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MOSCOW, Nov 26 (PRIME) -- An increasing number of Russian companies now realize the great opportunities offered by social networking Web sites for building customer loyalty through social media marketing (SMM), which is aimed at reducing companies’ costs of direct advertising on the Internet. However, domestic companies generally have no clear strategy of SMM development and do not take full advantage of this promising sector, experts said.
Yury Bryukvin, CEO of St. Petersburg-based information analysis agency Rustele.com, believes that “pure” social media marketing should be primarily distinguished from direct advertising on the Internet. “The very task of SMM is to reduce a company’s expenses on direct advertising,” Bryukvin said.
The SMM market is usually distinguished from the social ads market as SMM market services are not taken into account in the volume of the broader advertising market, and social ads are usually attributed to the display and contextual advertising segments, Bryukvin said.
“Thus, the Russian SMM market could be divided into the following segments: development of applications and content for communities; creation of new online communities and corporate Web blogs, integration of corporate web sites into social networks; community management; and SMM monitoring, analyzing, consulting,” Bryukvin said.
Bryukvin said that so-called “pure” SMM is a range of measures aimed at managing online communities in social networking Web sites; creating content that attracts users and encourages them to share this content with friends via social networks; designing special applications for promoting brands in social networks.
Denis Terekhov, managing partner of Social Networks Agency, agreed saying that community management is definitely the most popular technique of SMM, which involves running branded communities and groups on the largest social networks, namely, Vkontakte and Facebook.
“It seems that just a couple of years ago, SMM was primarily understood as placing text, or advertisements, for money on the Web sites of popular bloggers – some kind of product placement on the Internet. Now it takes a back seat,” Terekhov told PRIME.
Companies use monitoring and processing of users’ responses less frequently – negative comments on any services or goods, Terekhov said. “But I think that this is where the brands should start working with new media,” Terekhov said.
He also said that integrated solutions, such as work with gaming applications and mobile marketing, had taken their niche in the social networking area.
Bryukvin from Rustele.com added that advertising on the Internet could also be considered as a tool for promoting brands via social networks, but direct advertising pursues other purposes and requires bigger financing.
According to Bryukvin, almost all large companies are now taking certain steps to promote their brands via social networks, as they realize the importance of these PR tools. However, the main problem is that no company has a clear concept of the development of SMM, Bryukvin said.
“In the West, interesting SMM cases that really support business are actively being developed and implemented. In our country, this segment is still in its infancy. I have only heard of intelligent SMM projects once or twice,” Bryukvin said.
Bryukvin said that a Russian bank once developed a strategy that monitored negative comments on the bank’s services on social networks. The bank then rated flaws in its services using this data. “The survey helped the bank monitor the current situation within service departments, while the bank did not even set a task to eliminate these problems immediately,” Bryukvin said.
Another example of the development of SMM proposed by one of the Russian communications operators was more interesting, Bryukvin said. The project allowed users to run a free application that analyzed the information placed on a user’s page on a social network. Based on this analysis, the program offered the user tailored loan programs provided by a partner bank.
“The future of the SMM segment belongs to such projects, but I am not speaking about the near future,” Bryukvin said, adding that we could see the active development of such business-oriented SMM projects no earlier than in a year’s time.
However, Bryukvin said that companies are ready to spend money on SMM projects right now, and the advertising budgets of almost every well-known brand include the cost of SMM campaigns. “But in fact, the companies do not finance SMM projects anywhere near enough,” Bryukvin said.
Terekhov from Social Networks Agency believes that Internet companies spend all the funds allocated for advertising on promotion via social networks, mobile operators spend between 3% and 5% of their advertising budgets on SMM projects, while retailers allocates on average up to 10%.
Russian social networks themselves can hardly monetize their services, and most of them only limit SMM activities to targeted advertising, Terekhov said. “Some of them earn through SMS services that offer users to send an image of a flower, or a kitten, or any other picture to a friend by sending a paid SMS message. PR opportunities are almost never used, although the future belongs to them,” Terekhov said.
Sometimes interesting projects emerge that allow social networks to take advantage of their potential. For example, in late October, blogging Web site Livejournal.ru launched a special option called Promo in Journals allowing the users to monetize their blogging Web pages by advertising publications of other users, Ilya Dronov, head of Livejournal.ru’s Russian service said. For promoting the blogs of other users, a blogger receives a special currency – LJ-slugs – which can be converted into Russian rubles or the U.S. dollars by special brokers.
In any case, SMM projects now only occupy up to 5% of the country’s entire advertising market, Terekhov from Social Networks Agency said. “In some sectors this share reaches 10%, but such examples are few,” Terekhov said.
However, he was quite optimistic saying: “The character of one old Russian movie said that in 20 years there will be no theater or cinema – only TV. I want to rephrase his statement and say that there will soon only be online communication and work with social networks is its foundation.”