The World Economic Forum’s annual meeting in Davos Switzerland took place between January 25-29th.  Today, I discovered some great footage from that meeting on YouTube, which dovetails nicely into my blog from Friday, in which I made several predictions for mobile in 2008. In the video, Chad Hurley, Co-Founder of YouTube, talks about some of the exciting things that lay ahead for YouTube:

I’ve talked a lot in this blog about how companies are using social media to capture new customers and engage existing customers.  Today, Advertising Age wrote a fascinating article on the success of Canadian toy manufacturer, Ganz, who has used social media and the Internet to spark massive sales of its Webkinz stuffed animals.  I’ve got mixed feelings about Webkinz marketing model and success. On the one hand, I admire the Ganz creativity. On the other hand, I question whether Webkinz takes marketing to children one step too far.  Before I explain this paradox in more detail, here’s some background…

Webkinz, which launched last year, are proving exceptionally popular among American children aged 6-11.  The success of Webkinz is so impressive that Advertising Age refers to them as “Beanie Babies on steroids”.  By November 2005, Ganz had sold one million Webkinz, without doing any formal advertising.  Ganz reports that this number was pushed “significantly higher” during the holiday season.  Instead of advertising, Ganz made Webkinz successful  by engaging a strong network of sales reps and retailers as well as innovative PR and social media strategies.  Bloggers and YouTubers started talking about Webkinz en-masse, which attracted the attention of the media and resulted in publicity on “Good Morning America,” “Regis & Kelly” and “Rachael Ray.” Social media combined with the power of traditional press accelerated the sales of Webkinz.

Webkinz word of mouth success via social media is in great part to do with its web-savvy product strategy.  Each Webkinz stuffed animal comes with a printed tag, with a secret code and the address of what Advertising Age refers to a “safe” social-media enabled website for kids.  Once registered, kids can dress and feed their avatar Webkinz by earning “KinzCash” by playing games and winning quizzes.  Kids can also engage their avatars with other Webkinz avatars by inviting them to be friends and sending messages from a pre-selected list of options (Advertising Age uses the example “You are” and “very nice”.).  So, in effect, the Webkinz site becomes a mini MySpace for very young kids, without the threat of sexual predators. Imagine the success of Cabbage Patch Kids in the 1980s, and add to the “adoption process” the power of the internet and talking cartoons, and it’s not hard to see why kids can’t get enough of Webkinz.

The concerning part of Webkinz and similar products is the way that they engage with and solicit information from children.  When a child goes to the Webkinz site s/he is greeted by vivid cartoon images and written instructions.  When the child clicks on the text “My First Adoption,” a cartoon named “Ms. Birdy” appears welcoming the child to the “Adoption Center.” Ms. Birdy asks the child to read and complete the end user license agreement (EULA).  Webkinz’s EULA is a typical legal masterpiece.  It contains text that is well beyond the reading comprehension level of a 6-11 years old, and yet, without suggesting that the child ask for parental assistance, “Ms. Birdy” asks the child to read and agree to the terms contained within the EULA.  Included in the terms is a paragraph, which says that any feedback provided to Danz on the site will become the intellectual property of Danz. I understand why Danz has this clause in the EULA, but I don’t feel that it is appropriate to expect that a child can read or understand a legal document intended for adults. I take issue with any website that expects a minor-aged child to click through and agree to a legal agreement without parental involvement – especially one that claims ownership of any intellectual property that the child submits in the form of feedback for the site.

After the child clicks “I agree” to the EULA (which they couldn’t possibly understand), Ms. Birdy speaks, telling the child that if s/he is under 9 years old, her/his parents should help her/him with registration.  The site then asks the child to submit personal information into the website: first name, date of birth, country of residence, and state. Although, it is not considered personally identifiable, this information does not appear to be transmitted securely, which is concerning to anyone illegally watching a family’s internet activity or a child predator stalking kids at the local library.

The child is then asked to create a username and password and submit the secret code on the tag of their Webkinz animal.  This code allows the child to play in “Webkinz World” for one year from the “date of adoption,” with the option to renew after that year for a fee.  All of this, is, of course, explained in the EULA, which is too complex for a child to understand.

While I am excited to see social media being used as an effective marketing tool, and I am pleased that DANZ complies with the Children’s Online Privacy Act (COPA), the Webkinz registration issues I mentioned highlight a larger issue of concern.  Companies are marketing to children, soliciting information from them on-line, and asking them to read legal agreements, which are beyond their level of comprehension.  It is difficult for parents to watch out for their kids in situations like this.  If a kid thinks it is okay to input their information onto, say, the Webkinz’s site without parental permission, what is to say that same child won’t think it is just as okay to give that information to a stranger via another website?  Nothing, unless their parents are involved.

One of the things that should be of growing concern to social media enthusiasts and child advocates alike is that there is currently no safe way to identify whether someone is a minor on-line.  Having a “second life” full of social media and networking on-line is becoming more and more common. In so many ways, anonymity is an accepted part of the Internet. This may hurt kids.  By this I mean, in real life, a child can’t go into a 7/11 to purchase porn, cigarettes, or booze, without showing appropriate age identification.  However, on-line, there is no such thing as an age identification. The Internet is largely anonymous.  As a result, there is no way to protect kids from seeing or interacting with inappropriate material, as there is in the non-anonymous “first life” – unless that material costs money and requires a credit card to purchase. A scary thought.

An interesting new report from Hitwise says that one in twenty web visits is now to the top social media websites.  In a recently published report entitled, “S-Commerce: Beyond MySpace and YouTube.  A new approach for brands to participate in social networking,” Boston based on-line market research firm, Compete Inc., says:

• More than two–thirds of on-line consumers visited a social networking site in June 2006;
  
• Social networks have grown 109% since January 2004 and are on pace to eclipse web titans Google and Yahoo
  
• On-line socialites spend a remarkable amount of time on social networking sites. Site usage, measured by pages viewed per member, has increased 414% since January 2004, nearly four–times faster than member growth.
• The average on-line socialite is 37 years old, just five years younger than the average adult Internet user.
• Annual discretionary income for on-line socialites is nearly $8,000, 20% higher than consumers who have not used a social networking site, and they spend nearly 25% of their disposable income on on-line purchases (versus 17% for non–socialites).
• Social networkers are early adopters; more than 40% of online socialites are the first among their colleagues to purchase new products or services, double the rate of non–socialites. They are also influential within their peer set; 37% of online socialites are regularly consulted by colleagues for their opinions on a topic, whereas only 15% of non–socialites claim this influence.

These findings are enough to get even the most skeptical and conventional marketers salivating.   The opportunity for marketers to engage not only with early adoptors but those with high disposible income and the ability to influence others is too great to miss.

For any of you that have read Malcom Gladwell’s book:

The Tipping Point: How Little Things Can Make a Big Difference

Malcolm Gladwell

Compete’s profile of the average social networker is awefully similar to what Gladwell describes as a “Maven”.  For those of you who haven’t read the book, “Maven” is the term Gladwell uses to describe members of the public who create the “Tipping Point” for great ideas and inspire trends to take route amongst the public.  Marketers strive to appeal to mavens because they are the catlysts to the success of products and ideas. They are well connected and talk about what they know, what they love, and what they detest, and their friends, family, and colleagues consider mavens “experts” and usually request and take their advice. In his book, Gladwell says that if you can reach out and appeal to the mavens of the world, your product has a much higher chance to succeed.

Compete’s study argues a similar point. I has coins the phrase “s-commerce” (short for “social commerce”) to describe the way that marketers use social networking sites to to their advantage.  According to Compete, s-commerce presents marketers with an opportunity to:

• “Research consumers, while they research you and your rivals
• Create a channel connect consumers and your brand
• Engage consumers in a conversation: listen, learn, and leverage.”
  

The study claims that the most successful players in s-commerce are utilizing one or more of the following strategies:

• “Branded Microsites
• Customer Forums
• Customer Ratings & Reviews”

This Compete study highlights the importance of going beyond on-line advertising on social networking sites and engaging with your consituents/potential customers.

In a Q&A published on Marketingshift yesterday, Jason Zajac, formerly of Palm, and now General Manager, Social Media at Yahoo highlights the same thing.  He talks about how Yahoo and its partners are successfully using social media competitions and advertising to engage with enthusiasts to generate enthusiasm for products.  It’s well worth a read.

People don’t like feeling like they’re being sold to. The beauty of social networking from a marketers perspective is that it offers the opportunity to “sell” to “mavens” by engaging, rather than annoying them with ads.  The most successful exploitation of social media to the marketers’ advantage will be the subtle opportunities to integrate with potential customers without making those prospective customers feel unfairly incroached upon.

As an aside: Yhoo just launched its new service, Mixd, which looks like it could be a winner – especially for Gen-Y-ers.   It allows users to mass text message their friends – organizing last-minute meet-ups, sharing pictures and videos from their mobile, and sharing memories of particular events on specific websites for those events. With the initial success of advertising on Flickr, it will be interesting to see whether Mixd becomes an avenue for Yahoo to generate revenue on more viral marketing – espcially for venues, events, etc.

On Tuesday, Verizon announced that it will be adding YouTube content to its V Cast line-up, as part of its V Cast Video Service. Yesterday (Nov 29), it announced that it in early December some (not all) Revver content will also be available on the same service.  Users will need to spend $15 a month to access these video services.

$15 seems expensive for the current V Cast video lineup – even with some Revver and You Tube clips.  Keep in mind, Verizon won’t be offering unlimited access to Revver and YouTube clips – just a select number of pre-selected clips.  If I were a Verizon customer, to spend 15 bucks a month, I’d expect to be accessing a whole lot of YouTube, Revver, and a TON of free cached TV shows and movies “on demand” and live streaming TV.  I’d also want to upload and download video from my phone to both services.  In the case of Revver- I’d want to be able to upload my videos from my mobile phone and cash-in on opportunities to make money in the process, which is part of Revver’s business model.  In addition to offering only partial YouTube and Revver content, there is no live TV with V Cast – only video clips and a limited number of shows.  Plus, V Cast only works on some of Verizon’s phones.

Paying $15 a month when you can use your phone as a modem on another mobile network, connecting it to my PC and accessing the entire internet of social media sites wirelessly for FREE sounds like a better bet.

Alternatively, MobiTV, which is available on Cingular in the US for $9.99/ month (also available via Sprint branded as Sprint TV in the US and on Orange in the UK), streams live (well, short delays) TV to your phone. Okay, so you can’t see videos from Revver or YouTube through MobiTV, but you can see the very latest news, weather, etc. Similarly, if you’re on other networks, there’s no shortage of cheap live TV options…. Vodafone offers a great TV service called Vodafone Live.  And another ISV called ROK offers 21 channels of mobile TV and SD cards with movie and TV content pre-loaded on them.

While sites like YouTube and many video search engines allow anyone to view videos, other sides like Grouper.com (based in Sausalito, CA and recently purchased by Sony) enable privacy settings.  I also like Grouper because it allows members to add video to any website or their MySpace, Facebook, Y!360, Friendster, and Blogger pages. Plus, with Grouper, users can control privacy settings on specific videos so that they can’t be seen by just anyone.

Privacy in video is important – not just because it allows users to control who sees them/ their video, but it also has the potential to give social media companies the ability to add revenue enhancing features to their sites and explore revenue based partnerships.  I was thinking about this the other day with singshot.com, which is kind of like American Idol, but available on-line.  Singshot provides karaoke-esque background instrumentals, and users sing along. The resulting tracks are posted on-line, and members of the public can vote on them and provide feedback.  The downside with the site is that there is NO VIDEO!  Depending on their subscriber numbers, if Singshot were to add video, they may have the potential for a whole new revenue model.  They could continue to let any member of the public listen to and vote on audio tracks, but they could also offer a premium (paid for subscription service), enabling only those who pay to see, vote and comment on video. Alternatively, they could charge performers a subscription fee (which could include the cost of a webcam) to post video in order to get feedback on style, dance routines, etc.

In addition, to allowing personal privacy, social media “privacy” features are attractive to Mobile Operators, who want to differentiate themselves from their competition. Web-based Independent Software Vendors (ISVs) in the social media space who strive for mobile enablement should be thinking carefully about privacy.  In my experience, mobile operators haven’t yet seen the potential of social media to increase revenues and user bases.  Therefore, it hasn’t been a huge push for mobile enabled social media.  This is changing.  As this change happens, one thing is almost certain, the social media ISVs that win the mobile game will have thought about privacy.  Mobile operators want to differentiate their service offerings from their competition, and in the social media world, one of the few ways to do that is by offering unique content.  Social media ISVs don’t want to make custom versions of their software for every OEM and Mobile operator out there because doing so limits the number of users that can interact, which defeats the usefuleness and viral spread of social media – especially social networking AND, it increases the amount of work that goes into software development and maintenance. I think the way to get around this is through privacy.

By having different privacy settings, users on different mobile networks would be able to see different premium content and features than those on other networks – say videos, etc..  This would mean that members of the “public” would still be able to access specific sites, but they may not be able to “see” or “do” certain “premium” things from their mobile phone without being a “subscriber” to a particular mobile operator or have a particular type of mobile phone.  I’m not advocating segmenting the market in this way, but doing so may be one way to grab the mobile market, which is difficult to penetrate without carrier buy-in.  In my experience, the only way to get mobile operator buy-in is by guarenteeing increased revenue (through increased subscribers and paid-for software/subscription opportunities).