MARKETING CONSULTANCY: Benefits of networking - Web communities are providing a cost-effective opportunity for marketers, Claire Irvin discovers

As the success of viral marketing has proved, linking customers is a great way of letting them refer each other to a product, a web site or a company with a reputation for good service.

As the success of viral marketing has proved, linking customers is a great way of letting them refer each other to a product, a web site or a company with a reputation for good service.

Marketing consultants are encouraging their clients to build communities of people that share an affinity toward a certain brand, and the best way of doing this could be via the net. Formerly known for its isolating and anti-social effect, the internet is proving to be a vital marketing tool for chatrooms and discussion forums.

Attracting consumers online and continually coming up with new ideas and content for a site is time consuming and expensive, yet until recently has been the basis of most web sites. A cost-effective alternative seems the logical way forward.

'A community site typically caters for a particular interest group and focuses around a series of online noticeboards and chatrooms,' explains independent web consultant Philip Gibson. 'These enable the members to generate both ideas and content. Not only does this provide them with a high level of interactivity, it also builds a genuine sense of ownership and loyalty.'

Many organisations are linking to like-minded web sites to maximise their offering and their potential audience. Planit4kids, for example, is a site offering parents cost-effective ideas for entertaining bored offspring during school holidays and weekends. It has created links with partners including charities, schools and magazines, as well as internet service providers and web portals.



Right place, right time

'Companies benefit commercially from setting up web communities, catching consumers at an appropriate time and adding credibility by association to their brands,' says marketing manager Katja Hug-Ayling.

'The main commercial benefit is more efficient use of your budget,' she says. 'Instead of paying for everything you do, web partners enable you to mutually benefit from exposure on the back of someone else's work. It's a cleverer way of doing business.'

It's also an approach that is particularly pertinent in the online world, where extravagant marketing has contributed to the demise of many high-profile dotcoms. Huge ad spend calls for constant replenishing, which many investors are wary of.

'A direct, simple, targeted approach, through a portal the consumer is comfortable with, can dramatically reduce your customer acquisition costs,' explains Adam Wylie, managing partner of new media agency 23rd.

'Above-the-line hasn't had its day but, in this case, there are better ways of marketing,' he adds.

Web communities also enable businesses to catch consumers when they are at their most receptive.

'The internet works differently from the real world,' explains Hug-Ayling.

'Even if you hit the right note with your offline advertising, you can't assume that someone will then look up your web site later. Instead, you need to catch people in the right frame of mind - when they are visiting other web sites.'

Hannah Roberts, of web consultancy Brandnet, cites Johnson & Johnson as an effective builder of online loyalty. Registration at www.

huggiesclub.com requires parents to fill in their baby's birth date, effectively allowing Johnson & Johnson to track the infant from the cradle right through to adulthood.

Established brands can also add credibility to partner brands. For example, visitors to Kimberly Clark's Huggies Mother and Baby Club are given a link to Planit4kids.com through a brand they have already embraced, so they are unlikely to see the as exploitative marketing.

'In our case, the combined benefit to Planit4kids.com has been more traffic, e-commerce, increased brand saliency and consumer goodwill,' says Hug-Ayling.



Come back soon

But whether consumers return to sites to spend their money is a

contentious issue. Do frequent visitors really provide concrete returns or do they simply boost the web site's hit rate?

'Corporate sites are still pretty unfriendly,' Wylie says. 'To make a site work, you need content to drive it, a community and functionality.

If you can develop the correct set, it will be of real use to the consumer, will bring people together offline and will act as a 'shop window' or a portal into the brand.'

While many businesses are still failing to make the most of potentially lucrative offline opportunities, there are others, such as Nokia, which are reaping the benefits.

The electronics giant has built an offline community through 'the Nokia game' (www.nokiagame.

com), which invites anyone with any brand of mobile phone to take part by piecing together clues given out across media such as WAP, the internet, TV and radio. The Nokia game has created an offline community of 'players' and provided a brand and relationship building opportunity, linking all players to Nokia through the web site and the Nokia club.

But does this sort of activity translate into pounds and pence? Web agency Enigma has built communities for brands including i-FM, Unique You and Student Watchout. In the year since the i-FM site, for the facilities management sector, was launched, hits per month have increased from 60,000 to 600,000. Updated daily, the site provides an archive of trade information, a discussion forum and the results of its own interactive weekly surveys.

It is also set to offer an online exchange for people to search for services.



From B2B to B2C

'Any community has one leading portal,' explains Enigma's managing director, David Emanuel. 'We understood the issues surrounding the industry. We built up good relations with the trade magazines, then with the industry associations and exhibition companies, none of whom could support a rival site individually. So, by ring-fencing our marketing, we have made it difficult for other organisations to get a look in.'

When Enigma created Student Watchout, an online insurance service for students, it applied business to business (B2B) principles to a business to consumer (B2C) marketplace.

Treating students as a niche market, the site brought together several insurance providers and a range of services to a market traditionally dominated by one on-campus provider Endsleigh. By creating a web portal, Enigma gave students ready access to other suppliers that did not have physical presence on campus.

'Most organisations look for a medium- to long-term investment in their sites,' says Emanuel. 'We have seen significant return within 12 months on the i-FM site. Watchout had good returns within an unprecedented six months. But if you spend lots on marketing, obviously your return will be much lower.'

Paul Griffith, commercial director of net consultancy E-Marketing, warns: 'The return on site investment can be difficult to disengage from the overall company profit. You can track loyalty in terms of how often people are returning to the site, but turning that into pounds per audience is very difficult.'



Building loyalty online

For some web sites, aiming to add value to their offering has turned into a profitable new business proposition. When pet insurance provider PetPlan's web site was first launched 18 months ago, the company was selling just 10 to 12 policies a month online. Now this figure has risen to over 400 policies a month.

'Whereas most insurance companies can retain clients through no-claims bonuses, we need to find other ways to build loyalty,' says Petplan spokeswomen Alison Andrews.

As well as accessing information on insurance services, petplan.com users can e-mail vets, join in discussion forums and look up tips on animal nutrition and care at any time. 'This is particularly useful for time-pressed people who might find call centre hours inconvenient,' says Andrews.

'It also enables us to build communications with our existing clients as well as attracting new ones.'

Web communities make the process of customer retention and acquisition almost organic, with consumers happily volunteering information that has previously cost organisations dearly to gather.

E-marketing has recently launched a nightclub-themed web site for dance radio station Atlantic 252. The site is set up like a nightclub with features including the 'DJ Booth', where visitors can e-mail music requests, vote for their favourite tracks and give opinions.

'Within two weeks of the site going live, it had received over 300 comments from people giving ideas for site content - which is a marketer's dream.

Atlantic was being fed with information straight from the mouths of its target audience.' says Griffith.

Brand ownership and a site's 'stickiness' are central to its success.

But how you achieve this will depend on who your customers are and what your brand is.

LeisureDistrict.net offers a wide range of online leisure activities and boasts more than 2.7 million users.

'People like to feel they are part of something,' says Steve Laitman, chief executive of e-district.net and creator of LeisureDistrict.net.

'We have built an environment where the user becomes involved with the content - for example, keeping virtual pets alive and happy, watering flowers to keep them alive, solving brain teasers, competing against other users and making new friends.'

The personal touch is all-important, Laitman continues: 'Our users can contact us online and because we answer each message on a personal basis and listen to everyone, they feel part of the community.'

Gibson was instrumental in setting up www.expertgardener.com with Alan Titchmarsh and Charlie Dimmock. The site offers its members daily news bulletins, a magazine and a library. At its heart are five communities, each focusing on a particular style of gardening. In its first six months, with little advertising, it has seen over 20,000 visitors sign up as members.

'For me, the most difficult and rewarding aspect was getting to grips with what makes an online community tick,' says Gibson. 'They don't happen by themselves. To get off the ground, an online community needs to be 'seeded'. And to flourish, it needs to be hosted.'

A team of about 20 gardeners, based around the UK, now work as site 'hosts' on a part-time basis.



Give-and-take

Web communities clearly offer companies the opportunity to tap into a wealth of customer data - but it must be done with care.

'Consumers are wary of giving away too much information but they realise there is a trade-off,' says 23rd's Wylie. 'If they are well targeted, and receive the content they want, they will be prepared to make the trade.

But everyone involved must be crystal clear about who has, or will have, the information.'

Members of the Planit4kids.com voluntary members' club, for example, are asked for basic information, such as their email address, the number and age of their children, and their postcode. The company pledges that this information will only be used for the benefit of the user and will not be passed on to other organisations.

'If data is used responsibly in this way, consumers understand the benefits of sharing their details - but it is important not to ask for too much,' says Hug-Ayling.

Unique You, another site created by Enigma, offers advice for people who are going through a divorce. Instead of asking for user details, it encourages visitors to pass on the details of the site to friends, thus creating a community through its visitors.

The inherent threat of web site troublemakers, or 'cyber-terrorists', looms large. But, say experts, it is simply a matter of carefully monitoring your site. 'If you ignore troublemakers, they generally go away,' says Gibson. 'On occasion, we have had to withdraw membership from expertgardener.

com. But we decided not to install software to auto-delete expletives because we didn't want to become a nanny state.'

Web communities have even spawned a new marketing category - consumer to consumer (C2C).

Pampers, for example, has incorporated a C2C element in its web site with a chat and advice section for parents to share knowledge and information.

It has been estimated that in the US alone, the online C2C market will grow from dollars 200m (pounds 140.5m) in 1999 to dollars 3bn (pounds 2.1bn) in 2001.

Swaphut.com was launched in the UK three months ago. With a definite C2C bent, the site allows the consumer to become the retailer, inviting teenagers to exchange unwanted belongings. Co-founders Dr Anish Grewal and Vivek Sharma have resisted above-the-line advertising and are opting for strategic marketing. 'We get hits through traffic attracted to the site and we have several active partnerships with established companies in the pipeline,' says Grewal.

'We believe C2C is the true power of the internet, so we see no need to go offline with it. It is more difficult for B2C companies to work efficiently on the net as they are competing with offline businesses.'



SETTING UP A WEB COMMUNITY

Identify business partners by:

- analysing key players with a high profile and innovative reputation in different market sectors that are relevant to your audience

- brainstorming the implications of your current strategy and seeking partners up-front who can contribute to delivering it

- reviewing the interests and trends set by key organisations, including blue chip companies and trade publications

- using personal and business contacts

- monitoring competitor activity



Implement partnerships by:

- using top legal input from the start

- allowing for two phases - a loose agreement to start with, which can be implemented quickly, then a more far-reaching, fully-contractual agreement



Assess web partners' suitability on the basis of:

- the nature of their users - how closely do they match your target consumer?

- the number of their users: if their audience is more generic, do they have a large customer base and therefore the potential to deliver high traffic figures?

- the internet usage habits of their audience: which offline partners have a higher proportion of internet users than others?

- their business objectives and their fit with, and potential contribution to, your business objectives

- their ability to underpin your competitive advantage

- their track record of achievement and forging successful partnerships with others.

Source: Planit4kids.com



FABULOUS BAKIN' BOYS

Brand-building in the highly competitive snacks market is not easy, especially for smaller companies with limited ad spend. Muffin manufacturer The Fabulous Bakin' Boys turned to E-Marketing to raise the profile of its product as a fun 'brand with attitude' via the web, with no above-the-line advertising. The strategy contributed to year-on-year sales growth of over 55%.

Its first web site was launched in 1997. 'Our consumers love using it to communicate with us,' says managing director Tom Russell. 'In nine years, we probably had 30 letters in total from our customers. As soon as people were able to communicate via the site, we received more than 30 e-mails a week.'

Eighteen months after the launch of the first site, E-Marketing worked on a new concept, launched in June 1999, aimed at harnessing the power of e-mail. In addition to product and nutrition information, it features a library of more than 1,000 jokes and branded online games. Site visitors can forward jokes or games to their friends by e-mail, all automatically branded with the message 'brought to you by The Fabulous Bakin' Boys' and carrying a direct link to the site.

According to Russell, the site (www.bakinboys.co.uk) has had a major impact on consumer awareness. The company builds a profile of its consumers' market demographics and buying habits via an online questionnaire, and online customer comments have also contributed to new product development, such as a range of low-fat muffins.

Traffic to the site has now stabilised at over 1,000 user sessions (or 6,400 page views) each week, and the company predicts that over the next year, traffic will increase by up to a further 50%.



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