Digital Media Journal

How Many NEW iPhone 3G Users Can We Add in Singapore?

 

Christmas is just around the corner and traditionally, the final two months of the year will witness many consumer companies offering sales promotions in anticipation of the Christmas shopping season.  

ION Orchard

Not surprisingly, these consumer-focused firms will use a combination of discounting (inventory clearance) and force bundling of multiple products (perception of value for money) to encourage the budget-conscious Singaporean consumer to open their wallets.  For example, one of Singapore's leading retail store, John Little, is holding a Christmas Sale at the Singapore Expo Centre from 18 to 29 November 2009.

Clearly, the clouds of pessimism that greeted Singapore at the start of the year is showing signs of clearing as Nielsen reported a rise in consumer confidence in a survey done in October 2009.  We should not be surprised to see consumers finalizing their Christmas shopping list as they begin to receive the latest Christmas promotional advertisements in their email inbox.

 One item which is likely to feature at the top of the shopping list for Starhub and M1 subscribers is the Apple iPhone 3GS.  Following their successful negotiations with Apple to secure the distribution rights for this iconic product, they are now accepting pre-orders which I believe will be available by the Christmas period.

  

 

As a Starhub subscriber, I have opted to reserve a set for myself as I wait for their price plans that are presumably tailored for the iPhone (just like SingTel when they released their handset in early 2008).

 

 

The only red herring is the possibility of Apple not being able to supply the necessary units to satisfy the worldwide demand of this product.  After all, Singapore is NOT the only country in the world with a supposedly insatiable demand for the Apple iPhone 3G and there was an initial period where the exclusive distributor, SingTel, was not able to meet the overwhelming demand for the handset in Singapore.

I was curious to know if there is still any room to grow the Apple iPhone 3G user population in Singapore.   Predictably, there is no breakdown in the number of units sold by the then-exclusive distributor, SingTel, following the handset’s debut on 22 August 2008.  As such, I relied on publicly available information and undertook a simple, unscientific investigation to satisfy my curiosity.  The investigative process is illustrated below:

Step 1:

 One of the primary applications of the iPhone 3G handset is the pre-installed Safari mobile browser which allows user to access the Internet on their handset.  Accordingly, any iPhone user that accesses the Internet with the browser will send the browser's information to the destination website.  In this instance, the website owner can differentiate the browser types accessing their online site, giving them the information to adapt their content to meet the formatting needs of the various browsers in the market today. Using the same browser information captured by websites today, we can estimate the market share of mobile browsers in Singapore accessing the Internet:

 

 

Source: StatCounter Global Stats - Mobile Browser Market Share

The line graph above shows a brutal battle between Nokia (all models) and the Apple (just the iPhone) as users access the Internet on their handsets.  For example, more than 39% of all mobile browsers accessing the Internet comes from the iPhone on 18 November 2009.  In contrast, Nokia's mobile browsers (presumably Symbian) constitutes slightly less than 27% on the same chart.The other handset models are clearly not used by their owners to access the Internet, suggesting that they are primarily voice-call users.  However, this chart is far too granular for me to extract meaningful information from the chart.  I then changed the graph's layout to a bar chart:

 

 

Source: StatCounter Global Stats - Mobile Browser Market Share

This is much better.  The above bar chart is showing an annualized browser market share since the 1st of January 2009.  This is clearly more useful vis-a-vis the line graph above as I am now able to extract the percentage share of all mobile browsers in Singapore.  In this instance, Nokia's has a indicative mobile browser market share of 32% while the iPhone has a 30% market share.  This sounds reasonable as Nokia has released multiple handset models which are capable of accessing the Internet since the launch of 3G services in Singapore in late 2004. 

Step 2:

Since we now know that 30% of all online mobile traffic is attributed to iPhone users in Singapore, we can make a conservative assumption that the same percentage (i.e. 30%) is applied to Singapore's mobile market.  In this instance, the mobile market universe is based the number of 3G subscribers in Singapore.  More importantly, we have to use the entire 3G subscriber population in Singapore, which includes Starhub and M1, as there are avenues for a non-SingTel subscriber to use the iPhone by buying the handset at inflated prices from the secondary market (though prices are expected to drop following the announcement of Starhub and M1 to distribute the handset).  

Concurrently, we are excluding all 2G subscribers as the target audience are predominately voice-call users.  Hence, it is highly unlikely that these subscribers will invest in a relatively expensive handset with the primary intent to make voice-calls.

As such, the percentage of mobile browsers (described in the earlier chart) represents the mobile handset mix used to access the Internet.   Therefore, it is a conservative assumption that 30% of all 3G subscribers are using the iPhone to access the Internet.

Step 3:

According to Info-communications Development Authority of Singapore (IDA), there are 2,927,700 3G  subscribers in Singapore (pre-paid and post-paid).

 Using the above numbers, we can now make a conservative estimate that there are 878,310 iPhone users in Singapore.  Clearly, this number highlights the high probability that there are many non-SingTel users who own the iPhone.  According to SingTel's FY10Q2  results which ended 30 September 2009, the mobile operator has 1,426,000 3G subscribers (I am unable to differentiate 3G pre-paid users from the financial results).  If this is the case, that will suggest that more than 60% of all SingTel subscribers are iPhone users.  That percentage does not make sense to me and confirms my belief that there are already Starhub and M1 subscribers who are using the iPhone as their primary mobile handset.

 So how many more iPhone users can Starhub and M1 add to the already more than 800,000 iPhone population in Singapore?  It is very unlikely that SingTel users will convert their subscription to either Starhub or M1 for the purpose of owning a iPhone handset.  This is because SingTel was the exclusive distributor and any of the operator's subscribers seeking to own the device can only purchase it from their incumbent operator.  Hence, it is safe to say that any SingTel subscriber who wanted to own the iPhone would have purchased the device and is contracted over 2 years (for some it is 3 years as they re-contracted after 12 months for another 2 years if they want to purchase the iPhone 3GS).  This will mean that any incremental iPhone users following the entry of Starhub and M1 is likely to be their own subscribers. 

Based on this argument, I can assume that any subscriber who signed with either mobile operator between 2007 to 2008 (i.e. the maximum contract period when purchasing a subsidized handset from the operator) are the immediate target audience.  In addition, I am assuming that these subscribers are unlikely to enter into a contractual agreement with SingTel for the purpose of owning a iPhone handset (i.e. two operator plans running concurrently).  Finally, I would presume that any subscriber who signed a 2-year contract in 2009 will need to pay a penalty  (e.g. $300) to purchase the iPhone.  

Using the above-mentioned assumptions, I looked through the full year financial results of Starhub and M1 for 2007 and 2008.  Ideally, I should use the Net Additions metric to be absolutely sure on the number of new subscribers who signed with the operators in the said period.  Unfortunately, this metric was not provided consistently in both financial results.  As such, I am making an assumption that the change in the number of subscribers for each quarter is an indicative figure of new subscribers who signed with either operator.  

Based on the above table, the total number of M1 and Starhub subscribers who have completed their two year contractual relationship with their respective operators is 532,000.  It is my opinion that these subscribers are the prime target audience for the operators to promote the iPhone 3G handset.

However, not everyone who is free from their 2 year contractual period will purchase an iPhone.  Indeed, the 532,000 subscribers can choose any handset that is available in the market. Hence, I am assuming that 30% of this available subscriber base will purchase a iPhone 3G once it is distributed by Starhub or M1. 

Therefore, I am making the case that there will be an additional 159,600 iPhone users in Singapore once Starhub and M1 finally offer the iconic handset (in Christmas?). 

Which means that we're likely to have slightly more than 1.04 million iPhone users by 2010.  To put this in its context, the dominant English newspaper in Singapore, The Straits Times, has a readership base of 1.44 million with an average daily circulation of slightly more than 370,000  copies. 

If every iPhone user reads The Straits Times, that will mean that every 3 out of 4 reader is a iPhone user.  

- Darren -

 

A Roadmap for Facebook Page Marketing by the Altimeter Group

This is another great research report by the Altimeter Group that is published under Open Research at no-cost under creative commons licensing.  It offers marketing executives 8 success criteria factors for Facebook Page marketing and case studies on how some brands in the United States used Facebook to augment their customer engagement process.

All the best,
Darren

The 8 Success Criteria For Facebook Page Marketing

View more documents from Jeremiah Owyang.

Measuring Social Media....Yes, Analytics for Social Media

Let's see now, my last blog posting was in the Christmas season in 2009.  In the blogsphere world, that is a LONG time.

Since then, I have been working on my MBA program which is nearing the end as I write this blog.  It has been an intense four months for me.  Handling strategic management, performance management, international business management and international finance has frankly out my brain cells to the test within a short space of time.  Still, it is my personal decision to do the accelerated path for this MBA program, and I am thrilled to have my intellectual curiosity tested to the max by the endless case studies over this period.

Since I finished my strategic management exam yesterday, I decided to re-visit some of the blog postings on my Google Reader, and was pleasantly surprised to find two exceptional research studies that are contributed at no cost by Altimeter's analyst, Jeremiah Owyang and Joe Lovett from Web Analytics Demystifed.  Both reports are similar in its research findings, but with subtle contextual differences that do not differentiate the substance of their arguments.  Published under the premise of open research, the authors have clearly walked the talk in the social media space by encouraging comments and feedback from the online community that would improve the research further. 

Now who says there's no good and free research online?  So long we remain open to new ideas, and apply critical reasoning on the arguments offered by the authors, everyone will stand to learn more about social media.  My thanks to Jeremiah and Joe for graciously allowing their hard work to be shared in the WWW.

- Darren -

Altimeter Report: Social Marketing Analytics

View more documents from Jeremiah Owyang.

Social Marketing Analytics: A New Framework for Measuring Results in Social Media

View more documents from John Lovett.

Latest Facebook trends in Altimeter Group and Web Analytics Demystified.

Metrics from a Mobile Handset. Use it Well and You'll Improve Your Mobile Value Proposition

The mobile handset is a multi-functional device with the advantage of using its unique hardware features to create different marketing channels for businesses today. This will suggest that there is no universal metric for mobile as each channel function almost independently, and would require an unique set of metrics that are relevant to that specific channel.

Let me try to break this down for you:

1. Ads served from ad network
This will mean that your mobile Internet site or ad-supported games has to be accessed by users on a frequent basis so as to drive page views. In this instance, your metric is no different from what most webmasters will do in the traditional PC online space where they'll put tags such as Netratings and Google Analytics to understand the traffic origins and user navigation patterns. This allows the mobile site owner and game developer to analyse how users intreract with the mobile property and make adjustments to the user navigation pattern if necessary to maximize the inventory value at each page or game level accessed by the user.

2. SMS campaign
The obvious will be to track the number of messages sent from a SMS broadcasting campaign. Should you include a call-to-action for users to respond by replying to the SMS, you'll then get hold of important metrics such as:

a. Users' mobile service provider

You can use the mobile service provider's target market and market share as a proxy to determine which segment of the market is being addressed by the SMS campaign.  You can get information about the mobile service provider easily if it's listed on the stock exchange as they are compelled to post such information on their quarterly reports to the exchange.

b. Response date and time

This allows you to determine the period which most users will be accessible so as to fine-tune the broadcast time for your future SMS campaigns.

3. Mobile WAP site
The channel gives you the opportunity to understand:

a. Users' browser preferences

With so many browsers serving the needs of today's mobile handsets like Opera, Symbian and Apple's Safari, the WAP site owner needs to understand that a HTML page is simply not good enough for mobile WAP sites as the look and feel is determined by how the browser interprets the HTML code and display it in accordance to the size of the screen. That's why companies such as Netbiscults have tools that allow different look and feel for different browsers, giving users the visual experience that fulfills the brand positioning of the WAP site.

b. Users mobile handset

If the WAP site is being accessed by users through mobile service providers that provide HTTP codes to the WAP site owner, the owner can then use these codes and understand the user handset preferences and take active steps to ensure that the WAP site's look and feel will fulfill the visual requirements of popular handsets' screen size.

c. Geographical Location

If the WAP site is targeted to international mobile users, the IP address captured on the log file of the WAP site will gives the site owner an indication on the geographical location of the user who is accessing the site. You can then use this information to incorporate targeted information on the WAP site which is relevant to the user's specific location.

What I described above can be applied to customer acquisition strategies as the metrics flowing back to the campaign owner will help improve the service proposition (be it a SMS or WAP site).  This increases the future probability of a user committing to a clear call-to-action. Inevitably, this will fulfill the definition of a conversion, the same metric used on the online space to attribute the user's engagement in the mobile campaign to actual business performance.

I hope that what I described is useful for you.

Darren

Does these five individuals represent the future of the Internet?

It's been some time since I last posted on my blog for a variety of reasons - my MBA, work, family, and all other peripheral stuff that seems to pop up unexpectedly whenever I have the time to sit down and really contemplate on the issues I feel strongly about and post on my blog.  I guess this usually happen when you take on more responsibilities in your life, and reflects a growing reality that I have to accept following each passing year.  Life I used to have in the early 20s doesn't cut it any more in my 30s. 

So, it's likely that I will be posting more observations on this blog, rather analysis of my observations which I need the time to think through the arguments before posing there here.  Naturally, these observations are focused on areas related to the digital world, which is the context of my blog.

One of the many observations I'm going to post here is a panel discussion held sometime in July where 5 young users of anything digital - Internet, mobile, X-Box, Twitter, Facebook, MySpace, etc. shared their usage patterns on the digital space, and more importantly, what are they willing to pay on the Internet.

My takeaway from this: If these individuals represent the Internet of the future, then all of us are in serious trouble.  Take a look and let me know how you feel after hearing their thoughts.

Darren (htxqrnm3pe)

Only 5% Access the Internet From the Workplace in China

This is a common sight now as more citizens are accessing the Internet in China.  According to the report from the Wall Street Journal, China now have 338 million accessing the Internet.  

What is striking is that only 5% access the Internet in the workplace.  Is it due to the culture of doing business in China?

As we dwell on this observation, a Forrester report predicted that Asia will represent over 40% of the world's Internet users, with North America accounting for around 13%.  Clearly, this represents a shift in absolute numbers due to geographical population density.

The question is: can this rising number of Internet users be monetized?

- Darren - 

Does Coupons Change User Behaviour (Translation: Get you to buy something)?

The last time I received a physical coupon was in the newspaper delivered to my home.  You see, there is a service provided by Singapore Press Holdings (SPH) where advertisers can insert such coupons in the bundled newspapers to be delivered to homes around the country.  Since the delivery is managed and controlled by SPH, the advertiser has the choice of selecting which geographical location they wish the coupon is to be delivered (e.g. the eastern side of Singapore would include towns such as Marine Parade, Bedok and Changi).  An example of such a physical coupon is shown below.

Setting aside the theory on how such direct marketing tactics are developed by advertisers, I have to admit that I will take the trouble to look through the coupon with great interest.  But the intent to encourage me to buy a product otherwise would not will fail on me because the promotional product has to be something that I need now, or aspire to own in the future.  Hence, the coupon has to address my demand requirements at the point of receiving the promotional instrument (i.e. coupons).

Assuming that the product or service in the coupon addresses this need of mine, I will pay close attention on the the nature of the coupon.  This nature represents what the coupon seeks to communicate:

1. Is it a price discount? 
2. A conditional offer such as a ridiculously low price for the 1st 100 customers?

The nature mentioned above will determine whether I will make a purchasing decision or not (though I must admit that the second nature will not interest me).  Having said that, I must confess that this behaviour which I described earlier somehow indicates that I am reliant on coupons to make purchasing decisions for certain products.  This is because coupons intentionally influence the demand and supply of a purchasing decision.  Prior to this influence,I (i.e. consumer) may not have reached a point where the demand is so overwhelming that I have to make that purchase.  As such, coupons do play a major role in influencing my purchasing decision for specific products.  As a general rule, this influence will be the most effective for products which are not commoditized in the market such as mobile handsets, vehicles and consumer electronics.

Hence, companies that use coupons as a promotional strategy will need to make sure that the product or service in the promotion matches the need of consumers like myself.  This matching is aligned to my earlier posting on market segmentation on user databases.  In such instances, the medium which is employed to distribute the coupons play an important role in changing the usage pattern of consumers such as myself.  For example, a broad product category such as food and beverage, groceries or clothing will see the coupons being distributed through newspapers which are perceived as mass media platforms (see below). 

As the products get more specific such as consumer electronics, then the medium used to distribute the coupons will change accordingly.  For instance, a coupon that offers three months free membership to a gym will work best in magazines that focuses on exercise and general fitness.

Hence, the effectiveness of coupons to influence consumer behaviour is dependent on first and foremost, market segmentation and matching products to consumer needs.  Following this, the distribution of the coupons through the right channels is critical as such channels represent the proxy of consumer needs.  Mixing both together with the right execution will probably get me to buy more than I would usually have done (which may not be a good thing given this economy...).

- Darren -

Direct Marketing - Making it Work in the Traditional and Digital World.

When I think of direct marketers, the first thing that comes to my mind is: harassment.  And yet, the vast majority of of the direct marketing industry continues to adopt what I consider to be "untargeted marketing".  In most instances, these direct marketing firms acquire databases from other firms which seems to have developed a great business model to collate mobile numbers and email addresses of individuals.  Despite myself being part of the direct marketing industry with my present company, I still find it difficult to figure out how these database firms can get these mobile numbers with such ease with the strict privacy regulations adopted in countries such as Singapore.  But that is another topic to be discussed in a separate post.

But seriously, why don't these direct marketing firms target their offers to the right audience in the first place?  Speaking from my personal experience, I have been contacted by telemarketers (it seems that contacting unsuspecting individuals on their mobile handsets is the preferred mode of operation) throughout the working week with offers to join spas, take up a yoga course and sign up to a seemingly unlimited number of credit facilities from banks (which is not a good offer to make to today's materialistic Generation Y individual). 

In the past, I used to get these untargetted advertisements in my mailbox.

This led to a massive problem of such mailers being dumped by presumably frustrated home owners (I do make it a point to dump them in the nearby rubbish bin). This problem has since been solved by the company responsible for delivering the mail to our mailboxes with anti-junk mail features such as appointing the postman as the sole person with the key that opens all the mailboxes so as to deliver the mail to them.  Nonetheless, the junk mail still persist with the postal company now working as the advertising agent to deliver junk mail to home mail boxes.  This post probably reminds me to contact them and remove my address off their "junk mail" list.

But back to the most common mode of direct marketing - the phone call.  While the offer seems to be so attractive when articulated in an almost perfect manner by the telemarketer (no doubt from a script), the unfortunate ending to this conversation is a firm rebuke from me that "I simply have no need for the product"!  In particular, I find it absolutely frustrating to receive such calls when I'm at home with my family.  The video below best describes how I feel when I receive such calls at home.

While I have no intimate knowledge of the business practices of these direct marketing firms that made these calls to individuals such as myself, I do know, however, that targeting the right message to the right audience is a lot of hard work.  I know this as I do this on a daily basis in my role as a Database Marketing Manager in my firm.  The fact is that direct marketing is a function, and the delivery method is just a conduit between the firm and the individual.  As such, the best practices of direct marketing is consistent in the traditional and digital (media) world as the intent of the message can be communicated through phone, email, SMS, MMS, Location-Based advertising and mobile barcodes such as QR technology.

Hence, the differences in delivering the message should not overshadow the common rule that the right message needs to reach the right audience: We need to target the right message to the most appropriate market segment.  No one is saying that this is the nirvana of direct marketing, but it is certainly the best possible way to deliver the best effective advertising message to the right audience.

Using my role as an example, I will need to ensure that:

1.  The consumer database has no duplicate entries - Each user will only appear once in the database.

2.  Fill in as many demographic information for each user as possible.  Usually, surveys are the best means of getting this information.

3.  Segment the entire database by demographic profiles such as age bands (i.e. Under 18, 19 - 24, etc.) and occupation (i.e. senior management, manager, senior executive, etc.).

These 3 stages form the foundation of basic database segmentation.  What comes next will require absolute discipline and maximum attention to detail:

1.  Contact a sample of each segment to deliver the advertising message.

2.  Record the result of the entire interaction between the company and the individual

• Was the individual interested to find out more?
• How many stages did the individual go through in the interaction before deciding on the next action?  The stages are similar to what is described as the consumer purchasing funnel.
• What is the next action of this individual?  Accept the offer or decline?
• If the offer is declined by the individual, what would be the reasons behind this decision?
• When was the call made - morning, afternoon, evening or at night?

3.  Consolidate all the recorded details and identify patterns in the five points above within each database segment. 

4.  Create a regression model for each demographic segment and identify which variables (i.e. the points above) have the most significant influence to the success of the advertising message.

5.  Using the regression model, refine the advertising message and contact the users which meets the specification of a successful individual in the database. 

The 5 points made earlier represent how I manage the direct marketing business in my firm.  Undoubtedly, I left out the specific details of how I undertake these responsibilities as they are trade secrets.  What is commonly known, however, is that the digital world which my business is predominately in (i.e. online, mobile, and digital billboard advertising) gives me the advantages which the traditional world do not have.  One such example is the collecting of feedback data from my email marketing campaigns.  I am able to find out through a click of a button on the number of individuals who opened an email, clicked on the links in the email advertisement and how many times the email advertisement is being forwarded to another individual.  Such tracking abilities are readily available in today's online direct marketing industry.  These features are replicated, though in different variants, for the other digital media channels such as SMS, MMS and location-based advertising. 

As such, the efficiency of the campaign feedback gives me the data needed to crunch the numbers and creating the regression models needed to identify the variables needed to improve future campaigns.  It is only through this constant improvement where direct marketing firms can finally say with conviction that they have made the best effort possible to reach the right audience with the right message and hopefully, at the right time.  If these efforts are made, then we won't have instances described brilliantly in the video below.

- Darren -

Countdown to the Launch of the iPhone 3G(S) in Singapore

As of the time of this posting, there's one more hour to go before SingTel starts the festivities leading to the launch of Apple's new iPhone 3G(S).  It will be interesting to see if the crowd matches the number of people queuing for the original iPhone 3G some 12 months ago.

Here are some photos leading up to the launch:

All interested Singaporeans are directed to join the queue.  However, all business customers are still welcome to visit the mobile operator, which is indicated by a iPhone 3G (S) signboard.

The crowd is building up slowly as the mobile operator mounted an extensive tented environment to cater for all weather conditions.

These individuals are likely to be one of the 1st 100s who will get their hands on the new iPhone 3G (S).

- Darren -

Will the iPhone 3G(S) Overtake Nokia for Mobile Browsing in Singapore?

As Singapore awaits the launch of iPhone 3G(S) by SingTel on 10th July 2009, it is perhaps an appropriate time to see how the iPhone has influenced the mobile browsing habits of mobile users in the country.  I'll be using data from StatCounter which uses a sample size of more than 3 million websites with more than 4 billion pageviews per month. 

Source: StatCounter Global Stats - Mobile Browser Market Share

As you can see from the graph above, Nokia's browser (presumably Symbian) has swapped the leadership position with iPhone's Safari browser over many months since the start of 2009.  Interestingly, there is a divergent break in this flipping trend between the two browsers sometime last month.  I decided to do a more focused analysis on this by using data for the last three months (i.e. April to July 08):

Source: StatCounter Global Stats - Mobile Browser Market Share

It seems that the divergent break started on 14 June 2009 and this gap between the browsers widened since 1st July 2009.  As of 8 July 2009, more than 38% of all websites were accessed Nokia's mobile browser in Singapore.  In comparison, slightly more than 26% used iPhone's Safari to access websites in Singapore in the same period.  It will be interesting to see the effect of iPhone 3G(S) on the mobile browser competition in Singapore following their launch tomorrow. 

How is this information useful for marketing professionals?  Simply said, the two dominant mobile digital platforms today are Nokia and Apple.  I'm sure advertisers know this trend, either through popular perception or through word-of-mouth from the marketing community.  Nonetheless, the need to justify and convince senior management such as the CFO or CEO on investments in mobile marketing can now use these trends as the rationale to perhaps develop apps to tap on this increasingly tech-savvy target audience.  I'm sure a picture speaks a thousand words for your internal proposal to get the budget needed to meet your marketing objectives.

- Darren -

The Realities of Social Media Marketing for Businesses

It has been a long time since I last blogged on my site.  Back then I made a promise to myself to get involved in a blogging site that actually requires me to pay money to host the site as I'm a strong believer in ROI (i.e. blog more to justify the monthly fees!). It is not surprising, however, to have the realities of family and working life dictating how much time I can set aside to develop an editorial piece which is worthy to be published in my blog.  After all, I am determined to document my personal observations on digital media so that it serves as a journal of my journey in this exciting medium.

It is perhaps fitting that the topic of interest in my observation today is on the realities of social media marketing for businesses today.  Running a Google search on this subject will give you 234,000,000 pages in 0.23 seconds. As the number suggests, it's no longer an emerging tool.  It is a tool that needs to be taken seriously by the community.

Arguably, it is no longer surprising to hear of a fellow online user having a Facebook account.  The service is not only accessible on the PC/laptop/Netbook, but is also on major mobile platforms such as the iPhone, Symbian handsets such as the Nokia N79 and even on the Blackberry. 

In fact, Facebook is one of the very, very few Blackberry applications that is certified by RIM to have the clearance needed to be installed on any Blackberry device, despite the high enterprise security features associated with such business-oriented devices.

Indeed, Facebook has transformed the social media scene in the maturing Web 2.0 online world.  You can even get a specific URL for yourself now that personalize your Facebook URL in the online world (though I still curse my slowness in getting my personal vanity URL from the site).  Under this backdrop, we now see the number of unique visitors to Facebook have exceeded MySpace in November last year, with a staggering 113 million unique visitors in May 2009 alone.

Clearly, social media is no longer a medium used exclusively by tech geeks or net-savvy Generation Y individuals.  In fact, Facebook is now used by a broader spectrum of users across various demographic groups.  As the graph below illustrates, the site is beginning to see a more broad based participation, signally that such sites are evolving into a mainstream communication channel.

It is perhaps not surprising that many businesses are trying to get into the social media space in the hope that this will be the next alternative marketing channel.  After all, Nielsen Online suggested in a March 2009 report that social networks and blogs are now the fourth most popular online activity, and ominously ahead of email which is the incumbent communication protocol since the evolution of the Internet. These sites collectively host online member communities which are visited by 67% of the global online population.  In particular, Hitwise reported that Facebook users spend close to 19 minutes on the social networking site, representing the period where companies on these social networking platforms can potentially reach out to. This is probably one of the main reasons why established media channels such as CNN chose to integrate Facebook in their online programming such as the recent live telecast of Michael Jackson's memorial in Los Angeles.

Clearly, this rising number represents the size of the target audience which companies seek to engage and establish an online relationship with.  Assuming that such relationships are positive, the company would have created a parallel communication channel online to engage and build brand equity with these online users.

Invariably, questions will be asked on the sustainability of these social networking sites and virtual worlds that companies are presumably clamoring to establish their presence in them.  Indeed, one of the pioneers in social networking, MySpace, had to retrench many of their global staff strength as they seek to compete with the rising popularity of Facebook. 

But how do companies really do business on these social media sites?  Is it simply the case of setting up an account or a page in Facebook, with the belief that it will be populated naturally by the more than 200 million users on this social media site?

I would argue that businesses should not use the size of these online communities as the motivating force to establish their online presence in these social networking sites.  These social media sites are a conduit for online communities to interact on issues which may be relevant to the nature of the business’s operations.  This interaction forms the opinions and feedback which companies can use as a basis to improve their value proposition to their target audience.  Companies should therefore set aside resources such as a dedicated team that is focused on reviewing issues discussed on these social networking sites and if need to, respond to such feedback that allows the company’s position to be delivered with ambiguity.  This is important as the nature of such online interaction is uninhibited and is not moderated by anyone on these social networking sites.  As such, it is critical that companies respond unequivocally to issues which may adversely influence the public’s perception of the company.  Accordingly, a proactive and well-thought through process to interact with these online communities will reinforce the brand positioning of these companies, and foster a situation where relationships with their target audience can be built over the long run.

Concurrently, these consumers of social media actively provide demographic and psychographic data so as to get the most benefit and value from their online social networking experience.  In doing so, these users are presenting companies insights on the behavioral and lifestyle preferences which are used to fine-tune the targeting of potential customers on these social networking sites.  As these users in the online communities actively interact with their network through site-specific applications, uploading and sharing of photographs and discussions through dedicated group forums, companies will get to experience a richer set of data about these users.  As a result, the targeting of communication materials to these users is more specific than what conventional online marketers will do on websites.

Herein lies the realities of social media marketing.  It requires a dedicated and deliberate effort to ensure staff are trained to take advantage of this Web 2.0 communication channel.  Remember, it is now mainstream, and it will be foolish to ignore it.

- Darren -