Unlocking the social and mobile marketing demand jam

August 10th, 2010 | Justin Kistner

After months of having to keep my mouth shut, which is really hard for a social guy like me, news of our Transpond acquisition is finally out. It’s been an exciting ride that last 24 hours. Now, I’d like to share more about the story behind the story.

Social is dominating time spent online

For the last two years, social has dominated the time spent online. This year social was twice as large as the next closest activity, which was games. The time spent on social and gaming is hard to ignore. Especially when traditional online channels like email fell by 1/3 just since last year.

It’s also hard to ignore the dominance of Facebook. Time on site for Facebook accounts for more hours than Google, YouTube, MSN, WindowsLive, Bing and Yahoo! combined.

And, it’s the world’s network. Facebook is the top network in the top 10 largest countries in the world, expect for Russia, where’s #3. In fact, it’s the top network in 111 of 131 countries.

And that’s just social.

Mobile will dominate Internet consumption

Mobile is exploding. There are more mobile phones globally than there are toothbrushes. And, more of those phones will be smartphones than feature phones by next year.

But, there’s a problem.

Marketing budget gap

Despite the two year trend of social dominance, marketing dollars are not right sizing. Search, email, & website command 77% of the budget today. That makes the current allocation is a ratio of dollars to user time spent is 6.5:1 The allocation for social is 0.5:1. Mobile doesn’t even show up as a category. If businesses spent a ratio of 6.5:1 on social it would command 150% of the budget. Assuming social is as effective as search, email, & website, then a ratio of 3:1 or 2:1 on search, email, website, social and mobile would right size the budget.

Speaking of marketing effectiveness, we hear this as the most common misconception for the gap.

Marketing effectiveness

If marketing effectiveness is the reason, then let’s look at where dollars are spent today. Search, email, & website represent the magic trifecta of marketing. And they work together like this:

Fundamentally the effective marketing equation is acquisition, subscription, and conversion. But platforms like Facebook offer all of these elements. And in richer formats. And on a single, integrated system. With half a billion connected people. Social marketing is an evolution of traditional online marketing based on the same equation. Here’s the translation:

Real problem: Lack of expertise

Over the past six months, we’ve had the honor to view the full picture for the lag in budgeted dollars for social and mobile marketing. Our Facebook Analytics release was the most demand we’ve seen for a release since our original log file analyzer. That put us in conversations with all of the leading brands, agencies, and vendors investing in social. What became clear to us was the lack of expertise in the space.

Brands often have 2 agencies involved on campaigns: 1 developing creative and 1 doing the media buy. Creative agencies are outsourcing to smaller agencies that specialize in Facebook development, who are swamped with demand. It’s not uncommon for those smaller agencies to need to hire contractors to keep up with demand. The lack of talent for agencies to hire is causing campaigns to require too much coordination, which slows down development and increases cost. We also see a painful by product from that scenario. Due to the pain and cost of development, most campaign choose not to measure because the extra effort to integrate measurement and the extra cost are often not palatable.

Pent up demand

Seeing our customers’ pain points made us look deeper into the market. We conducted a study of the top 100 brands in social identified by Charlene Li of the Altimeter Group. We found that 83% of the market had between 0-3 apps. Our take away is: social and mobile are sizable markets that need a solution that isn’t dependent on developers and already had measurement integrated. I wrote more about our Facebook app adoption study in July on our blog.

Webtrends Apps makes it easier

Acquiring Transpond was an easy choice for us because they had the only solution that allowed anyone to edit every aspect of an app, down to the borders around alert windows in Facebook. It was also the only solution that supported publishing native Facebook, iOS, Android, Nokia, and mobile web apps. Here’s a look at what Webtrends Apps looks like:

To make it even easier on marketers, we took their app studio and integrated analytics. If you’re not a Webtrends Analytics customer, we have a built in analytics dashboard. If you want the data in Webtrends Analytics, simply enter your account ID (known as the DCSID) at the point of publishing, and you’re done! No tagging required.

Looking to the future

First, we don’t think traditional websites and email are going away. We believe that HTML5 and other web technologies are poised to create another period of innovation similar to what we saw during the Web 2.0 era. But, we do think that social and mobile are in dire need of solutions to bring investments inline with Internet usage.

We also think the lack of developer talent and expertise in the space is temporary. As we make it easier to create, measure, and improve social and mobile marketing campaigns, more money will flow into the space. That will inherently attract more talent into the space. More developers will pick up social and mobile development skills and brands will become savvier about managing campaigns as well. Our products will evolve with these changes when they occur.

In the mean time, let’s make some apps! You can build them for free and share them up to 100 impressions a day (for approvals and what not).