Context Is King: New Ideas Leverage Marketing Power of Social Networking

Maitreyi Krishnaswamy, head of FiOS TV widgets, Verizon Communications

Maitreyi Krishnaswamy, head of FiOS TV widgets, Verizon Communications

With Nielsen reporting that Americans are now averaging more than six hours per month on social networks, service providers, programmers and advertisers are developing ever more sophisticated ways to leverage online communities to their advantage.

In a market saturated with linear, VOD and over-the-top choices, it has become obvious to stakeholders that social networking is a vital tool in their efforts to build a buzz and a following, Seventy-nine percent of social networking users say they’d be likely to watch a show that a friend recommends via a site such as Facebook, according to a June survey by the Cable %26 Telecommunications Association for Marketing (CTAM). And one-third of social networkers say they found out about a new TV show from social networking.

“These findings underscore the potential ‘water cooler’ effect social networking sites can have, as well as the opportunities for television programmers and advertisers to interact with viewers in an even more meaningful way,” says CTAM president and CEO Char Beales.

“Facebook is Just Huge”

Some programmers say social networking has become central to building awareness for brand-new networks. One example is Halogen, a faith-based channel from The Inspiration Networks (INSP) that targets the 18-34 demographic.

In the months leading up to Halogen’s October 2009 launch, Halogen exploited social networking services such as Facebook and Twitter to great effect. Since then, Halogen has used social networking to solicit feedback for new programming. For example, its reality TV series “Jump Shipp” was green-lighted after it generated more than 32,000 online votes and promotional messages on social networking sites such as Facebook and Twitter.

“That was an important component in the decision to pick up ‘Jump Shipp,'” says Steve Knight, Halogen’s social media manager.

Why not focus on topically relevant social networking sites – such as GodTube – that are geared toward people seeking religious content? Many faith-based networks do, but secular sites such as YouTube and Twitter can be just as attractive to programmers, because they’re a way to reach people who otherwise wouldn’t channel surf through their cable provider’s religious block.

“Facebook is just huge,” Knight says. “It’s exploding. We see the majority of our interaction on our Facebook.”

Halogen’s experiences suggest that using social networking to promote programming can also directly benefit TV service providers. “They’ve had several people comment that they’ve found Halogen on social media platforms, and now they’re going to subscribe to their local cable provider so they can get the network,” says INSP spokesperson Kristina Hill.

Halogen’s experiences also suggest that social networking can be a faster, cheaper alternative to some of the traditional ways that faith-based networks have tried to build awareness, such as by sending collateral and people to houses of worship and youth groups – sometimes with the help of a local MSO or telco TV provider. Faith-based networks’ same basic social networking strategy could be applied to a wide variety of other demographics, such as Hispanics or women.

“It’s a very cost-effective medium to get out there,” Hill says.

Monetizing Networking

Comcast’s Tunerfish service is one recent example of how multichannel operators are looking to capitalize on consumer interest in social networking. Originally developed by Plaxo, which Comcast acquired in 2008, Tunerfish lets users post about network and over-the-top video content.

Multichannel providers benefit financially if social networking convinces consumers to sign up for video service or upgrade to a tier that carries the programming they’ve heard about. They also could benefit if social networking produces highly engaged audiences, which are particularly attractive to advertisers.

After all, social networking is the kind of activity that most users tend to engage in daily, if not hourly. That almost panicky sense of missing out on something is attractive to advertisers and programmers looking for new and highly effective ways to attract and retain customers and audiences.

“Why are content providers pumping so much money and effort into social media campaigns? It’s really about increasing the popularity and ratings of their programming,” says Maitreyi Krishnaswamy, Verizon Communications’ head of FiOS TV widgets. “With those ratings increased, they become prime spots for advertising. That’s what the whole effort is about.”

About a year ago, Verizon launched Facebook and Twitter widgets for FiOS TV, initially for tasks such as status updates and Tweeting about shows. Verizon says that social networking companies initially were skeptical about the value of tying into TV.

“We showed them how being contextual brings a lot of value, and they tell me that their e-mail inboxes and phones exploded about two weeks after we hit the market,” says Joe Ambeault, Verizon’s director of product development for video services. “Now there are very few places in the high-tech world where you can’t get Twitter and Facebook. All of the game consoles added them. I think TiVO is adding it. I’m proud to say the generally perceived as slow-to-move telcos were first to market.”

Verizon says its social networking strategy has now moved into a second phase, where there’s a tighter relationship between what’s on screen, what viewers can do and what programmers can offer.

“We’re working with our content providers,” Krishnaswamy says. “They’re coming to us for special hash tags on Twitter that promote specific programming and specific social media campaigns. It’s become a much more mature space.”

With maturity comes additional pressure to make money – no small feat, considering how social networking users tend to balk at sharing their personal information, habits and preferences with anyone outside of their circle.

“How do you monetize a massive installed base who doesn’t want to give up their personal information?” asks Michael Inouye, digital home industry analyst at ABI Research. “Naturally this is a very difficult question to answer because one, if it was easy there would be less value in pursuing it, and second, it would have already been solved.”

For social networks, one option is to leverage the large and growing number of companies, including programmers, that have accounts that consumers can friend.

“In these cases, the social network could charge a fee for additional services/customizability,” Inouye says. “The commercial associations also provide some insight into the users’ preferences. In other words, while many would consider scanning posts as a means to target advertising an invasion of privacy, leveraging their affiliations with, say, Ford Motor Company, is less intrusive.”

Service providers also could use social networking to sell VOD.

“An analog to this scenario could be the Xbox 360 and Netflix, where users can watch the same movie and chat, virtualizing the living room,” Inouye says. “While some might argue sharing a VOD rental could potentially cannibalize other rentals, it also could very well encourage friends/family currently outside of this network to join/subscribe.”

Staying Relevant

The more social networking apps, widgets and services they offer – not just to viewers, but also to programmers and advertisers – the more value MSOs and telco TV providers can deliver to the marketplace. In the process, multichannel providers reduce the chances that they’ll be marginalized as dumb pipes, with other companies grabbing all of the revenue from social-networking-enhanced advertising and marketing.

Of course, the power to leverage social networking to drive service penetration also poses a threat as a growing number of consumer electronics manufacturers build social networking widgets and apps into their TV sets and other devices, as in the case of Samsung’s play with Facebook and Twitter. But Verizon believes it has an advantage because apps and widgets built into TV sets don’t have awareness of content delivered by the operator over an RF or IP connection.

For example, suppose that while watching Ashton Kutcher on “The Tonight Show with Jay Leno” a Verizon customer has the on-screen option of signing up for Kutcher’s Twitter feed. When switching to a shopping channel, that customer’s on-screen social networking apps could automatically switch to, say, a Twitter feed about what’s on sale at that moment.

“That’s something that Yahoo widgets or other widgets in that space cannot offer because they’re not intelligent enough to know what’s happening in the broadcast channel,” says Verizon’s Krishnaswamy.

One way that a service provider can monetize that intelligence is by delivering advertising and marketing messages based on what each customer is watching. For example, a reality show could use a social networking widget to promote that it will be in the viewer’s town later that month looking for the next season’s contestants.

“[That’s] opposed to leaving to chance and letting the customer discover [that information] on their own when they go online,” Krishnaswamy says. “We’re really starting to see this as a serious business in terms of offering promoted Tweets and qualified leads.”

Leveraging Mobile Devices

Even so, Krishnaswamy acknowledges that TV-set-based apps and widgets eventually could add the ability to detect what’s on screen, reducing the service provider advantage to some extent. Set-based apps and widgets also could capitalize on the growing selection of over-the-top programming, where the service provider might have little or no insight into what’s on the TV screen at a particular moment.

Set-top boxes (STBs) also play a decisive role in how service providers fend off not only companies such as Google and Yahoo, but also their multichannel competitors. For example, Verizon’s STBs have both RF and IP connections, giving the company a potential edge over MSOs whose boxes support only RF. (Verizon’s STBs also communicate directly with social networking services, such as Twitter, and with programmers.)

STBs also could be a way to support devices that provide a better social networking user experience. For example, if the STB has built-in Wi-Fi, it could use that to connect to a social networking app on the customer’s smartphone or tablet. A similar strategy is to use the customer’s Wi-Fi router instead of building that functionality and its costs into STBs.

Either way, the Wi-Fi approach is more effective from an adoption standpoint than if the social networking apps worked only with a standard TV remote, and it’s more cost-effective than if the operator deeply subsidized a special remote control with a QWERTY keyboard to facilitate typing a Tweet or a wall post. The Wi-Fi strategy also gets a boost from the fact that for most consumers, their smartphone is already their device of choice for any type of social networking. By some estimates, more than 60 percent of Web pages served to smartphones are from social networking sites.

After initial feedback showed that consumers don’t like to use standard remotes for social networking, Verizon created FiOS Mobile Remote, a smartphone app. The operator is in the midst of expanding the app to work on more than just Verizon Wireless smartphones.

“We’re going to be launching on iPhone and iPad,” Krishnaswamy says.

Pure Mobile Plays

Smartphones and 3G-equipped tablets such as the iPad also open the door for other types of video-centric social networking services. One example is theChanner, a new app for Android and Apple devices that overlays video feeds with a social networking interface. That all-in-one design is supposed to make it more convenient for users to find and share content with other social networkers.

For the most part, theChanner doesn’t compete directly with MSOs and telco TV providers because the majority of its 100-plus channels aren’t also found on multichannel systems.

“We are largely dealing with TV networks at this point who are streaming their content live to the Internet,” says Nina Alastruey, theChanner’s CEO. “theChanner helps the TV networks expand their audience reach. They can now apply the same social networking promotions they are currently doing to a mobile audience, and create new promotions with our assistance.

“By streaming their content over the Internet, a TV network will be able to reach the audience through a multitude of devices: TVs, computers, tablets and mobile phones. We enable the last two options.”

For programmers that don’t already stream, theChanner also provides a turnkey way to do so while launching a mobile social networking offering.

“We will assist them in reaching the mobile audience by rendering their content into our platform,” Alastruey says. “These networks need to explore ways to monetize their content, and we are a key to enabling them to achieve that.”

The timing certainly is right.

“Social networking is undergoing the rather methodical process of defining business models and exploring new opportunities to generate revenue,” says ABI’s Inouye. “In other words, while the initial goal was to ramp up and amass as many users as possible, often to attract venture funding or acquisitions, the time has come – and for some, gone – to monetize these services.”