Homophily Meets Social Commerce

Viral Brand Genome DavidWestendorfCOOtrueAnthem

Fall09

ExecutiveSummary

Online virality is predicated on Homophily, a sociological principle from the 1950’s that explains our inexorable tendency to link up with one another in ways that confirm our core beliefs. Those who liked Ike, in other words, liked each other.

People who travel in social circles tend to behave similarly. A social circle, also called a “social graph” can be as innocuous as members of a website or just as simple as lifetime friends. As examples: Long time friends, Brad and David have the same silver Land Rover, whereas Corey and Emaleigh, clicked on the same Gilt Group email.

Homophily is especially intriguing where social graphs and ecommerce meet. Can we someday statistically predict the likelihood that friends will make the same purchase?

Today, we all have friends who are active on online social networks. Eric, for example, updates his Facebook status three times daily, each time notifying his 450 friends of his current mood, a thought he had, or something as simple as what he’s eating for lunch. We also have friends who share more targeted opinions within specific topics. Brian is a recognized cycling expert, he passes advice to novices constantly though his twitter feed. Both of these people are influencers. Their immediate social circle is often persuaded by their opinions and actions.

trueAnthem finds individuals like Eric and Brian, identifies the links to their 200+ friends, and tracks individual purchase behavior on ecommerce sites.

trueAnthem’s social commerce occurs in four key steps:

1. Establish links between online individuals and create a social map. 2. Determine who the dominant influencers are. 3. Link individuals to shopping and commerce behavior. 4. Leverage influencers to market products to their friends.

Homophily

“The purpose of this document is to explain the technology behind this predictive mapping, known as the Viral Brand Genome”

David Westendorf, COO

TheSocialMediaPlayer’stheLynchpinForconsumers,trueAnthemissimplyawaytogetfreemusic.

Today there is rampant music piracy; but via the trueAnthem network, the 100+ bands on trueAnthem give their music away for free, and are paid for it. This is alternative business model to iTunes, where emerging bands get lost in the overwhelming noise. Moreover, trueAnthem monetizes a world where 40 billion tracks were downloaded for free in 2008, and only 4 billion tracks were actually paid for.

While trueAnthem’s music is free of charge, and free from DRM restrictions, largely consumers are willing to listen to an audio “trueAd” accompanying each free track. A trueAd is an 8-second endorsement, done by the artist, creatively mentioning the brand. Therefore, consumer “fans” of a band get a glimpse into the personal lives of the musicians they adore, with a message sponsored by the brand.

We call this “socially responsible downloading.” 4.5 million people have bought-in to the trueAnthem concept, making the business viable as it scales long term.

An important leverage point for trueAnthem is that the bands already have online fans. As a demonstration, Shaolin Temple of Boom (SToB), an Industrial Rock band, has 124,931 “friends” on MySpace and 12,000 on Facebook. This fan base creates an instant audience for any advertiser that supports this band.

The free music and video assets are ingrained in a dedicated “Social Media Player” for each band. (Exhibit 1)

Exhibit1

VBG1.0

This is a Flash-based media player, compatible across over thirty-eight social networking sites including: MySpace, Facebook, Friendster, Orkut, Bebo and dozens of lesser sites. It is also embeddable for bloggers and savvy HTML programmers. (Exhibit 2)

Exhibit2

The Social Media Player begins its life as a “seed” on trueAnthem.com and the band’s social networking pages. Shaolin Temple of Boom’s (SToB’s) Social Media Player (Exhibit 3) begins its life at www.myspace.com/shaolintempleofboom.

Exhibit3

Within hours, SToB’s 124,931 friends are alerted that there is something fresh on the band’s page. More often than not, the music released with trueAnthem is new material, and free for the taking.

Of the 124,931 SToB friends, a certain portion will “grab” the Social Media Player and install it on their own MySpace page. In the SToB example; 4,541 people grabbed the Social Media Player. These 4,541 fans placed the Social Media Player on their own pages, for their own friends to see. This action is a visible badge of fandom, a digital expression similar to bumper stickers or concert t-shirts.

We call this sharing order of fan’s friends, and their friends’-of-friends (FOAF). In one promotional campaign, the depth of FOAF was eight levels of people deep. Ultimately, SToB had 45,287 grab installations of the Social Media Player.

The Social Media Player itself is a simple UI (Exhibit 4), with the following options: listen to audio files, view videos, click banners, download tracks, shop, etc. The orange “Share” button enhances the person-to-person virality.

Exhibit4

The Social Media Player also has the capability of administering a questionnaire (lower portion of Exhibit 4), which brands can customize for their strategic targeting purposes. This self-selecting media has proven to be a competitive advantage for advertisers, especially as they attain higher levels of precision in their message delivery.

Beneath this simple UI is tremendous consumer reporting intelligence… the “prize” found within the beautifully wrapped present.

GraphTheoryPuttoWorkWhen a Social Media Player gets grabbed from a webpage, the MachineID associated with that initial Social Media Player is written to the database as a ParentID (Exhibit 9)

Exhibit5

This is the single most important element in tracking web virality. trueAnthem has filed for provisional patent protection under Patent Application #61142881: “A method of reporting data to a party, a method of assembling the data, a method of reformulating the assembled data, and a method of presenting the reformulated data to the party.”

A relationship is cemented in the database that permanently links a parent to a child. With the exception of a band’s first Social Media Player that originates on trueAnthem.com, all consumer end user Social Media Players have a parent.

Through this unique process, we are able to follow content as it travels throughout its viral life, and monitor it at each stop along the way. A “tree” is constructed within the database where “parents” beget “children” who beget “grandchildren” etc. Each node maintains an association with other family nodes. Some nodes are dead-ends, where individuals grab from parents yet have no children of their own, while others prolifically spread across multiple generations.

For each node, all down-stream activity below the individual on the tree is rolled-up and tallied for the individual in a “RollUp.” Though an individual’s Social Media Player may only be directly responsible for 68 song listens, his children, grandchildren, etc. are responsible for 94 listens. Therefore, this individual is indirectly responsible for a total of 162 listens. (Exhibit 10)

VBG2.0

Exhibit6

One element in which advertisers find deep value is the BannerClickRollUp. This is important because advertisers gain visibility into which individuals influence commerce behavior (Exhibit 11).

Exhibit7

To build the most meaningful tree, we prune all Social Media Player posts which have never loaded, hence our tree load/post ratio will always be greater than 1.

For all nodes that a PersonId can be associated with, we group these nodes by the PersonId and the statistics are rolled up. This enables individuals to install more than one Social Media Player on their pages. Naturally, an individual can be a fan of more than one band.

Exhibit 12 shows the beginning of a tree; a visualization of the data structure. Every node below is parentally related to the node above it.

Exhibit8

This visualization is a hint of the Viral Brand Genome, which is outlined in more detail in Section 5.0.

ViralBrandGenomeVisualizesEverythingBased on the strong underpinnings of the data structure, we have the ability to sort the data in multitude of ways. Advertising partners have the ability to hone-in on what they deem strategically important. In the example below, Wonka valued pure virality and recognized those individuals who spread the campaign message most. In this case, installments or “grabs” was the measured variable.

Exhibit 13 charts the 13 most influential individuals out of a program where 2.4 million uniques engaged with the brand’s message.

Exhibit9

If a brand values listens, downloads, etc. this is all possible to track. Increasingly, brands most strongly value their own criteria. As shown in Exhibit 4 in Section 1, “Do you wear contacts” is a simple criteria to determine influence, and track appropriately.

VBG3.0

In Exhibit 14, we see virality as broken out by the client’s age groupings; 13-15; 16-17 and 18-20. The individuals listed are actual, and are the actual quantity of Social Media Player (Widget) Installs.

Exhibit10

FlashTechnologyFacilitatesTracking

As the Social Media Player is loaded within a web browser, an applet gets deposited on the end-user’s computer. This applet installation happens whenever someone encounters the trueAnthem network: trueanthem.com, Social Media Players on any web domain, social network, a client’s websites, etc. There is no manual download process required.

Similar to a browser “cookie”, this applet, called “VBGApplet”, provides a conduit for information to pass between the client’s machine and the server. It resides in the User Profile settings on the end user’s machine. However, unlike a website-deposited Javascript cookie, this VBGApplet is not deleted with the same frequency as browser cookies. Moreover, it doesn’t suffer from the same unfortunate reputation as a Javascript cookie. Adobe’s Flash reputation is much stronger within the technical community.

At the instant of install, the VBGApplet pings trueAnthem’s database, and determines whether the computer is new to trueAnthem or a previously enabled machine. In the former event, a new database record is created, where each computer is assigned a sequential Global Unique Identifier, called a “MachineID.”

The following fact will be repeated throughout this document- All end-user Social Media Player interactions are recorded by the VBGApplet. Every action is captured: song listens, file downloads, video views, grabs, shares, banner displays, completed questionnaires, etc. Every time the Social Media Player is loaded with new content, the VBGApplet checks-in with the server and transmits the new data. The information is passed to the database (see Section 3.0 below) and added to the MachineID associated with the action.

For an increasing number of trueAnthem clients, trueAnthem’s Flash tracking tags reside on key website pages, such as product information and ecommerce pages (Exhibit 5). These 1-pixel-by-1-pixel trueAnthem Flash tracking tags recognize when a trueAnthem registered machine is visiting the webpage. Webpage information and MachineID are passed back to the trueAnthem database, and added to the record associated with that MachineID. The benefit of this is intelligence for banner clicks, product shopping, and ecommerce transactions, is that the information is gathered at the individual level.

Exhibit11

VBG4.0

trueAnthemDatabaseAll of the end-user actions generated through the Social Media Player are deposited into a core transactional database. The database environment utilizes SQL Server 2005, using tSQL language. This enables data to be written to the physical database and extracted from the database for reporting and exporting purposes.

WebOrb de-serializes, or translates, Flash ActionScript client-side code to .Net server-side code. This allows the Social Media Player to speak to the database; essentially a facilitator between Adobe and Microsoft. As an added precaution, a log-server maintains hourly data dumps for failsafe purposes.

All actions associated with a specific MachineID are added to the individual record in real time. Theoretically, the maximum of fields is unlimited, however, a typical record has about 120 fields of information.

Some of the Social Media Player’s recorded actions include: band name, songs listened to, downloads, clicks, video views, banners displayed, email registration, opt-in data, etc. (Exhibit 6)

Exhibit12

The breadth of the individual information gathered creates tremendous cross-tabulation capabilities. Promotional activity is then combined with shopping and commerce.

VBG5.0

Below (Exhibit 7) illustrates trueAnthem’s analytic process at a high level. The end-user’s experience of getting free music and video persuades them pass the player along virally, while trueAnthem collects analytical data on them.

Exhibit13

Information is added to the database at three levels:

1. Individual Information: a. The Social Media Player interaction (outlined above) b. Geographic Data: Such as IP address, State, and ZIP code (when

available from a social network’s API) c. Marketing Information: Answers to marketing questions (Section 1.0), opt-

in information, email address, coupon download and redemption, etc. 2. Commerce Data from client websites (Section 2.5).

a. This data begins when banners are presented and clicked/not clicked. b. Landing pages, product pages, cart pages, abandonments, etc. c. For the first time, we can determine “which half of my advertising works.”

(Exhibit 8) 3. The person-to-person data

a. Limited to two very important fields, MachineID and ParentMachineID. (further explained in Section 4.0).

Exhibit14

The main trueAnthem transactional database writes nightly to a SQL reporting server based on criteria set forth in scripted queries. Within these queries are algorithms based on graph theory.

In the graph theory lexicon, each record is a “node” where it can be plotted in relation to other nodes.

HowDoBrandsTakeAction?Identifying individual influencers is an academic exercise unless there is an actionable plan for the brand.

sCRM is trueAnthem’s answer.

sCRM enables a brand to nurture a relationship over time. Of course not all consumers are “in-market” at any given point in time. This principle becomes a fallacy within current direct marketing, which is much more “snapshot” oriented.

trueAnthem’s content, which is constantly refreshed, allows brands to keep their message in front of the consumer. Thus, enabling the brand’s message to turn into action throughout the consumer’s consideration and shopping phase. When the consumer is truly in-market, there is a logical action to take.

trueAnthem recommends cultivating heavy influencers with special attention. In the Wonka examples above, trueAnthem identified 450 individuals who influenced 2+ Social Media Player Installs. It was simple for Wonka to send a care package of chocolate.

Whereas chocolate is not a common ecommerce purchase, sCRM makes more sense for brands with strong direct ecommerce channels.

Currently, trueAnthem and several key clients are building profiling technology to determine the relationship between content consumption, viral influence, shopping behavior and actual ecommerce behavior.

The field of social commerce through consumer behavior profiling, is emerging as a new phase of internet marketing. Previously, the companies that changed the way internet marketing targeted consumers were companies such as Claritas that enhanced targeting through clusters; Omniture pioneered web profiling; and Google increased contextual relevance. The field of social commerce will have similar dominant winners. Fundamental consumer behavior has been recognized. The information is readily available. The winner will be the first to market, with the best tools for analysis.

VBG6.0VBG6.0