Google
revolutionized advertising by popularizing pay-per-click. This model
has not translated well to the world of social networking, because
customers of social networks engage sites in a different way than
customers of search
engines.
Because social networks have
generated staggering quantities of traffic without generating as much
economic value from traditional advertising models, there's a big
opportunity to buy traffic on a new model. Starting with
Facebook's
developer program, social networks are all jumping on the apps
bandwagon. Those apps are generating even more pageviews, making it
quite affordable to buy application installs (which is a
cost-per-action ad that requires the user to install the app before the
action is considered complete). These cost-per-install ads are a
reasonable way to jumpstart traffic to a new app, which is what they've
been used for so far. But I think there is a much more interesting way
to use the model, and that's what I want to talk about today.
If
you ask an expert in Facebook apps to come help build yours, you'll
usually hear the same advice: build your app for virality. That's
sensible advice; most people who have made a business on Facebook rely
on the
viral driver of growth.
Those who have tried to build apps that exist just as glorified landing
pages or marketing channels have generally failed. So why buy
advertising on a cost-per-install basis? If you have a virally-growing
app, you don't need the extra installs. And if your app is designed to
drive traffic to some off-network site or product, the cost is usually
prohibitive, because the traffic in your app doesn't convert any better
than a traditional CPM or CPC-based ad anywhere else on the network.
As
a result, CPI advertising is incredibly cheap. I have seen plenty of
situations where CPI rates are as low as $0.25 to $1.00, and plenty of
situations where you'd pay that much just for a click to your
traditional landing pages.
The unexplored value of CPI ads is
this: social networking apps give you the opportunity to practice
advanced marketing techniques like true
one-to-one marketing or
permission marketing.
When someone clicks on one of your traditional CPC or CPM ads, what do
you know about them? You know the content of the ad, so you know a
little bit about what they're interested in. Other than that, you know
their IP address, maybe their browser version or what country they are
in. In other words, not very much. That's why so much of traditional
CPC marketing is focused on optimizing landing pages and registration
forms.
By contrast, look at what it means to have someone
install your Facebook app. Again, you know they have some level of
interest in your ad. You already have an authenticated login. You know
the person's age, gender, where they went to school, who their friends
are, what their interests are. And, most importantly, you have several
reliable communciation channels to talk to them including including
email, profile notifications, feed items and status messages.
Imagine
the kind of impact you could have with a potential customer if you
didn't have to waste any energy at all on convincing them to invite
their friends. You can actually communicate with them instead, learning
more about them, getting better at serving their needs. If you have an
e-commerce product, for example, you could try using the app to offer
specialized product offers or to tune your recommendations. If you
follow
Seth Godin's
original permission marketing concept, you could offer your customers
entries in a contest in exchange for learning more about your products.
You could find out what products your customer already uses, and find
out when they run out, need to refill, are ready to switch, or it's
time to upgrade.
Think of all the money car companies spend
advertising to people who are not at all thinking of buying a car, just
to reach the handful who are. What if, instead, you could self-select
as someone who is thinking of getting a new car, and have the car
company work with you to research and select the best option, instead of spamming you with ads all the time?
The
specific form will depend on the kind of product or service you want to
sell. But the general principle is to frame your marketing on social
networks as an exchange of value,
played in rounds. As the customer gives you a little of what you want,
you give them a little of what they want. If you have the patience to
walk down that path, you can convert prospects into customers for life.
From their point of view, buying your product gives them not just the
product itself, but membership in an exclusive club where they can get
the inside scoop on what you're thinking and doing. Wouldn't you rather
relate to customers in that frame of mind than on TV or in a banner ad?
And, as a customer, wouldn't you rather be treated that way?
Lucinda Stawel
