in an unproven industry. To its defenders, the Chicago company is a victim of its success, its stumbles emblematic of a business in infancy. After all, Groupon has hordes of fans who rave about the company’s deals and its liberal refund policy. And some merchants see the company has a way to get much-need exposure.

“It’s free marketing and it brings in a lot of people,” says Cono Moreno, owner of Brooklyn’s Verde restaurant.

But critics say the issues Groupon is facing are symptomatic of something more troubling: questionable accounting, an overvalued business model and an industry that is turning into the digital equivalent of junk mail.

Groupon is expected to go public Nov. 4. The company could not comment for this story due to the quiet period for its IPO, during which time company officials are barred by regulators from discussing anything about the firm. But interviews with analysts, investment managers and merchants tell the story of a company that grew too fast as it raced to go public.

Groupon’s beginning

Groupon began in 2008 when computer programmer Andrew Mason, a Northwestern University grad and former punk band keyboardist, figured out how to get people excited about the low-margin business of coupons.

Mason’s brainchild: sign up merchants to offer coupons online through a website and Groupon’s email subscriber list. Shoppers who see these ads on their computers, tablets or mobile phones can then buy the coupons, getting bargains on everything from knee socks to Botox. The deals are targeted toward customers’ cities and preferences. Groups bidding on coupons equals — voila — Groupon.

By 2010, Groupon was in nearly 100 cities and 25 countries. Groupon’s staff ballooned to nearly 10,000. Mason, now 30, was on his way to becoming the next tech billionaire.

The scene was set for an IPO. In June, Groupon filed documents with the SEC reporting $713.4 million in revenue in 2010, making it the first company to surpass the $500-million revenue mark in its third year, according to Forbes magazine. But Groupon began facing a growing perception that its business was unstable.

The online deal space was getting jammed with competitors, like Living Social, and Google. They are among the many copycats who are attempting to do what Groupon does. Big merchants are also running their own daily deals online.

At the same time that competition is building, consumers are questioning the quality of Groupon’s offerings. Those who are disgruntled with Groupon often broadcast it on Yelp, the user review website that rates merchants. There’s even something called the “Yelp Effect,” named for the way angry customers drive down the merchants’ Yelp ratings.

“Most of the deals are for female-centric services like spas and nails or for high-ticket non-necessities like skydiving and travel,” says Richard Breen, a Greenville, S.C., marketing executive who used to use Groupon. “I typically delete it each day now without opening the email.”

When she first started using Groupon in 2008, Sabrina Kidwai, of Alexandria Va., was happy with the deals site. But then she used a Groupon for a picture canvas for a family photo. She placed the order three days before the Groupon’s expiration, but the merchant was so overwhelmed with the response to the deal that it couldn’t fulfill her order. What ensued was a customer service nightmare that ended with Kidwai getting her picture canvas two months later.

“I definitely think there are some wonderful deals, but users really need to pay attention and speak up when the company provides you with a bad experience,” she said.

Adding to growing customer discontent, Groupon, which was initially seen by small mom-and-pop shops as a way to drum up new business, was losing favor with some of them. Merchants began to do the cruel math on the daily deals.

Restaurants offering $50 of food for just $25 only collect $12.50 — not even enough to cover the cost of the food. Some businesses also complain that the deals for new customers anger long-time patrons. Others say that the bargains attract high-maintenance types who don’t turn into loyal customers.

“Your restaurants are full packed with people who aren’t making you any money,” says Paul Evans, a Kansas City marketing executive who advises clients against using Groupon.

Take Jessie Burke, for instance. Last year, the owner of Portland’s Posies Café offered a $13 coupon for $6. The café was deluged with customers and Burke ended up having to take $8,000 out of personal savings to cover payroll.

“It is the single worst decision I have ever made as a business owner,” Burke said in a blog post that quickly went viral.

Andres Arango, founder of natural jewelry company, had a similar experience. He sold 80 coupons — $35 of jewelry for $15 — in two days. But of that $15, he only got $7.50. And he still had to dole out $35 worth of jewelry.

As far as customers? “They never came back,” Arango said

John Byers, a Boston University computer science professor who conducted a study on thousands of Groupon deals, wrote that he found that “Offering a Groupon puts a merchant’s reputation at risk. The audience being reached may be more critical than their typical audience or have a more tenuous fit with the merchant.”

Groupon also has faced trouble behind its own doors.

After only two months, its public relations chief quit in August. The next day, CEO Mason wrote a 2,500-word email to the staff defending Groupon against critics. That email was leaked to the press and then lambasted by some analysts and members of the investment community for violating terms of the quiet period.

Two seasoned executives hired as COOs also left. The latest, former Google sales vice president Margo Georgiadis, resigned after five months to return to Google. Her departure coincided with Groupon’s announcement that it was restating its revenue by around half.

“It’s like watching a Ben Stiller movie and waiting for the next painful moment,” says Mulpuru, the Forrester analyst.

The next chapter

After Groupon filed documents for its IPO in June, the SEC — and the investment community — began asking serious questions about the company.

The first concern stemmed from how Groupon accounted for its revenue.

Groupon roughly splits the money it collects from customers with merchants. But in the filing, Groupon reported all of its gross billings as revenue. Standard accounting principles dictate that Groupon should have used net revenue — the amount it keeps after paying the merchant.

For example, Groupon reported $1.52 billion in revenue for the first half of 2011. But after the SEC questioned it, Groupon in late September submitted new documents that showed that net revenue in the first half of this year was actually $688 million. Groupon was overstating its revenue by roughly half.

Groupon’s growth has no doubt been quantum. Since November, 2008, it has signed up 142.9 million email subscribers and has had more than 30 million customers. But only 20 percent of subscribers have purchased a Groupon. And only 10 percent have purchased more than one.

Groupon also faces concerns about how it has used its money.

On Oct. 7, in its fourth amendment, Groupon disclosed that it had spent half its net revenue — $345.1 million — on marketing costs alone during the first half of this year. Analysts think of those costs as how much Groupon is paying to acquire subscribers.

Additionally, there are questions about how the company has used investor money. Traditionally, investor money is used to grow a business before it goes public. But according to Groupon’s SEC filings, $810 million of the $946 million it raised went to early investors and insiders. That includes $398 million to Groupon’s largest investor, shareholder and executive chairman, Eric Lefkofsky.

“Taking this money raises questions about the integrity of the company and enormous questions about the quality of the management team,” says Mulpuru. “Groupon’s primary problem first and foremost is greed.”

Meanwhile, the company’s debt has skyrocketed. Groupon’s ratio of debt to capital is 102 percent. By comparison, the ratio for social-networking site LinkedIn is about 30 percent and gaming site Zynga’s is about 49 percent. “Those companies are all in normal territory,” says Ed Ketz, a Penn State accounting professor. “But Groupon’s is excessively high.”

In Friday’s filing, the company laid out third-quarter financial figures that showed it is getting closer to profitability. For the three months ended Sept. 30, Groupon narrowed its net loss of $10.6 million on revenue of $430.2 million in part by lowering marketing spending. That compares with a loss of $49 million on revenue of $81.8 million in the same period last year.

Groupon, which rejected a $6 billion takeover offer from Google Inc. last year, disclosed in the Friday filing that its revenue has grown from $1.2 million in 2009’s second quarter to $430.2 million in the third quarter of this year.

The company has its supporters. Groupon has been funded by such venture capital heavyweights as Andreessen Horowitz, firm of Netscape founder Marc Andreessen. Andreessen declined to comment, but in an August essay in the Wall Street Journal, he wrote that companies like Groupon would “eat the retail marketing industry.”

“We are in the middle of a dramatic and broad technological and economic shift in which software companies are poised to take over large swaths of the economy,” he wrote.


Work with Brand Experts

If you happen to need someone in order to help you with building your brand, one of the last things you should do is consult someone who lacks experience. In addition, you should not try to do this type of marketing on your own. Essentially, the type of marketing that you do will likely differ from someone who is a professional. Therefore, you are giving yourself a disadvantage.
Why You Should Never Attempt To Do Your Own Branding?

Any company that wants to expand, needs to utilize the powers of branding. Therefore, this is one area of the business that you should ensure is done right. Below, you will find some of the main reasons on why you should not do your own marketing and instead leave it to branding professionals.

You Lack Experience

If you don’t have the experience to build your brand, you will not have nearly the success that you would if you use a branding company. Without experience, you will be denying yourself the opportunity to reach your full potential. For this reason, if you don’t know what you’re doing, you should avoid doing it.

Experience is Desired

When you opt to use a branding company with a great deal of experience you will increase your chances for success. Marketing can be very challenging and takes years to master. People that repeat processes over and over usually have a better idea of what actually works.

A Variety of Skill Sets

Successful marketers possess a wide variety of skills. These individuals have to be able to think analytically while being able to identify things that are meaningful. Some branding professionals don’t have all the skills, but do have the resources to effectively use these skills.

Differ in Perspective

Many times, companies find it very difficult to market themselves. This is because the way you see your business is often different than how other people see it. Further, if you market a company, you have to have someone that is able to evaluate their observations before creating a marketing strategy. If you try to do this on your own, you might not see areas that need work because most people see their businesses in a very positive light.

One of the most important things that a business owner can do is to find the best branding company. An experienced local branding professional will be able to make suggestions that will help a business grow. If your company doesn’t have a presence, you will not have as much business as you would with a brand.

What We Can Learn From Steve Jobs



Millions of people today are paying their tributes to Steve Jobs, arguably one of the most important and influential CEOs of modern day history. It is hard to find a person like Jobs. He had laser-like focus and demanded the utmost quality of his employees. From starting Apple in his garage, to getting ousted in 1985 from the very company he built, to coming back in 1997 and taking Apple (Nasdaq:AAPL – News) from the brink of bankruptcy to the largest company in the world, Steve has changed the world in more ways than one. Steve Jobs clearly had a significant impact on people around the world and left us along with the business community a few lessons we can all share. (


Focus on Quality, Not Money
To Jobs, it was never about the money. At age 22 he had nothing; at age 23 his net worth was $1 million; at age 24, $10 million; and at the age of 25, over $100 million. Along the way, he was uncomfortable with his fortune. His focus was on creating life-improving products and making an impact on a person’s life. That’s what drove him, that’s what made him get up in the morning. Money was just a side effect that he didn’t care to think about.

“Being the richest man in the cemetery doesn’t matter to me. Going to bed at night saying we’ve done something wonderful – that’s what matters to me,” said Jobs.

The business community can take note. Put people first. Focus on quality.

Focus on the Future, Not the Present or Even the Past.
Always the visionary, Jobs was ahead of his time, time and time again. Too often companies can get trapped in the present, pumping out products with no inspiration. A few examples: In 1998 the first iMac came with no floppy disk drive whereas every other computer manufacturer had still included them at that time. The release of the iPhone did not have a keyboard whereas the Blackberry, the most popular smartphone at the time, had one. It also did not include flash as Jobs saw HTML 5 as the future. Now with the iPad, it promises to be the computer for everyone that the original Mac aspired to be. Through all of these decisions and more there was backlash, but in the end people eventually came around and benefited from this forward thinking. The world would be more innovative if more companies had the same focus.

Show People What They Want, Not What They Ask For
Never relying on focus groups, Jobs trusted one thing: himself.

“Don’t let the noise of other’s opinions drown out your own inner voice,” he said.

People often think they want something until they get shown an alternative they never thought possible. Another quality about Steve was his ability to say no, even more often than he said yes to ideas.

“The secret to innovation is saying no to 1,000 things,” said Jobs.

Of course, no product was his idea alone, but he was the one that fostered the environment for ideas to be created and had the final say. The problem with focus groups is they can be influenced depending on the type of question asked, and the people involved have a preconceived notion of what they want based on the products that are out at the time. The business community should focus more on what they want, and focus on the future and less on the here and now.

The Bottom Line
There is no doubt the world has lost an amazing human being. A part of him will live on with the products we use and he will continue to be an inspiration to future leaders. No other CEO in recent memory has had rock stars and politicians show up at his door. Meanwhile, millions of people found out about his death on the very devices he helped create. The business community and future leaders should take note of his example: focus on quality, focus on the future and rely on your internal vision. The world will be a better place for it.

“The thing that drives me and my colleagues … is that you see something very compelling to you, and you don’t quite know how to get it, but you know, sometimes intuitively, it’s within your grasp. And it’s worth putting in years of your life to make it come into existence,” said Jobs.

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Top 14 Benefits of Social Media Marketing




There’s a lot of fuss surrounding social media these days. If you still haven’t jumped on the bandwagon and aren’t sure why so many people are making such a big deal about it, here are 14 benefits of social media for your business and you from Success magazine.

For Business:

Establish a Brand and Raise Awareness

Since the majority of the population is already visiting social media sites like Facebook, Twitter and YouTube, getting your brand name all over those networks can help let people know that you’re around. If you have yet to create a company image online, social networks are the place to do it.

Create a fun YouTube video that entertains and informs. Funny videos tend to make their way around the Internet a lot faster than any other kind, so when making a video, keep in mind that you want it to be interesting enough for your target audience to want to share. Using Facebook and Twitter to create a fun online community that your customers will want to visit will boost brand loyalty and drive traffic to your Website, allowing you the chance to make more online sales.


Spy on the Competition

Follow your competitors on Twitter and Facebook and you’ll be able to see what they have up their sleeve. Just make sure to provide a better deal than whatever they have going on.

Pitch Products in a More Human, Interactive Way

Since people visit social media sites to get personal rather than be bombarded with ads, discuss your business in a fun way and engage your customers with questions. Ask their opinions and entice them to respond back. This way you’re making a valuable connection that will help grow your number of return customers.

Bring Attention to Your Products

Featuring a product on a social media site is one of the fastest ways to bring attention to it. Offer a promotion along with it for your online community members and watch your sales skyrocket.

Increase Customer Loyalty And Trust

Speaking to your customers in a personal way will make them feel like they are talking to a friend, not a company. This will help build their trust in you, which will make them do business with you rather than your competition. It will also improve the chances of customer recommendations.

Listen to Your Customer’s Opinion

Social media sites are an awesome way to see what your target audience is saying about your company or your products. Take their constructive criticism and use it to enhance your product to better meet their needs.

Conduct Market Research

Listen to what your customers say about your products and track what links they click on and you’ll begin to see what your customers like and respond to. People love to express their opinions on social media sites, which will allow you to hear the truth. Then you can use your new-found information to tweak your product or service to please them as well as continue to post more information and links that they will enjoy.

Strengthen Customer Service

Social media networks allow your company to answer your customers’ questions and concerns directly in a timely manner. This will improve customer satisfaction and also save you money on long distance customer service phone calls.

For You:

Build Your Personal Reputation

Social networks allow you to get your name out to the world and talk about things that matter to you. This will help you build a good online reputation, which is critical nowadays if you’re looking for a job or even a new business contact.

Display Your Resume

LinkedIn allows you to display your full resume online for any future employers or recruiters to see. This will help bring you new opportunities that never would have existed otherwise.

Find a Job

Jobs are posted every minute on social networks like LinkedIn and Twitter along with the links or information you need to apply for them.

Showcase Your Talents And Establish Yourself as an Expert

If you’re passionate about a certain subject, whether it’s work-related or a hobby, the Internet is a great place to show off your knowledge. Soon people will be coming to you for the breaking information on that topic, and talking about you to friends.

Enhance Your Business Contacts and Enhance Personal Relationships

Through professional sites like LinkedIn, you can build your number of business contacts and enhance your reputation as an expert in your industry. You can also connect with those long-lost high school and college classmates, old colleagues, and out-of-town family members.

Share Information with Like-Minded People

Connect with other professionals in your field to share information. Where else would you be able to connect with industry professionals across the globe to swap stories and advice?

Thinking of Re-Branding?



When should companies allow declining, aging brands to finish their lifecycles? When should they opt to revitalize them? These are hard questions for companies in view of fast-changing consumer demands, increasing global competition, and diminishing awareness of heritage brands among younger consumers.

Many CMOs feel that brands follow irrevocable life stages: they are born, mature, plateau, and eventually decline and die. Generally, companies that witness declining brands in their portfolios employ the “best business practice” of cutting marketing investments in them, and reallocating the dollars on growth brands instead. Without any marketing support, declining brands continue to wither away and die. Yet, with the heavy investment necessary to launch new brands and products, companies seem to be interested in the revitalization of diminishing brands more than ever.

How can companies determine whether to revitalize brands? Consumer research plays a vital role in this process. Mature brands have great heritage and might still be enjoyed by consumers who have had positive, longstanding relationships with them.

By surveying these consumers, you can mine the following data:

  • What are the points of differentiation, or unique selling proposition of the brand, per their perception?
  • What are the brand’s Enjoyment assets™? How many pleasant associations and experiences have consumers had with the brand?
  • What are the negatives, if any, associated with the brand?
  • What is the perceived value of the brand?
  • Is the perceived value of the brand still active, or is it dormant? How does it stack up against the brands in those same categories?
  • How relevant is the brand?
  • What, in the consumers’ perception, can the brand do for them to add value or more desirable attributes?
  • How much loyalty is there to the brand?


Mature brands tend to be supported by few marketing initiatives. Thus, these brands are “out of sight, out of mind” for many consumers. Consumer mind share translates to market share, thus companies that choose to revitalize brands must commit to developing comprehensive marketing programs. This will result in heritage customers’ recalling the brand, and getting them to purchase its products again. It will also begin to create brand awareness among new consumers.

Once a sound decision has been made to revitalize, brand managers can make subtle or sweeping changes to the corporate brand, products, packaging, or all three.

Three Kinds of Revitalization

  1. Revitalization can require the rebranding of a company from the inside out.
  2. Revitalization can involve updating the brand’s products and product attributes with better, demanded features.
  3. Revitalization can require repackaging for a more contemporary brand image to appeal to new generations of consumers.


A striking example of corporate and product revitalization is Cadillac. An iconic American automobile brand, Cadillac started dying a slow death in the past few decades with its stodgy image and lack of consumer relevance. Mature, affluent luxury cars buyers were buying Mercedes and BMWs. Enter in the Escalade—a powerful SUV loaded with plenty of edgy urban appeal—for an affluent, young, hip audience that is willing to shell out $60,000, on average, to drive one! Once a dying brand, Cadillac is now a 21st century, urban symbol.

Arm & Hammer cleverly rejuvenated its products and brand, when the slowdown in home baking adversely affected sales, by emphasizing its two greatest attributes: the cleaning, deodorizing properties of its core product. By demonstrating myriad uses for baking soda in the home, Arm & Hammer turned its business around, then it leveraged its brand into oral care and laundry care categories. The 150-year-old brand continues to enjoy great heritage, even as it attracts new and ever-younger generations of consumers.

Brand Revitalization and Packaging

Myriad CPG brands are constantly being revitalized, and repackaged, to contemporize them for new generations of consumers and to ensure companies’ continuing growth in equity. Food and HBA brands are masters at revitalization.

When sales slowed on the venerable 40-year-old Head & Shoulders shampoo brand, P&G decided to revitalize. Consumers can still purchase the classic formula, or meet more cosmetic-oriented needs with reformulated SKUs that guarantee extra fullness, dry scalp care, or intensive treatment. With its revitalization, P&G now says that Head & Shoulders has broader appeal among more consumers. The CPG giant also designed contemporary packaging, reduced package size, and set a higher price point for additional anti-dandruff ingredients to give the repositioned heritage brand the same presence as a salon formula line rather than that of a basic, utilitarian product.

Snack food giant Frito Lay revitalized its product line recently by eliminating trans fats (in the form of hydrogenated oils). The company then revitalized the packaging of its extensive line to make the “0 grams Trans Fats” very prominent on the upper right hand corner of every product package. Touting the use of whole grains in a number of its products helps the company fulfill its commitment to deliver tasty snacks that are more healthy and nutritious.

Contemporizing Packaging the Right Way

CPG companies feel the pressure to repackage with more frequency now than in years past. It’s important to keep product packaging contemporary to appeal to core customers, while attracting new ones:

  • It is vital to retain brand heritage and equity. The strengths of the mature brand should be leveraged when repackaging.
  • Consumer research uncovers the brand drivers, some of which are latent when products have been in the marketplace for decades.
  • Research enables the brand identity/package design expert to make certain the brand and product core assets and differentiators are firmly in place.


Since a brand’s packaging is its most enduring and accessible brand communication vehicle, it must convey the brand experience through the package design system. The brand’s packaging must be a synergistic part of the overall brand expression continuum. Recognizable, trusted brands in visually appealing, stimulating packaging have a distinct advantage in a sea of product sameness, in category after category.

Bottom line: Periodic corporate brand revitalization is an essential component of brand management. Product revitalization gives new relevance to what could have been perceived as tired, aging consumer goods. Finally, revitalized packaging allows a CPG company to communicate its realigned core brand, prioritize its communication hierarchies and share its core assets fully with customers, creating an emotional bond.

Nothing continues to build on the brand’s heritage and equity with more power than that.

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Best and Worst Practices – Social Media Marketing


Social media is hot, just take a look at Google Trends to see the comparison between topics like “search marketing” being eclipsed by “social media” in terms of search volume and news references – at least according to Google. Along with all that “hotness”, there’s good and bad when it comes to the way companies are beginning to engage social media channels.

Social Media Best Practices:

  • Start with a plan, not tactics.  Research and build a Social Media Roadmap involving:  Audience, Objectives, Strategy, Tactics, Tools/Technology and Metrics.  [Insert plug here: TopRank offers a 2 day workshop on how to do this]
  • “Give to get” – Successful social media marketing programs involve listening and participation. That participation centers around giving value before expecting anything in return. This is not “sales” as you know it. But companies can definitely increase sales as a result.
  • Commit resources & time to be successful or you may very well fail. It’s important to forecast labor hours, who, what, when, how and where with the intention of succeeding, not just experimenting. If a social media effort is successful, scalability will be an even bigger issue if you don’t plan for it.  Hiring a community manager for example, may not be justified when a social media monitoring program is started or with a new company, but a job req and understanding of the role should be ready in case it’s called for.
  • Be transparent with intentions & your identity or you may alienate the very audiences you’re trying to connect with.  Objectives, strategy and doing your homework about a community should make it pretty obvious what types of commercial messages are appropriate.  Being transparent about intentions might come in the form of stating a purpose:  ”Brand XYZ has created this Facebook page to help consumers make better choices about Topic XYZ”.  It’s fine if goals are to increase sales, but participation should be focused on providing the kind of value that facilitates sales – not attempting to make sales directly. When is the last time you purchased something other than a virtual cupcake on Facebook?
  • Understand, you do not control the message.  Old habits die hard and there’s a tendency to want to treat social media participation like advertising where the ability to control messaging is the norm. Once information or media is available on the social web, people will inevitably mash it up, stretch it, pull it and reshape it according to their interests. Brands need to protect their identities, copyright and intellectual property for sure, but rather than “controlling the message” marketers should encourage the mashup and creativity.
  • Welcome participation, feedback and co-creation. As comfort levels rise with social web participation, companies will see opportunties to encourage participation with communications, especially with brand evangelists. Developing relationships and community within social communities on the web can facilitate buy in, provide invaluable feedback and crowdsourcing opportunities.
  • Metrics should roll up to objectives and objectives should be relevant to the channel.  More than a few companies see evidence of other social media efforts ranging from Superbowl commercials on YouTube to social participation during and after President Obama’s campaign, and “want that too”.  Direct marketing is the lens through which many social media efforts are first viewed, with a tendency to focus on action “A” resulting in “B” outcome. Social media marketing is more like public relations than direct marketing. It’s more like providing resource “A” results in “action “B” that influences outcome “C”. Metrics for success need to consider the pre-goal performance indicators like number of “friends”, comments, links, etc as well as commercial outcomes influenced by social media participation.

Social Media Worst Practices:

  • Being fake in any way isn’t good for anyone on the social web. Early on, companies like Walmart and Sony (via their PR firms) tried to fake their way into making consumers believe sites like the Sony PSP blog or the Walmarting Across America blog were authored by impartial brand evangelists, when it wasn’t that at all. Both Sony and Walmart have learned from those mistakes and now have social media sites that follow many of the best practices above. Some say failure with social media is a sort of “rite of passage”.
  • Not listening. How can you learn anything if information is only flowing one way?Listening is really the most important step in learning about social communities on the web. It’s important just starting out and even more so on an ongoing basis to monitorconversations, sentiment about brands and identifying influentials to engage. Lucky for companies, there are abundant social media monitoring tools to choose from.
  • Being oblivious to formal & unwritten social rules. It pays to lurk a bit before participation with social communities, especially when you have commercial intentions.  Aspire to “speak like a native” when embarking on social media journey to improve your brand visibility and to encourage relationships. Social networking, news and media sharing sites all have Terms of Service guidelines, but the community itself will have guidelines for behavior that can only be understood by observing and participating.  Ignoring these guidelines risks alienation by the community.
  • Being pushy or overtly salesy in messaging and communications and expecting traditional marketing outcomes are common behaviors by companies that see social media communities simply as content distribution channels for existing marketing programs.  Overt commercial messages, especially sales solicitations are outright tabu in most social communties. A social environment amongst “friends” and likeminded individuals isn’t going to accept interruptive messaging. Think of barging into a conversation at a party trying to sell something to people who are talking about their favorite movies and sharing baby pictures – and the disdain that behavior would encourage. Provide the kind of information that facilitates choices that lead to sales, and you’ll go a lot further.
  • Approaching social media channels as silos – Many companies approach social media via individual web sites rather than as a collaborative effort. An example would be a company that starts a blog within one division and another that starts something on Facebook and yet another creates a group on LinkedIn or Ning. Not working together is inefficient and can create mixed messages for consumers that participate in more than one social media destination for the brand.

Update 07/2009 thanks to Hillary Danni Davis

  • Not staffing appropriately

Actively listening and building relationships with communities is a full-time job. Also, its imperative to ensure community managers have the skill sets needed to articulate their objectives for social media in addition to utilizing tools that will resonate with their audience.

  • Not having a mechanism to assess ROI

CEOs that ultimately give the green light to pursue social media marketing are concerned with the bottom line. Its essential that a social media strategy includes mechanisms to assess business value. It might be a value placed on increased product awareness, solid sales leads or cost savings due to a reduction in support staff due to social media tools. ROI is easier to obtain if there is a stated goal for the social media campaign. Regardless of how value is determined, social media needs to be validated as a profitable marketing channel.

Learning from companies what they think of social media as a topic and opportunity over the past few years has been enlightening.  Our digital marketing and public relations agency gets to talk to a substantial number of companies each month that need help making sense of where social media might fit within overall marketing and PR efforts. Those conversations vary, but an increasing number of client side marketers clearly aware of the social media marketing fundamentals.

In those cases, companies simply want help from someone that has the experience to guide them in creating a social media strategy, specific supporting tactics and dealing with measurement issues. Other companies really have no idea how to proceed and need a focus on education and an audit that will help them create a social media roadmap before getting into specific programs.

What’s encouraging is that more companies are looking more seriously at the challenges and opportunities of social media participation. Others understand that social media is not a destination, but rather an indication of consumer behaviors aided by technology. Successful social media marketing isn’t about the tools, it’s about the people.

If nothing else, remember that social media is about the C’s:  Conversation, Connections, Community, Consumer, Control, Creative, Collaboration and Content.  Do: listen, be transparent about your intentions, “Give to Get” and have a plan. Don’t: Be fake, interruptive and focus only on short term sales.

The Worst Social Media Moves of 2010!


There’s no shortage of organizations looking to hand out awards for the best social media campaigns, but they are only half the story. Every Oscar needs a Razzy to balance it out. We must punish failure as well as praise excellence. Or, at least, that was the mood at the fourth annual Suxorz Awards event at Social Media Week on Thursday night.

The evening’s panel of marketing experts was filled by Jessica AmasonBrian ClarkBrian Morrissey and BL Ochman and was moderated by Henry Copeland. Each panelist put forth a nominee for each of four categories. After all the panelists had explained why they were nominating a particular social media action, Copeland turned the discussion over to the crowd, letting them vote on the worst of the lot.

Afterward, the floor was opened up to people’s choice nominations, and the winner of that round was put up against the winners of previous rounds for a vote on who had the worst social media moment of the past 12 months. No statues were given out, but the Grand Suxorz “winner” did receive a mocking post on their Facebook wall written by the panelists.

Here are campaigns that ended up winning their respective categories:

Meme Purgatory: This category was all about brands thinking they understood how to start or control a viral phenomenon. The nominees were Dell’s “Dr. Ashley” campaign, Volkswagen’s “Sluggy Patterson” character, Cisco’s “Ted from Accounting” videos and Smirnoff Ice’s handling of the “Bros Icing Bros” phenomenon. Cisco handily won this category for its series of videos, which ape the style but not the humor value of the popular Old Spice Guy campaign, after the audience begged the panel to stop the Ted video early.

Missed Connections: These nominees were for companies that tried using social media but got the fundamentals wrong. The nominees included a Facebook campaign to bring Starbucks to Budapest, Hungary, that was later taken over by the coffee chain, CVS’ community manager having a locked Twitter account, Denny’s accidentally pointing customers to a Taiwanese boy’s abandoned Twitter account on the back of its menus and a video produced by Leo Burnett about the virtues of social communication that ended up having none of the virtues of social communication.

Denny’s ended up winning the round because of how funny the mistake was and because it took Denny’s so long to notice anything was wrong.

Mean People Suck: These nominees all stumbled by failing to handle fan interaction well. Dr. Pepper got in trouble for its Facebook status takeover campaign, which ended up a little more peppery that the brand would have liked. Nestle’s fight with Greenpeace continues to embarrass the brand. Price Chopper, a grocery store chain, complained to a customer’s boss after the customer criticized the chain on Twitter. Mercedes was criticized for requiring users to like the brand on Facebook to learn more about an upcoming Twitter ad campaign. The Twitter campaign itself was also criticized, since the volume of tweets from participants was so high.

Price Chopper walked away with this one, since its reaction was so over the top and contrary to the values of social media.

You’re so vain: This round was all about misuse of celebrity. LeBron James was called out forjoining Twitter just in time to capitalize on speculation that he might switch teams  — and then not using the platform to share any information. Designer Kenneth Cole took more scorn for his Egypt comments — though at at least one panelist argued that the off-color remark wasn’t really all that bad. The passel of celebrities that participated in the “Digital Death” charity campaign were lampooned for going along with a stunt was both tasteless (in comparing silence on Twitter to actual deaths) and ineffective (in that the the silenced celebrities couldn’t use their networks to raise money).

Fast Company’s Influencer Project also took a hit, since it didn’t really measure a person’s influence so much as their willingness to spam their friends. The panelists said trying to identify influencers is a worthy goal, but the campaign shows how much we have to learn about calculating influence.

The Digital Death campaign won the day, with participants noting that it was both silly and ineffective — though it did have the effect of temporarily silencing a few of the Web’s less appealing celebrities.

People’s Choice: Nominations here included the Transportation Security Administration’s handling of airport full-body scanners, BP’s response to the Gulf of Mexico Oil spill, Charmin’sFacebook presence and Facebook’s “Facebook Stories” feature, with BP winning the round.

BP, Price Chopper, Digital Deaths, Cisco and Denny’s were the contenders in the final round. Apologists came out on several sides, with some people saying that it’s understandable the Denny’s would miss the typo since it is managing an successful Twitter presence. At least one audience member argued that BP shouldn’t qualify as a social media failure because the company’s problems run much deeper.

The vote was close, but in the end, Price Chopper emerged as the year’s worst social media faux pas, embodying the opposite of everything social media interaction is supposed to be about. At last glance, it looks like the chain took down the Facebook post “congratulating” it on the victory.

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