Category: Market Trends

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Has Facebook Arrived As a New Mass Medium?

Building a social media strategy for clients is like building any other PR program – you target your message to the outlets that matter to your audience and your objectives. So where you want to build social media buzz helps you identify where you get the most value, whether it is with your professional contacts on LinkedIn, or through vertical outlets such as IT Toolbox or BankInnovation.net. Of course, there are those mainstream media outlets where all clients crave coverage, such as the New York Times and the Wall Street Journal. It looks like Facebook is starting to develop the same regulation as the “must have” social media site for any social media strategy.

A recent survey by Anderson Analytics revealed that Facebook has become the coolest place on the web for college students, despite the fact it is continues to grow in popularity with their parents. The Anderson Analytics 2009-2010 GenX2Z American College Student Survey conducted this fall shows that 82 percent of college men and 90 percent of college women ranked Facebook as “cool,” and  other social media sites including MySpace were ranked as “lame” by comparison. Consider the growing number of adult users migrating to Facebook, including these college students’ parents and even grandparents, and you have a bona fide phenomenon.

“Once a trend goes mainstream, it often gradually loses its ‘cool’ factor among young people, and they move on to the next ‘big thing,’” said Tom H.C. Anderson, managing partner of Anderson Analytics. “Our data indicate this is not the case with Facebook.”

The same survey revealed that college students are participating less in blogs (down 5 percent from 2008) and discussion boards (down 8 percent), which bodes well for microblogging. Twitter continues to grow, although growth has flattened a bit in recent months.

What’s also interesting is we are seeing a media convergence on Facebook. The survey shows that 70 percent of college students had watched entire television episodes or feature film streamed online. In fact, for the first time a streaming media site, Hulu.com, ranked in the top 10 sites in the survey. And there is a natural symbiosis between Facebook and streaming media sites like Hulu and YouTube. There is a Hulu widget on Facebook and popular shows, like the Simpsons and Family Guy, are streamed on Hulu with fan pages on Facebook. The convergence is organic.

And popular brands who “get it” and understand how to engage are seeing a boost from Facebook. In the Anderson Analytics study, both McDonalds and Coca-Cola ranged first among college students, and they also had more Facebook fans than their number two competitors. (Coke’s Facebook fans outnumber Pepsi twenty to one.)

What this survey reveals is that social media in general and Facebook in particular have become a real marketing force, not just to reach college students but for all ages. Extending your marketing program with a social media presence is a cost-effective and sure-fire way to expand your brand footprint.

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There’s Bias in Analyst Reports? I am Shocked!

If you have visited this blog before, you may recall a posting in October that profiled the lawsuit filed by ZL Technologies against Gartner Group. In the original lawsuit, ZL technologies challenged the validity of Gartner’s Magic Quadrant methodology (which ultimately resulted in poor rankings for ZL’s product).

Well, this week I received an update from ZL Technologies. (They must have added me to a mailing list based on my blog post – gosh, does that make me a journalist? More likely it makes me a pawn in SL Technologies’ misguided marketing efforts, but I digress.) Apparently, ZL has amended its lawsuit, arguing that Gartner’s research is based on more opinion than fact. In earlier court testimony, Gartner alleges that its Magic Quadrant reports are opinions not based upon fact, although their marketing materials indicates that the opinion is actually based on a body of facts. This from the cover note from ZL Technologies that I received this week:

“While this case is focused on ZL’s dispute with Gartner over the erroneous statements in Gartner’s publications, the issues here also implicate Gartner’s larger business model. Gartner plainly admits that it attempts to leverage value from its largest clients, many of whom are also vendors covered in the company’s research. ZL’s legal filings describe how that business model causes Gartner to favor those large companies at the expense of identifying the best technologies, thus misleading not just the vendors who are inaccurately reviewed by Gartner, but the consumers who base their IT purchasing decisions on Gartner’s biased research.”

So, basically, the lawsuit is alleging bias based on the size (and presumably the spend) of Gartner’s clients.

Well, duh!

This is not a new challenge. One of the lessons that I have learned working in trade publishing, both as an editor and as a PR professional, is that money can’t buy me love, but it can buy me access!

If my client is a major advertiser with a publication, I know that it usually is easier to get a hearing with the editorial staff. The same is true with analysts. I have represented a number of smaller clients who don’t buy market research. I set them up with very successful analyst meetings, and more often than not the technology gets included in the next report. However, the quality of the coverage will be better if you have access.

And let’s face it, the big vendors get access because they pay for the privilege. If I am a Gartner subscriber, then I can contact the analysts when I need an opinion or when I want input on a new product. That’s what the subscription is for. And because it is a paid engagement, the analyst will learn more about your company, its strategy, and its products because that’s why you pay him. Whether it’s intentional or not, access tends to promote bias – the fact that analysts have more contact with and insight about paying clients probably means that those clients will get better treatment in reports. It’s human nature.

So does that mean if you can’t pay to play, you don’t play at all? Of course not. Analyst research continues to provide an invaluable service to the marketplace. However, the analysts’ role is changing. I recently attended a Forrester Research discussion about predictions for the market in 2010. One of the insights that came to light was that more and more technology buyers are turning to social networking to find new IT solutions. They are going to LinkedIn and their peer networks asking about the best enterprise proxy servers or how to deal with cloud computing. There was a time when the first place these buyers would go was to their friendly neighborhood research analyst to get their take on the market. Now the analysts are becoming market validators more than predictors. The social media networks are providing information on the latest trends, and the analysts are handicapping the players.

So what does all this say for the ZL Technologies lawsuit? Although the lawsuit is alleging research bias, the real issue is how much power Gartner has in making or breaking sales in a specified market. Is this lawsuit just sour grapes on ZL’s part because they didn’t get the ranking they wanted? Probably. Gartner uses a number of factors in handicapping vendors in any market, including how deep their pockets are (i.e. will they be around tomorrow to service what they sell), and how good their marketing and sales strategy is (which helps assure they will be around to service what they sell). That’s part of the reason that it’s hard for start-ups to rate well in analyst comparison reports, no matter how innovative their technology.

So from the e-mail I received this week, it strikes me that ZL is using this lawsuit as a focal point for its marketing program. I am sure they are getting a lot of attention from the lawsuit, but I doubt that they are selling much e-mail archiving software as a result.

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Analyst Relations: Dating the 800-pound Gorilla

800 pound gorillaIndustry analysts play a unique role in media relations, especially in high-tech PR. You always want to brief analysts before you make a major product launch to get their take on your new technology, and ideally their buy-in so you can ask them to serve as an independent, unbiased reference for editors and sometimes prospects. Of course, not all industry research is created equal, and some has more value than others. My clients tend to watch their rankings in Gartner Magic Quadrant and Forrester Wave reports quite closely, because those rankings do translate into sales.

However, analysts are fallible. Even with the best market data and research their reports are still subjective, which is why I found the recent news that ZL Technologies is suing Gartner Group for $132 million in lost sales astounding:

“ZL alleges at great length in its Complaint (and recapitulates in its Opposition) that it has a strong product and satisfied customers. The Magic Quadrant reports do not say otherwise; the real point of contention here is not the quality of ZL’s product, but instead the subjective analytical model Gartner used to assess ZL’s market position and prospects. ZL does not contest Gartner’s basic assessments of ZL—that it has a good product but needs to expand its sales and marketing—but ZL challenges its placement on the Magic Quadrant Report because Gartner uses a “misguided analytical model” that gives “undue weight to sales and marketing.””

Does Gartner really have that much market power? Over the last decade, I have watched Gartner gobble up Meta Group, Dataquest, and a host of other analyst firms like Pacman, so at the end of the day they are the biggest market force in the room, but does that really mean their analyses are more accurate? According to the filing by ZL Technologies, the Gartner Magic Quadrant holds the power of life and death for their sales. Although I see analysts having an influence on the market, I can’t see their reports having a stranglehold. Surely, having a better solution, better support, and a strong sales team make up the difference for an inaccurate research ranking.

David Ferris of Ferris Research has a good take on the issue. As he states,

  • Any analyst firm is simply expressing an educated opinion.
  • No one firm knows the future, but can only predict based on past data.
  • The connection between analyst dollars spent and report results should be minimal, or non-existent. Paying for research should not give you special privileges.
  • Customers should consider the value of the product, not analyst rankings, hen making a buying decision.
  • Bigger is not necessarily better in the analyst world. Any research report is only as good as the analysts who are gathering and reporting the data.

With great power comes great responsibility. Gartner has achieved great power, largely through acquisition, but that doesn’t mean they hold all the wisdom. In many ways, this lawsuit gives Gartner too much credit, too much power by claiming the Gartner Magic Quadrant has the ability to make or break a sale or a market. Analyst research can be valuable, but when you make it your sole raison d’être for closing or losing new business, you’ve missed the point.

Who knows how the ZL Technologies lawsuit will turn out. But in my experience, when tech companies call out the lawyers to solve their marketing problems, there are bigger internal problems that are affecting their chances for success.

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Understanding the New Consumer

Consumers are turning into Ants, not Grasshoppers
Consumers are turning into Ants, not Grasshoppers

If you haven’t discovered TED Talks, you are missing a great source of inspirational thinking. TED, which stands for Technology, Education, Design, plays host to some awesome pundits and thinkers who have some really insightful stuff to share.

This week, I have been working on a press release for a client, Market Rates Insight, a company that provides competitive rate research to banks and credit unions. Their latest research report reveals that consumers are looking to banks for security; trusting their money to an FDIC-insured institution over other options that may offer higher yields.  Even though banks are paying less than mutual funds or stocks, consumers are seeking security for their money. This is part of a shift in consumerism where people are planning for the future rather than spending in the present.

That’s why I found the recent TED Talks recent presentation by John Gerzema so interesting. Gerzema is co-author of The Brand Bubble, a new book that advocates change as the best strategy for brand management in today’s market, and is Chief Insights Officer for Young & Rubicam. If you watch the video, you see that his perception is that consumers have returned to an old reality. They are no longer leveraging their future, and the future of their children. The economic downturn has transformed the grasshoppers into ants that are saving for the future.

Consumers are saving more now. Spending in Q4 dropped 3.7 percent, the lowest in 62 years. Gerzema shares some interesting change indicators. More molars need filling because stress is causing people to grind their teeth.  Gun sales are up 25 percent since January according to the FBI. The Cornell Institute reports that vasectomies are up 48 percent. And shark attacks are at the lowest level since 2003 because no one is at the beach.

So what Gerzema is seeing (or hoping for) is that by restricting demand, consumers can control their consumption and be more discriminating. As Gerzema says,

“By restricting their demand, consumers can actually align their values with their spending and align capitalism to not just be about more, but to be about better…”

Gerzema expands this theme, talking about people downscaling their consumption patterns and adjusting purchases to take advantage of reduced costs. Consumers also are demanding more empathy and social responsibility from companies. And they are looking for “durable living,” investing for the long haul. And finally, he points to the “return to the fold” phenomena, where consumers look to their peers to endorse brands and validate brand decisions.

And much of this ties back to social media. People are looking to share their values and empathy through social media outlets, and they are looking for validation of their decisions and values. They are using the Internet more than ever to connect with like-minded people and research their purchases and support this new socially responsible lifestyle. If marketers are going to engage with these consumers, they need to be sensitive to this shift in perception and be prepared to engage with authenticity, empathy, and longevity. The new consumer is all about cooperative consumerism, and the smart marketing professionals will become part of the cooperative.