Knowledge management and social transformation

For some time I have been banging on about my frustration with social media tools simply being used for marketing purposes while they also have the ability to help transform the way we do business.

The following is a discussion of how different business disciplines have transformed and how marketers can gain a better understanding of social media marketing practices today from looking at the past.
Knowledge management fundamentals

Some 15 years ago I was involved in the knowledge management (KM) discipline. At the time it was an emerging field and a group of us were involved in putting together the Standards Australia Knowledge Management Framework.

Essentially knowledge management was about the creation, transfer and retention of that knowledge primarily within organisations.

The buzzwords of the time included: co-creation, collaboration, CoP (Communities of Practice) – sound familiar? These are words that we often use today in discussions about social media.
Knowledge management implementation barriers

Many of the discussions that we had years ago about how to get people to share their knowledge came up against two critical barriers.
Technology

In 1994 the best we could do was Lotus Notes, we thought it was innovative at the time. We started experimenting with wikis, more innovative intranets but the tools were certainly lacking. Today we have tools such as Twitter, Blogs, RSS, Mashups, Yammer, Facebook, and a variety of wiki platforms.
Attitudes/culture

Encouraging people to share their knowledge was fundamental to the success of the KM program, yet the culture of sharing – even in an online social sense – wasn’t embedded in our culture. Sure there were a few forums but the idea of social networks, review sites etc. didn’t really exist. Today the culture of sharing, contributing and collaborating is embedded in our psyche. We want to share and expect to have our say.
Enter Enterprise 2.0

In the past three years the term Enterprise 2.0 has been bandied around but what is it?

Harvard professor Andrew McAfee coined the phrase Enterprise 2.0, defining it as:

“The use of emergent social software platforms within companies or between companies and their partner or customers”.

The benefits of Enterprise 2.0 are often named as increasing innovation, productivity and ultimately harnessing the collective intelligence of that organisation – certainly KM was a forerunner to this discipline.
How is this relevant to me as a marketer?

As a marketer you are probably aware of social media tools and how they are currently being used to help engage with consumers today i.e. with companies blogging, being involved in Twitter and using different social media monitoring tools to listen to conversations

Many marketers understand these tools as essentially external facing, yet the philosophy behind the benefits and use of these tools was traditionally internal facing (i.e. knowledge management through to Enterprise 2.0). Understanding the history and transition of the varying disciplines gives you a greater understanding of the multiple benefits of the tools.

For example: on a simple level it is good to look at each of the tools your organisation is using such as Twitter, but is this being used for marketing purposes only? Or is it being used as a CRM tool? Are you systematically gathering consumers’ insights that can be fed back to R&D for product development? In short, are you getting the best ROI from these tools?
Enter social business transformation

Recently the esteemed David Armano, a senior partner at Dachis Corp penned a post about business transformation entitled ‘From Social Media to Social Business Design'. Essentially the post discussed "a shift in thinking – less about media and more about tapping the benefits of being a social business in a purposeful way".

Joint partner in Dachis Corp, Peter Kim also posted recently ‘Reflections on Social Business'.

At the core of their new idea is 'The Social Business Design Framework' which captures ecosystem (community), hivemind (culture), dynamic signal (collaboration), and metafilter (content). It is not too dissimilar to the Standards Australia KM Framework that also highlights culture, tools people etc.

So am I saying that Armano's so called new business idea is simply KM? No. There is a fundamental difference. KM was primarily interested in managing internal knowledge sources within a company. The Armano model includes both internal and external knowledge management tools and applications for a more holistic strategy.

Knowledge management (KM) was often discussed as a form of change theory – a discipline that can revolutionise the way we do business. Today with new technologies and cultures aligned with collaboration Social Business Transformation will be possible and marketers can play their part in the revolution.

VW: Meet The Volkswagens (Display Ad)

I think this may be my favourite ad this year. For one it looks fantastic - extremely well designed and visually impactful. Secondly it works perfectly - no bugs or stalls. Finally, without appearing to jump on a bandwagon, it utilises a mainstream trend to pull you in and encourage engagement. Fantastic work!

Apple: Second Opinion Web Banner (NY Times)

Apple have launched another fantastic banner campaign on New York Times, this time its the “Apple: Second Opinion” web banner featured as a rich media page takeover on the home page of the New York times. A classic synced leaderboard / medium rectangle but this time with a nice throw to a few speaking heads across the other side of the site! Nice work Apple.

Content Marketing Strategy with a Side of Social

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Development of a content marketing strategy that speaks to the target audience plays a key role in successful execution of an overall online marketing program. Companies that embrace the social web as part of their marketing mix need to consider the content created within social media channels just as much as corporate web site content.

Whether you communicate to your audience via a blog, Twitter or social networking sites like Facebook, the only true way to build relationships with a growing network is to listen, engage and provide content they find valuable.

When developing a social media content strategy, start by asking questions like: “What does my network find valuable?”.

A little listening can go a long way to get to the heart of a community’s needs. By understanding the pain points of those your company wishes to connect with, the better you’ll be able to provide the resources needed to make better decisions and improve their business.

You may have heard Lee Odden reference the need to create a social media roadmap, starting first by gaining a better understanding of the intended audience and identifying objectives. A social media marketing strategy is the bridge between reaching that audience and mutual goals. Gain an understanding of how you are going to speak to the community and what you want them to do.

Think realistically about providing and receiving value. For example, will building a network of 1,000 friends on Facebook have an impact on your business without clear goals around what you want those friends to do? There’s an implied connection between quantity of network and marketing effectiveness, but with social media it’s more about quality, not quantity.

Capturing insight about your audience in a social media context can be accomplished through:
Participation
Social media monitoring tools
Analyzing web traffic and behaviors to your web site from social media web sites
Surveys of your existing customers
Referencing demographic information supplied by social media sites that offer advertising
Third party data sources such as Quantcast, Hitwise or Microsoft Advertising Audience Intelligence tools

If the objective for your social media efforts is to sell more product, become a resource to help your audience use that product and give insight into what’s in it for them. Make a bigger impact with your community by giving them the knowledge and tools to help them accomplish their goals and in turn, they will see your company as a valuable resource. Follow the ‘give to get’ mentality to build relationships.

How do I create unique content that speaks to my audience?

Provide opportunities for your network to create their own content. Run promotions involving user generate articles, videos, images or other content that can be shared, promoted and recognized. You can also collect and examine the resources you already have, including case studies, articles, white papers, PPTs or blog posts. Chances are, you have the makings for great unique content or can lay the ground work to repurpose that content.

In this age of Web 2.0, those who are active in social media are essentially publishers. Content creation plays a key role in your social media strategy. One way to ensure you publish consistent, unique content that speaks to your target audience and aligns with your target keyword concepts is to create a content calendar.

Using Banner Ads to Promote Your Website

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We are in a period when banner advertising seems to be on the wane. You know, those rectangular boxes on commercial sites. Click-through rates have dipped to 0.20% for average banners and to about 0.50% for rich media banners, according to the Eyeblaster Analytics Bulletin for March 2009. That's horrible! Are banner ads dead as a viable form of advertising? Not really. A great many companies, large and small, still use banner ads as part of their advertising mix and will continue to do so. Nevertheless, advertisers are becoming more sophisticated about when and how to use banner ads.

Defining Terms

To explore this broad and evolving type of advertising we need to begin by defining some terms:

• Hits -- A fuzzy term meaning the number of times a webserver has been "hit" by a request for a webpage or a graphic image. Since perhaps 5 out 6 "hits" are for graphic images, the number of "hits" can be grossly misleading. Usually people mean by "hits" the number of times a webpage has been seen, but to be precise, the better term is "views," "pageviews," or (more sophisticated) "impressions."
• Page impressions or pageviews -- Refers to the number of times a webpage has been requested by the server.
• Banner views or impressions -- Refers to the number of times a banner has been viewed. Almost the same as "page views," but some banner server programs don't count the banner view unless the visitor stays on the page long enough for the banner to be fully downloaded from the banner server.
• CPM -- A metric from the print advertising, meaning "Cost Per Thousand," using the Roman numeral "M" to stand for one thousand. A price of $15 CPM means, $15 for every thousand times a banner is displayed.
• Banner ad -- An ad graphic hyperlinked to the URL of the advertiser. These are sometimes static graphic images, but animated rich-media banners do much better. The most common banner size used to be 468 x 60 pixels (Full Banner). To standardize, the Internet Advertising Bureau (IAB) specifies ad sizes in their Ad Unit Guideliness. The sizes they're recommending these days are 300x250 (Medium Rectangle), 180x150 (Rectangle), 728x90 (Leaderboard), and 160x600 (Wide Skyscraper). In fact, I don't see people following these IAB size recommendations very closely. You'll see a lot of 125x125 (Square Button) on sites, too.
• Creative -- "Ad-speak" for the actual banner graphic.
• Click -- When a visitor clicks her mouse on a banner ad, she is transferred to the advertiser's site. The number of responses to a banner ad is sometimes refereed to as the number of "clicks."
• Click Throughs -- Same as "click," commonly used to count the number of visitors who click on the banner and are transferred to the advertiser's site.
• Click Through Rate (CTR) -- The percentage of click throughs to banner views. A 1% CTR means that 1% of each 1000 banner views (or 10 visitors) have clicked through.
• Conversion Rate -- The percentage of shoppers in an online store who actually make a purchase. This varies a great deal, and depends a great deal on the quality of the landing page (See more in my book, How to Develop a Landing Page).
• Cookies -- Small files written to your computer when you view a banner ad, visit a website, or put a product in a shopping cart. This helps the banner server to keep from showing you the same ad, or perhaps show you ads you might be more interested in seeing. Cookies are controversial, but are here to stay; too much of the Web is run by cookies to get rid of them. Cookies also allow an advertiser to track which banner ad a visitor saw that brought him to the advertiser's site, and which banner ads resulted in actual sales.
• Run of Site (ROS) -- Refers to displaying a banner ad throughout a website or a banner network with no targeting by keyword or site category. Run of site advertising will probably cost less than more targeted advertising.

How Do You Measure Success?

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Click Through Rate (CTR). This is a basic measure of how effective an ad is. CTRs range from the industry average of about 0.20% to as high as 5% or 10%. As a general rule, the more targeted the site, the higher the CTR. For example, you'd expect an ad for Wilson Tennis Racquets to get a higher CTR on a tennis site than on a general sports site. On a general site such as MSNBC they would get an even lower CTR. (Disclosure: I hold no financial interest in Wilson Sporting Goods, but wish I did.)

Cost Per Sale. A much more important figure is the actual cost of making the sale of a tennis racquet. In the final analysis, you don't care how high the CTR is if it doesn't result in a proportionate number of sales. What complicates this is the fact that your banner ads on the World Tennis Ratings site may actually sell fewer tennis racquets than those on NCAAChampionships.com. You can only make this determination when you use sophisticated tracking methods using cookies to separate the lookers from the buyers, and determine which sites and which banner ads had the best result. Most ad serving software, ad networks, and affiliate program software and services provide this kind of information. You can also determine this by coding all banner ad links.

Branding. While CTR and cost per sale relate to direct marketing objectives, another way of looking at banner ads is as "branding" tools. They create brand awareness, and a brand image in the viewer's mind, whether or not the viewer clicks on the ad. But hopefully, when the viewer gets ready to make a purchase, those "impressions" (a wonderful ad agency buzz word!) will cause you to select Coca Cola over Pepsi, or Barnes and Noble over Amazon, or JCrew over Lands' End. Branding is very difficult to measure, but can be very powerful. Typically, only the larger and better-established companies have the budget to pursue branding consistently. Brand awareness is sometimes measured in surveys with questions such as: "What brand names can you recall in the field of tennis?"

CPM Banner Economicss

While brand marketers may assess effectiveness in some fuzzy way, direct marketers look at any advertising method in terms of how many sales it produces immediately. Let me give you an idea of how the numbers might look for banner ads. Your results will vary, depending upon where you advertise and the effectiveness of your creative. Here are some arbitrary numbers to use in our calculation:

• CPM = $2 (a not untypical rate for general, not-very-targeted websites)
• CTR = 0.20%
• Conversion Rate = 2% (from your landing page)

Cost per Visitor = CPM / (1000 x CTR) = $2.00 / (1000 x .002) = $1

In our example, the $2 you spent to show the banner ad to 1000 people netted you 0.2% or 2 visitors to your site. Each visitor cost you $1 to get there. Hmmm. Now let's calculate what your advertising cost is per sale. At a 2% conversion rate from you landing page it would take 50 visitors to make one sale.

Cost per Sale = Cost per Visitor / Conversion Rate = $1.00 / .02 = $50

Oops! You mean it costs me $50 to get one sale? Yes, Virginia. Of course, if you have a 10% conversion rate (like a few top merchants) rather than a 2% conversion rate (which is high for many small businesses), it only costs you $10 to get a sale.

Lower Cost Approaches

What this means is that banner advertising on a CPM basis can be expensive. First, you need to determine what cost per sale you can afford. Then consider these alternatives:

1. Develop a compelling ad that 5% of viewers click on. That can radically change the economics! If you're serious about banner advertising, my book How to Write an Ad that Clicks is one of the few recent books that explains ad design techniques for standard banners ads. This is lore that few graphic designer probably are familiar with!
2. Reduce your CPM. Ad agencies specialize in placing ads on selected sites. They usually work on a CPM basis, and often make their money by purchasing the ad space at a 15% to 20% agency discount. Tell your ad agency the most you can pay and don't budge. There are hundreds of ad networks that specialize in placing clients ads on a network of "quality" sites that they can serve banners to. Out of your CPM rate, the publisher site gets a portion and the ad network company gets the rest. Try negotiating a lower rate!
3. Find a PPC or CPC ad network. The advertiser is king -- it's an ad-buyer's market these days. Some ad networks only charge you when you get a click-through, thus you Pay Per Click (PPC) or on a Cost Per Click (CPC) basis. Now you don't have to pay for banner impressions seen by people who aren't interested at all. Note: The line between pricing methods is fuzzy these days. Some networks offer your choice of pricing approaches -- or a combination of two methods.
4. Start an Affiliate Program. Affiliate programs work on a Cost Per Sale (CPS) or Cost Per Action (CPA) basis. You pay a fixed amount only when you get an actual sale or lead! Affiliate program software or service organizations will host your banners and make them available to affiliates. (See my recommendations for affiliate programs and services.)
5. Add Google AdWords PPC text ads to your advertising mix. Keep some banner ads, but try keyword performance based advertising as well.

Don't count banner ads out yet. Developing an effective banner ad strategy may bring thousands of people to your site who will become your customers.

[This very popular article first appeared in the June 22, 1996 issue of Web Marketing Today, was revised July 1, 2000, and was recently revised again.]