Social Media & Marketing: Online Networking & Advertising


Social Media & Marketing: Online Networking & Advertising

A thesis submitted in fulfillment of the requirements for the award Bachelor of Arts (Communication) (Honours)

By Weng Wah, Wong

School of Communication Faculty of Arts Charles Sturt University

February 2008

Social Media & Marketing: Online Networking & Advertising


Declaration of Authorship
I certify that the work presented here is, to the best of my knowledge and belief, original and the result of my own investigations, except as acknowledged, and has not been submitted, either in part or whole, for a degree at this or any other University.

________________________ Weng Wah, Wong February 2008

Social Media & Marketing: Online Networking & Advertising


Whilst once the domain of the information seeker and the passive web surfer, the Internet has evolved to become a truly social media environment; an interactive environment that now sees a free-flow of information and conversation. In line with this evolution we have seen the balance of power shift from the marketer to the consumer, from the communicator to the receiver through social media platforms such as YouTube, MySpace and more recently, Facebook.

Currently it is estimated that during an average adult’s day, a total of nine hours is spent surfing the net. It is anticipated that this time commitment will increase significantly as social networking becomes mainstream.

Since consumers are now able to control the ebb and flow of information, marketers and advertisers are coming to recognize that, in order to succeed in the new digital world, they need to re-think their strategies.

Social media is seen as an emerging communication environment for many, therefore little to date has been written on it. Indeed it appears that many media practitioners, marketing agencies and advertising agencies are continuing to apply traditional planning strategies in this new environment.

In this thesis, my objective is to highlight the growing importance of online advertising, especially social advertising in the social media environment. The thesis seeks to do this by

Social Media & Marketing: Online Networking & Advertising


addressing the principal research question “What strategies can be successfully employed by advertising and marketing practitioners within the social networking platform?”

For this study, the principal form of data collection was participant observation in two leading media agencies over a period of one month. This was followed by a series of informal interviews to survey the digital environment and by mini case studies. The research was successful in obtaining relevant and contemporary data detailing the Australia digital environment supported by case studies of successful social media campaigns in Facebook, MySpace and Bebo.

From the investigation the researcher has identified that word of mouth is the most powerful form of advertising in Web 2.0, and to harness this form of advertising, advertisers need to build trust and continuously engage the consumer via various online activities. By developing a high level of engagement with the consumers through the use of interactive online activities, consumers’ positive word of mouth may be generated, facilitating a successful online marketing strategy.

Social Media & Marketing: Online Networking & Advertising


Arguably, my greatest academic accomplishment is the completion of this thesis. It has been a real challenge for me in terms of getting the language right and balancing external factors such as the recent loss of my father and the commitments of working fulltime and tertiary study.

Undertaking and now completing my Honours has built up my personal and professional confidence and self esteem. I have learnt much on this journey, not only about my specific area of research, but about myself. It has been a gratifying experience and I would like to take this opportunity to thank a few important people who have helped and supported me along the way:

First and foremost, I would like to show my deepest and sincerest gratitude to Dr John Carroll who has been a very good mentor to me from the start of my course. He has provided endless moral support, help and motivation to me in my hardest times. Without him, I would not have been able to finish the course. I admire his willingness to go the extra mile with me.

The second person whom I want to express my deepest gratitude to is Rod McCulloch who has been my supervisor for the last six months. He is a very important person in the production of this thesis as he was the one that spend hours and days in correcting my English and also feeding me constructive feedback to ensure this thesis meets the high standard set by my university. I really appreciate his help and also his time to help me. When I doubted my capabilities in completing this course, he believed in me.

Social Media & Marketing: Online Networking & Advertising


I would also like to thank Timothy Francis Gregory, James Foo and Don Still who have helped with proofreading my work at various stages. Without their help, I would still be struggling with words and endless grammatical errors. Lauren Magid continuously offered assistance to me when I was away from the course and I am really touched by all the little things she did to help me in regard to this thesis. My cousin, Henry Cheang has provided me with endless resources to assist me in completing this thesis. There are no words to adequately express my gratitude to him as he has been providing and helping me to cope with living in a new country over the past twelve months. Both Ng Wen Chien and Viona Lai have provided me with endless support and motivation during the hard times of my life. When I did not even believe in myself that I could complete this thesis, they believed in me, which means a lot to me.

Last but not least, I would like to thank my family who has been very supportive and considerate over the past year, and also my church members who have been praying for me everyday. Thank you so much!

Weng Wah, Wong

Social Media & Marketing: Online Networking & Advertising


Table of Contents
i) Declaration of Authorship ii) Abstract iii) Acknowledgements 2 3 5

1.0 Introduction 1.1 Motivation 1.2 Thesis Structure 1.3 Overview of Research Questions

10 10 12 13

2.0 Literature Review 2.1 Introduction 2.1.1 Media Landscape 2.1.2 Interactivity 2.1.3 Social Media 2.1.4 Word of Mouth Marketing 2.1.5 Social Networking 2.2 Conclusion

14 15 16 21 28 34 38 42

3.0 Research Approach 3.1 Problem Statement 3.1.1 Research Objective 3.1.2 Research Model

44 44 44 46

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3.1.3 Research Questions 3.1.4 Definitions

47 48

3.2 Research Method 3.2.1 Research Type 3.2.2 Research Strategy 3.2.3 Data Analysis

50 50 51 54

4.0 Analysis of data 4.1 Australia Advertising Industry 4.1.1 Media Landscape In Australia 4.1.2 The Internet 4.1.3 Media 2.0 4.1.4 Consumer 2.0 4.1.5 Conclusion

57 57 57 64 68 73 83

4.2 Social Media & Marketing 4.2.1 Social Media Marketing Framework 4.2.2 Social Networking Social Advertising 4.2.3 Case Studies Bebo MySpace

84 84 89 89 101 101 109

Social Media & Marketing: Online Networking & Advertising

9 Facebook


5.0 Conclusions 5.1 Reflections on Methodology and Limitations 5.1.1 Answer to Research Questions 5.1.2 Further Implications of the Study

120 120 122 126

List of Figures & Tables List of References Appendix A – Journals Apendix B – Email Transcripts

128 130 143 151

Social Media & Marketing: Online Networking & Advertising


Chapter 1: Introduction
I am pleased to submit this, my Thesis, for consideration for the award Bachelor of Arts (Communication) (Honours) at Charles Sturt University. The research component of this thesis was undertaken during the period of February 2007 to November 2007, with the area of study being online advertising, specifically within the social media environment.

This first chapter examines the motivation for the study into online advertising and briefly outlines the structure of the Thesis.

1.1 Motivation The World Wide Web (www) was chosen as the platform for this research primarily due to its impact as a communication medium and its exponential growth in terms of the number of users navigating the network of websites globally. It has heightened the capabilities of information exchange in an ever expanding media environment.

There have been two generations of the World Wide Web which are known as Web 1.0 and Web 2.0. A layman’s way of defining Web 1.0 and Web 2.0 is that the Internet in Web 1.0 is a one-way communication configuration tool, whereas Web 2.0 is a two-way communication tool.

The structure of the Internet is characterized by both increasing media diversity and by the expanding array of media platforms. Hence, the Internet has evolved into a range of media, rather than a single medium. In this evolution, it integrates the capabilities of many existing

Social Media & Marketing: Online Networking & Advertising


media into a highly flexible and personalized communication tool. These properties of flexibility and personalization of content have given birth to the notion of social media.

Social media is defined as the manifestation of the Internet and a social tool that allows people-to-people communication online (Goldhammer, 2007, para. 6; Chartered Institute of Public Relations, 2006, p. 2; Wikipedia, 2007, para. 1). As the name implies, social media involves the building of communities or networks, encouraging participation and engagement (CIPR, 2006, p. 2). Examples of social media applications are Wikipedia, MySpace, Facebook and

In this social media environment, Internet users are brought closer to each other with social software that foster closer relationships and encourage group participation and collaboration. For example, instant messaging has allowed communication with one or many, with just a few clicks. Another example is the Wikipedia platform which is an online encyclopedia that allows group collaboration in producing content. The power of one may be limited but the power of a network is limitless.

Social media is a relatively new communication environment; hence there is little written to date in the literature. The purpose of this research study then is to investigate current practices of the advertising industry and specifically online advertising in the social media environment.

Social Media & Marketing: Online Networking & Advertising


Without doubt, the greatest encouragement I have received in the course of this research was the fact that a segment of my work on the social media environment entitled “Evolution or Revolution” in has gained significant global attention. In just six months, my presentation received 17,677 visitations, with a majority requesting a copy. Most of these requests have come from advertising agencies in the US and Europe and indeed, this overwhelming response helped fuel my desire to produce a comprehensive presentation of my research findings.

1.2 Thesis Structure In this section, the researcher seeks to provide a brief summary of the structure of the research.

This Thesis begins with 1.0 Introduction, where the researcher provides the background to the thesis and provides a short overview of the research questions.

In Chapter 2.0, readers will be introduced to what has been written in the literature regarding the research topic. Chapter 3.0 discusses the researcher’s approach to the answering of the research questions while Chapter 4.0 outlines the findings from the data collected. Chapter 4.1 provides an overview of the Australian advertising industry landscape. The main trends of Internet usage by Australian audiences are also highlighted here. Chapter 4.2 introduces the social media marketing model and incorporates mini case studies to exemplify what has been discussed. In Chapter 5.0 the researcher concludes by specifically addressing the research questions and also presenting recommendations.

Social Media & Marketing: Online Networking & Advertising


1.3 Research Questions This section contains the questions that will be answered in this thesis. Based on the main themes explored in the literature review, this thesis addresses the following question:

What strategies can be successfully employed by advertising and marketing practitioners within the social networking platform?

To address this, the following three sub-questions were constructed: § § What elements do current social marketing campaigns exhibit? What elements make marketing with social networking unique and different from other forms of online advertising? § What strategies can be devised to enable advertisers to maximize success on the social networking platform?

Social Media & Marketing: Online Networking & Advertising


Chapter 2.0: Literature Review
This literature review both explores what has been written and identifies areas where little or no investigation has been conducted thus far into social media. As this field of study is still very new, there is a seeming lack of peer-reviewed sources. Hence, the necessary information for this research was obtained largely from the Internet itself as it provides the latest source of information in this field.

Prior to undertaking this literature review there appeared to be little, if any, literature on the roles that advertising can play in the social networking media environment. This research seeks to add to the limited body of knowledge in this area.

The research focuses primarily on Internet advertising, specifically on the social media aspect as this has seen tremendous growth in very recent times. Not only has it attracted much media attention, but considerable advertising spend as well. From the investigation, five main themes repeatedly emerged: the media landscape, interactivity, social media, word of mouth marketing and social networking. These five themes form the backbone of this literature review.

By the end of this review, new developments of the Internet in relation to social media, the history and future of online advertising have been identified. It is also hoped that the review will provide a more profound insight into the aspects of social media and how these are affecting advertising.

Social Media & Marketing: Online Networking & Advertising


2.1 Introduction The notion of social media, and specifically its relationship to the advertising industry is in its infancy. There is still very little written in the literature relating to social media and its impact in the advertising environment today. Hence, this research has largely utilised information gleaned from the Internet itself which has been authenticated for credibility.

As described earlier, the literature review covers the following five main themes of media landscape, interactivity, social media, word of mouth marketing and social networking. Details of these are as follows:

1) Media Landscape- The roles of advertising and current trends. 2) Interactivity- The Web’s main feature is its ability to be hyper-interactive in terms of use. Therefore, the literature review strives to develop an understanding of what has been said about Web interactivity in relation to the user. 3) Social Media- Arguably the most debatable media topic which sums up the Internet and its huge potential in various fields. 4) Word of mouth marketing- The success of good marketing and advertising often is measured by the success of word of mouth. The more people a certain advertising program reaches, the more awareness is generated. 5) Social Networking- A good understanding of the function and prominence of social networking will allow marketers to take advantage of opportunities that currently exist or may arise in the future.

Social Media & Marketing: Online Networking & Advertising


Although the literature presents these themes in a variety of contexts, this study will primarily focus on their relevance in establishing an understanding of how advertising can be used on this social media platform.

2.1.1 Media Landscape Overview of the Media Scene The total Internet advertising spend in the US in 2004 was larger than that of the whole outdoor advertising industry, was about 80% of the size of the US magazine advertising industry and was half the size of the radio advertising sector! Total US advertising spend on the Internet as recorded by the Interactive Advertising Bureau (IAB) and

PricewaterhouseCoopers (PWC) in 2004 totaled 9.6 billion dollars (as cited in DoubleClick, 2005, p. 3).

Comparing 2004 with 2003, Internet advertising spend increased by 31.5% (IAB/PWC), compared to 10% for broadcast television, 7.4% for the advertising industry in general (Universal McCann) and 6.6% for the current dollar GDP of the US economy as a whole (as cited in DoubleClick, 2005, p. 4).

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Figure 1.0: A Brief History of Online Advertising from 1994-2004. Source: DoubleClick 2005

2004 continued the acceleration of online advertising spend in the US and for the first time in four years, the industry outspent the previous highpoint of 2000, when the budget for Internet advertising dropped by 25% as a direct consequence of the economic recession from 2000 to 2002 (DoubleClick, 2005, p. 4). This is shown in Figure 1.0.

Over the same period, the number of adult Americans using the Internet rose steadily, at an average cumulative annual rate of 7% from 2000 to 2004 (DoubleClick, 2005, p. 4). The shift toward Internet advertising was accompanied, at least in part, by a shift away from advertising in other media (Hallerman, 2006, para. 1).

Social Media & Marketing: Online Networking & Advertising


While the advertising community went through a period of uncertainty about the viability of the Internet as a serious medium, consumers had no such doubts and continued to embrace it wholeheartedly. It was only natural, therefore, that advertisers eventually returned in full force, recognizing the need to be where their audience is (Doubleclick, 2005, p. 4).

According to Citigroup Investment Research, newspapers have been the hardest hit, losing $890 million annually in advertising revenue to the Internet from 2004 through 2007. As shown in Figure 2.0, this was followed by broadcast TV, with losses to the Internet of $720 million per year. As the Internet made up an increasing share of the total media space, Internet advertising spending has supported the year-over-year growth of the total media spend (Hallerman, 2006, para. 1).

Figure 2.0: Change in Ad Spend by Consumer Medium Source: eMarketer, 2007

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David Hallerman, IMedia Connection (2006) states:

“Internet advertising spending will continue to rise even as total media spending falls for two key reasons: One, in tough times, marketers will increasingly look to more measurable media to make sure their spending is as effective as possible (and that's the Internet); and two, as consumer spending falls, consumers will increasingly use the Internet for research and shopping to maximize their dollars, too. And therefore, marketers will more likely give up advertising spending in traditional media than in the Internet space.”

Mass Media goes niche

In 1965, advertisers could reach 80% of Americans aged 18-49 by running TV commercials on only CBS, NBC and ABC (Auletta, 2005 as cited in DoubleClick, 2006). By 1994, the “big four” broadcast networks being CBS, NBC, ABC and FOX commanded a 52% primetime audience share. By 2004, that share was down to 31% (Strengel, 2004, as cited in DoubleClick, 2006).

Today, the average U.S. household has 90 TV channels. As Procter & Gamble’s Jim Stengel stated at the 2004 AAAA Media Conference:

“We must accept the fact that there is no ‘mass’ in ‘mass media’ anymore, and leverage more targeted approaches... And, we must better understand who we are reaching as media plans become more fragmented. I give us a ‘D’ here because our

Social Media & Marketing: Online Networking & Advertising


mentalities have not changed. Our work processes have not changed enough. Our measurement has not evolved.”

As media choices have proliferated for consumers, so too has the volume of advertising we are exposed to every day. Estimates from various research companies of the number of commercial messages the average American is exposed to each day range from hundreds to more than 5,000, when you include not only advertisements on television, radio, magazines, newspapers, movie theatres, Web sites and email messages but also omnipresent logos on billboards, bus stops, stadiums, key rings, t-shirts, baseball caps and so on (Double Click, 2005, p. 14).

Figure 3.0: Time Spent with Media Daily Source: Future Exploration Network, 2006

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Broadband penetration and technology convergence have been identified as the major reasons for the change in consumer lifestyle and media consumption habits. Research by the Future Exploration Network (2006, p. 4) revealed that an average adult spends at least nine hours on the Internet per day. This is shown in Figure 3.0. Thus, it becomes clear that as consumers shift their attention to the online world, advertisers must be drawn to the online mediums to reach and influence them.

As Bloom (2006) explains, over the past ten years audiences have been steadfastly and dramatically deserting traditional media channels, not because of the availability of new media, but rather because of the simple lack of quality and social value to be found in their conventional media channels.

The fragmented world of traditional advertising and the growing maturity of digital media are forcing brands, media owners and agencies to seek alternative ways of engaging consumers (Bonello, 2006, para. 1). Traditional mediums of communication are no longer as effective, with brands struggling to make their voices heard within the boundaries of the traditional advertising environment, at a time when audiences are tuning out and becoming their own producers (Bloom, 2006, para. 10).

2.1.2 Interactivity Marketing communications on the Web provides benefits to both consumers and marketers. Many of these benefits stem from the inherent interaction between the Web site and the consumer (Roehm & Haugtvedt, 1999, p. 27).

Social Media & Marketing: Online Networking & Advertising


The Web is highly interactive and this has allowed people to control what information they see, for how long, how many times, and in what order (Roehm & Haugtvedt, 1999, p. 28). Since the inception of the Web, interactivity has been a term that many scholars and practitioners have tried to define with regard to the functions and applications of the medium as it relates to advertising and communications (Sohn & Leckenby, 2002). Interactivity in this context, is one of the important elements in advertising studies as it has been used as a measurement of advertising effectiveness of the Internet (Sohn & Leckenby, 2002). However, the multidimensional nature of the interactivity construct has made it difficult to be properly conceptualized as there are many definitions of interactivity that encompass various fields (Sohn, Leckenby & Jee, 2003; Peters, 2006). These definitions are detailed in Table 4.0: Multiple Definitions of Interactivity – Page 22, 23)

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Social Media & Marketing: Online Networking & Advertising


Social Media & Marketing: Online Networking & Advertising


Table 4.0: Multiple Definitions of Interactivity Source: Johnson, G. J., Bruner II, G.C. & Kumar, A. (2006).

Social Media & Marketing: Online Networking & Advertising


Upon closer examination, these different definitions can be classified according to whether they focus on user–machine interaction, user–user interaction or user–message interaction (Liu & Shrum, 2002, p. 5). User–machine interaction was the focus of early definitions of interactivity, where the emphasis was on human interaction with computers. To be interactive, a computer system must be responsive to users' actions. However, although user– machine interaction is an important aspect of interactivity, it alone is no longer adequate in addressing the concept of interactivity taking into account the proliferation of more advanced technology such as the Internet.

User–user interaction is most often discussed from an interpersonal communication perspective. The more that communication in a computer-mediated environment resembles interpersonal communication, the more interactive the communication is (Ha & James, 1998 as cited in Liu & Shrum, 2002). However, one problem with this perspective is that it ignores the ability of a medium such as the Internet to break the boundaries of traditional interpersonal communication. For example, traditional interpersonal communication requires two people to be in the same place at the same time for communication to take place but in the Internet, not only do people no longer need to be at the same place, they do not even need to be communicating at the same time. In addition, with online translation services, people also do not need to understand each other’s languages to be able to communicate. Furthermore, research has shown that computer-mediated communication and face-to-face communication are not functional alternatives (Flaherty, Pearce, & Rubin, 1998 as cited in Liu & Shrum, 2002).

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From a user–message interaction perspective, interactivity is defined by Steuer (1992) as: “the extent to which users can participate in modifying the form and content of a mediated environment in real time”. Whereas people have little control over messages in the traditional media, the Internet provides users with considerably more freedom in controlling the messages they receive. It also allows users to customize messages according to their own needs.

The view of interactivity as being a subjective experience of an individual user has been defined as “the extent to which a person perceives he or she controls the interaction process, his or her communicative counterpart (a person, a mass-mediated environment, or a computer mediated environment) personalizes and responds to his or her communicative behaviour” (Wu 2000, p. 41 as cited in Sohn, Leckenby & Jee, 2003).

Ha and James (1998) as cited in Dholokia, Zhao, Dholakia & Fortin (2000) studied the interactivity of early business Web sites and proposed five dimensions of interactivity, specifically: playfulness, choice, connectedness, information collection, and reciprocal communication. Further research was undertaken by Dholokia, (2000), who modified the model to reflect a total of six dimensions of interactivity: user control, responsiveness, real time interactions, connectedness, personalization/ customization, and playfulness.

Social Media & Marketing: Online Networking & Advertising


2.1.3 Social Media While social media as a construct has existed since the advent of the Internet, the recent phenomenal growth of social networking sites has popularized the phrase. Young (2006) claims that social media is a new medium in its own right. As such, he argues that successful commercial exploitation of this new medium requires the development of new business/advertising models (para. 3).

The Internet has become more socially-friendly, with the development of various social software giving users a pleasant browsing experience. Web 2.0 is one prominent instance, and is defined by Reilly (2005) as follows:

“Web 2.0 as a platform, spanning all connected devices; Web 2.0 applications are those that make the most of the intrinsic advantages of that platform: delivering software as a continually-updated service that gets better the more people use it, consuming and remixing data from multiple sources, including individual users, while providing their own data and services in a form that allows remixing by others, creating network effects through an ‘architecture of participation’ and going beyond the page metaphor of Web 1.0 to deliver rich user experiences”.

Social media is unique in the sense that it has transformed a passive audience into producers and distributors of media (Young, 2006, para. 3). From a marketing perspective, social media has allowed people themselves to become an integral part of the brand communication strategies and processes (Young, 2006, para. 3). Hollis Thomases (2006) in his article entitled

Social Media & Marketing: Online Networking & Advertising


“Are Advertisers Brave Enough for Social Media?” stresses that the social media audience comprises vocal and engaged people who desire a say and perceive that they may influence or exhibit some control over what is shown to the community (para. 7). Social media introduces new models of value creation and has brought an understanding to many that the media platform has evolved from interactive to social media. This is shown in Figure 5.0.

Social Media & Marketing: Online Networking & Advertising


Whereas the media evolution began with broadcast media (e.g. CNN) where the relationship with the audience is defined as one-to-many, it has evolved to become interactive as Internet platforms such as allow readers to comment, rate, market via email and occasionally discuss issues of interest in forums. As the online market grows and consumes more of people’s time, the Internet looks set to become a more prominent medium for the sharing of information and news. An excellent example is Wikipedia, where its relationship is many-to-many and readers are the participants, reporters and even editors.

In short, this significant shift in Internet use from passive to active can be summed up effectively in one word – “participation” (Connecting the dots, 2006, p. 7). The new culture on the Web is about consumer creation. Conversation defines the heart of social media, supporting the popular beliefs of Levine, Locke, Searls & Weinberger (1999) that markets are conversations that consist of human beings, not demographic sectors. The Internet is enabling and indeed, promoting conversations among individuals that were simply not possible in the era of mass media.

According to Future Exploration Network (2006), a symbiotic relationship has emerged between mainstream media (such as newspapers and broadcast media) and social media (such as blogs, podcasts, online social networks). Both media models feed off each other, e.g. blogs provide a vast public forum for discussion of content distributed by major media. An example, is the leading blog search engine, Technorati which has enabled every online item of The Washington Post, Newsweek and Associated Press newspapers to display the complete blog discussion about that article hence turning an article into a conversation visible

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to all. At the same time it has become common for mainstream media to quote blogs and bloggers, sometimes exclusively, and the conversations between bloggers often provide the ideas for media stories. Together, mainstream and social media create a single media landscape in which everyone participates.

The generation of participation has changed the rules of information filtering. In the past, it was the journalist who created the content which was then filtered by editors. In the realms of social media, user-generated content has created a vitally important trend which is that of user-filtered content. The flexibility of the Internet has transformed and shifted the power from the editor to the consumer.

Social media is the manifestation of the Internet and is a social tool that allows media sharing with one another (Goldhammer, 2007, para. 6; Chartered Institute of Public Relations, 2006, p. 2; Wikipedia, 2007, para. 1). This technology has allowed people to interact and share ideas and content instantaneously. As the name implies, social media involves the building of communities or networks, encouraging participation and engagement (CIPR, 2006, p. 2). Prominent examples of social media applications are Wikipedia (encyclopedia), MySpace (social networking), (social networking),YouTube (video sharing), Second Life (virtual reality), Digg (news sharing), Flickr (photo sharing) and Miniclip (game sharing). Indeed, the Internet itself is a giant, global social network which is created by and for individuals (Goldhammer, 2007, para. 11).

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In summarizing social media, Mayfield, (2007, p. 5) concludes that social media has the following characteristics:

1. Participation: Social media encourages contributions and feedback from everyone who is interested. It blurs the line between the concept of media and audience.

2. Openness: Most social media services are open to feedback and participation. They encourage voting, feedback, comments and sharing of information. There are rarely any barriers to the access and utilisation of content - password-protected content is frowned upon.

3. Conversation: Whereas traditional media is about "broadcast" content that is transmitted or distributed to an audience, social media is more seen as conversational and having a two-way interaction.

4. Community: Social media allows communities to form quickly and communicate effectively about common interests - be that a love for photography, a political issue or a favourite TV show.

5. Connectedness: Most kinds of social media thrive on their inherent connectedness, via links and the combination of different kinds of media in one place.

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2.1.4 Word of Mouth Marketing In this marketing-saturated world, many of us have become quite adept at ignoring the "noise" of advertising. Indeed, the advances in modern technology are making it quite easy to avoid advertising altogether. TiVo (which is a popular brand of digital video recorder in the United States with built in time-shifting technology) has enabled consumers to skip over ads they do not want to see. Consumers are listening to satellite radio or podcasts, and they are gathering news and information according to their own schedule and in their chosen format (Martin, 2007; Taylor, 2005).

Consumers are becoming more able and willing to ignore traditional advertising; they are becoming even more influenced by what others consider objective "testimonials" from friends, family, and even total strangers. Much of word of mouth advertising is driven by how a company has made a person "feel" (Martin, 2007; Taylor, 2005).

Social media provides the technology and platform to spread the “word of mouth” message. In social media, people share information via their networks of friends, a one-to-many communication. In support of this statement, a report by MarketingSherpa based on a survey of 790 viral marketers (as cited in Wyk, 2006) found social networking-related activitiesdriven by sites such as MySpace and YouTube- have had the most explosive impact on the growth of viral marketing in the past year. Digital channels have facilitated the leveraging of online communities; the ease with which digital content can be shared now becoming incredibly powerful. Digital channels amplify what word of mouth can accomplish in analog

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channels, and suddenly people are discussing the product in a public forum accessible to the entire online population (Lockhorn, 2007).

Word of mouth amplification, according to Lockhorn (2007), is a double-edged sword. The “uncontrolled distribution is powerful” and “terrifyingly unpredictable”. Word of mouth campaigns can take off very quietly through niche communities and can be powerfully persuasive, or conversely result in an astonishing backlash (Lockhorn, 2007).

Word of mouth is controlled by the consumer and it has been the consumer’s nature to care more about what other consumers think than what a particular advertisement says (Ramsey & Blackshaw, 2006, para. 1; Keller & Berry, 2006 para. 1). This form of marketing has been viewed by many as an important complement to traditional media and an essential part of the marketing mix (Womma, 2005, para. 1). For example, a 2004 Deutsche Bank study in the US on the consumer packaged-goods sector found only 18% of TV advertising campaigns generated a positive return on annual investment, whilst the Harvard Business Review reported that for every dollar invested in traditional advertising for consumer packagedgoods, the short-term return on investment was just 54 cents. One response to the saturation has been to reduce media costs by using free (and influential) media—word of mouth connections—to deliver marketing messages (Wyk, 2006).

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As cited in Wyk (2006), a 2004 UK survey by Mediaedgecia found 76% of people accredit word of mouth as the main influence on their purchasing decisions, compared to only 15% for traditional advertising. This supports the belief that consumers have a high distrust level for advertising. This is not a new phenomenon. According to research as cited in Wyk (2006), the level of trust in product recommendations from other consumers was high; from friends, it was even higher at 65% when compared to “experts” at 27%. Consumer-to-consumer contacts are, in this respect, undoubtedly powerful. When one consumer says something to another, the message is likely to be immediate, personal, credible and relevant (Letelier, Spinosa & Calder, 2003, p. 90).

Womma, (2006) defined word of mouth marketing as the opportunity: “to give people a reason to talk about the products and make it easier for the conversation to take place.”

Word of mouth marketing is certainly not new. It has been around since man first learnt to communicate (Kiviat 2007; Wasserman 2005). However, the Internet has allowed campaigns to be more measurable by using the latest online software and metrics. It has also increased the power of those who spread the word, and because "computer-generated media" like blogs and discussion forums amplify reach, companies are wooing such e-fluentials with freebies that are given out prior to distribution to the masses. According to WOMMA (2006), there are two key differences between word of mouth that result from day-to-day interaction with customers, and in particular the kind that occurs as a result of a specific campaign to create or encourage it. The first is organic word of mouth, which occurs naturally when people be-

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come advocates and share their support because they are satisfied or even delighted with the product. The second form is amplified word of mouth which happens when marketers launch campaigns designed to encourage or accelerate word of mouth in existing or new communities. This is explained in Figure 6.0.

Figure 6.0: Organic Vs Amplified Word of Mouth Source: WOMMA, 2005

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2.1.5 Social Networking

Within this literature review, social networking is considered to be one of the most important elements in the social media construct since just as it is through a network of friends (offline) that we are connected; then through the online network, people are communicating, collaborating and sharing via peer-to-peer networks.

Word of mouth requires a network of people to transmit information to. Research has shown that despite the more limited social presence of computer-mediated communication, online relationships are often strong with frequent, supportive and companionable contact (Sproull & Kiesler, 1991 as cited in Wellman, 1996). However, this statement is considered

somewhat outdated, as today the online environment has given much control and flexibility to the user, allowing him or her to stay in contact in real time and on-the-go via the mobile phone. A good example is Twitter, a social networking site where users can stay in touch with their network of friends, anytime, anywhere while they are on-the-go.

Social network theory has long been studied by scholars as it is through understanding the mapping which connects one person to another that one can evaluate the social capital of that individual. Specifically, it allows the understanding of the resources accumulated through the relationships among people to be studied and understood (Coleman 1988, as cited in Ellison, Lampe & Steinfield, 2006).

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Social capital is an elastic term with a variety of definitions in multiple fields (Adler & Kwon, 2002 as cited in Ellison, Lampe & Steinfield, 2006). Bourdieu and Wacquant (1992) as cited in Ellison et al., (2006) define social capital as “the sum of the resources, actual or virtual, that accrue to an individual or a group by virtue of possessing a durable network of more or less institutionalized relationships of mutual acquaintance and recognition” (p. 14). Relationships in this context can differ in form and function. Other definitions nominate social capital as a network that ties goodwill, mutual support, shared language, shared norms, social trust and a sense of mutual obligation that people can derive value from. It is understood to be the “glue” that holds together social aggregates such as networks of personal relationships, communities, regions, or even whole nations, according to Ellison et al., (2006).

One advantage of studying online communities is that it allows researchers to gather data with considerably less effort than other forms of communities. The researcher’s ability to learn more about the social network is simply a side-effect of users transmitting information digitally (Ellison et al., 2006).

Social capital allows individuals to draw on resources from other members of the network and leverage connections from multiple social contexts. These resources can take the form of important information, employment opportunities, personal relationships, or the capacity to organize groups (Paxton, 1999 as cited in Ellison et al., 2006).

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When a computer network connects people, it is a social network (Wellman, 1996). According to Wellman (1996), just as a computer network is a set of machines connected by a set of cables, a social network is a set of people connected by a set of socially meaningful relationships. A social network resembles the architecture of the World Wide Web as each of the networks shares a deep structural property (Hammond & Glenn, 2004, p. 15).

Computer networks provide the venue for social networks to happen and also facilitate the building of more relationships amongst a wider range of people. The asynchronous nature of the Internet and the distance-free cost structure of a computer network that transcends spatial limits has enabled people to communicate easily and effectively over different time zones. Thus, it has enabled more active contact and interaction in what would otherwise have been latent relationships (Wellman, 1996, p. 191).

The advent of the Internet has allowed communities and work groups to be organized by mutual interests rather than by shared neighbourhoods or worksites (Fischer, 1984; Wellman & Leighton, 1979 as cited in Wellman 1996). It has also allowed a continuation of interaction from an offline community to an online community such as Today’s online social networking sites are structured to both facilitate meetings with new individuals as well as maintain existing ties (Ellison, et al., 2006).

According to Ellison et al., (2006) citing Boyd (2004), research on (a social networking site) found that a user may have a variety of motivations for using a social

Social Media & Marketing: Online Networking & Advertising


networking site. It can range from using the site to connect with old friends, meeting new acquaintances, dating or furthering professional networks.

Information exchange is the primary motivation for social relations to happen (Monge, 1977; McGee, 1990 as cited in Hammond & Glenn, 2004). Levine, Searls & Weinberger, (1999) support this statement with their chapter in the Cluetrain Manifesto which highlights the fact that people in the market are always finding ways to converse. The authors conclude that conversations must and will happen because the market consists of conversations.

Social networking sites are online spaces that allow individuals to introduce themselves, articulate their social networks, and establish or maintain connections with others (Ellison, et al., 2006). These sites usually connect people with shared interests such as music or games. MySpace, for instance, has millions of members connected to each other who create their own content and share this with friends and groups in the spaces.

The surge in popularity that social networking sites currently enjoy was highlighted when Rupert Murdoch acquired MySpace for $580 million in 2005 (FoxNews, 2006). The feasibility of such sites has yet to be substantiated by many, but Ellison, et al. (2006) believe that social networking sites are the best sources for personal consumer information. Such personal information can then be used to explore the potential marketing and advertising strategies that are relevant to these social networks. eMarketer, a research agency has forecast that global advertising spend on social networks will leap from US$445 million in 2006 to $1.1 billion in 2007 and $2.8 billion in 2010 (cited in Jones, 2007).

Social Media & Marketing: Online Networking & Advertising


2.2 Conclusion Having reviewed the literature, it is evident that the social networking environment is growing exponentially. As cited in Fodaghi, (2007), Nielsen//Netratings reported that MySpace had an audience of 2.75 million in May 2007, or more than 13% of the Australian population. Another social networking site, Facebook is gaining popularity too, having grown in usage by 826% in the six months to May 2007. Indeed, an astounding 287,000 Australians logged onto Facebook in May 2007, up from 56,000 in the previous January! (Alpha, 2007).

Social networking sites are easily the fastest-growing marketing communication medium ever. As a result, many media companies are now spending significantly on research, identifying and leveraging the unique potential of this online advertising medium for greater profitability.

The Web has so much to offer when compared to the traditional media of television and radio. Today, an advertising spot on television is not only expensive but is also being challenged by the new technology. Time shifting video recorders and the all-powerful remote control allow annoyed audiences who find such commercials disruptive to mute the audio source or even switch channels, thus eliminating completely whatever influence that commercial would have had on them. Furthermore the Web is more cost-effective than a 15 second television commercial run nationwide.

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A 15-second spot or video clip on YouTube costs almost nothing if the content of the advertising is relevant and engaging, for not only will the advertisement be seen by direct users of the site, but it can also reach out to indirect users – individuals who have been emailed the link of the YouTube page by direct users. If these indirect users find the clip relevant and engaging, they could forward its link to even more people. This is the power of word of mouth on a social network.

Advertising on the Internet has progressed to another dimension, one where it engages, informs and fosters relationships. The potential of this medium is apparently limitless and it is the prerogative of advertisers and marketers to maximise this potential with currently very little governance or control. In light of this, my focus is in this area, the identification of the myriad factors that make advertising work on the Internet, specifically on the social networking platform.

Social Media & Marketing: Online Networking & Advertising


Chapter 3: Research Approach
In this chapter, the approach taken for the research is outlined. Specifically, the problem statement is clearly enunciated, research models and methodologies are explained and the analysis of data is discussed.

3.1 Problem Statement 3.1.1 Research Objective As identified earlier, online advertising is relatively new, and although there has been an increase in the advertising expenditure on the Internet, there are still relatively few who are willing to advertise on social networking sites.

The type of advertising prevalent in the online environment is described as passive advertising. It is effective in generating awareness but is a low engagement form of advertising. This research focuses on social media marketing which I suggest is a form of engagement marketing that helps a brand to amplify marketing messages. However this form of marketing and advertising is yet to receive serious attention, as online advertising is still relatively new to brand agencies.

Social Media & Marketing: Online Networking & Advertising


According to Sir Martin Sorrell, CEO of the WPP Group, “The only reason why online advertising spend is only 2% of the media budget is because brands fear to be investing in something they are unsure of. They are used to doing what they are doing and it takes a lot to change this behaviour,” (Digital Marketing Summit, 2007).

An interview with Tom Parish, a social media specialist identified the following perspectives: “Advertising will change a lot. With marketing departments, they will change and become more conversation departments. Traditional advertising will of course exist in some form. But over time a two way approach to advertising - engagement relationship based marketing will play a greater part in the overall marketing strategy” (Personal communication, April 23, 2007)

As identified earlier, social networking is the principal focus of this research study. The researcher seeks to identify social networking as a potential platform upon which advertisers can engage with the consumer and one on which they may build an effective campaign.

Therefore, the purpose of this research is to investigate a set of hypotheses that explain how and to what extent social networking platforms can be used effectively for online advertising and this will be done by analyzing the consumer involvement and advertising in the social networking platform.

Social Media & Marketing: Online Networking & Advertising


3.1.2 Research Model The research model is defined as a schematic representation of the research objective, providing a clear-cut visual of the steps that have to be taken in order to reach the stated objective.

The research model in Figure 7.0 can be explained as follows: an analysis of the literature on advertising trends (detailing the latest trends, social networking theories and concepts), leading to theoretical insights that explain how social networking works as an advertising platform. The model provides necessary understanding of the field before proceeding to the data collection stage. Two principal types of research are identified: primary research and secondary research. The primary research methods chosen for data collection are participant observation and interview. The secondary data collection encompasses background materials and archival research. Final analysis of the data collected using these methods will be used to address the main research question.

Figure 7.0: Research Framework

Social Media & Marketing: Online Networking & Advertising


3.1.3 Research Questions This section identifies the questions and subsequent sub questions that will be answered in this thesis. Based on the main themes identified in the literature review, this thesis addresses the following question:

What strategies can be successfully employed by advertising and marketing practitioners within the social networking platform?

To address this, the following three sub-questions were constructed: § § What elements do current social marketing campaigns exhibit? What elements make marketing with social networking unique and different from other forms of online advertising? § What strategies can be devised to enable advertising companies to maximize their success on the social networking platform?

Social Media & Marketing: Online Networking & Advertising


3.1.4 Definitions The terminologies used throughout this thesis are defined as follows:


Social networking sites: Web sites designed for members to create and post content, usually in the form of profile pages, primarily in order to communicate with each other.


Classic influentials. These online users are experts within a particular interest category - such as electronics, entertainment or fashion, and are the first people friends reach out to when making a decision about a purchase.


New influentials. These online users are avid users of social media and its accompanying tools and are active broadcasters of information across large groups of both friends and strangers.


Frequent networkers. These online users use social networking sites daily.


Ad impressions: An ad impression refers to the number of times a banner ad is “served” to visitors through a website. Impressions are mere assumptions that visitors have seen the ad - there is no way of confirming that the ad was fully downloaded prior to the visitor leaving that page or if the visitor has actually seen the ad. This is measured entirely on the ad-serving side.

Social Media & Marketing: Online Networking & Advertising



Unique Users: The number of different individuals who visit a site within a specific time period. To identify unique users, Web sites rely on some form of user registration or identification system or research studies using panels of people, such as Nielsen Media Research (NMR) WebRatings. Also referred to as unique visitors.

Social Media & Marketing: Online Networking & Advertising


3.2 Research Method
3.2.1 Research Type According to Verschuren and Doorewaard (2000) as cited in Kloos (2006), there are two types of research study − theoretical-oriented studies and practical-oriented studies. Theoretical studies are focused on developing or testing theories, while practical research is focused on developing, testing and evaluating solutions for practical problems.

This research model collected utilized here is a practical-oriented study. Its ultimate objective is to evaluate the feasibility of the social networking platform as an investment for marketing and advertising practitioners.

In this study, I have taken an interpretive approach with the aim of determining how people understand the social world and express themselves through language, sound, imagery, personal style and social rituals.

I subscribe to the notion that concepts and theories emerge out of the data that directly relate to a particular naturally-occurring situation (Daymon & Holloway, 2002). For example, I need to be involved in the field as a participant observer in order for me to conceptualize the reality before proceeding to interpret it.

A researcher who applies this method usually deploys qualitative methods of research because it allows him/her to get close to the people they are studying and become involved with them (Daymon & Holloway, 2002). This offers research flexibility, as there are no

Social Media & Marketing: Online Networking & Advertising


certainties. Researchers may therefore commit to exploring new avenues that emerge as informants reveal their understanding and interest.

3.2.2 Research Strategy Two types of research strategies exist, quantitative and qualitative. Each utilizes a range of tools in their application.

Quantitative research is concerned with the collection and analysis of data in numeric form. It tends to place an emphasis on relatively large-scale numerical data. On the other hand, qualitative research is concerned with collecting and analyzing information in as many forms, chiefly non-numeric, as possible. It tends to focus on exploring, in as much detail as possible, a smaller number of instances which are deemed interesting or illuminating, and aims to achieve “depth” rather than breadth (Blaxter, Hughes & Tight, 1992, p. 60).

Intense debate has taken place within the social sciences regarding the relative merits of quantitative and qualitative strategies for research. However, it is generally agreed that each method has its advantages and disadvantages. Nonetheless, it is possible for the researcher to synthesize the advantages of both strategies to compensate for the weaknesses of each strategy.

In this study, a qualitative research strategy is applied. Specifically, participant observation, an interview, and case study methodology has been utilized to meet the research objective.

Social Media & Marketing: Online Networking & Advertising


The first stage is the observational method. According to Daymon & Holloway, (2002) “observation entails the systematic noting and recording of events, artifacts and behaviour of informants as they occur in specific situations rather than as they are later remembered, recounted and generalized by participants themselves” (p. 203). This method articulates the distinction between the extent of participation and observation. According to Rugg & Petre (2007), observation can be subdivided in one of two ways; either into 'direct observation' and 'indirect observation', or 'disclosed observation' and 'undisclosed observation'.

In this study, undisclosed observation is undertaken. The researcher requests the opportunity to visit two leading media agencies (identified as “Alpha and “Beta” in this thesis) with the intention of data collection. The researcher spends a total of four weeks in both agencies. The objective here is to gain first-hand exposure to, and a comprehensive understanding of, the nature of online media planning. After being in the “Alpha” agency, the researcher moves to “Beta” agency and observes if the theme that was observed in the first can be replicated. During the second observation period, the researcher seeks validation and insights from an expert in the online community. The researcher has also taken the opportunity to attend several conferences on Web 2.0.

The multiple observations have delivered significant results, as the researcher has managed to gather a considerable amount of soft data (computer files) from both agencies, valuable insights from an industry practitioner, and validation of information from conferences which are all part of archival research. In order to utilize all these data, the researcher de-identified information that may compromise confidentiality of the agencies and/or any individual. This

Social Media & Marketing: Online Networking & Advertising


is vital for the protection of the best interests of the parties involved, and to maintain the researcher’s ethical standing.

The interview is the second research method where the researcher utilizes an informal style of interview via email correspondence. This method is flexible as it allows the interviewer to structure the question to understand the perspective of the interviewees, with no time limit. An interview, defined as “a conversation with a purpose”, involves questioning or discussing issues with people. The e-mail correspondence process for this research is unstructured and the end result of the interview is an archive of the e-mail.

The main purpose for utilizing this method is to validate both for the data collected and the respondents’ points of view. There are no set numbers of interviewees for this research. However, whenever there is a conspicuous discrepancy in the data collected, the interviewing method will be extended in order to close the gap. Interviewees are chosen on the basis of their professional backgrounds to ensure the credibility of information.

The final research method utilized is that of the case study. A case study inquiry is usually associated with an intensive investigation of a location, organization or campaign (Daymon & Holloway, 2002). As explained by Daymon & Halloway (2002), the purpose of a case study is to increase knowledge about real, contemporary communication events in a particular context.

Social Media & Marketing: Online Networking & Advertising


In the social research context, the case study method is often accorded the central role in the research, with the case being allowed to stand on its own (Daymon & Halloway, 2002). However, this is not a one-size-fits-all definition of a case study. Indeed, in various fields, the term 'case study' has different meanings and terms of usage.

In the field of advertising and marketing communications, case studies are often used to illustrate or provide an example of something else (Daymon & Halloway, 2002). In advertising agencies and public relations consultancies, case studies are usually a compilation of best practice or award-winning campaigns used for promotional purposes (Daymon & Halloway, 2002). However for this research, case studies refer to the best practices of Internet marketing campaigns that have delivered commendable results. Several case studies will be introduced to provide an understanding of how successful campaigns can work in the social media environment.

3.2.3 Data Analysis Analysis, as defined by Blaxter, Hughes & Tight (1996), is the search for explanation and understanding, in the course of which concepts and theories are likely to be advanced, considered and developed. In this research, content analysis is performed to analyse the data collected.

Holsti, (1969) as cited in Content Analysis (2007), defines content analysis as “any technique for making inferences by objectively and systematically identifying specified characteristics of messages." Content analysis allows the researcher to include large amounts of textual

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information and systematically identify its properties, for example the frequencies of mostused keywords, by detecting the more important structures of its communication content. Such amounts of textual information, categorized according to a certain theoretical framework, will ultimately provide a meaningful summary of the content under scrutiny.

Content analysis is part of an element in media evaluation or analysis. Data from content analysis will usually be combined with media data, for example; circulation, levels of readership, number of viewers or listeners and frequency of publication (Content Analysis, 2007).

The data that has been gathered by the researcher can be categorized into primary and secondary data. The primary data consists of a four week journal and an interview transcript (where both are reproduced in the Appendix A and B) whereas the secondary data consists of data from the studied agencies, online resources from the Internet, magazines ranging from AdNews and B&T (advertising industry publication), Digital Media (Asia Pacific Advertising Magazine), BRW (Australian Business Review Weekly), videos, podcasts and lastly observational journals of attended conferences.

The researcher sourced a significant volume of secondary data from the literature, trade journals and case studies. The researcher then followed a five step process that involved: reviewing all the files, shortlisting the files, transcribing the files, highlighting the main points and categorizing them. Finally, by revisiting the text I was able to further highlight the

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main points of the article. Utilizing this method, I am able to see all the resources by category and by content.

After all the files have been processed and categorized, the researcher begins to list all the files in a spreadsheet, thus enabling the tracking of resources. Ultimately, this process is used to categorize the agencies’s data under separate Alpha and Beta listings for the convenience of referencing.

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Chapter 4: Analysis of Data
This section provides an insight into online advertising in Australia and seeks to inform readers about the important concepts and themes that have emerged from within the industry. The media landscape in Section 4.1.1 addresses advertising expenditure in the industry and aims to provide a concise and precise understanding in the Australia advertising environment. Section 4.1.2 – aims to build an understanding of the evolving media industry and consumer’s activity on the Internet. Chapter 4.2 is dedicated to introducing the main key concepts of social media and marketing. Section 4.2.1 introduces the social media marketing framework, Section 4.2.2 - introduces social advertising concept and lastly Section 4.2.3 describes mini case studies of social advertising campaigns.

4.1 Australian Advertising Industry
4.1.1 Media Landscape in Australia Over the twelve month period to 30 June 2007, online advertising expenditure in Australia totalled $1,199.5 million; an increase of 54.2% (or $421.5 million) over the twelve months ended 30 June 2006 (PricewaterhouseCoopers, 2007). Paid search remains the primary driver of growth in expenditure on the Internet, overtaking display advertising. This trend, according to market analysts, will continue to remain the largest growth driver over the next five years. The large increase in search advertising is due to new clients experimenting with search and advertisers competing for keyword placement. This in turn is driving up prices. Search and directories advertising accounted for 44% of the total expenditure over the last 12 months (PricewaterhouseCoopers, 2007). This is shown in Figure 8.0 and Figure 8.1.

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Figure 8.0: Online Advertising Expenditure – Total Spend by Category by Period. Source: PricewaterhouseCoopers – IAB Online Advertising Expenditure Report – June 2007 page, 7.

Figure 8.1: Online Advertising Expenditure 12 months ended 30 June 2007 Category Share. Source: PricewaterhouseCoopers – IAB Online Advertising Expenditure Report – June 2007 page, 7.

Search marketing is developing at a rapid pace as advertising and marketing specialists realize how important it is to have their brands or companies at the top of the search results (Wyk, 2007). Considering the growth of consumer information and search activity before purchase, investment in search marketing can no longer be ignored. A recent survey by

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Accenture (2007) revealed that 69% of the respondents researched product features online, 68% compared prices online before physically shopping in store, and 58% said they used the Internet to locate items online before going to a store to purchase (Maskalyuk, 2007). Also another survey by Cherrypicks reveals that 70% of today’s youth often research products before purchasing (Cooper, 2007). In the US, research by Edelman (2007) reveals that in 2003 “the person like yourself or your peer” was only trusted by 22%, while in the most recent (2007) study, 68% of respondents said they trusted a peer. This is a significant attitudinal change that indicates trust is an importance determinant of credibility. Experience shows us that people are more inclined to believe word of mouth over traditional forms of advertising and communications. Over 80% of consumers trust recommendations from other consumers and 60% of consumers trust another consumer’s online postings (Alpha, 2007). Jupiter (2007) reveals that friends are the greatest influence over online users when making a large purchase, influencing 20% of online users in the past year. This then underscores the importance of brand presence on the Web and the maintenance of a good reputation conveyed through web communication.

Richard Kimber said in a 2007 Business Review Weekly interview: “Even if people do not buy online, a huge amount of the purchase cycle involves research that people do ahead of buying. Retailers have started to incorporate online as part of the broader campaigns, so rather than being run out of the e-commerce department or the IT department, it becomes more of mainstream marketing activity as part of an integrated campaign”(as cited in Fodaghi, 2007, p. 32).

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In general, advertising expenditure in Australia clearly indicates that the Internet has taken a share of spend from both television and newspapers (Ceasa, 2006 as cited in Alpha, 2007), as shown in Table 8.2. The growth rate disparity between Internet advertising and total media spending indicates that the majority of Internet dollars come from other media, more so than new spending entering the market (Hallerman, 2006).

Figure 8.2: Share of Advertising Expenditure as cited in Alpha, 2007

In 2006, the Internet accounted for 8% of the total share of advertising while consumers were spending 16% of their time on the Internet. This data suggest that the Internet advertising spends will continue to increase in the future in line with time spent online. It is believed that it will be some time before advertising spends match total online media consumption. However those who realize the power of the Internet have already begun leveraging and maximize their presence on the Web.

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Time spent with Media A research study titled “Family Affairs” undertaken by Yahoo & OMD (2006) revealed that the youth (18 years and above) are spending at least nine hours a day consuming media and concluded that youth are increasingly spending more time on the Internet compared to other mediums.

Yahoo & OMD (2006) also revealed that globally, the Internet is the most consumed medium, with an average of 3.6 hours spent online, followed by television at 2.5 hours, radio at 1.3 hours, newspapers at 0.7 hours and lastly magazines at 0.6 hours. Internet consumption is expected to increase yet again when mobile providers begin to incorporate high speed surfing on mobile telephones. At the moment, 56.6% of the youth in Australia are already engaging with the Internet daily (Yahoo & OMD, 2006) Therefore is little doubt that the Internet is establishing itself as the most important platform to target the youth market.

The Internet in Australia Today, almost every company has a dot com address which is commonly referred to as a website. In the last few years, it has been of growing importance amongst businesses to have their own websites and hence the Web has become a key part of today’s marketing strategies. Marketers view websites as a competitive advantage for their businesses because with the Web the need for a physical presence may be diminished or even removed completely. Additionally, a web presence overcomes geographic boundaries, providing a company with a global presence.

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As businesses look to stay one step ahead, consumers are also seen to be shifting and changing the way they look for information, moving from the traditional library to the Internet. Hence, embracing the Internet as a business, marketing and advertising tool is no longer optional if one wants to remain competitive in today’s and tomorrow’s marketplace.

The Australia/Oceania region has the second highest Internet penetration globally with 55.2% of the total penetration (Miniwatts Marketing Group, 2007). Furthermore, its accumulated usage growth over the last five years amounts to 149.9%. On average, this means, Australia/Oceania delivers 30% year-to-year growth in hours spent on the medium. Asia still remains the highest (See Figure 8.3) and the strongest region with a 302.0% growth rate for the last seven years (2000-2007).
400 350


300 (Millions of users) 250 200 150 100 50 0
Asia Europe North America Latin America Africa Middle East Australia/ Oceania
89 232

33 19 19

Figure 8.3: Internet Users Souce: Miniwatts Marketing Group (2007)

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The online industry The online advertising industry varies in size from country to country and in Australia is still in its relative infancy. From the researcher’s observation of the two surveyed media agencies there appears to be a great similarity in terms of employee’s age in the online team and also the sizes of the team. The digital planners in both agencies were aged between 22 years and 25 that is, Generation Y-ers (people who were born between 1985 and 1995). At the beginning of the year, both agencies had less than six people in their interactive departments. Within a few months, both agencies had expanded their teams significantly. They then had 10 to 12 employees working in the online planning and buying department, clearly indicating the impact that this medium is having within the media industry.

The Internet offers many opportunities for marketing and advertising because the platform is flexible, easy to use and inexpensive. At the 2007 Australia Digital Summit conference, one of the key note speakers argued strongly that Internet advertising will continue to boom, especially with the year-to-year price increase of television advertising and other above-theline advertising. Hence, marketing and advertising specialists will increasingly look to engage their target audience via the Web. It is not only less expensive to advertise on the Web but it provides essential accountability for the money spent in the medium. As the focus on return on investment (ROI) metrics of measurement continues to improve, there will be more advertisers investing in this platform. In the meantime, marketing and advertising needs to review the traditional ways they are doing things. Agencies need to be reminded that increasingly consumers are in control. Consumers have more power and more information

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than ever before and brands that really want to make a difference have to go beyond the expectations set by others (Martyn, 2007).

4.1.2. The Internet

The exponential growth and global expansion of the Internet has led many to believe that the Internet is ushering in a new era − the information age − and a new social form − the information society. The evolution of the information society is a result of the transformation that has taken place over a relatively short period of time. To facilitate a better understanding, Figure 8.4 clearly illustrates the growth in global communications flow. Over just the last 160 or so years, mankind has traversed the industrial age, modern media age and lastly the information age. At present, we are moving from the information age into the conceptual age.

Figure 8.4: Growth in Global Information Flow Sources: Alpha, 2007

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In order to recognize the importance of the key themes highlighted in this research, it is important that we review the evolution of media, highlighting key areas that facilitate an understanding of the importance of engaging the consumer in this new information age.

Advertising has existed in one form or another from the time that humans began to interact. The most basic form of advertising is today known as word of mouth. It is arguably the most effective and the longest existing form of advertising. Mass media as we now know it did not really exist until Johann Guttenberg invented the printing machine in 1440. As a result of his printing machine, the newspaper was able to deliver information on a large scale. Hence the term “mass media”. This marked the first media revolution. The second media revolution was driven by television and print and was also widely known as the age of interruption. That is the age where technology connects people to people, enabling interruption (Friedman, 2006). Additionally, it facilitated an increase in advertising messages being exposed to people.

The third revolution is being driven by the Internet. An example of this is the emergence of Napster. Napster began as a free audio and video download tool, with a goal of making it a real business in partnership with record labels. In the beginning, it was very small and unknown, however within less than six months, Napster went from being an unknown technology to the biggest threat the music industry had ever seen.

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According to Dodge (2005), the goal of Napster was to be the source of an online distribution channel for the record labels, much like iTunes.

“Napster had over 50 millions users many of whom were willing to pay $5 per month or $1 per download for digital music. That translates to about $250M a month or $3B per year. Even if Napster kept just 10% of the revenue that would be $300M per year against expenses of less than $10M. At the stock market multiples of the day that would have been a $15B IPO”. (Dodge, 2005)

With the evolution of the Napster phenomenon and the growth of MP3 technology, file sharing became popular. People were overwhelmed and thrilled by the power of sharing. The impact of this technology was the emergence of a new breed of consumers known as “prosumers”, which will be discussed later in the chapter.

The Digital Ecosystem

Advertising Uni-Directional

Web1.0 Bi-Directional

“Death” of traditional media

Transition to mainstream




Web2.0 Multi-Directional Small Worlds

1900 - 1990

1991 - 2001

2002 - Today

Figure 8.5: The Digital Eco System Source: Beta, 2007 (Viral & Word of mouth marketing)

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Furthermore, the recent history of media may be characterized in three stages as shown in Figure 8.5. The first stage was all about communication, where advertising was unidirectional and passive. The second stage relates back to the beginnings of the Internet where it was referred to as Web 1.0. Communication in Web 1.0 was bi-directional where the web was mainly read. The third stage refers to Web 2.0, where the Web is used for both reading and writing (co-creation). Here the Web is multi-directional. As a result of this, the world has become a smaller place.

The notion of Web 1.0 and Web 2.0 relates to the transformation of the Internet. They highlight the changes, the modernization, and the upgrade of the Web. While Web 1.0 was only mostly read, Web 2.0 enhances communication, creates engagement, ensures transparency and builds trust. With such attributes it follows that it is complementary to traditional communication advertising (Bradley, 2007). Table 8.6 highlights the corresponding power shift from service provider to consumer.
Web 1.0 DoubleClick Ofoto Akamai Britannica Online personal websites evite domain name page views screen scraping publishing content directories stickiness --> --> --> --> --> --> --> --> --> --> --> --> --> --> --> Web 2.0 Google AdSense Flickr BitTorrent Napster Wikipedia blogging and search engine cost per click web services participation wikis tagging syndication

Table 8.6: Differences between Web 1.0 and Web 2.0 Source: Reilly, 2005

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Whilst Web 1.0 illustrated the simplicity of the Web and how communication was still very much passive, in Web 2.0 the Web is more social friendly and encourages active participation. For example, in Web 1.0 information publishing has always been one way. Web 2.0 shows us that information publishing can be much simpler and faster when one harnesses collective power by encouraging participation.

4.1.3 Media 2.0 Web 2.0 exemplifies the improvement and advancement of technology, allowing the user to be in control. The ‘2.0’ phenomenon also applies to mass media. Media 2.0 highlights the intimacy of the media with the audience (Beta, 2007).

Media 1.0 Channel 10 Channel 9 Channel 7 ABC

Media 2.0 Foxtel TIVO PS3 XBOX 360

Table 8.7: Media 1.0 and Media 2.0 Source: Kennedy (2007)

In consumer media terms, in Australia, Media 1.0 corresponds to free to air television channels such as Channel 10, 9, 7 and the ABC while Media 2.0 corresponds to Foxtel, Tivo, PS3 and XBOX360. The drift from Media 1.0 to Media 2.0 highlights the shift of control from media-centric to consumer-centric.

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In the Media 1.0 environment, audiences may choose from a limited range of channels and programs and there are excellent opportunities for marketers to advertise to consumers. However, Media 2.0 changes the media landscape and the balance of power by putting the consumer in control. For example, TIVO is a time-shifting technology that allows consumers to skip advertisements and also fast forward to the programs they would like to watch. Gaming devices such as Playstation 3 or Xbox 360 have allowed content to be portable and viewed on these personal devices at any time and any where.

The entire notion of the 2.0 phenomenon highlights the importance of the power shift amongst consumers and brands. Consumers are moving from a passive audience status to an active audience status, from consumer 1.0 to consumer 2.0. In essence, consumers are becoming smarter and are maximizing the inherent advantages of the Web to their own advantage. The Web is their playground, without stringent and tight law enforcement being implemented. It is apparent that consumers 2.0 are now in control. The inefficient markets are becoming effacing markets, for example eBay, and all of this as results of unprecedented global innovation (Stanley, 2005).

“Magazines aren’t magazines any more, they are brand,” said Nick Cutler, Sales Director of magazine publishing house Derwent Howard.

When the Web changes and shifts, the media changes as well. The print industry is going through drastic changes now as consumers increasingly embrace digital media (Mescal, 2007). For example, Derwent Howard consumers began moving away from offline

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magazines to the Web for game information. Derwent Howard quickly recognized this trend and launched a website to cater to this online reader activity (Cutler, 2007).

Besides print, television programs are becoming interactive, rather than simply passive programs. A good example is American Idol, which is an annual American televised talent competition. The success of this American Idol on television is predicated on the concept of the TV audience voting for who they want to win, rather than the winner being solely decided by the judges. This participation and engagement model has proven successful with TV ratings skyrocketing and look-alike programs appearing in other countries (Nielsen Media Research, 2007). This is an example of how traditional media is becoming interactive and more social friendly in order to engage with the consumer 2.0.

Another example of media 2.0 “consumer versus corporation” power is a case that has drawn much attention and impacted on Dell’s market in the US. It began with latent dissatisfaction with Dell’s customer service and perceived arrogant attitude and led into a major disaster for the company. The controversy centred on Jeff Jarvis, a journalist turned blogger who was best known for pushing newspapers to engage in “news as conversation”. Jeff had been writing on his BuzzMachine blog about his problems with a Dell notebook. He used a phrase common to those who have found themselves trapped in a Dell tech support maze: Dell Hell. His posts elicited literally hundreds of comments on his blog, many from other customers who believed Dell did not listen to their problems.

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Figure 8.8: NASDAQ - Dell’s Crisis Source: Dodge (2005)

According to Dodge (2005), Dell’s stock prices immediately dropped after Jeff Jarvis’s postings on his blog. Figure 8.8 is a screenshot of Google Finance and highlights the crisis impacting Dell’s shares. Dell had enjoyed a bull run since 2002 but suffered a year-long dip following Jarvis’s posts on 21st June 2005.

The voicing of public opinion has seen significant change with the Internet democratizing communications. Individuals are now empowered to not only voice their dissatisfaction, but to group together to amplify the impact of their protests. Such is the power of Media 2.0.

The notion of Web 2.0 and Media 2.0 as the key drivers of a consumer revolution on the Web is exemplified by the cover of Time, highlighting the person of the year as “YOU” (see Figure 8.9). This is indeed true. Consumers are now number one and in control of the Information Age.

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Figure 8.9: Time – Person of the Year Cover Source: Grossman (2006)

“But that's what makes all this interesting. Web 2.0 is a massive social experiment, and like any experiment worth trying, it could fail. There's no road map for how an organism that's not a bacterium lives and works together on this planet in numbers in excess of 6 billion. But 2006 gave us some ideas. This is an opportunity to build a new kind of international understanding, not politician to politician, great man to great man, but citizen to citizen, person to person. It's a chance for people to look at a computer screen and really, genuinely wonder who's out there looking back at them. Go on. Tell us you're not just a little bit curious.” (Grossman, 2006)

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The Internet is not just about information sharing. It is about connecting people to information, to ideas and to each other. It not only encourages human engagement with the medium, but importantly it allows consumers to enjoy deep experiences within a community, allowing people to be able to connect seamlessly with their chosen communities. It is all about an experience that is customized to user needs and its success is reflected in the following quotations from Alpha (2007):

“ 36% of Australian Internet users make regular use of participatory media (RSS, blogging, social networking, podcasting), and a further 4% feel they are likely to begin undertaking these activities during 2007” (Nielsen Australian Internet & Technology Report 2006-2007 as cited in Alpha, 2007)

“17% of 14-24 year old internet users use the internet for making social contacts, compared with 9% in 2005”(Roy Morgan single source Australia : Oct 2005 - Sep 2006, Oct 2004 - Sep 2005 as cited in Alpha, 2007).

4.1.4 Consumers 2.0 Modern technology has enabled consumers to have more control of the media. This has caused the communication landscape to change, with both a proliferation of media vehicles and a fragmentation of audience groups (Alpha, 2007). Whilst technology has been widely adopted by all age groups, it is the younger consumers who harness it in all aspects of their lives - the generation Y-ers (people who were born between 1985 and 1995) (Forrester, 2006). This is the media generation, the generation known as “consumer 2.0”.

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While it is difficult to categorically define consumer 2.0, I would define this group as people who use the Web for multiple uses and spend more than one hour daily on the Internet consuming and creating media. “Prosumer” is a widely accepted term used to categorize consumer 2.0.

Prosumer is a portmanteau formed by connecting both the word producer and professional with the word consumer. The term has different meanings in different contexts. In this study it means a consumer with professional tools. The Internet gave birth to the prosumer. This is possible because the Internet offers limitless content, ranging from do-it-yourself (DIY) guides to DIY movies which are available for free. As consumers become both equipped and more empowered by the Internet, it becomes increasingly difficult to reach them as they have the tools to select and see what they want to see, and to screen out irrelevant content.

Media multitasking is a common behaviour among consumer 2.0. Media multitasking means consuming two or more types of media at the same time. For example, an individual may open a multiple browser and read or listen to an online radio station while chatting via an online messenger.

In North America, 80% of all online adults listen to the radio, read a newspaper or magazine or use the Internet while watching TV (Forrester, 2005 as cited in Alpha, 2007). As can be seen from Table 9.0, the most popular combinations of media multitasking are reading newspapers while watching TV, and reading a magazine while watching TV. Over a two year period, online consumers who use the Internet while watching TV grew from 35% to 39%,

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and those using the Internet while listening to the radio grew from 31% to 40%. However the research showed that the Internet wins the attention battle when multitasked since only 11% of the consumers who went online while watching TV said they paid more attention to their TV (Forrester, 2005 as cited in Alpha, 2007).

Table 9.0: Consumer Technographics Source: Forrester (2005) as cited in Alpha (2007)

Technology is the key that drives the shift of media habits amongst consumers globally. This shift is inevitable as broadband penetration increases and the acceleration of the e-economy drives people to adopt this new model. As a result, two types of consumer have emerged over time; with Consumer 1.0 refering to digital immigrants and Consumer 2.0 refering to digital natives (Carroll, 2007). As Carroll explains “ if you still print out your e-mails and then read them, you definitely are a digital immigrant. If you are an immigrant, you speak with an accent because it is not your native language”

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However, whether one is a digital immigrant or digital native only serves to define the user’s capabilities towards harnessing the power of Web 2.0. It is crucial to understand the distinct difference between consumer 1.0 and consumer 2.0, because 2.0 is the market that marketers and advertisers are going to target. The failure to identify this will results in dollar wastage online. Consumers 2.0 is the new target audience!

To further elaborate on consumer 2.0, the following section defines threee key characteristics that the current consumer 2.0 demands of the Internet media. They are a) Real Time Dialogue, b) On Demand Expectation and c) Personal Experiences.

a) Real time Dialogue Procter & Gamble Chief Executing Officer, A.G. Lafley, in an ANA launch speech to marketers and advertisers implied that in order to be succesful in marketing to online consumers, marketers need to allow the consumers to be in control (cited in Alpha, 2007).

In an online environment, brands are not the only ones in control of the message. Consumers have grown to learn to take control of the message as well. Indeed, consumers have emerged as the co-creator of the message.

Success in an online environment is not just about placing the message in the right place and at the right time; it is about delivering a message that is relevant and turns the message into a viral component. As there are quite literally millions of brands competing for the consumer’s attention, an online marketing communication strategy must include a word of mouth

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replication system to be successful. This is a system where a message is passed on via either a business-to-consumer or consumer-to-consumer network.

When a brand controls the message often the message is governed by the authority, but when a message is created by the consumer it generates “talkability” from many points of view. It is this word of mouth system that serves to amplify awareness and deliver the products to the consumer via a trustworthy network of friends, as exemplified in Table 9.1.

Table 9.1 : Shifts of Control Source: Alpha, 2007

b) On demand As technology progresses, the speed at which we do things changes as well. From dial-up connection to high speed broadband connection, from Web 1.0 to Web 2.0, the ongoing development of the Internet is not solely driven by government but also by consumers. A good example is It is an open source software portal which encourages both group collaboration and individual participation in projects. When an individual participates in this, he or she is not only gaining self fulfillment but is also improving the current environment by helping to building new applications and systems on the Internet.

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On-demand is the fundamental change in how consumers experience the media and they now have unprecedented control over the content they consume. The “long tail phenomenon” is the primary reason for this. In the past, a consumer was subjected to what marketers decided to deliver to them. Now, we are finding that brands are slowly losing control online while consumers are taking control with consumer generated content in blogs, forums and other online venues. This means that the Internet has open up access to the long tail of contents. Consumers are no longer restricted to popular on-demand content or products, but to a wide range of niches (Alpha, 2007). This is also a reflection of the abundant resources available on the Internet and the scarcity of demand. Now, consumers have the liberty to choose! (“Long tail” will be discussed further on the next section).

The Internet has also allowed consumers to enjoy seamless portability across platforms and devices, not only in terms of the content but also in experience (Alpha, 2007). For example, consumers now have the ability to time shift through the usage of portable MP3 players that not only allow audio content to be stored in a portable format but also allow individuals to consume this content at any time. They are also implementing advertising blocking technology on browsers and using content management systems via the Internet such as, a platform that allows aggregation of contents. This technology utilizes the functions of “really simply syndication” (RSS) feeders and acts as an RSS integrator on this platform. Netvibes not only aggregates contents but also turns the platform into a personal homepage where individuals select and choose what they want to see on their screen. All of the above shows that consumers are increasingly in control of what content they do or do not consume.

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As software developers begin to improvise the current file format of Internet data, consumers are beginning to benefit from content being broken down into small chunks of information and its associated portability across a multitude of devices. From video-on-demand and DVRs to podcasts and video on mobile devices like laptops, mobile phones, MP3 players and PDAs, the technology includes personal start pages, RSS (an XML-based format for content distribution), desktop widgets, browser widgets, social filters, badges and skins.

As the previous discussion highlights, on-demand is a form of consumer 2.0 behaviour where messages are transformed from a passive audience to an active audience. Consumers are in control of what they see and interact with across a multitude of channels. In order for brands to engage with the consumer, brands must deliver value to the consumer, as Table 9.2 shows.

PASSIVE CONSUMPTION Consumer accepts all brand messages Their time One channel at a time Access to ‘hits’

ACTIVE MANAGEMENT Consumer decides which brands to let in My time Multi-channel coordination Access to ‘niches’

Table 9.2: Passive Consumption – Active Management Source: Alpha, 2007 Long Tail Media fragmentation is but the tip of the iceberg compared to the plethora of content (mediagenerated, consumer-generated and brand-generated) that is growing daily on digital platforms such as the Internet, mobile phones, PDAs and MP3s. As a result of this media fragmentation, the concept of “long tail” has developed. The term was coined by Chris Anderson, the Editor in Chief of Wired magazine.

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In the offline environment, the demand and supply curve is used to determine the demand and supply of products or services. This is crucial to understand when managing a business. However, it is different in the online world which exhibits the long tail economy. Basically, the long tail model represents the abundant demands and supplies on the Internet. In the online environment, the best selling products are not just the popular products but the aggregation of small niche products. As a result of the Internet’s low cost of distribution and ability to search out niches online, businesses like Netflix, iTunes and Amazon take advantage of the long tail by offering millions of product selections that their offline counterparts could never afford to offer. Furthermore, the communities that form around these businesses add to the utility of finding niche ‘content’ via their recommendations and ratings. For example as shown in Figure 9.3, the top online sites account for only 39% of minutes on the web and the ‘long tail’ of sites account for the remaining 61% (Alpha, 2007).

Sum of Total Minutes 2Q06 (MM)
Top sites account for only 39% of minutes on the web.

120,000 100,000 80,000 60,000 40,000 20,000 0

The ‘long tail’ of sites account for the remaining 61%

Yahoo – 13% Time Warner– 12% (mostly AOL) Microsoft – 8% (mostly MSN) MySpace – 3% eBay – 2% Google – 1%

Top 100 Properties
Source: comScore Media Metrix (second 3 months 2006 sum) US only

Figure 9.3: Long Tail of Sites Source: Alpha, 2007

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As a result of the abundant supply and demand for products, content and services on the Internet, marketers are able to deliver and meet the needs of each individual differently. Instead of being dependant of what brands can offer to consumers at the local market level, consumers are beginning to turn to the Internet as their primary source of information. The shift of control and power from brands to consumers has contributed to this change where we now see consumers interacting with each other to have their needs and wants fulfilled through web communities.

c) Personal Personalization is of utmost importance to consumers 2.0. As consumers are exposed to more and more choices and product information on the Internet, they have grown to be smarter as well and harder to engage with. There are no one-size-fits-all solutions when marketing to consumers, especially online. To engage with online consumers, marketers and advertiser must realize that brands have to deliver a personalized experience to the consumer and that the old model of advertising interruption simply is not going to work any longer.

In order for a campaign to work effectively, brands need to speak to, as well as to listen to the consumer, and build an affinity with him/her. Brands need to understand that they now need to be invited in to the hearts and minds of their consumers.

The only way for brands to succeed in this environment is to bring value via what I refer to as “engagement branding". This is the process by which a company engages with its customers across channels and over time to gain their attention and create relevant, valuable and

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motivating experiences - everything that traditional advertising and push marketing cannot do. Such active branding puts people first.

Brand owners now must acknowledge that consumers are the leading stakeholder in brand stewardship. Advertising and marketing practitioners should be building structured dialogue and conversation with their consumers with the aim of creating genuinely engaging dialogue and content that has intrinsic and relevant value for the consumer, as Table 9.4 illustrates.

Implications of Personal INTERUPTION INVITATION Push Pull Passive Experiential Selling Servicing Sponsor of content Brand as content Table 9.4: Implications of Personal Source: Alpha, 2007

Being personal implies that the old advertising interruption model is no longer effective in capturing the individual’s attention, because consumers have changed. Hence a different strategy is required. Brands have to be experiential rather than passive, servicing an individual’s needs, rather than just selling. Before-sales and after-sales relationships are critical, and rather than brands sponsoring content, content must be a brand as well.

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4.1.5 Conclusion We have learnt that consumers have changed and so to has the media environment. The new media environment requires a different strategy. Today, the imperative is to turn the old advertising model of interruption into integration, from passive to active and indeed, to interactive. From prediction to intention. From brand as publisher to consumer as publisher. From fixed place to any place and to active involvement in the “conversation”.

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Chapter 4.2: Social Media & Marketing
4.2.1 Social Media Marketing Framework The definition of marketing has evolved and changed significantly in recent years and today marketing is considered to be based on delivering continual value to the customer. Tailor (2000) suggests that “marketing is not about providing products or services, it is essentially about providing changing benefits to the changing needs and demands of the customer”. After all, as consumers are the end user of the products or services, it is very important to provide consumers with satisfaction.

The marketing and advertising focus is primarily on consumer needs and wants and on improving or creating a value-added service to these consumers. Research should inform marketing and advertising strategy, for from research, consumer insights will invariably be discovered.

Whilst it may appear to be stating the obvious, marketing communication begins and ends with people. According to Li (2007), we need to recognize four important elements when it comes to online marketing and advertising. The first one is people. We need to identify and understand who the consumers are that we are targeting. Secondly, we need to identify the campaign objectives, for from these the strategy will be developed. Thirdly, we must determine what methods we will employ to achieve the objectives. Finally, technology is the platform for online, therefore it is important to understand how our target audience interacts with technology. In short, we must identify insights! Insights allow marketers to understand

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their consumer’s behaviour and also identify opportunities to deliver brand engagement with their consumer.

In order to provide a better understanding of integrated marketing communication, I would like to introduce a strategic framework that is built on delivering effective strategies that focus on brand engagement with consumers. From this, we will be able to understand how marketing communication strategies are developed.

Understand & discover

Create & refine

Execute & evaluate




Brand Think Feel Do

Engagement Platform

Engagement Plan


Data Research Measurement


Content Prototype

Figure 10.0: Strategic Planning Model Source: Alpha, 2007

As shown in Figure 10.0, there are three phases involved in campaign planning. These are :a) Understand and Discover, b) Create and Refine, and c) Execute and Evaluate.

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Understand and Discover In this first phase there are four main points to consider: business, brand, consumer and communications. There is a need to understand the background of the business, because this will allow marketers to relate better to the entire project. The brand is the personality of the product, therefore it is important to ensure future strategies are aligned with the overall brand image. Failure to do so may confuse consumers and affect sales. Advertisers seek to deliver product and services advertising messages to consumers. Therefore, we need to have a thorough understanding of the consumer to determine which communication approach should be utilized to communicate effectively with them.

Create and Refine The second process involves strategy creation and refinement and builds upon the insights that were identified in the first stage. Developing strategies that are based on consumer insights aids marketers in the development of comprehensive engagement strategies linking the brand and consumer.

Execute and Evaluate The last stage is strategy execution and evaluation. In this stage, marketers segregate strategies into digital, non-digital, and content. This allows the marketer to see and evaluate each strategy for integration. Once all the strategies are integrated, they are executed and measured to ensure that the campaign achieves the set objectives.

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Previously, we identified that consumers are in control and they have the ability to filter out or block advertising. The only way for brands to build a relationship with the consumer is to converse at their level and add value.

Social Media Social media as a term has a number of applications. In the context of Internet marketing, social media refers to a collective group of web properties that are primarily driven by the user. For example, blogs, discussion boards, vlogs, video sharing sites and dating sites.

There are two aspects to social media. The first is known as search engine optimization (SEO). This refers to on-page tactics that a webmaster can produce to improve their website. Such optimization includes adding links to services such as Digg, Reddit and so that their pages can be easily “saved and submitted” to and for these services.

Social media optimization (SMO), on the other hand, is the off-page characteristic of social media. This includes writing content that is remarkable, unique and news-worthy. Marketing this content can be achieved by opening the content 'popular' on the services mentioned or even creating a video that is likely to be viral on the likes of YouTube and other video sites. Social media is about being social, so this off-page activity can include involvement in other similar blogs, forums and niche communities. In short, social media optimization (SMO) is the process of widely distributing content across multiple social media networks.

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To developed a better understanding of how social media marketing is executed, Figure 10.1 shows a concise framework by Armano (2007) titled “Conversation Architecture” where marketing moves beyond the idea of one-way messaging. Traditionally, marketing has been about the message. Now marketing is increasingly becoming more about experiences. These experiences are enhanced by building engagement through facilitating conversation and promoting community. As today’s consumers are becoming more active participants and seeking relationships, brands need to leverage the opportunity to build a relationship with their consumer. A relationship that leads to loyalty, affinity-building, and lastly, to a sense of emotional attachment to the community.

Figure 10.1 : Conversation Architecture Source: Armano, 2007

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4.2.2 Social Networking Social Advertising

Facebook, (2007) defines social advertising as the following:

“Social actions are powerful because they act as trusted referrals and reinforce the fact that people influence people,” said Zuckerberg. “It’s no longer just about messages that are broadcasted by companies, but increasingly about information that is shared between friends. So we set out to use these social actions to build a new kind of advertising system.”

Social advertising reflects advertisement formats that engage with the social context of the user viewing the advertisement. Traditionally, advertisements are targeted based on the individual search or the individual page. For example, if a user views a web page about baking, they may see advertisements for baking trays and recipes that fall within the category. Or, if users view a web page containing brownie recipes, they may see advertisements about recipes or something else relevant to the page contents (Google, 2007).

Generally, social networking sites include any Web site that allows users to create a personal profile and interact with other. In social advertising the advertisement is targeted based on what it knows about the individual user's social network. Advertisements can be targeted specifically towards the target audience user’s profile. For instance, Nike would like to target

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18-22 males living in New South Wales. MySpace (a popular social networking site) will then only display Nike advertisements targeting this geographic audience only. Advertising on social networks is both one-to-one and one-to-many. For example, a single user receives a targeted message and then passes it on to an influencer who spreads the message to their network. Examples of how social networks have been influential include the Bourne Ultimatum theatre movie release campaign which was created by the “Alpha” agency and which leveraged social networking tools in MySpace to generate awareness and interest through video content and promotional tactics.

Social advertising is the first form of advertising to systematically leverage historically "offline" dynamics such as peer-pressure, friend recommendations, and other forms of social influence. At the present time it can only function if the user’s details are registered with the system. Currently social advertising is happening on social networking sites such as Facebook, MySpace and others and its strength lies in the power of such sites. In these social networking spaces, brands can converse with consumers, turning them into friends rather than just customers. For example, Facebook reveals its unique solution advertisements endorses and encourages members to subscribe to a brand which is called “Fan-Sumers” (an evolution of the consumer). As consumers share their affinities, brands can advertise using trusted social relationships (Owhyang, 2007).

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Social networking A social network is a technical and hierarchical infrastructure that enables people across the world to establish communities of interest where they can exchange ideas, content, tools and information in order to enhance the experience of being a part of a community. All social networks exhibit different unique selling points thus attracting different users. Marketers therefore cannot adopt a “one profile fits all” mentality. Advertisers must use features that capitalize on each site’s unique properties otherwise engagement will be limited and expensive creative executions will fail (Riley, Card, Zia & Inia, 2007).

Social networking is an activity where people network with each other to stay in touch. This process usually begins when a person starts to tell others about themselves through their profile on the online platform. This platform provides an efficient environment for users to share their interest with each other by browsing each other’s profiles and befriending each other. However this form of communication is an asynchronous communication, meaning there is a built-in delay between sending messages and receiving responses, or between posting information to a friend’s profile and waiting for them to read it (eMarketer, 2007 as cited in Alpha, 2007). According to comScore Media Metrix, as cited in Riley et al. (2007) more than 60 million US Internet users visit

The growth of social networking sites is based on the fundamental convenience and simplicity of how social networking enables human-to-human contact. People want to be connected with their family and friends. They want to be able to share their life’s highlights

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with them as easily as possible and these platforms provide a way to be in touch and not lose touch. Now people do not need to worry about losing their phonebook, or even about moving from one place to another place because now everyone can be in contact with anyone as long as there is an Internet connection. According to the Future Foundation, Social Networks, 2006 as cited in Microsoft, 2007:

“The growth of the networked society, the increases in individualism, and the shift away from “automatic” deference to society’s institutions means that personal sources of advice and influence are more important than ever”.

What is this implying to advertisers? According to Marc Bressel, Regional Sales Director of EMEA:

“Advertisers need to harness the power of social recommendation by identifying advocates of brands online and making them the first to receive deep and relevant content to encourage them to socially recommend a brand to a friend. By creating performance-related incentives for social recommendation, advertisers have an opportunity to engage with large scale consumer audiences and monetize social networks” (As cited in Microsoft, 2007).

Social networking facts According to eMarketer (2007) as cited in Alpha (2007) worldwide online social network advertising spending will increase from US$1,235 million in 2007 to US$3,630 million by 2011 as shown in Table 10.2.

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Table 10.2: Worldwide Online Social Network Advertising Spending Source: eMarketer, 2007 as cited in Alpha, 2007

The forecast in advertising spending truly reflects the potentiality of this medium as a future marketing tool on the Web. To fully explore this growth, data has been obtained from international social networking sites including MySpace and Facebook and such data can also detail the Australian market.

In the US market, 69% of online users aged 18 to 24 years have used social networking sites in the past year compared with 23% of those aged 45 to 54. According to comScore Media Metrix (as cited in Riley, Card Zia & Ina, 2007), the average users of social networking sites are aged 25 to 34 years old as shown in Figure 10.3.

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Figure 10.3: Frequent Visitor to Social Networks Source: Riley et al., 2007

In July 2007, children and teens made up 19.4% of Internet users (Nielsen//NetRatings as cited in Alpha, 2007). Research by eMarketer (2007) as cited in Alpha (2007) and reproduced in Figure 10.4 reveals that 26% of them utilize social networking each day and 22% visit several times a day. This implies that teens in general enjoy being in their own spaces and communicating with friends on this platform (eMarketer, 2007). eMarketer as cited in Alpha (2007) reveals that in a week, at least 45% of teens spend at least one to four hours online as shown in Figure 10.5.

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Figure 10.4: Frequency of Social Networking Web Site Source: eMarketer, 2007 as cited in Alpha, 2007

Figure 10.5: Time Spent per Week on Social Networking Sites Source: eMarketer, 2007 as cited in Alpha, 2007

According to Microsoft (2007), the popular misconception is that people only use social networking sites for dating and meeting possible partners. This is indeed not true. Besides using social networking sites to facilitate existing relationships and to keep in touch with friends, they are also using it to deepen relationships with like-minded people.

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Motivations involved in social networking According to Microsoft (2007), there are three motivations involved when it comes to social networking. As shown in Figure 10.6, these are the need to self-express, to be part of communities and to extend one’s network.

The inner motivations of one to self-express are visibly reflected by how people are utilizing the Internet to share their life highlights. Blogging is one of the self expression tools that enable people to share their life highlights through writing, pictures and videos being posted on their blog. The amazing aspect of this is that it enables people to respond to the author and also allow their life highlights to be shared publicly or privately.

The sense of belonging and friendship is also one of the motivations that draw people to network. Most often than not, people are utilizing community sites to extend the network of friends and to meet new people online. In short, social networking sites represent a fundamental shift in the way people interact with each other and with other media (Fox Interactive, 2007).

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Figure 10.6: Social Networking Motivations Source: Microsoft, 2007

The power of recommendation As mentioned in Section 2.1.1 - Media Landscape, trust is an important factor. This is the reason why social networking has become popular because people trust the people of their network. According to Forrester (2006) (as cited in Microsoft (2007),

“80% of consumers trust advice from friends online – that is three times as much trust than in ads via traditional media. This implies that social networkers have a strong influence within a community - particularly those driving social recommendation of advertising/brands” (Microsoft, 2007).

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Riley et al. (2007) addresses this by stating,

“Simply advertising on social network is not enough to influence users. Advertisers must augment general awareness campaigns by harnessing the influence friends have over users’ purchase decisions”.

The ‘new influentials’ are the people who are likely to spread viral advertising messages and engage with social marketing (Jupiter, 2007). By targeting new influentials, advertisers have a higher success rate in spreading viral messages or attracting consumer-created content. Jupiter (2007) also reveals that the new influentials are relatively likely to visit social sites compared to all online users. Targeting these new influentials rather than frequent networkers is worthwhile as more advertisers inundate social networks with invitations to engage with advertising in the form of consumer-created commercials and contests.

“Friending” is the next advertising. In the real world, consumers are more likely to be attracted by retail events such as sales and would be inclined to walk into the shop and browse. It is the same in the virtual world. According to Fox Interactive 2007, individuals are more likely to befriend a brand just to find out more about the brand’s marketing activity, see Figure 10.7

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Figure 10.7: Why did you make a company or a brand your friend on your favourite SN site?

Source: Fox Interactive, 2007

There is a meaningful connection between brands and individuals in the social network environment. As Fox Interactive (2007) suggests:

“Having Puma as a friend is pretty cool. You get some online sales or whatever since they’re kind of expensive. You can see what kind of shoes they have.” Claire, 18, Chicago

“I don’t want companies to advertise to me. I want them to be my friend.” Rob, 27, Los Angeles

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Social networking in Australia A study by Hitwise in 2007 revealed a 114% increase over a period of three months (28 July to 13 October 2007) in Australians visiting a social networking website. MySpace continues to lead with Facebook gaining market share. According to Hitwise (2007), as at the week ending 13 October 2007, 33.9% of Australians visited Australian based social networking sites and chat websites, while 66.1% went to international websites. Hitwise (2007) found that Australian Internet users spent an average of 20 minutes and 8 seconds on these websites, which is on average approximately 9 minutes longer than the time spent on other websites.

The top fifteen social networking and chat websites visited by Australians for the week ending 13 October, 2007 were led by MySpace, Facebook, YouTube and Bebo, while Australian visits to Facebook has increased by 293% over the three month period (Hitwise, 2007).

By analysing the incoming and outgoing of users after entering and leaving a site, the study also revealed that there was a cross duplication of users. From the research, 9.19% of Facebook's traffic came from MySpace and 5.76% of Facebook's traffic went directly to MySpace (Hitwise, 2007).

In the US, 7% of teens aged 13-17 are using more than one social network at least weekly (Riley et al., 2007).

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As one colleague recently observed:

“The bad thing about social networking sites is that they are here today and gone tomorrow, new sites will be up by improving the current model and the next thing you know, users are migrating, how do advertisers address this platform?”

4.2.3 Case Studies Three main social networking sites that have been popular in the last six months are introduced as mini case studies that demonstrate the power of social networking. The case studies represent a collection of presentations made by media proprietors during the researcher’s observation period. The data is useful in that it allows those who are not in the media industry to develop a basic understanding of social media’s potential as an advertising and marketing medium. Jim Scheinman is the founder of Bebo, a site that was launched in July 2005. Soon after its launch, the site appeared at the top of the Google Zeitgeist list in 2006 (Dower, 2007), see Figure 10.8. The site was also reported to be the overall top ranking website in Ireland, edging out Google and Yahoo (Dower, 2007).

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Figure 10.8: Google Zeitgeist Source: Bebo Presentation

By mid 2007, Bebo had about 2.5 million registered users with up to 450 million page views per month (Scheiman, 2007 as cited in Dower, 2007). Over the six month period, September 2006 to March 2007, site traffic grew by 49%. The average time individuals spent at Bebo is 28.58 minutes compared with 26.26 minutes for MySpace (Hitwise, 2007 as cited in Dower, 2007).

In general, social networking sites are competing with each other for traffic, and as a result of the competitiveness of these sites many users are duplicated users.

One of the major reasons for duplicate social networking websites is that not all individuals choose to join the same website. So, if there is a better, more user-friendly website out there that most of a user's friends decide to join, a user might decide to try it out and once they find it easier to use, they may even be convinced to use the site as their permanent source of social networking.

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In every social networking site, there will be common criteria which apply and best describe the attributes of a social networking site. For Bebo they are:

1) User profile pages containing personalized components such as photos, blogs, video content and a range of other multimedia “add-ons”.

2) Users have the flexibility to borrow content for their own profile pages from other parts of the site, such as profile skins from Bebo Skins, videos from Bebo TV and others.

It is the simplicity and ease of the Bebo site that has attracted the 13 to 19 year old teen market (Scheinman (2007) cited in Dower (2007).

Hence, the success of a social networking site is not based on functionality alone but also the ease of use and of course, how it interacts with the user in building engagement between the platform and that user.

Bebo is unique when compared to MySpace, in that it is better organized and less cluttered. In an advertising context, the Bebo advertising model is different in that it applies a social advertising context to interruptive marketing – conversation rather than interruption. At Bebo, users have the option of what type of advertising they would like to have appear on their profile page. In this way advertising is not only attractive to marketers but also to the site user. Individual users will be receiving relevant advertising messages, and because they

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are actually choosing what type of advertising they would like to see, advertising that is shown on the profile page creates a higher attention rate.

There are various advertising models used on social networking sites. The conventional model is display advertising. That is, ordinary placements in a site such as banners, leaderboards, islands and others. Another form of advertising that is frequently mentioned in this study is engagement marketing. In the context of social networking, this can be achieved by creating a profile page within the social networking group that draws attention and offers page views through display advertising. Once traffic is redirected towards the site, the user will then be engaged with the site through branded content that was designed for a specific brand. To illustrate this, the following is a case study from Ireland for advertising the Disney “Cars” movie on Bebo. It is an excellent illustration of this scenario.

Bebo - Disney “Cars” Although the Disney “Cars” movie campaign was launched specifically for the target audience in Ireland, it also received significant attention from users from other parts of the world. Such is the “internationalization” of the medium.

Disney approached Bebo with the intention of building a community that enabled participation among Bebo-ers. The objective was to build campaign awareness through viral communication on the social networking site, as Disney recognized the need to move their consumer from passive recipients of the film messages to active and engaged consumers (Disney Promotions Executive, as cited in Bebo presentation).

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Bebo approached this campaign by creating a “Cars” sponsored profile that had a movie trailer, a blog to keep the fans up-to-date with related news, trivia, a competition, quizzes and polls as well as behind the scenes insights and photos of all the movie characters along with their profiles. With this sponsored profile, the brand not only engaged its audience but also interacted with it. Such a successful conversion of an audience leads to the passing on of the message or adoption of a branded property to its profile page.

Figure 10.9 exemplifies the impact of a branded profile page. The interaction process in the “Cars” profile page could have begun by having a consumer visit the “Cars” brand community. While the consumer is at the page, he or she may come across a download for “Cars” wallpaper or a skin for an individual’s profile page. The consumer might then pass on the wallpaper to a friend whom they believe would be interested in it or they might even load it to their own page. From here, other consumers might see “Cars” personal pages and decide to use them for themselves or pass them along. Those consumers viewing the “Cars” wallpaper or receiving the pass along may be influenced by this consumer-to-consumer communication.

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Figure 10.9: User Interaction on Social Networking Site Source: Fox Interactive, 2007

To facilitate this pass-along effect, Bebo created a built-in internal multimedia enabled mail system (see Figure 11.0) which was designed to enhance the user’s ability to share content amongst friends and also allow them to transport creative assets from the “Cars” profile page, thus creating a viral movement through the site.

For this “Cars” campaign, a contest was staged in conjunction with the launch. The contest utilized the whiteboard that is in the profile page and users were asked to draw their favorite “Cars” character. This activity not only allowed users to interact with the site, but also to be creative and to express themselves. The fact that the winner of the whiteboard competition would receive a rare autographed book about the movie would also have encouraged many

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users to enter the contest. Each element of the profile was afforded maximum exposure throughout the site, with multiple touch points on the homepage and TV sections and within the contest’s area and sponsored thumbnails.

Results The overall results of the campaign were as follows: -

Video Views Sponsored Profile Views Video Homepages Skin Homepages Friends Profile Comments

: 45,000 people : 90,000 views : 5,000 views : 2,700 downloaded : 2,200 friends : 1,000 comments

Source: Bebo’s Presentation & The campaign is estimated to have had a modest budget of $40,000. It was deemed to be measurable, effective and value for money.

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Figure 11.0: User Interface Source: Bebo, 2007

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109 MySpace MySpace was founded in August 2003. The acceleration of awareness of MySpace was facilitated through its acquisition by News Corp for US$580 million (Hitwise, 2006). This is a strong indication of the value placed on these web properties by web publishers, marketers and advertisers.

MySpace claims to be the world’s largest social networking site with 200 millions users worldwide, 4 million users in Australia, 3,043,000 unique browsers in Australia and at least 1.13 billion page impressions (MySpace Internal Figures, 2007, Nielsen Net Ratings August, 2007 as cited in MySpace presentation).

3,500 3,000 2,500 2,000 1,500 1,000 500

Unique Audience [000]
Blogger Facebook bebo

Figure 12.0: MySpace Australian Unique Audience 2007 Source: MySpace, 2007 as cited in Alpha, 2007

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According to Alpha (2007), and reproduced in Figure 12.0, it is the leading site with the largest audience, compared to Blogger, Facebook and Bebo. MySpace (2007) also claims to have the highest total page views of all the social networking sites.

MySpace’s audience splits are as follows: § § § 57% of all 14-17 year olds 51% of all 18-24 year olds 20% of all 25-39 year olds

Source: Nielsen Net Ratings NetView, July 2007 as cited in Alpha, 2007

From the research it is apparent that sponsored profile pages deliver results. Therefore, rather than presenting another sponsored profile page case study, here I will discuss how MySpace as a brand leads its members from online to offline. In this mini case study, one will see how social networking can be used to engage users from an online to offline model.

MySpace Secret Shows Early in 2007, MySpace launched its MySpace Secret Shows in Australia. MySpace Secret Shows is a channel within MySpace where members of MySpace are informed of the latest happenings in the entertainment industry, and specifically the music industry. Occasionally MySpace organizes Secret Show gatherings with very little prior notice, creating a desire for music fans to visit this site and to subscribe to its update for the latest happenings. The Secret

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Show usually features music artists, including both local and international bands and MySpace users who join this viewer group gain exclusive invites to these gatherings.

The first Secret Show was in Brisbane and it attracted a crowd of more than 400 people. People began queuing up from 5 a.m. with chairs, stools and even mattresses! Due to limited space, 150 latecomers had to be turned away. “Pretty much the best gig I’ve been to. Very relaxed and intimate. I loved it”, commented one show visitor. According to MySpace (2007), its user base grows at least 7% every time there is a Secret Show gathering.

What does this means to marketers and advertisers? It means that if a brand such as MySpace can shift its engagement from online to offline, other brands can do the same on this platform, or indeed on any other social networking platform. Since it is the biggest social networking site in the world and has the most consumer touch points, including video, music, gaming and etc. it is obviously very attractive for marketers and advertisers.

The Secret Show case study shows that engaging consumers both online and offline is equally important because they actually allow the brand to be more personal and relevant to the consumer. Hence, it is now becoming more common to see a brand utilize offline to drive traffic to the online page, and from the online page, encourage them to participate in the brand’s offline activities. These are all important strategies of a truly integrated campaign.

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112 Facebook Facebook was founded by Mark Zuckerberg, and was launched in February, 2004. In Australia, there are at least 380,000 active users monthly, 70% recorded having geographic location as their primary network, 26% have college as their primary network and 4% have high school as their primary network.

Figure 12.1: Australia Active Users August 2006 – August 2007 Source: Facebook, 2007 Presentation as cited in Alpha, 2007

In Australia, 56% of Facebook users are female, 4% are under 18 years old, 49% are between 18 and 24, 35% are 25 to 34, and 12% are over 35 years old. In Australia last year there were about 514 million page views monthly with at least 1,334 average page views per user (Source Facebook, 2007 as cited in Alpha, 2007). In the US, Facebook was the number one site in 2007 among both male and female 18 to 24 year olds (eMarketer, 2007 as cited in Facebook, 2007).

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As mentioned earlier, different social networking sites have different styles and functionality. In Facebook, it is the efficiency of locating friends and the interactivity of mini applications.

From the researcher’s experience, to build at least 70% of your friends in a social site could take 3 to 5 months, depending on the intensity of site use and how readily friends adopted the site. In Facebook, it takes less than 2 months with the same sort of intensity applied, to have 50% of the network completed. However, the researcher still frequents the first social networking site that he joined because that is the network which has the most friends. In terms of length of stay in a site, the researcher finds he spends a shorter time in his old social site when compared to a newly joined site. This goes some way to explaining the reasons for a cross duplicating audience.

Since Facebook primarily engages with users through mini applications, the researcher will discuss a Red Bull application that has been successful in Facebook in terms of creating word of mouth. In general, mini applications usually take off quite well because every time a user installs an application to his or her Facebook, the application prompts the user to invite their friends to install the application. Hence, this actually speeds up the adoption of the application. The amazing thing about these applications is that it is on the network and it is interactive. People who adopt this mini application can not only play with their friends but also get to challenge each other. As for the brand, this actually creates a viral effect when people start to talk about it offline and ask their friend to participate in it as well so that they get to play together.

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There are currently 652,769,589 installs across 10,713 apps on Facebook. “Facebook has approximately 56 million Unique Active Users in the past 30 days and a valuation of $16.8 billion” (Adonomics, 2007, December 8).

Facebook launched its platform to application builders on the 29th May 2007. Within four months, 5,000 applications were created. Compete (2007) reveals Facebook activity grew 32% from May to August, 2007, with more than a third of the growth coming from the new applications, as shown in Figure 12.2.

Figure 12.2: Facebook Applications Source: Compete, 2007 as cited in Johnston, 2007

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Red Bull – Roshambull Red Bull ‘Roshambull’ is an application that was created for Red Bull. As shown in Figure 12.3, it is an online version of the classic rock, paper, and scissors game. Although it seems to be strange to be playing this game online, it is a perfect match for the Facebook community (Johnston, 2007). This application allows users to add Roshambull to their Facebook profiles and then to invite friends to battle. This game is not the usual kid’s game, in that it leverages Facebook technology to actually create a scouting sheet that can be used to help players decide what to throw, as shown in Figure 12.4. Before one makes the next throw, they can also check their friend’s stats and see what they have been throwing in the past. This concept not only makes the game harder but also highly engaging, as the individual is constantly trying to out-strategize their opponent.

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Figure 12.3: Red Bull Roshambull Profile Page Source: Facebook, 2007

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Figure 12.4: Red Bull Roshambull Source: Facebook, 2007

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The “Roshambull” application reinforces the fact that social networking is a consumer-toconsumer construct. If an advertiser wants to utilize this platform, they must first fully understand the platform. Gusteav, as cited in Alpha, 2007 says:

“The biggest flaw I have with companies looking to generate positive WOM online is that they begin with the notion that they are going to “take advantage” of social networks or blogs. You can’t – What you can do is participate in social networks and blogs. To do that you have to have 100 per cent confidence in what you’re saying about your brand. If you’re overstating claims you’ll be seen through very quickly”.

Advertisers looking to engage their consumer on a social networking platform must integrate different and popular styles of communication on each individual site. MySpace is large and therefore represents the widest array of communication styles. It is content creation-centred, particularly video and music. Bebo and Facebook each foster a communication centred on socializing more, rather than on content creation. Bebo attracts the youngest crowd and Facebook specializes in college students.

In each case, the heavy users of any social networking site spend a tremendous amount of time and effort in creating an environment that they feel familiar with and one that is trustworthy and safe for them and their friends. In order for someone (i.e. advertisers/marketers) to be included in this social activity, they must respect that they are on the outside and are asking to be invited inside (Jupiter, 2007).

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In summary, social networking sites are highly flexible and engaging. However to effectively leverage these mediums for marketing and advertising purposes, one must understand how the consumer is behaving in this space before planning the strategy.

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Chapter 5: Conclusion
5.1 Reflections on methodology and limitations Having undertaken this project over the last eight months or so, one recognizes that the area of social networking and marketing viability is huge, growing exponentially and also constantly evolving.

The principal research method used was participant observation. The research observation process went very well as the ultimate objective of the observation was mainly to create an opportunity where the observer can gain access to past presentations of the company. Overall, the internship was considered a success though there was some access limits applied to ongoing company projects.

As a result of the one month internship in the media company, the researcher with permission retrieved vast amounts of past presentations from the company. Most of the presentations retrieved were training presentations, conference presentations and media owners’ recommendations to the media company. This retrieval was considered to be fruitful because the review of the presentations opened up access to information regarding social media and the marketing environment. Undertaking the role as an observer has helped the researcher to conceptualize contemporary digital concepts and by utilizing the practical-oriented model, the researcher is able to explain the process of digital marketing from a first person perspective.

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Up to the present time, online is the fastest growing advertising medium. It is recognized and acknowledged that online is arguably the future of advertising and the study here aims to providing substantial reference to support this statement. In addition, the research highlights the fact that the growth of online as a viable medium for advertising has given birth to the social networking platforms where is also widely known as social media as a whole.

One challenge in undertaking the research has been the relatively tight time frame – that is eight months – that was available. Another challenge to the presentation of my thesis was language. As I am an international student, I have found the lack of translating my thoughts into English to be very challenging I feel that now I am not only a more competent researcher, I am a more confident scholar.

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5.1.1 Answer to Research Questions The intention of this research was to identify for advertising and marketing agencies the growing importance of the social networking platform in the online industry. In doing so the researcher has identified three sub questions which have assisted in addressing the main research question concerning strategies that may be successfully employed by advertising and marketing practitioners within the social networking environment.

Now let us revisit the sub questions and answer it in brief. The three sub questions were:§ What elements do current social marketing campaign exhibit? A social marketing campaign exhibits five types of characteristics which are participation, openness, conversation, community and connectedness which is mentioned earlier on page 30 in the discussion of social media characteristics.


What elements make marketing with social networking unique and different from other forms of online advertising? The flexibility, the precision targeting and the viral element that is in built in a social networking site are the main reasons that make marketing with social networking unique and different. It allows brands to target specifically to their target audience while no other forms of online advertising can provide such accuracy. Harnessing on the social power of recommendations, the consumer no longer hears only from the brand but hears the brand message through friends which increases the credibility and trust of consumer and the brand. Section 4.2.2 details the answer to this question.

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What strategies can be devised to enable advertisers to maximize their success on the social networking platform? An integrated campaign, offline and online will be the most strategic strategies that will maximize their success on the social networking platforms because it reaches the consumer through all touch points and driving traffic to the web through offline activities and online activities. In order for the web strategies to work, advertisers need to understand their consumer and learn how to interact and engage with the consumers without being intrusive. Successfully executing this will allow the brand message to be passed along (that is, by word of mouth). Successful executions of some social networking strategies are exemplified in Section 4.2.3. For more information, also please refer to Section 4.2.1.

From the research it is clear that social networking marketing is very different from traditional marketing. Simply moving offline strategies to an online environment is not a viable solution. This explains why in the past decade, digital marketing has focused on moving the old advertising model into the new landscape of the Internet.

In fact, online and offline advertising are two different fields. One cannot use the old model of advertising in the new landscape. Online is a medium on its own, with multiple channels which we refer to as websites. Every website is unique and the amazing aspect of the Internet is that most of the content is free. You do not have to pay to read a newspaper online but you do so offline. Offline advertising is about target audience rating points (TARPS) while online is about impressions. Offline advertising does not have the capabilities to disseminate

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advertising messages directly to the specific target audience, but online this is possible with behavioural targeting and strategies.

This study has shown that there are significant differences between offline (traditional communication) strategies and those employed online. Many advertising agencies, recognizing this, have developed not only online strategies but specialist online agencies to implement them. However, whilst the two strategies are different, it is apparent from this research that they may be integrated to deliver an IMC (Integrated Marketing Communication) solution. See Figure 10.0.

Even in the online environment there are distinct differences between Web 1.0 and Web 2.0. Web 1.0 advertising is focused on passive advertising. Advertisers buy placements (banners) and media planners traffic this banners. At the end of the campaign, success or otherwise is measured by the cost of clicks generated and impressions delivered.

In Web 2.0 advertising, online advertising is supported by search engine optimization, social media marketing optimization and lastly, specific targeting through behavioral targeting. Web 2.0 advertising is more than just return on investment. Rather, it is about return on influence. How can brands be part of the consumer’s daily conversation? The answer is by listening to and interacting with them. It is about adding the personal touch. While traditional search advertisers like Google and Yahoo match by keyword, social networking sites such as MySpace and Facebook utilize something far more powerful - people and their relationships. So now let us considered the main research question.

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What strategies can be successfully employed by advertising and marketing practitioners within the social networking platform?

Online is an area where advertisers and marketers can enjoy tremendous flexibility. Depending on the negotiations with the publisher (the site provider), there are little or no restrictions on activity. The great thing about online is that the campaign is not limited to one country but is able to reach the world.

Offline and online integration is no longer an option to advertisers. It is essential for, as we have seen, consumer attention has shifted. To address this we have to understand our consumer; where they are, what are they doing online and how we as advertisers can reach them without being seen to intrude into their privacy. The impact of an integrated campaign is not only its power but its effectiveness in ensuring the brand remains top of the mind by reaching the consumers at all available touch points.

A really important benefit for any client undertaking an online marketing communication campaign should be the accountability of online; something that offline struggles to provide. Other really important benefits are interactivity which translates into engagement, flexibility that is not restricted by statutory controls, and the nature of viral marketing in amplifying the message.

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So what is so attractive about social networking to advertisers and marketers? Firstly, it reaches a targeted audience and secondly the fact that it does reach the targeted audience provides accountability. The brand message is communicated virally on the network rather than the traditional advertiser-to-consumer model, thus leveraging the power of consumer-toconsumer which is arguably the most powerful method of advertising.

It is therefore very clear that the key success of a social media marketing program lies in building a relationship with the consumer. Advertisers and marketers need to create an interactive campaign that builds a relationship through engagement. Again as we have seen, today’s consumer wants a relationship not just another type of product targeted at them. To succeed, marketers and advertisers need to be consumer-centric and start listening before talking, engaging and building friendship, instead of just marketing. This is what social media marketing is all about!

5.1.2 Further Implications of the Study As we have seen from this research, the power is already shifting in a dramatically inevitable way from the marketer to the consumer. As social networking sites prove themselves to be a powerful marketing and advertising platform, the traditional webmaster will disappear as sites such as MySpace allow businesses and consumers to take charge of the creation of content and the effective targeting of message recipients.

The implications for marketers are enormous. Beyond the paradigm shift, marketers need to understand and address the unique challenges of operating in the social media environment.

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What is very clear from my research is the fact that the area of social media marketing is evolving and changing very rapidly. Ideally further research is needed to record the new trends which will continue to merge.

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List of Figures & Tables

Figure 1.0: A Brief History of Online Advertising from 1994-2004. Figure 2.0: Change in Ad Spend by Consumer Medium

p. 17 p. 18

Figure 3.0: Time Spent with Media Daily
Table 4.0: Multiple Definitions of Interactivity Figure 5.0: Social Media Introduces New Models of Value Creation. Figure 6.0: Organic Vs Amplified Word of Mouth Figure 7.0: Research Framework Figure 8.0: Online Advertising Expenditure – Total Spend by Category by Period.

p. 20
p. 23 p. 30 p. 37 p. 46 P. 58

Figure 8.1: Online Advertising Expenditure 12 months ended 30 June 2007 Category Share. P. 58 Figure 8.2: Share of Advertising Expenditure Figure 8.3: Internet Users Figure 8.4: Growth in Global Information Flow Figure 8.5: The Digital Eco System Table 8.6: Differences between Web 1.0 and Web 2.0 Table 8.7: Media 1.0 and Media 2.0 Figure 8.8: NASDAQ - Dell’s Crisis Figure 8.9: Time – Person of the Year Cover Table 9.0: Consumer Technographics Table 9.1: Shifts of Control Table 9.2: Passive Consumption – Active Management Figure 9.3: Long Tail of Sites Table 9.4: Implications of Personal p. 60 p. 62 p. 64 p. 66 p. 67 p. 68 p. 71 p. 72 p. 75 p. 77 p. 79 p. 80 p. 82

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Figure 10.0: Strategic Planning Model Figure 10.1: Conversation Architecture Table 10.2: Worldwide Online Social Network Advertising Spending Figure 10.3: Frequent Visitor to Social Networks Figure 10.4: Frequency of Social Networking Web Site Figure 10.5: Time Spent per Week on Social Networking Sites Figure 10.6: Social Networking Motivations

p. 85 p. 88 p. 93 p. 94 p. 95 p. 95 p. 97

Figure 10.7: Why did you make a company or a brand your friend on your favourite SN site? P.99 Figure 10.8: Google Zeitgeist Figure 10.9: User Interaction on Social Networking Site Figure 11.0: User Interface Figure 12.0: MySpace Australian Unique Audience 2007 Figure 12.1: Australia Active Users August 2006 – August 2007 Figure 12.2: Facebook Applications Figure 12.3: Red Bull Roshambull Profile Page Figure 12.4: Red Bull Roshambull p. 102 p. 106 p. 108 p. 119 p. 112 p. 114 p. 116 p. 117

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APPENDIX A – Journals

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ALPHA WORK EXPERIENCE JOURNAL 3/7/2007 - Tuesday : First day 1) Digital Landscape Summary 2007.ppt 2) Terminology & Agency Workflow : Beyond Workflow : Powerpoint Slides : Online Training.ppt 3) Screengrabs

Insights 1) The work induction was all summarized in a powerpoint. Throughout the powerpoint, I have learnt about the key terms being used when it comes to a media placement and furthermore, it gives me a thorough understanding of what this online media agency does.

2) As soon as I have gone through the powerpoint, work was allocated to me just to reinforce what I’ve learnt from the powerpoint and put it into work. I was given a task which involved me surfing into websites which have the brand advertisement on it, and then do a “screen grabs= screen capture” over the ad. The process varies and could take almost the entire day, as advertisements on the website rotate hence I have to keep on refreshing and waiting until the client’s advertisement turn up. I have no idea why they do the ‘screengrabs’, one reason that was explained was that, it was to ensure the campaign is running and active on the website.

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4/7/2007- Wednesday: Second Day Duties 1) Continuation of screengrabs and hands-on the software use which are AdRelevance by AcNielsen and DoubleClick which is adserving tools used by Beyond. 2) Post measurement analysis was taught to me 3) Was involved with the presentation of the Bourne Ultimatum proposal to the client.

Insights I was assigned to do screengrabs as this is a necessary procedure which every digital planners have to to to ensure all brands advertising is running and active. Besides that, I was taught by my colleagues on how to use the campaign measurement software (AdRelevance).

AdRelevance Comparing campaigns in the sectors of your choice by different criteria, including the sites where advertising is placed, the creative used, the campaign frequency, and the number of impressions achieved > Estimating how much competitors are spending on their online campaigns, and how many ad impressions they are receiving

> Understanding the average ad spend in a sector to ensure that your clients are making the maximum impact for their budget

> Assessing which sectors and advertisers are the most active

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Double Click DART for Advertisers (DFA), a hosted, enterprise-class advertising management and serving solution which helps marketers reach their online goals efficiently and effectively.

5/7/2007- Thursday: Third Day 1) Screengrabs 2) Post Analysis Report 3) Bourne Ultimatum Proposal 4) Submission of Codings on the Flash File for tracking 6/7/2007- Friday: Fourth Day - Was out for lunch with media owner, no relevant insights were collected. 9/7/2007- Monday 1) Screengrabs 2) Post Analysis Report

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BETA WORK EXPERIENCE JOURNAL 10/9/2002 – Day 1 1) Induction Manual 2) Team Introduction

Duties - Introduction to Nielsen Ad Relevance: Campaign Review & Tracking - Competitors Analysis on the creative execution frame by frame followed by top 5 sites being advertised and results of the campaign. The analysis was further narrowed down by the type of insurance.

4) Introduction to digital planning powerpoint was passed to me for me to understand more about the online industry is. Refer to powerpoint.

11/9/2007 - Day 2

1) For me entire day I only fill up numbers from a paper to the powerpoint, the powerpoint was a review of the campaign performance which has impressions, click through rate, and number of clicks. 2) Gathering Cost per impressions from media owner.

12/9/2007 - Day 3 1) Reporting : CTR, CPM 2) EyeBlaster: AdServer : Upload rich media content a. It will track b. 1 week after launch > Report c. 1 day after live> Check if it is live d. 1 week after campaign- Post Campaign Analysis e. Importance of this is optimization

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Optimization is about tracking the campaign chances of reaching the campaign objectives and if it doesn’t, finding the best way to fix it. Most of the time it involves changing the creatives to another, or switching the advertising placement, recommendation is from the publishers.

3) Client’s meeting- Conventional media planning i. Escalating cost without reference to clients, pushes client into a corner. ii. Media expertise is thoroughly on just ad bookings and placement.

4) Media Owner Meeting: DoubleClick regarding new software.

13/9/2007- Day 4 1) Competitive Analysis for tourism authority a. Involving the use of AdRelevance to track campaigns that have run in the past 8 months, extracting creatives, tracking the post-campaign results and do a competitive analysis.

2) MySpace Product Mock up: Was asked to design for the MySpace platform.

14/9/2007- Day 5 1) Mock up for NEW Pitch 2) PITCH Mock up for the survey website 3) One digital merger- Understand that there is a bigger boundary of the online planning department and the role of media planners in the media agency is just the one of the roles, other roles that are being exposed through observation, are production and search. However, there is still a lot to be covered. 4) Tourism Authority - Netview, Netintelligence.

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17/9/2007 – Day 6 1) Completed the powerpoint mock up for the Pitch. 2) Gather information for Tourism Authority, break down by site composition, audience duplication 3) Gathering data to convince the Tourism Authority client to invest in social media sites.

18/9/2007- Day 7 1) Tourism Authority Data Entry a. Travel Australia Macro Analysis i. Looking into traffic performance: Average pages per visit & Minutes per visit, Channel Visitation, Page views, Inward & Outward Traffic towards Sponsorship 2) Sensis Mobile Media Presentation 3) Tourism Authority Sites Seeking via

19/9/2007- Day 8 1) Finished data entry. 2) Spent most of the time doing design for other teams which was a negative and unproductive day for data collection as I am not exposed to the media planning side as much as I wanted to be.

20/9/2007- Day 9 1) Data entry

21/9/2007- Day 10 1) Research into finding how rich media is better in terms of accountability towards planning. 2) Finding potential sites for advertising

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24/9/2007- Day 11 1) Reporting- Using Eyeblaster to retrieve reports 2) Using Nielsen: NetRatings to find out Ad Spends.

25/9/2007 – Day 12 1) Reporting

26 September 2007- Day 13 - Reporting - One colleague made a quite good comment on my thesis, he went about saying that the life span of social network sites are short as everyday there will always be a new creation, improving on the current old model of the sites and sooner or later it will either be bought over or users would migrate. He also commented that a Gen Y user may eventually have several memberships in social sites and thus is hard to say is feasible when this is just merely a trend.

27/9/2007- Day 14 Roy Morgan Competitive Analysis for NEW Pitch In the meeting, everyone talks about their project performance and during this; the boss makes a comment and said that everything that is on MSN always works. One reason for him to say so is because there was quite a high click through rate in one of the brands.

28/9/2007- Day 15 - Media presentation from MySpace.

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APPENDIX B – E-MAIL Transcripts

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