Marketers know it’s cheaper and smarter to retain customers than acquire new ones, especially in temperamental economies.
But while they continue to nurture relationships by sending existing customers letters and emails, or persuading them to join loyalty programmes, some experts believe social networking sites such as Facebook and MySpace are more effective platforms for customer relationship management, or CRM, efforts than online display ads. This view, say marketers, can use sponsored groups on these sites to engage meaningfully with customers through discussions, posts and offers, among others.
Advertisers in India currently use social media for a combination of CRM and online advertising. Microsoft India Pvt. Ltd’s director, advertiser and publisher solutions, Rajnish, who uses one name, says online marketing encompasses all forms of consumer engagement, brand-building tools and CRM.
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In his opinion, both CRM and online paid ads have an important role in building brands and engaging consumers. “Some companies create online customer forums and blogs for their brands on their official websites itself, such as Coke, MTV; some have online properties across social networks and some have independent properties such as Hindustan Unilever Ltd’s Sunsilk ‘Gang of Girls’,” he says.
Roy de Souza, founder and chief executive of San Francisco-based Zedo Inc., the world’s third largest ad server that does behaviourally targeted online advertising, tells me he has not yet seen brand advertising working well on social networks. While he agrees that social networks are talked about as another way of keeping in touch with existing customers, he has some reservations on the efficacy of sponsored groups on them in building long-term relationships.
His point: Companies such as Jet Airways (India) Ltd or Amazon.com Inc. are advised to create groups on Facebook or pages on Facebook so that their customers can join the group or become fans or friends of the page and then see the latest news and special offers from the companies. “However, I have not seen much success with this yet. Very few users join the Jet Airways or Amazon groups and very few visit the Jet Airways or Amazon pages,” he says.
So, if sponsored groups, pages and ads don’t really click in CRM programmes, what does?
In Roy’s view, a more effective way for companies to keep in touch with customers on social networks would be to buy a type of behaviourally-targeted advertising called retargeting that helps advertisers find their customers from the millions on these social sites.
This is how it works: When someone buys a ticket from Jet online or buys a book from Amazon online, the ad network knows this user has made a purchase. The ad network then finds those users again on a new Internet site (social networks, or games, photo or video sites) and shows them an Amazon ad or Jet ad that says come back and buy again.
Retargeting works better than creating a group or page on the social network because the advertiser can show ads to all users on that network who have bought the product earlier. It can show the ads not just once but every few days, says Roy. “This is much better than creating a group or page because so few users visit the group or the page and even fewer will visit the group or the page every few days,” he says.
Overall, social networks promise marketers scope for deeper consumer engagement based on shared interests. B.N. Chandrakanth, co-founder and managing director, Theorem Inc., a global media operations company, says this environment is suitable only for niche brand-building exercises. He points to blogs that have found sponsors in brands such as BMW, Harley Davidson and Cadillac, where users are so passionate about the brands that they use the network as a social forum to discuss how these brands are part of their everyday lives.
Expect CRM to be even more targeted.
Marion Arathoon is Mint’s advertising editor. Your comments are welcome at firstname.lastname@example.org