The adventures of an analog engineer and digital storyteller who studies emerging networks and their impact on the great game of business.
Aug 21, 2012

Yesterday, I got an email from NewBlueFX, a company that creates plugins for nonlinear video editors like my favorite, Sony Vegas. The email, entitled, “You Determine The Discount Sitewide Sale” described an interesting social marketing campaign that promised a one percent discount for every retweet of its message, with a sixty percent cap.

Here are the rules from the email:

  • The Tweet-a-thon starts Monday August 20th at 12:00AM PT and goes until Tuesday 11:59PM PT.
  • Total Tweets and corresponding discount to be announced Wednesday morning 7AM PT.
  • Discount can be used on any product available on
  • Wednesday’s sitewide promotion expires Thursday, August 23rd at 7:00AM PT

I love this campaign from the standpoint that NewBlueFX clearly sees its audience as an asset. It also gives us the opportunity to play with some math to calculate potential dividends that the company is seeking to extract from those assets.

The company’s Twitter account, @newbluefx, has 928 followers (the asset). Due to NewBlueFX’s niche product line, this audience likely consists of specialized video artists who’ve made significant investments in sophisticated video editing software. Since like-minded people tend to follow each other on Twitter, NewBlueFX is betting that by encouraging its audience to spread its messages through their networks, that the message will ultimately find its way to the right people as opposed to (as traditional media offers) the most people.

The company has done something else by offering a discount for each retweet…it has established a retweet price.

Consider that the NewBlueFX online catalog contains 26 products, whose:

  • Average price is $127.64
  • Median price is $129.95
  • Mode price is $129.95
  • High price is $299.95
  • and a Low price is $49.95

By taking the median price of $129.95, New BlueFX has established a price of $1.299 for every retweet (1% of the median product price) its campaign generates–up to a cap of 60 retweets.

The model gets even more interesting if you compare it with advertising through traditional media. By capping its discount (and therefore the amount it is willing to pay for the entire campaign), any retweets generated over 60 will drive the effective cost per impression down–the opposite of what happens when purchasing traditional advertising.

Social vs. Traditional CPM

If the average Twitter user has 126 followers, each retweet has the potential to be spread to 60 x 126 = 7,560 people. Therefore, NewBlueFX has established that it is willing to pay $77.94 (60 x $1.299) for access to its audience’s audience. Had NewBlueFX decided to invest that same amount of money in someone else’s audience (traditional media), similar access would translate into a CPM (cost per thousand impressions) of $10.31 (1000*($77.94/7,560)).

Figure 1 illustrates the company’s CPM costs as a function of the retweets it generates:

  • If nobody retweets, NewBlueFx offers no discount, and therefore carries no advertising cost.
  • For the first 60 retweets, NewBlueFx pays a flat rate of $10.31 CPM, capping its campaign advertising expenditures to $77.94.
  • Then something very interesting happens. Because the discount is capped at 60%, every retweet that exceeds 60 is a bonus, essentially causing the company’s CPM rate to fall-off exponentially the more successful it is.

The more successful the campaign, the lower the CPM

 Figure 1: CPM per Retweet

This example shows the difference between social media and traditional media. In traditional media, your message will only travel as far as you are willing to pay for its distribution. In social media, your message will only travel as far as your audience (asset) is willing to spread it for you.

NewBlueFX recognizes that its audience is an asset that can pay dividends.

Does your company?

Jul 18, 2012

Many years ago, while helping my Grandmother tend to her vegetable garden, I noticed that she was removing random stems from her tomato plants.

“What are you doing?” I asked.

“I’m removing the suckers,” she said, explaining that if she allowed these little sprouts to grow, they’d eventually develop their own fruit. More fruit on each plant meant less nourishment for each tomato, and therefore, by removing the suckers, she hoped to get a higher quality yield.

Recently, I’ve been thinking about suckers, but in the form of new social media channels (Foursquare, Pinterest, Instagram, Google+, etc…) that seem to be sprouting everywhere. Although each new channel offers new ways to reach audiences, each also comes with an additional cost–the fact that they all require fresh content. Content development takes time and effort, therefore, companies choosing to adopt new channels without assigning additional content-development resources are simply feeding suckers that draw nutrients away from their existing social media channels.

It all comes down to the gardener’s choice. If your company has decided to add more social media channels to its portfolio and it wants to maintain the same quality and quantity of its content, it has two choices:

  1. Increase the social media staffing resources to meet the new content demand
  2. Reduce the amount of social channels to match the social media team’s content development capacity.

But alas, that’s not what appears to be happening in corporate-land. Instead of adding resources or reducing the number of channels, companies appear to be blindly adding new channels. Without the capacity to create new content, I’ve noticed a trend. These companies are choosing to spread the same content evenly throughout all of the company’s social channels.

In 2010, I created the One Page Social Media Strategy Document (DOC download) to help with this dilemma. It identifies the reasons why each social media channel was adopted, its unique purpose, and how each stacks up against the rest of the channels. If you haven’t already, give it a try. Upper management will love you:-)

All social media channels need fresh content.  Content takes time and effort to produce. Therefore, if your company can’t invest the time and effort required to create compelling content for each adopted channel, then it’s time to do some pruning.

What social media channel are you willing to sacrifice so that others may prosper?

Photo Credit: Nick Dimmock

May 29, 2012

Last post, Granularity and Innovation, we discussed the short and long-term ramifications of increasing the granularity by which we can measure things. We used the Green Button data from my Southern California Edison account to download energy consumption data and then made some extrapolations.

The Green Button is one of the first steps in helping people make informed decisions about their personal energy usage. It is also the building block for entrepreneurs who will come up with innovative uses for the data, something that the Department of Energy decided to build upon by offering $100,000 in prize money for the most innovative uses of Green Button data. The winners of this Apps for Energy competition were announced last Tuesday, May 22nd.

I found the breadth and depth of the apps refreshing, as each winner attacked the problem from a different and unique perspective.

For example:

Place App Name Description Motivation
1st Leafully Leafully is an app that allows people to visualize their power consumption in terms of saved trees. One section of the app shows how many equivalent trees were consumed. Another section contains a goal-setting game that maps a user’s behavior to saving a tree. Environment
2nd Melon Melon is an app that focuses on saving energy in commercial buildings. By providing basic information such as the size of building and its Green Energy button data, the app generates an Energy Star benchmark, comparing the user’s energy consumption with other buildings nationally. If the building scores in the top 25% of all buildings, it may also qualify for an Energy Star certification. EnergyStar Rating
3rd VELOBill VELOBill looks at the problem from the residential customer’s perspective, helping consumers make sense out of their monthly utility bills (gas, water, and electric). It puts mind-numbing, text-based content into an easier to read, more graphically pleasing format. Finally, it performs an analysis on usage, and make consumption reduction recommendations. Understanding Energy Bills
Student Wotz Wotz is an app that comes from the University or California Irvine. It’s an HTML 5 app that breaks the data into three different sections: Play, Explore, and Challenge. The Explore section allows one to take a look at their energy usage over time. The Challenge section offers not only ways to reduce consumption, but puts the various energy savings into fun terms like “cheeseburgers.” The Play section contains two games (Asteroid and Tetris) with each game’s difficulty based on one’s previous energy consumption readings. Education/Play

Challenged-based innovation is a way to tap into the collective wisdom of the crowd. It allows organizations to work with people who are passionate about a subject, as opposed to those who are only in it to meet the bare-minimum requirements of a contract. It’s a way to reach into the soul of the entrepreneur and more organizations should consider using it.