Marketing spending for every sector (B2B and B2C products and services) has increased significantly compared to only six months ago, according to a recent report released by Duke University and the American Marketing Association, as indicated by the graph below. The study also reveals that, in the next five years alone, marketers will earmark one-fifths of their budgets for social.

Considering the precarious concept of tying social media directly to measurable results (in the sense that more FB fans = more conversions), why the move toward more moola?

Arguably, one notable trend might just have a lot do with why businesses are investing more in social. What is it? How consumers access information. Let’s take a brief look at this potential influencer on businesses banking their dough on social.

News Gathering Becomes a More Social Experience

Gone are the days when the vast majority of the general public counted on a singular source of news. The sound of the swift unfolding of an awkwardly large sheet of newsprint is not too uncommon these days, but it’s likely that the same person logs onto several other online platforms to find newsworthy morsels, and then publishes the most compelling bits by re-tweeting a link or sharing it via email.  The Pew Research Center recently revealed that: “…a full 33% of cell phone owners now access news on their cell phones; 28% of Web users report having customized their home page to include news from sources and on topics that particularly interest them; while 37% of Internet users report having contributed to the creation of news, commented about it, or disseminated it via postings on social media sites like Facebook or Twitter.”

What does this have to do with ecommerce? Suppose this fragmentation of content consumption is directly tied to “foraging and opportunism”, as some have argued. And, when looked at in terms of the current economic landscape in which consumers have little time or money to waste, perhaps the anchor that defines this foraging behavior is the tried and true “what’s in it for me” attitude.  Social that is relevant and speaks to the unique lifestyles, preferences, and needs of the consumer is a critical hallmark of what retailers are all trying to achieve and maintain: strong customer focus. Mission critical to consumers is finding information that they can use, and while their patterns of consumption can be more unpredictable than ever before, providing them with a wider range of social tools and touchpoints can make or break the sale.

PowerReviews Client Mike Moran, founder of CurrySimple, succinctly sums up this idea when speaking about the success of his own social strategy (the company uses Facebook, Twitter, and reviews, among other social tools) to drive more sales: “You have to understand that different consumers want to interact in different ways, so if you can have a non-overwhelming way of providing accessible and several methods of interaction, there is more potential to grabbing those eyeballs and converting them.”

Emarketer recently published a compelling article entitled: “What is the Future of Social Media?”, in which the author predicts that social media will soon see even more change than it has in recent years, and its importance will extend far beyond marketing to “nearly every aspect of a company’s business.” The author also states that in the future, the consumer voice will be a critical force not only in shaping social media, but in leading the way toward product innovation and design.

For many PowerReviews clients, the future is now.

In our newsletter, the PowerReviews Quarterly, we often have the opportunity to share cutting-edge stories on how our clients are finding tremendous value from user-generated content to drive product innovation and create a better customer experience.

In our last issue, our own Pehr Luedtke, CEO of PowerReviews, wrote about how some of our clients “Get Social with Reviews”. Here, he spotlighted Gardener’s Supply Company, whose newly designed Deluxe Tractor Scoot shows us how customer reviews can help evolve product design, that is, make good products even better. Customers contributed their insights on the design of the original model via online reviews and customer surveys, and their voices helped to build the newly improved version, pictured to the left.

And some of you might also remember our story on Wine Enthusiast’s ‘NFINITY line of wine cellars (also featured in an eBiz Profile in the Ecommerce Guide). The retailer inventoried all of the features that its customers were looking for and set out to develop a value-priced, next-generation product that incorporated the customer feedback received via online reviews. ‘NFINITY answered a huge unmet need in wine storage: multi-purpose shelving and dual temperature controls. The customer voice helped make ‘NFINITY the most successful product launch in Wine Enthusiast history.

If creating a better customer experience is a priority for you in 2010, then it starts with listening to the customer voice, and reviews play a critical role in getting there.

Don’t miss out! To hear more about the exciting ways PowerReviews clients leverage user-generated content to drive sales and improve customer experience, subscribe to our newsletter, the PowerReviews Quarterly.

Remember when everyone thought Social Media was a passing fad? You might even remember the video below, entitled “The Social Media Revolution,” that enlightened us with stats such as “If Facebook were a country…it would be the world’s 4^th largest,” and “Ashton Kutcher and Ellen DeGeneres have more Twitter followers than the entire population of Ireland, Norway, and Panama.”

And, now, as we get ready to enter the coming year, it’s important to note that more than 56% of media buyers say social network presence is a top priority in 2010 (source: 2010 Media Planning Intelligence Study).  Forrester Analyst Augie Ray says that 2010 is the year “social marketing gets serious,” remarking on the findings of a report released last Friday by Forrester Research. The report suggests a strong focus in 2010 on budgets and structure in social media marketing, in which “marketers will move out of test phase and treat Social Computing as a mature channel, setting budgets and establishing formal listening and measurement plans.”

Further, the 2010 Social Media Marketing Benchmark Report from MarketingSherpa reveals that about 25% of social media marketers have made it to the strategic phase of their effort: tying objectives to metrics.

Take a look at how marketers are defining their success metrics below.

Let’s bring it back to basics. In thinking about these phases and where your company falls, it helps to make sure all the fundamentals are taken care of. Here’s a list of key questions to keep top of mind to make sure your company has all bases covered when building your social media strategy into the new year. (source: ClickZ)

10-Step Social Media Strategy Checklist

1. What are we trying to accomplish? Are you looking for more leads, more direct sales, greater brand awareness, conversions, or brand engagement?
2. Why social media? Is your audience there? Do you want to build stronger relationships with customers and prospects? Tap into online word-of-mouth channels?
3. What kind of social media will help us best achieve our goals? Do you need to utilize social networking sites, blogs, real-time updates (e.g., Twitter), social news sites, media-sharing sites, review/directory sites, virtual worlds, or display ads on social media sites?
4. Are we prepared to let go of control of our brand, at least a little? Once you engage in a conversation, you have to give up control. Is your company willing to do that?
5. What will we do to encourage participation? What are you planning to do to drive people to your social media presence? And do you have the money to do it?
6. Who will maintain our social media presence? Do you have someone ready to commit a big chunk of time to maintaining your social media presence?
7. Do we have the resources to keep this up, or will this be a short campaign? Have you budgeted the resources to continue your social media presence beyond the fiscal year?
8. How does engaging users via social media integrate into our overall marketing/communications strategy? How does social media fit into what you’re trying to do in all your other channels, and how will you use those channels to support each other?
9. How do we measure success? What constitutes failure? Are you measuring views, followers, comments, or subscribers? What’s the threshold for your success metrics that takes them into success territory?
10. What will we do less of if we’re spending resources on social media? How will your overall goals be impacted by taking money away from other forms of advertising/marketing and moving it into social media?

What other questions are you asking yourself to ensure that your social marketing strategy is sound for 2010? We’d love to hear your thoughts.

You may not have heard about the DARPA Network Challenge that went on this last Saturday because there wasn’t much formal press during the contest.  But if anybody asked you to find a red balloon via Twitter or Facebook, then you were a part of it.

The challenge sounds easy:

“Be the first to submit the locations of 10 moored, 8-foot, red, weather balloons at 10 fixed locations in the continental United States. The balloons will be in readily accessible locations and visible from nearby roads.”

But if you stop to think about how big of a place this contest covers, it becomes an impossible task for a small team to execute. This, of course, was the test, and some kids from MIT knocked it out of the park.

It took them 9 hours to find all 10 balloons.

Take a look at the map below for the locations:

Here is the description of how they did it:

1. A person signs up via email on the following website: http://balloon.mit.edu/.
   • This person wins $2000 if they find a balloon.
2. Forward to your friends and get them to sign up.
   • You win $1000 if your immediate friend finds it.
3. Now all your friends forward to their friends.
   • If a friend’s friend finds it you get $500.
4. Repeat step 3 for everybody.
   • If a friend’s friend’s friend finds it you get $250.
5. The remaining $250 goes to charity.

See the image below for the “pyramid” scheme:

And now why it worked…

They had many viral elements in the equation:

a)      Great brand recognition – MIT, DARPA, The Red Balloon(s)

b)      Compelling incentives – Find a balloon to get cash, involve your friends and get more cash

c)      Low barriers – sign-up via web/email

d)     Multipliers – a personal link on sign-up to send to friends via any social mode

e)      Ego capital – “You might get on TV if I find a balloon!”

f)       Feel good moment – some prize money went to charity

Compare this with the “Army of Eyes” team.

They got part of it, but not all of it. They built the same idea to reach lots of people via Twitter / I-phone / Facebook and created an incentive with the money. But, the “Army of Eyes” didn’t win. Why not? They didn’t give people a mechanism or incentive to spread the contest. The more people who sign up, the more likely we are to win as a group, but the less likely we are to win as an individual. I bet that it would have worked eventually, but clearly, their army didn’t grow fast enough compared to MIT.

I realize that the defense agency doing a contest about that “will explore the roles the Internet and social networking play in the timely communication, wide-area team-building, and urgent mobilization required to solve broad-scope, time-critical problems” is probably not so sexy, so let’s bring it back to social commerce.

Today’s additional food for thought is that Google rolled out real time updates from Twitter. This is certainly closer to having commerce implications than a red balloon.

Watch this video and imagine the possibilities.

What do you do to mobilize your army of customers?  Is your company working in real time?

Domestic year-over-year online sales on Cyber Monday showed a 16% lift from last year, according to research by Coremetrics. Moreover, Black Friday internet spending revealed an uptick in the average dollar value that consumers spent per order by 35% year over year, led by apparel retailers. We also learned that consumers are buying more items per order than they did last year—by 18.3 percent.

These growing numbers in online spending are contrasted by shorter time spent online by consumers engaging in holiday shopping, however, as browsing sessions and number of page views decreased overall, while bounce rates increased significantly, up almost 40%.

So, increased online spending up + less time spent online = consumers know what they want, and if they don’t see it on a retailer’s site immediately—they’re gone—and onto the next site. It’s the curse of the online drive-by. The fact that bounce rates are up this holiday season strongly indicates that online shoppers are already armed with research before they step “foot” onto a retailer’s site.

Where did online shoppers go for that research? A Deloitte study surveyed 10000 consumers for its 24^th annual holiday-shopping survey and found that over half of respondents who admitted that they turn to social media during the holidays will use social networks to research gift ideas, check on wish lists, and hunt for discounts. And, with Shop.org research that reveals 40.6% of online retailers have revamped their sites with Customer ratings and reviews, it’s safe to say that a growing number of online shoppers are relying on peer level feedback to help them make informed purchase decisions on gifts.

PowerReviews clients know this, and many of them have taken advantage of our Social Navigation™ feature, which allows shoppers to view and search products sorted by customer-rated pros, cons, best uses and affinity groups.  Social Navigation™ enables shoppers to find products and narrow their selections using customer-defined features that not only matter to real users of the product, but are tested by people who actually own the product—it’s a built-in guide for gift givers and everyday shoppers alike.

Onlineshoes is committed to improving user experience on their site, and their use of Social Navigation™ clearly demonstrates this. Take a look at their holiday gift shop, where customers can browse products not only by categories such as popularity, brand, and newest, but they can also sort by highest-rated and type of gift recipient.

Holiday gift guides abound online, but a site that allows shoppers to browse gifts based on top-rated customer reviews combines ease and speed of research with more credibility through feedback from real people.  Social Navigation™ can provide holiday gift-giving inspiration for shoppers and revealing insights for retailers.

According to foodreference.com, Chris Hendrix holds the world record for eating crawfish. He ate 331 in 12 minutes.

The world record for eating corn on the cob is 33 1/2 ears in 12 minutes, held by Cookie Jarvis.

Oysters? Sonya Thomas ate 36 dozen oysters in 10 minutes.

Armed with hot wings and a prayer, a few brave team members of PowerReviews sought to shatter the world record for eating these atomic appetizers. Watch as sheer will and brazen bellies allowed them to rise to the challenge and test their physical limits.

Who reigned supreme in this challenge, you ask? Chuck the champion put down 54 wings in 20 minutes.

Take a look at the video below to find out how PowerReviews puts the hot back in wings.

Today we announced that the U.S. Patent & Trademark Office just issued a key patent to PowerReviews related to our tag-based review technology – specifically, the ability to present at-a-glance review summaries that make reviews more informative and easier to use. This is the first of seven patents we have filed around next-generation product reviews.

We believe that these innovations have enabled three major advances in social commerce:

• More informative, easier-to-use product reviews
• Social recommendations, based on a person’s lifestyle and intended uses
• Structured analytics, driving more actionable product and marketing insights

We look forward to bringing you further innovation that drives confidence and engagement for your customers and greater sales and customer loyalty for you.

For more information on our patent and the full press release, click here.

We’re both proud and honored to be able to share this news with you and look forward to bringing you further innovation in the years to come.

The Wall Street Journal featured a story yesterday that credited PowerReviews with helping ecommerce businesses boost customer review volume and build trust among online shoppers. The results: shoppers feel more comfortable buying online, while merchants are better able to identify problems with their products or services.

The article highlighted the success stories of PowerReviews clients drugstore.com and Diapers.com.

Drugstore.com’s 300% lift in review volume after implementing our software and launching a follow-up email campaign (a PowerReviews best practice) not only helped to lend credibility to their products, but garnered a legion of verified buyers, adding even more authenticity to the reviews. Layering on the lasting benefits of the follow-up email, drugstore.com CMO David Lonczak said that this practice helps customers receiving these requests in their inbox “feel important” and “increased our brand’s connection [to drugstore.com customers].”

Our AnswerBox solution also received an honorable mention–with a focus on its capability to help merchants “reap the benefits of input from consumers before a sale is made, by posting questions from people thinking about buying a product and the answers, including comments from other consumers.”

Bazaarvoice’s capability to link customer reviews to users’ Facebook profiles was also mentioned, reinforcing the viral nature of peer-level feedback online.  (Read about our own Facebook publishing feature – Social Megaphone.)

When consulting online reviews, a shopper’s level of comfort largely depends on feeling that sense of connection to the person making a review. Director of E-commerce Solutions at Diapers.com Josh Himwich remarks, “the most important recommender is going to be people who are in a very similar situation to yourself.” However, not all reviews solutions provide this crucial information.

The article pointed to Diapers.com’s use of our Affinity Reviews™ as a feature that sets PowerReviews apart from others in the industry. This PowerTags™ technology, unique to PowerReviews, captures structured customer feedback to help shoppers “distinguish one reviewer from another” (’first-time parent’ or ‘grandparent’), and is critical to helping to guide their purchases online.

The common denominator here: social commerce solutions that drive measurable results for businesses – through more sales and deeper customer relationships.

In the last year, my work has focused primarily around leveraging reviews and other user generated content before and after the validation stage of shopping – to attract new shoppers to their site, help shoppers sort through and find the right product for them and get more engaged with the Brand after they leave.  I wanted to share with you some of the key lessons I’ve learned in this process that will help you get the greatest sales uplift value from customer reviews.

1.  Maximize the number of credible reviews on your site

It’s no secret that the most important step to getting full leverage out of reviews is sending an automated email to invite customers back to write a review after a purchase – commonly called a post-transaction follow-up email.  This is the proven method to generate the most reviews on your site from a very credible source – your known customers!  In fact, one client recently increased reviews by 26 times by implementing the follow-up email.  Our system marks these reviews with a “Verified Buyer” badge, which creates trust among your customers.

We recommend that you send the follow-up email to all past purchasers from the previous 6 months prior to launching reviews on your product pages.  Within the first month, you should have 20% of your total SKUs have at least 1 review, with 100% review coverage for your top sellers. Further, as the Netshops Case Study shows, it’s the number of reviews per product that drives sales uplift, with 4-7 reviews per product being enough for 75% of shoppers to “have sufficient confidence to judge the product” (etailing group study of 1200 typical internet shoppers).

Did you know the follow-up email also ensures a more balanced and improved overall product rating?  Because the email captures reviews from a wider cross-section of customers, our customers have experienced a 15% increase in the average product rating across their site once they implemented the follow-up email!  If you need help, let us know.  We’ve created a tool to help you send the follow-up email.

2.  Make a great first impression

It’s one thing to collect customer reviews, but if you don’t display the reviews in a user friendly way, with an informative and easy-to-absorb review summary, you’re not getting the greatest sales impact from these reviews.  That’s why we created the next generation of our review summary, called Review Snapshot 2.0.  Initial tests showed an 18.3% reduction in product page bounce rate and a 16.7% increase in product page conversion.  Check out the Review Snapshot at Jelly Belly.

3.  Maximize SEO Benefit

Since the inception of our review solution, we’ve provided customers the ability to increase natural search traffic from customer review content via our SEO Mini-Site.  This solution leverages a set of SEO-optimized review landing pages, which drive traffic through the landing page to the product page.  Late last year, we launched our next generation SEO tool called – In-Line SEO(tm), which enables customer review content to be indexed directly on the product page itself.  Early customer review adopters, such as eBags, Newegg and Zappos, created home-grown review solutions to achieve the SEO benefit of reviews directly on the product page.  Now everyone else can benefit from this approach without having to manage the review display themselves (so you can easily adopt all the review enhancements in the future).  Check out Robert Chea’s blog post last week for more details.

4.  Take review content everywhere it can drive more sales

After you’ve spent the effort collecting credible, high quality reviews, make sure you leverage those reviews throughout your site and in your email marketing efforts.  In our case, the review content is “tag-based”, which means you can take it entirely new places in social merchandising and social marketing.

• On category pages and anywhere you list products, include the star ratings snippet.  Thirty days after adding ratings on the category page, Diapers.com experienced a 15% increase in product page views and a 14% increase in conversion.

• Highlight Top-Rated products on your site.  Check out REI’s Top-Rated products section on REI.com.  Utilizing our tags, you can also take it one step further by creating more personalized Top-Rated pages.  See Top-Rated women’s comfortable shoes for travel on OnlineShoes.com.

• Embrace Social Navigation to its fullest by adding ratings and review tags to your site navigation so people can narrow by “use” or “pro” or “lifestyle” (about me).  Check out Social Navigation implementations at sites such as OnlineShoes.com and Dick’s Sporting Goods.  For a very different Social Navigation interface, using tag clouds, check out Kiddicare.com.

• Add ratings and review tags to your email marketing campaigns.  By adding ratings to their email, Mountain Gear increased click-through by 8%, conversion by 17% and Average Order Value by 85%.  Impressive results!

5.  Take your online reviews offline

With the retail market still dominated by offline sales, it makes good business sense to bring ratings and reviews to your offline customers.  PowerReviews allows you to provide customer reviews in store with mobile applications that fully leverage the powerful Review Snapshot feature – high impact in a small form factor.  We also can suggest ways to maximize the display of customer reviews in store by leveraging both the ratings and the tags in store signage.

I encourage you to fully harness the amazing content your customers are creating for you every day.  These are just some of the ways you can do that, with clear wins for you and your customers.  As always, if you have any questions about the information shared, please contact your Account Manager.

What does this mean to a Shopify client?  We took an easy implementation and made it downright simple.  The usual integration process has three steps.  The first step is to upload a product feed.  With Shopify, we pull it directly from the Shopify platform with a click of a button.  The second step is to select the appropriate “write-a-review” forms for the product categories (that’s important because we have product-specific review forms with tags for the “pros”, “cons”, “best uses” and “reviewer profiles” that relate to each category).  Since this is very straightforward, we didn’t need to simply it.  The final step is to put our JavaScript code on their pages in order to display the review content.  With input from their CEO, Tobi Lütke, it was decided that their technically-savvy merchants would have the option to select exactly where to display their customer reviews.

Last, but definitely not least, we are about to launch a fully automated “Follow-Up Email” program with Shopify — automatically sending their clients’ customers an email 3-4 weeks after their purchase asking them to review the product.  Why is this a big deal?  As many of you know, a review solution on its own doesn’t guarantee success.  All of our ROI studies indicate that review volume is the primary driver of sales uplift, and follow-up email drives 95% of that review volume.  (one such ROI study is with Netshops)

So, welcome Shopify merchants to the PowerReviews family!  We are excited to partner with Jaded Pixel to offer you our award-winning review solution for Small and Medium-Sized Retailers fully integrated into your eCommerce Platform.