Business Over Coffee » Facebook

One Year Later and @NewEgg is Still Winning

Zach — Mon, 13 Jun 2011 15:00:51 +0000

Every now and again, you see a business who is absolutely killing it. You watch as the momentum carries them into an enormous amount of success. They slowly go from David fighting against Goliath, to winning, to becoming Goliath themselves. This is a story of David becoming Goliath… and then forgetting where he came from.

David v. Goliath (who once was David)

As I was growing up, Best Buy was unquestionably a place you would beg to be dropped off while your mom visited the nearest clothing outlet or mall, as was often the case. You would spend hours walking through an endless display of mystical, amazing, and ‘necessary’ technology. Best Buy was one of these fabulous success stories eventually rising to the top of the consumer electronics industry (and for many good reasons).

They were, without a doubt, at the top of their class.

However, as I came of age there was a David in the making. By the time I was at college in 2006, there was this cool website where you could order some of that mystical technology you had put your hands on in middle school and dreamed of owning growing up… but there was a conflict of interests.

When you were younger, you always pictured yourself buying that laptop, that external hard drive, and that flash drive from Best Buy.

So naturally, you head to Best Buy. As you arrive you are greeted by some pretty un-helpful employees. You ask about the famous price match that you used to use as the reason for coming to Best Buy instead of say, Circuit City. They ask which store you found a better price, was it Circuit City? Target? Wal-Mart?

You respond, ‘Newegg has them for $50 less. That exact product.’ The employee looks back at you oddly… I wrote about this story in February of 2010 and pointed to the fact that if something didn’t change, companies like NewEgg and Amazon were certainly going to win that race (the original blog found here).

Like I said in the previous blog, I had mad respect for Best Buy growing up. I fully expected them to figure it out and make adjustments to be competitive with online companies. Well, a recent event has forever forced me to give up hope on Best Buy and officially claim NewEgg king. Best Buy clearly doesn’t get ‘it’ and on so many levels.

The New(Egg) King

If you don’t know about the fiasco involving Best Buy issuing a cease and desist to NewEgg… well you should. NewEgg made a pretty hilarious commercial, featured below:

First off, that is a pretty classic commercial. Secondly, it is of note that in marketing it is a general fact that as long as you are not the top dog in an industry or category, poking fun at the leader is an acceptable practice.

Best Buy issued a cease and desist to NewEgg after this commercial was met with much On Air and Internet success. What happens next is something that is probably going to be the stuff of social media legend. Instead of ignoring it or hiding it or actually removing the commercial, NewEgg posted the cease and desist documentation to their Facebook Fan Page! How crazy is that! They also posted their response to their Facebook and Twitter.

Between the two posts (of both documentations on Facebook), there were over 2,000 comments and 3400 ‘likes’ on Facebook. Not only that, but the views on the YouTube commercial spiked, were imbedded in blogs like this, and the whole story covered here and in like places. This is viral in about as many ways as is possible and this is only talking about Facebook. I saw countless people tweeting and retweeting this stuff.

So What?

There is no reason, at all, that Best Buy should be losing to NewEgg. Their brand was so deeply ingrained in my brain that I literally went to their store to ask for the price match before I would even consider buying from NewEgg. They had me, my money, my word of mouth, and my loyalty… and they squandered it.

They use their social media channels to blast you with sales, deals, and new products. All the while, NewEgg is using theirs to actually interact and connect with their followers.

But so what? Why do they care about my business or my loyalty? Don’t they have 3 million fans to NewEgg’s 600 thousand? Don’t they make more money than NewEgg?

Certainly, they do. But the game is changing and NewEgg understands the new rules. In fact, they are creating them.

Best Buy’s bottom line might look good right now, but we’ll see who still stands in 5 years. My bet’s on NewEgg. It’s a shame they are private, or I know what shares I would be buying… My money would gladly rest in the laurels of David.

Zach

P.S. NewEgg got a little crazy after those two postings. To further the ‘Geek On’ marketing campaign as featured in the video ad above, they gave away 5,000 shirts with the Geek On logo on it (also seen above). The first 5,000 customers to order it from their store got it absolutely free. At the same time, if you head over to the Best Buy fan page you can catch the online only, one day sale of that Flip Mino I bought from NewEgg last year…

Do Facebook Ads Work?

Zach — Wed, 20 Apr 2011 15:00:33 +0000

I’ve recently been playing with Facebook ads and the response I’ve seen is actually impressive. I ran two distinct ads for my gaming blog:

1. An ad about an upcoming convention we are hosting that showed up to current fans

2. An ad geared towards people who don’t yet play our games, but are friends with current fans

After a week or so, I had received 5 text messages from various friends saying something along the lines of,

“Hey, I just saw a Facebook ad for your site. It was legit.”

Facebook ads is actually pretty fantastic as far as targeting goes. You can get pretty specific about who is going to be seeing your ads. My only concern was whether or not people would actually see the ads on Facebook.

I know most of the time I don’t notice them, but I was curious who would see them. After getting the response I did from friends, it was pretty obvious that a fair number of people were seeing the ads. For those unfamiliar with Facebook Ads, there are three major sections when setting up an ad:

1. Design Your Ad

This section is pretty straightforward. You can see it here:

You can see that it gives a preview of your ad at the bottom. Don’t be afraid to tweak this until you are happy. In fact, I would recommend creating multiple campaigns and seeing what happens. Testing out images and wording can both affect the number of people who see and click your ad.

2. Targeting

For me, this is actually the most useful part. What is crazy is that regardless if you actually do a Facebook ad or not, this could be an amazing tool. As an example, I narrowed down this sample ad to:

- Males
- Ages 22-32
- Live in the U.S. and in Tulsa, Oklahoma
- And who have ‘Marketing’ listed as an interest on their profile

It estimates that the reach of my ad will be around 1,100 people (this box is shown to the right of the screen). Regardless of your topic, this could really be great for preliminary research on starting a business. You can get a feel for who is out there that you could potentially tap into and who you can market to once you actually do launch. The first time I used this tool I was playing with it for a few hours.

You can see the top part of #2 here:

3. Campaigns, Pricing and Scheduling

If you don’t know how Internet ads work, you can either pay per click or per impression. For most small businesses, I would highly recommend per click. IF you pay per click, viewers have to actually click on the ad before it does anything. If you pay per impression, your ad could appear on a page and even if they don’t see it you have to pay.

You can set up a time frame, daily budget, and bid price in this section. These are standard features for online advertising and are really nice to have. They also have a recommended bid. This is based on the competing ads and how many times they think your ad needs to show up to get clicked to hit your budget. Obviously something you can play with, but overall it’s a pretty good system.

The Results

My gaming blog has spent a little over $30 in advertising in the past month and if nothing else it was worth the text messages from my friends. Being serious, I’m still not sure the exact impact it had. We have gained 20 or so fans in that time, but how much was related to the ad I’m not sure.

I really think local businesses are going to be able to use this in interesting ways. The ability to market to just the friends of your fans is a big deal. I think online businesses and blogs can certainly use it as well, but it’s just a different form. If you haven’t experimented with this tool yet, I recommend heading over to the Facebook ads section and checking it out. Like I said previously, the targeting section is worth looking at if nothing else.

If you have had any experience with Facebook ads I’d love to hear about it. It’s a relatively new platform, so I’d be interested in stories of successes and failures on Facebook. And as always, questions or thoughts are more than welcome.

Zach

The Value of Facebook

Austin Spitzer — Fri, 18 Mar 2011 15:14:41 +0000

A few months ago someone asked me how Facebook was worth so much (some analysts say as much as $50 billion). They don’t sell anything and each account is free… so how can it be worth so much. Well let’s think in terms of advertising.

Currently, there are more than 500 million users on Facebook. That’s crazy when you think about it. If Facebook was a country it would be the third largest according to population size. If Zuckerberg wanted all 500 million of his users to see one message or one ad or anything along these lines, it could be done. Where else in history has this ever been possible?

How does the value of Facebook help individual businesses? Well think in terms of how you can reach these people. Before when you wanted to notify people of what was happening, you could either post something to your website (which may or may not be successful), send out an email (which may be seen as spam) or do other small things that may or may not work. Well, if you have a following on a tool such as Facebook, this is a lot easier.cespacespacespacespacespacespacespacespacespacespacespacespacespace

Not too long ago, Facebook passed Google for the most visited site in a particular month. More recently, they have fought back and forth for the leading position. Either way, number 1 or 2 isn’t bad when you’re talking about number of visits to your page on a global scale.

People are constantly checking their Facebook to see what’s happening, what their friends are doing, and what pages they are following are doing. So if you can build a following (tips here and here) you can take advantage of the top visited site in the world, with the largest network, and offer something to your customers that they might not know about if Facebook didn’t exist.

One great example is the ability to offer coupons through Facebook. Currently there is a feature where you can put a “special” on Facebook and customers click a link. A mobile UPC code comes up on your mobile device and the business can scan the deal in-store, eliminating the hassle of printing for the customer.

This is just the beginning. The possibilities are endless. As technology advances and consumers continue to flock to the web, stop viewing Facebook as just a way to connect with friends and start seeing it as a way to connect with your customers on a very different level.

How are you using social media to market to customers? Does it work?

Austin

Three Lessons from ‘The Social Network’ Movie

Zach — Fri, 01 Oct 2010 18:07:07 +0000

Last night I had the opportunity of going to a special sneak peak of The Social Network, a movie retelling the story of the founding of Facebook (based on the book Accidental Billionaires). The movie and book have been criticized by Facebook founder Mark Zuckerberg as not being completely accurate. Regardless of how accurate the film was, it was very insightful and very entertaining. While we may never know the full story behind the founding of the social phenomenon, we can most certainly take a few things away from this movie.

Product > Profit

Both Zuckerberg and Sean Parker (founder of Napster and 6% stakeholder in Facebook) are found countless times throughout the movie expressing how important putting the development of the product over ‘monetizing’ is. A lot of websites have been started loaded with banner ads, etc. without considering how exactly their tool or service is better than what’s currently available and how exactly it’s going to be useful in solving everyday problems for people. Even further, lots of times businesses are started without a clear idea of how they are going to be useful, which ultimately leads to failure. Focusing on making an amazing product is critical to long-term success.

Who Knows You?

Regardless of the accuracy of the movie, it is obvious from the facts that the $500,000 angel investment from Peter Thiel was critically important to the rapid growth of Facebook in 2004 and 2005. This investment in Facebook very likely only occurred (or at least only occurred as soon as it did) thanks to Sean Parker’s involvement. What was critical wasn’t that Sean Parker knew Thiel, it was that Thiel knew Sean Parker. In business and in life, often times certain things happen solely because people know people. It’s important to remember that’s it’s not so much about who you know, but rather about who knows you.

Legal Representation

One of the large controversies with Facebook is between Zuckerberg and Eduardo Saverin. Eduardo was a co-founder of Facebook and initially a 30% stakeholder. In the movie, it depicts him negotiating a contract (post $500,000 seed investment) that increases his holdings in the company to 34%. He even says himself that the increase is so that if the company needs more funding his shares can be diluted. He then signs the contract.

Several months later, he comes back to Facebook to find out he now owns only 0.03% of Facebook. The big issue here is that he didn’t have legal representation during these negotiations. He did think the lawyers were ‘on his side’, but regardless in a deal this big you must have legal representation.

While the movie depicts these events in this manner, I’d be interested to know what actually happened here. My main question is with a $500,000 seed investment and with hundreds of thousands of users, why would Saverin ever choose to go back to Harvard? In one sense, if he didn’t understand the magnitude of Facebook at this point, maybe he deserved to lose his stakes in the company for the lack of commitment.

In the end, he and Zuckerberg settled for an amount unknown to the public. Further, Saverin now has a 5% stake in Facebook worth approximately $1.1 billion.

Worth Seeing?

Absolutely. A great and suspenseful movie definitely worth seeing. Realize that the events in the movie might not be completely accurate, but nonetheless insightful and enjoyable.

Zach

Build a Following: The Art of Surprise

Zach — Fri, 02 Apr 2010 00:04:19 +0000

As I continue to pursue my education, to run a business, and to help others get their businesses off the ground, I can’t help but notice a very distinct similarity. It seems to me that all successful companies in some way or another have developed a following. This is a group of loyal customers (fans, etc.) that are very active in spreading around the brand name to potential customers, participating in anything you have to offer, and generally the ones who are first to sign up for that new product of yours. But how do you develop a following? How do you turn customers into supporters? I would like to take a look at a few examples from my own experience.

Duct Tape Marketing

A small business marketer by the name of John Jantsch from Kansas City produces a phenomenal amount of quality content. Last semester I had the privilege of driving to grad classes 3 times a week that were around 60 miles away. I used this drive time to listen to audiobooks and podcasts and one of my absolute favorites was the Duct Tape Marketing podcast. I was taking marketing management that semester and John really had a way of bringing the concepts that I was learning about in class to life.

One day on twitter he mentioned something about his book (Duct Tape Marketing) being available to another follower. At this point I regularly read his blog and listened to EVERY podcast, so I was already a fan. I wanted to show him my support by buying his book, so I sent him a direct message asking where I could purchase the book. His response was that he wanted to send me a signed copy… for free.

This is the kind of thing that I’m sure happens for John all the time. He’s got someone who enjoys his content and decides to interact with him online. Instead of doing what is expected of a good business owner, he goes completely over the top and over delivers, surprising me with a signed copy of his book. Let me tell you, everyone I talk to about marketing hears about that book and everyone who asks me about finding great web content gets sent to his site. He continued the growth of his following that day.

Team Covenant

Team Covenant is the gaming content site that I started in 2007. Since the beginning, I have stressed complete customer satisfaction. Early on I hadn’t really thought about what we could do to go above and beyond. During the second year of the business one of my business partners, Steven, had the idea for us to write a note and sign every single invoice that left our offices. This has paid off tremendously. Every time we go to a convention or a tournament somewhere, we have people reminding us of a joke we told about the products they were ordering or a tip we offered that really helped them. Things like this turn people from being your customer to being your supporter.

Last weekend I took a step back and looked at a few things on our sites and social networks. I realized that we had been disregarding our Facebook Page. We had 102 followers, yet the only thing that was active was that our RSS feed was being imported to the page. This made the fan page somewhat irrelevant. So I wanted to try something out. I posted a status update that announced we would be giving away a free miniature from one of the games well sell under 2 conditions:

1. The page for that miniature on our wiki had to be filled out
2. We had to have at least 3 customer reviews on the reviews section of the fanpage

Within 5 minutes there were 10 responses and 2 reviews. By the next day there were tons of replies to our update and 7 awesome reviews. Within the week, we had gone from 101 fans to 127. Something as simple as an update on the fan page and sending a $15 item out got an entire crowd of people excited and I bet you anything it turned a handful from customers to followers. You can check out the fan page here.

So What?

While sending a free book to everyone that contacts you is not something that all of us in our small businesses can do, it is something we can model our interactions with customers after. I catch myself all the time getting into the routine and then just doing the daily grind. This is partly to do with the fact that I am extremely busy so a routine makes everything possible. However, I would highly recommend taking a step back.

Look at what is going on in your business and see if there are small, non-costly ways to surprise your customers. There are countless ways to start turning your customers into followers. John is soon to release a book (The Referral Engine). You can imagine how easy it will sell due to the sheer number of people who are his following. Imagine if you did that with your business. What can you do to take it to the next level like John?

Zach

Leveraging Facebook: The Fan Page

Zach — Wed, 17 Mar 2010 20:33:25 +0000

Facebook is big… no, it’s enormous. Not just in number of users, but in popularity when it comes to ‘buzz’ going around about business. Everyone is talking about how critical it is to have a fanpage on facebook… What I’m wondering is just how critical is it? If you are like me, you have probably wondered why a manufacturer of steel parts would ever need a fan page or why a fireworks wholesaler would ever be on facebook. Honestly, I’ve wondered whether or not facebook was even for ANY b2b (business to business) company. Let’s start by figuring out just what a fanpage is.

The Fan Page

Direct from the facebook page about pages:

A Facebook Page is a public profile that enables you to share your business and products with Facebook users… When your fans interact with your Facebook Page, stories linking to your Page can go to their friends via News Feed. As these friends interact with your Page, News Feed keeps driving word-of-mouth to a wider circle of friends.

Now, I’m not going to walk you through how to set a page up or anything (as that is what the link above does), but there are some things to note about facebook and pages. Essentially, social media (including facebook, twitter, youtube, flickr, etc.) is the next generation of an RSS feed… or rather a less specific RSS feed. When considering how to use a facebook page, you have to really consider how and why people who you want to interact with use facebook.

The Feed

There are all kinds of reasons to use Facebook as a user. Let’s first ask the question what is the first thing a user sees when they login to facebook? That’s right, the news feed. This is where social media is like an RSS feed, except for the content of the feed contains the activity and interaction of your entire network. Due to pages, this also includes the interaction and activity of any business, non-profit, or organization. As an entrepreneur, as a student, as a friend, as a colleague, as a brother, as a cousin, as an uncle… insert role here… I have all kinds of content coming to my feed. Every day I am hit with updates from high school friends, college friends, family, businesses, and organizations.

Here is an example of a wonderful fanpage (QT of course):

Let’s go back to what I find as one of the most absurd examples: the manufacturer. Why would a manufacturer EVER need a fan page? Who is a fan of a manufacturing company? I think that the reason that this sounds so absurd is due to facebook’s choice of wording. Twitter uses a different word for the same function as fan: follower. When we are looking at it from this perspective, it makes a bit more sense. There might be people who want to follow (meaning to get updates from) a manufacturer.

Consider that the vast majority of people use facebook. From executives to teenagers. Might it be possible that there is a contingent of people that would care to get updates from a manufacturer? Might it be possible that there is a group of people interested to see pictures of the new equipment being installed or the latest product off the line? You bet there is.

So What?

As a business owner deciding how to use facebook, you’ve to figure out who your ideal fan / follower is. Once you know the type of person who would want updates from you, you can decide if giving these people updates would benefit your business. You can then make the decision whether or not to begin updating your fan page with content that will attract that type of user. The takeaway here is to remember that ‘fans’ are actually followers. You don’t have to be a rock star to make use out of the feed capability of facebook.

Another use of the fan page is to use it as a tool to stay up to date on whatever industry you operate within. Whether that means following a few other successful people, organizations, etc. in your industry to stay up to date on the competition and to get ideas on how and how not to use social media or if it simply means becoming fans of companies and people up and down stream in your sector to keep an eye on things. Facebook has all kinds of ways to leverage it’s feed system to provide a stream of useful content to it’s users. Sadly, most users have no idea how to use this leverage and instead spend their time playing farmtown (please stop sending me requests!).

Lastly, Facebook makes it ridiculously easy to advertise on their site to your core audience, specifically if you have a fan page. They allow you to limit who your ads are shown to based on location, age, gender, keywords on their profile, etc. Amazing how powerful this can be.

I’m curious, do you use facebook? If so how? Has it been successful? Until next time, keep asking so what!

Zach