Dell and Twitter; thousands not millions

The morning after the iMedia conference last month, I wrote a list of five things that I believed to be true about the state of the world, agencies, communications, and so on.

It's here, if you didn't see it already.

Anyway, one of the five has been nagging at me ever since:

"We used to reach a million to affect a thousand.  Why not now just reach the thousand?"

...and it seemed to bother other people too, judging by the comments from Will, Andrew, Emily and Jeremy.  So I've decided to expand a little...

We as an industry evolved in a world where it was nigh on impossible to find the exact few thousand people who wanted your product or service at a given time. 

Even if you found the few thousand, then you'd be hard pushed to communicate your offer in a cost-effective way.

So we targeted everybody.  We spoke to millions, in order to affect the thousands.

Of course, over time we got very good at doing this on behalf of clients.  There were two key ways in which we improved what we did.

Firstly, we bought in bulk to deliver better value.  We got people more millions, and by association more cost efficient thousands, for their money:

Then, we began identifying a better selection of the millions; we started targeting much more smartly to make sure we didn't reach people that weren't really interested in the first place.

But the world has changed, phenomally.  I shan't reiterate 'why' again, see the first half of  the 'future of...' presentation if you want a refresh. But save to say this passage from Benkler's 'Wealth of Networks' encapsulates it very nicely...

“It seems passé today to speak of “the internet revolution”...  But it should not be.  The change brought about by the networked information environment is deep.  It is structural.  It goes to the very foundations of how liberal markets and liberal democracies have coevolved for almost two centuries”

Yochai Benkler, ‘The Wealth of Networks’

To wit; the cost of communication, sharing, and conversation is now so low that companies (and their agencies) have available to them the approach that they arguably would have wanted in the first place.

Just talk to the thousands.

If you can engage in conversation with the people who're actually in the market for your goods and services (and by 'engage in conversation' I don't mean in a fuzzy 'brand' way, but as in have them talk to someone in your company), then you achieve the very thing companies wanted in the first place.

Of course, in the grand scheme of things it's a very new approach... and as such we're only starting to see results seeping out from various places... 

...but recently Dell have shared the results of some of their Twitter activity.  By creating, developing and honing the @delloutlet twitter account, which releases information about deals and offers to be had direct from Dell, the company has directly created $2m in revenue. 

The 'thousands' of people interested in Dell products (in this case 600k+ subscribers to @delloutlet) have opted in to receive news of deals, news, information and exclusive twitter-only discounts.

Whilst clearly only a small proportion of the 600k+ have bought through the channel (do the maths - $2m/600k...), turn it around into old world maths...

...just how many millions of people would you have to reach to sell $2m worth of computing equipment?  And how much would it cost vs. how much it costs for Stefanie @ Dell to run the account.

I think it's a wonderful example of how a company can use social media, and I think there's three main lessons that people should take from it...

1. People like talking to People

Firstly, it's not a conversation being held by 'a brand'.  It's not a faceless 'Dell' account, but one set up and run by Stefanie.  I'm sure someone will cover for her when she's on holiday and stuff, but it's very clear that when you follow the @delloutlet account it's run by a person, not a faceless 'marcomms team'.

And people, believe it or not, like talking to other people.  At the Corporate Social Networking Forum last week, Euan Semple made a very good point; business is founded upon people who trust other people.

So yes, once again, it's about people, people, people...

2. Social media is not 'campaigning' media - it takes TIME to work...

Stefanie and Dell didn't set up their @delloutlet account three weeks ago.  Or even three months ago.  It's been going for 2 years now. 

And the numbers have only really started taking off in the last three months; this graph from Mashable shows the growth of their followers since March 09... from just over 100k three months ago, to 600k+ now.

Also from Mashable, this quote:

"It took nearly two years to reach $2 million in Twitter-based revenue, and only six months to go from $1 million to $2 million."

So that probably means that for the first 6 months, or even first year, the amount of effort, the trial and error, the constant refining probably outweighed the returns by far.  How many companies would have given up 6 months in, with a few thousand followers and limited returns?

Social media takes much longer to work.  Which means that you should really start now, and not be put off when, in the first six months, you're only talking to a handful of people.  Which brings me to the final point, and back to the beginning...

3. Talking to thousands can be much better than reaching millions

I'll be fascinated to see how quickly @delloutlet's success continues to grow, but a quick supposition makes you think that they'll hit $3m in the next three months...

...in fact, let's call it: by 1st September they'll hit $3m.  And probably $5m by the end of the year.  I'll remember to keep an eye out for it...

Which is a mightily impressive revenue stream to have developed.  And yet look again at the followers of the twitter account... it was only in May this year that there were more than half a million.

It just shows that where the old world demanded audience figures that had at least six noughts on the end, it's possible to create highly successful communications in the new world by talking to a fraction of that audience, and at a fraction of the cost too.

(additional stuff: ReadWriteWeb)

Comments

[Dan]

Also, by only talking to the thousands, you're not littering the minds of the hundreds of thousands with offers of unwanted crap. (Crap being a subjective term relating to their interest (or lack thereof) in your product.)

Which means that when you (as a marketing agency) want to reach a few thousand of the hundreds of thousands on behalf of a different client, those thousands are more likely to listen rather than filing the DM in the bin, the email in the spam or the advert in the ether.

[John V Willshire]

It sounds like a good thing, doesn't it? People get what they want, companies form real bonds with people, and there's less shit advertising and flyers and dm in the world.

It's almost utopian...

[chris stephenson]

almost John, almost.

what's interesting here is the opportunity to not abandon broadcast media, but rather recontextualise how you use it.

rather than using broadcast to start the conversation, dell could and should now be using it to broadcast the aggregated conversations / relationships that Stefanie and her team are having with consumers.

let the millions overhear the very real conversations that Dell is having with it's thousands...

[John V Willshire]

hello chap :)

I agree to some extent; it's like the Godin thing of 'motivate/connect/leverage' (from Tribes), where you tell the story of things you've done with people... you could do that through broadcast media.

However; a proposition... if you had $500k to do that job, would you spend it on a low weight burst of ATL media to tell the story, or would you recruit 5 more people to sit at Dell and talk to people for the next two years?

You could segment your conversationalists into different areas ('office', 'gaming', 'laptop', 'desktop' and so on), and reach deeper in niche communities.

The theoretical return on doing that is arguably 5 x $2m = $10m. Even if it's only a quarter of that, it's still $2.5m of revenue from an investment of half a millon.

Would you let millions overhear the conversations of thousands, or would you try to start 5x the thousands of conversations?

I think the answer comes down to how quickly you want a return. You can have a little return on your ATL right away, but then it dies. Or you can develop bigger longer term returns, which only arrive 2 years down the line.