Last week, I have suggested that contests and giveaways may be one of the most effective ways to build leads and drive signups for new daily deal websites. While it is becoming an increasingly common tactic, running your own contest or giveaway can still help you collect email addresses, Facebook fans, and Twitter followers, if you can sufficiently differentiate your marketing campaign to make it engaging and inherently viral (we will talk more about virality). Today we should be focusing on sweepstakes/lucky draw contests, because they are relatively cheap to run and easy to manage; plus, they are also the most eye-catching form of contest and most easily understandable at first glance.

The keys to running a successful sweepstakes/lucky draw contest are 1) a prize people would otherwise purchase with money if not presented with an opportunity to win it for free and 2) rules and parameters that are in line with your business objective – to drive signups and enhance brand awareness. Without further ado, let us get down to the best practices:

1. Big prize(s) with smaller chances to win trumps small prize(s) with bigger chances to win
If I offered you two opportunities: a 5% chance to win $10 or a 50% chance to win $1, which would you choose? Most people would likely go for the former (do not just take my word for it – Wikipedia says so too), because the initial investments for both cases are equal (no risk) yet the potential returns are much bigger in the former; the risk-reward ratio is much lower in the former. Big prizes are always more eye-catching anyway – in a contest, the magnitude of the prize is the focal point, the odds of winning are often treated as some form of fine print, thus big prizes encourage both sharing and participation. If you are unconvinced with the big-prizes-small-odds approach, you can certainly try the hybrid approach.

2. Have a built-in viral loop for your contest
To run a successful sweepstakes/lucky draw contest requires mass participation, and mass participation is only possible if participants themselves are incentivized to share your contest with others, be it directly or indirectly. All online contests and related marketing gimmicks require some form of viral marketing to keep awareness high after the initial marketing push by the contest purveyor. One popular method that we have come across in the network of daily deal websites that we host is to tie draw events to a minimum number of participants or Facebook Likes: e.g. “10 iPhone 4Ss to be given out. There will be 1 draw for each 100 participants (or 100 fans on our Facebook Page) achieved before the deadline. Limited to the first 1,000 participants only!” Participants have the incentive to share contest to increase the chances of a next draw event, driving signups and participation.

3. Facebook Likes as a method of participation
A related tactic that you can use with tactic 2. above is to say that winners for your big prize will be drawn from the pool of last 1,000 people who have Liked your Facebook Page (a chronological order of people who Liked your Facebook Page is visible from your administrative dashboard of your Facebook Page). This parameter will ensure that sharing is compulsory and that sharing and participation go hand-in-hand. An added bonus is that some people may be perceptive enough to Like and Unlike your Page frequently in order to always end up as one of the latest fans, ensuring that a post about your Facebook Page stays fresh and high up on those people’s friends’ News Feeds.

4. Conduct draws at regular intervals
Instead of saying that a draw will be conducted at random once a certain number of participants or Facebook Likes is reached, say that a draw will be conducted for the exact 100th, 200th, 500th, or 1,000th participant or Facebook fan. Crafting the rule this way may not encourage participants to join in when they are far from the draw interval, but it will definitely drive people to share your contest and your brand so that they have a chance at using other participants to get closer to the draw interval, at which point they themselves would opportunistically put in an entry. However, when hundreds or thousands of people think this way, interesting things happen.

5. “Last participant at closing time wins the grand prize”
This parameter should only apply to sweepstakes/lucky draw contests where multiple participations are allowed. Of course, you would need to craft the rules in such a way that their last entry can only count if it is separated from their second last entry by, say, 5 entries not belonging to them – otherwise, their last entry will be bypassed in favor of the second last entry that fulfills the rule. This rule will not only increase participation but also somewhat force sharing.

As with all marketing tactics out there, your mileage may vary. You should be able to craft contests for your intended or existing audience to match their expected behaviors in terms of the prizes that they care about, their level of adventure, their Facebook savvy, their Twitter savvy, etc. Of course, never forget that you need to give an initial marketing push to get the word out on your newly-made contests; nobody can participate unless people know about it. Give these tactics a try today!

P.S. If you want to start a daily deal website and conduct a sweepstakes/lucky draw contest right away to build leads, you can sign up for a free, no-credit-card-required, 15-day free trial account at our daily deal platform: http://www.zuupy.com. Have a good weekend!

After more than a year of implementation, the Facebook Like button has pretty much proven itself to be a viable social media marketing tool for online content providers. TechCrunch recently reported that, despite having much less fans on their Facebook account than on their Twitter account, Facebook is sending way more traffic than Twitter (source). Perhaps 140-character limits, shortened links, and lack of multimedia support are not exactly the best conditions that enable effective social media sharing; sharing a la Facebook seems to drive greater engagement after all.

It is reports like this that encourages content providers to focus more on getting people to share their content on Facebook rather than on Twitter; one could argue that a whole art focused on how to get Facebook Likes has emerged. Fan-gating is a popular technique, while other businesses use contests where their fans can upload their own content to be voted on by others – of course, to vote on any piece of content, you have to Like the Facebook Page first. Fashion/apparel brand companies like to run simple contests where their fans can upload pictures of themselves donning clothes of said brand, and whoever garners the most Likes by a closing date wins some vouchers. Participants would naturally pester their friends to Like their picture; however, to Like a picture on a Facebook Page, you need to Like the Facebook Page itself first. Loef recently ran one such gimmick.

Another increasingly popular method is a modified, cliffhanger version of fan-gating. Instead of asking for visitors to Like a Facebook Page or web page upfront, content providers lure people in first by providing great content upfront, building up a story up to a certain semi-climatic point, and then asking for a Like/share upon reaching a cliffhanger. Chinese short story websites and blogs are particularly fond of using this method. The following picture shows an example that helped this simple Chinese short story garner almost 200,000 Likes:

Do you know of any other novel way of garnering Facebook Likes? Or have you tried some methods of your own, which worked or did not work (like ours)? Let us hear about it in the comments section below.

In the past, we have used the Facebook Like button as a baked-in promotional mechanism to drive referral marketing of deals, and that formed the core functionality of our product (see screenshot below for an idea of how we did it with our SaaS group buying solution for online retailers). After nearly 6 months of collecting data and experimenting with the Facebook Open Graph API and plug-ins, we have decided once again to use Facebook like how every other business uses it – as an independent, bolt-on, add-on sharing mechanism, and nothing more. We will no longer be giving Facebook VIP status in our product.

Here are some problems with Facebook:

1. The Facebook API changes too often. The plug-ins are buggy, the API changes without notice rather often, and there are too many rules constraining how developers can use the API in building applications. As a platform, it is unstable, period. It may be a good idea to use Facebook as a platform for consumer applications, but it might have been a mistake for us to use Facebook as a platform for an ecommerce application.

2. Facebook is overhyped. Personally, even though Facebook actually has 600 million active users, developers still tend to overestimate how many people actually 1) have a Facebook account, 2) use it regularly, and 3) are comfortable using it as a third-party authentication method. Many consumers across different niche markets are simply not familiar with how Facebook works; developing Facebook-only applications marginalizes this segment of users, who may be substantial in number.

3. Facebook is still mainly social for most, and exclusively social for some. We are still not completely convinced that Facebook can be an effective platform for ecommerce or any commercial activity, i.e. does anyone even care about commercial offerings on Facebook? Low sales on so-called f-commerce platforms seem to support our view. Some businesses may be too quick to assume that, just because Facebook works for games, it will work for ecommerce. Of all the new variants of ecommerce, the one that might actually take off is, in our view, mobile commerce.

So which direction are we now taking with our product, Zuupy CrowdDeals? We are now focused on point-of-sale transactions, working more like a sales tool that facilitates group buying transactions and processes, leaving the marketing of deals largely to our customers (online retailers themselves). We hope that this small product pivot would serve as a better fit to what the market wants. After all, Likes are ultimately useless. Sales are what matters, and that is what we aim to bring to our customers from here on.

A recent Harvard Business School study has found that, if your customers are heavy social media users, they are more likely to refrain from making purchases as a result of encountering commercial offerings on social media, particularly those from friends. The results are succinctly summarized in this article.

The interesting question is obviously why. According to the study report, heavy social media users are “well connected, high status members” who are less likely to be positively influenced by the purchase behaviour of people in their network. Instead, they are likely to be influencers themselves and essentially see no reason in following their followers. In fact, they would probably actively go against what their so-called followers advocate, as it is unbecoming that a leader would want to look to her followers for direction, even when it concerns something trivial like online shopping. Pride seems to be the underlying reason.

The study did not authoritatively pinpoint the reason for the negative effect of social media on the purchase behaviour of heavy social media users but merely made speculations as to the explanation behind the results. What is relevant, however, is that more impressions and more buzz do not necessarily lead to an increase in positive engagement. There is also the possibility that heavy social media users are just not active purchasers in general, i.e. the negative engagement observed is not caused by their being heavy social media users. The results can truly be interpreted in many ways.

Does this mean that, if your customer base comprises heavy social media users, social commerce may be a futile investment? It is perhaps so, but if your customer base consists primarily of influencers by definition, there may be an opportunity to use them as a conduit to reach a wider audience, driving an increase in awareness and reach. So while their own purchase tendencies may be suppressed, their ability to affect the purchase tendencies of others may not be diluted.

After all, you do not have to purchase an offering yourself to (want to) promote it to your friends. What is your take?

In the past, we have chastised the idea of selling on Facebook (f-commerce): here and here. Recently, there have been several reports that social commerce may just be a bunch of hype, and, more relevantly, there are now compelling sales data pointing towards the infeasibility of Facebook as a platform for commerce. Forrester Research, Inc. released its latest report on the so-called f-commerce phenomenon, which has been neatly summarized in this SocialCommerceToday.com article.

Simply put, the results are pathetic; nobody has made any major money on Facebook to make it a worthwhile customer acquisition channel to consider. Worst of all, online retailers infected with the herd mentality still often charge ahead with plastering their website with Facebook Like buttons, buying fans (seriously?), installing f-commerce software on their Facebook Pages, etc. without a clear idea on how to turn a profit on those efforts. We have always wondered if Facebook’s explosive growth and hype have actually clouded the judgment of brands and retailers into believing that Facebook is the elixir to all marketing and branding woes.

No, Facebook is not the panacea for all ills. Use it for customer service, user feedback, or even for short-term deals and promotions if you want, but do the actual commercial transaction elsewhere – somewhere more stable and less vulnerable to API/policy changes. Any Facebook developer can testify that developing Facebook applications can be a nightmare sometimes; we never know what will change tomorrow. Platform issues aside, we really should also consider what or who we are competing against when we decide to peddle our goods on Facebook. No, your competitors are not other brands within your niche; think again.

Consider this quote by Paul Marsden:

“Facebook is a people-centric forum, and whilst huge – a forum it is. And the forum has been around since the 1970’s – do you know any businesses that made money from connecting forums with retail?”

Try competing with a consumer’s closest friends and family members. We would be very surprised if a large number of consumers would prefer to pull out their credit cards and make a purchase on a cramped “Facebook store” than to comment on their friends’ new haircut or post witty status updates to garner Likes and congratulatory comments. The blue bar on top of Facebook.com is an f-commerce retailer’s biggest enemy, just as the back button in a browser is a website owner’s biggest enemy. Once a red notification number appears, it is game over (or cart abandonment, whatever you prefer to call it).

We do not have statistics, but we suspect that the average Twitter corporate/business user follows a few hundred other Twitter users, and not necessarily out of interest. People follow others for a myriad of reasons: common courtesy (i.e. following back), to increase follower count (i.e. by making others obliged to follow you back), marketing reasons (i.e. to be on a potential customer’s radar), etc. In fact, we ourselves are guilty of using Twitterin the same way. Ergo, the Twitter Timeline is not a real aggregation of content shared by the people or companies in which we are truly interested. The possibly-enormous follower count that we have is a mere by-product of our other goals.

If that is the case, then the number of followers we have is inaccurate in reflecting how many impressions our Tweets get or how widely our message is spread, since engagement is likely to be very low. Impressions, after all, are only useful if people even read our message or click on our links. The fact is that, even if our customers solely follow people or companies in which they are interested, anyone following more than, say, 300 Twitter users would find her Timeline to be overwhelming and thus unappealing.

We propose a known yet frequently-overlooked way of marketing on Twitter: utilize the Mention tag (@) more often. There are several advantages of doing so. First, you are only competing for the attention of the user you mentioned with other users who used the Mention tag. Second, it adds a personal touch to your message, and your audience is likely to respond in some way. Third, it gives us the opportunity to be searched by our audience’s fans, customers, competitors, stakeholders, etc., which may very well lead to other benefits, e.g. partnership opportunities and new customers.

Mentioning specific people is undoubtedly less scalable, but, since it is a more targeted approach, the engagement rate is also likely to be higher overall. This hypothesis has been consistent with our experience using the Mention tag, at least on the receiving end. What has your experience been with the Mention tag?

We are constantly observing how the technology landscape is changing where we are (Singapore), and recently we have come to know of a Malaysian web startup, FongFeiKei.com, that aims to be a marketplace for people who need to sell off their concert and event tickets urgently because their previously-going-with-them friends stood them up. While the concept itself may not be new, we have come to realize that one viable way of discovering what the grassroots wants is to literally sit back and watch our Facebook News Feeds for hours and monitor how people are using Facebook in a way that facilitates or results in money transactions. Anyone with the habit of trawling through their News Feed on a daily basis would already see trends in how their friends use Facebook to fulfill certain needs.

Indeed, this method was how we got the idea for our flagship product, Zuupy FriendAdvisor, an online store add-on that lets shoppers consult their friends on Facebook for shopping advice while still shopping in the online store itself. In 2010, we saw that many people were asking for shopping advice by posting links of products, and, most of the time, friends were egging them on to buy. Can we say... conversion optimization opportunity for online retailers? Keep in mind that Best Buy relatively-recently implemented the “Ask Friends” feature in its Facebook Store, a feature that is very, very similar to Zuupy FriendAdvisor.

The fact is that, as Facebook grows in the number of functions that it serves, the News Feed will become less useful, considering that the signal-to-noise ratio will be increasingly unbearable. There exists multiple opportunities for vendors and entrepreneurs who can identify pockets of niche markets by picking out very specific yet sizable use cases of the status update feature. The rule is, of course, that your friend list must be large and diverse enough for such deeds of scrutiny of the grassroots population to be carried out effectively. For example, we at Zuupy have identified that using the status update feature to garner votes for contests and causes has become very prevalent. Perhaps there exists an opportunity to create a voting platform based on a vote-for-me-and-I’ll-vote-for-you model that monetizes via the sale of votes or ranking/prominence advantages on the platform.

The great thing about the Facebook News Feed is that it helps to crystallize the needs and wants of the demand side. As with most things, where there is a demand, there is a supply. Do you think that this method of understanding consumers is viable, or do you think that it is flawed or can be improved?

Social media marketers in general are fond of garnering more Likes for their Facebook Pages or web pages, in hopes of either providing social proof through sheer number of fans or amassing subscribers to be fed announcements, promotions, offers, and contests. Clearly, there is some evidence bolstering the effectiveness of these tactics (see SocialCommerceToday.com’s latest article on social commerce statistics), but, as with any prudent use of social media marketing tools and technologies, what really matters is not adoption or user behavior but ROI. The key question is still, “How many dollars am I getting back for every dollar I sink into this channel?”

There are many use cases for the Facebook Like button (to create a viral group deal solution, for instance), but consider the following points before adopting a “the more, the merrier” strategy with Facebook:

1. The number of subscribers alone is not ROI. It is helpful to view Facebook Pages as websites. Facebook Likes are somewhat analogous to traffic, and engagement (i.e. the act of actually following your updates) is somewhat analogous to conversion. Focusing on improving the Like count without ensuring that there is a valuable offering or content to drive engagement and action is, needless to say, a wasteful strategy. Of course, as Sean Ellis said, we should focus only on channel building or channel optimization at a time and never do both concurrently. The point, however, is that engagement is a crucial marketing component that is often overlooked.

2. The “social” context of Facebook is not conducive for commercial offerings. Our view has always been that “commercial social” is unlikely to work on a big scale, because it does not add value to the core purpose of Facebook: to stay connected with the people whom we love and care. This is a major pitfall of commercializing social media: unlike search engines, showing ads and offers is not contextually relevant and interferes with the socializing process. Search engines, on the other hand, are used to answer questions, and, often enough, ads are the answers to said questions. Social recommendations are only likely to work if it has some contextual relevance factor working in its favor.

3. Users click the Facebook Like button for different reasons. It has been reported that 40% of consumers Liked a company, brand, or association on Facebook to receive discounts and promotions (ExactTarget, September 2010) [1], while nearly 40% of consumers Liked companies on Facebook to publicly display their brand affiliation to friends. (ExactTarget, October 2010) [2]. Depending on how you interpret the statistics, they can mean different things. One possible interpretation: the majority of consumers who Liked a brand did not care about discounts and promotions (from [1]), while nearly 40% of consumers Liked a company merely for a social reason – to garner peer approval (from [2]). Any prudent marketer knows that assuming worst-case scenario is a standard procedure in the decision-making process.

4. Facebook is biased towards its own users. It is baffling that many agencies, companies, and brands are ready to expend top dollars on even buying Facebook Likes. Clearly, this method is the ultimate shortcut to Facebook list-building, but consider that Facebook makes it very convenient for users to unlike a Facebook Page or a web page (look at the tiny X on the top-right corner of each post). Unlike Friendster, Facebook knows that spam kills and kills quickly.

5. Facebook Likes are only useful if they are not used solely as social currency. The concept of social currency states that brands and companies will offer something valuable in exchange for sharing said offer or company via social media by users. We have previously explored the use of Facebook Likes as social currency (here and here) and opined that anything achieved through compulsion is unlikely to produce returns. Also, unlike cash, Facebook Likes and Tweets are also very easy to take back. The problem is that the social currency model is becoming increasingly common (e.g. “Like this Page first for...”) and is sometimes even the core fan acquisition strategy.

In the final analysis, the real value of Facebook lies in its user base and mass distribution model for content. However, a user base is just that: a market, which may or may not be easy to penetrate or engage. Although trite, the key to effective Facebook marketing is to attach an actionable metric to every tactic that measures ROI directly. Perhaps even buying fans is a highly-viable fan acquisition strategy; all we have to do is to look at the numbers and then decide.

Consumers are not idiots. Let that sink in. When Kanye West and Jay-Z decided to release a new song on Facebook, making access to that song contingent upon liking the song release page, one would think that they would be able to convert a few million of their 11 million existing Facebook fans into liking the new page. It turns out that consumers are no longer that easy to persuade, given that only 80,000 fans actually clicked Like. That, needless to say, is an abysmal hit rate.

A large part of Facebook marketing these days centers around encouraging consumers to share content through a variety of means, from blatantly asking them to share (“share it with your friends if you find it useful/funny”) to meticulously engineering viral loops that sound so good in theory that, if they worked, every employee of that business would be retiring by the next week in Bermuda. Consumers recognize a viral loop when they see one (really), so any overt attempt at making them play along with marketing shenanigans would naturally make the business look desperate and the brand less desirable.

A viral marketing strategy that is increasingly popular is the hostage strategy: if you want X, do Y first. This strategy is possibly the result of countless futile attempts at asking consumers nicely to share things, and, though more and more brands are adopting this approach, it remains unknown if this sort of free marketing actually produces returns. We ourselves use the hostage strategy in building our marketing app, and we have also recently experimented with the game mechanics strategy, i.e. making sharing fun and interactive.

At the end of the day, however, it may be best to revert to a no-nonsense plea to share, once consumers get tired of hostage situations and silly games. What do you think?

Social media sharing was simple back then. It works on a consume-first-share-later model: content providers gave out content for free, and consumers shared said content, if they deemed it worthy of sharing. These days, there seems to be another increasingly popular model, what we call the share-first-consume-later model. Facebook Likes and even tweets are now increasingly used as de facto currency on some content platforms.

In fact, this model is becoming mainstream. TechCrunch recently instituted tweets as a way for their readers to participate in a contest. Effectively, readers are offering tweets as a bribe to gain access to the contest, with TechCrunch merely giving an invitation to treat. Of course, legal technicalities aside, this is a model to which we subscribe, for we also make consumers click on Facebook Like buttons to participate in deals.

The other way of seeing it is that it is the businesses who are bribing consumers with valuable things to get them to Like something, a view adopted by author Nicholas Carr. In illustrating the absurdity of the social media bribery model with a personal analogy, he said, “Back in elementary school, there was this distinctly unlikable kid who, if you agreed to act like his friend for a day, would let you swim in his family's swimming pool.” Perhaps we can all read about his petty musings here and see if he knows what he is talking about.