Homework Assignment: Prediction Markets

28

October

2013

No ratings yet.

Prediction markets gain more and more recognition as being a very accurate forecasting method. On this market place, people buy and sell shares around a specific future event. And from this trading in shares some kind of share price will develop. This share price can be seen as the probability factor on whether the event will occur or not.

There is some very interesting literature on this topic. Prediction markets are played with real money or with game/playing money. There has been some research whether the prediction accuracy is different between real money and playing money markets. The outcome was that there is no difference in accuracy between these markets. I think this is a very interesting outcome since I expected real money markets to be more accurate. Other research about this topic has shown that prediction markets are also effective in the medical world, by predicting the influenza activity in a particular community.

I found two examples which are very big players in prediction markets. The first one is the Hollywood Stock Exchange (HSX). This market trades on actors, directors and movies. By buying and selling shares, people predict the popularity of these features of the film industry. This first example is played with playing money while my second example is ‘played’ with real money. Intrade is another very famous prediction market, and this market makes predictions on all kind of things such as science, art, technology and elections. Both markets seem to be very interesting, as many people use it and its predictions are very accurate.

Please rate this

Click-through rate quiz!!

17

October

2013

No ratings yet.

Facebook ads, we all know them. Some are quite nice, while others are just stupid. Some are beautiful made, others are very ugly. As a company you try to make an advertisement which gets a very high click-through rate (CTR) on Facebook. But what can a company do to get this high CTR? Well, there are actually some very simple solutions to get slightly more clicks on your advertisement. I have read about a research which looks at five different ways to achieve a higher CTR. So let’s play a short quiz with you guys. Try to answer these questions for yourself and see how many you got right:

1. Ads with people in it tend to have a higher click-through rate. But which images do you think are more effective as ads, images with females or images with males?

2. Ads which actually show their products are more effective. But which category of products achieves the highest CTR when showing their products? Fashion, high-tech, jewellery or cultural products?

3. Different types of background come with different types of CTR’s. Which background is more effective, a uniform (solid colour) background, a background with nature (tree/lake/mountain etc.) or a background showing the interior of a house?

4. The way you frame your product is of course important as well. Which of the following ways of framing your products works best? Landscape, close-up, aerial or portrait?

5. Last but not least, the background colour of the ad. Which of the following colours works most effective as a background for advertisements: Black, green, red, blue, purple or yellow?

So this was it. I will now give you the answers. The answer to the first question has an interesting outcome. Images with males achieve an average CTR of 0.03%, while images with females achieve a twice as high CTR, namely 0.06%. The second question was not that difficult I think. By showing the actual product of an ad about jewellery, the CTR is 0.12%. All the other categories achieved lower CTR’s. I think the reason for this is that jewellery is expensive and mostly small with many details. High-tech products are also expensive, but the worthiness of the product is in that category mostly not visible, because it’s the inside of the product which makes it special. Jewellery is a more visual product. The answer for question 3 is an interesting one again. It seems that a uniform background achieves a higher CTR than the other two backgrounds. The frame that actually works best for a product (Q4) is the close-up by achieving a CTR score of 0.05%. The closer and the more details people see from a product, the more interested they are. Finally, different background colours achieve different CTR scores as well. These are the colours from a high to low CTR score: purple, yellow, black, green, red and blue.

So I find it very interesting that only small changes in advertisement can achieve ‘much higher’ click-through rates. For some of the above features, can you think of any reasons why the one works better than the other? Why does images with females work better than images with males? And why does a solid purple background works best?

Sources:
http://www.marketingfacts.nl/images/research/9_Adobe-Infographic-090813-01-blogsized2.png

Please rate this

Bipolar Facebook Activity

10

October

2013

No ratings yet.

We all know these very intense Facebook campaigns of companies we follow on Facebook. They post several times a day that you can win big prizes or get huge discounts when you like their Facebook page. But once they got their target amount of likes, they keep silent for days, or even weeks. Research has shown that this is a very bad thing to do as a company. Once the interval between the posts is to long, most people are not reading the posts anymore.

There has been some interesting research in this field, showing that 72% of Facebook pages of companies are not posting on a regular basis. In fact, they overflow their fans with posts on one day, while then they keep silent for several days. As said, it is a fact that when you are not keeping in constant touch with your fans, you can get out of sight. This so called bipolar behaviour (posting irregularly) mostly occurs for smaller businesses, while the larger businesses tend to do a better job concerning their Facebook posts. Bipolar behaviour differs a lot among industries. The industry which is by far the most bipolar is the insurance industry, in which 86% of the companies are showing bipolar behaviour. In the following image you see the bipolar rate per industry:

Image
So what is the reason why companies do this? I think in some industries it’s just very difficult to post interesting things on a regular basis. In the insurance industry for example, I can imagine that it is difficult to post a lot of interesting things. Another reason could be that company owners set too many social media goals based on quantity, like: We need to double our amount of Facebook likes within the next month. After an intensive period of Facebook activity, they probably reach their target, but then they keep silent. That should actually be the moment to keep interacting with your fans on a regular basis.

What do you think are the main reasons companies are so ‘bipolar’?

Sources:
http://www.marketingfacts.nl/berichten/de-7-zonden-op-social-media-en-hoe-je-ze-vermijdt/
http://allfacebook.com/buzzspice-bipolar_b117416

Please rate this

GTA V, a social media succes

19

September

2013

No ratings yet.

Last Tuesday, September 17th, was a very important day for many gamers worldwide. It was the day on which the game Grand Theft Auto Five (GTA V) was released. It is said to be the greatest game ever made, in terms of quality as well as in terms of revenue. Here is a remarkable fact to show you the popularity of the game: The game has been made with a budget of $265 million, which makes GTA V the most expensive game ever. The gross profit of the game within the first 24 hours after it was launched, was calculated on $800 million. So, there is no doubt about the popularity of the game. But why do so many people buy this game? Is the game just so incredibly good, or was it the social marketing campaign which plays an important role in its success?

First, let’s take a step back in time. The previous big-launch in the Grand Theft Auto series was the game GTA IV, which was released in 2008. This game was a record-breaking success as well. It grossed about $310 million on its first day and over $500 million dollar of revenue in its first week. In that time, many critics were very positive about the game, some even said that it was the best game ever made. So the combination of the GTA-series’ popularity among gamers and the words of praise the series received from critics, must be seen as a confirmation of the fact that GTA V is just a very good game on its own. But something is remarkable about the facts above. GTA V grossed over $800 million on its first day, while GTA IV grossed ‘just’ $310 million on its first day of sale. So GTA V earned over 2.5 times more money within 24 hours! There could be many reasons for this. I think social media played a big role in the success of GTA V.

As said, there has been a period of 5 years between the launches of both Grand Theft Auto games. Rockstar, the developer of Grand Theft Auto, launched several smaller games in this period, but these games where all kind of extensions on the ‘big’ GTA IV game. So within this 5 year period, Rockstar had to stay in touch with its users. The way they managed to stay in touch with gamers, was mainly through social media. Rockstar is using social media very intense. They have accounts on Facebook, Twitter, YouTube, Google+ and Instagram. Below, some facts about Rockstar and Grand Theft Auto on social media:

Official Rockstar Facebook page: 4.8 million likes
Official Rockstar Twitter account: 1.3 million followers
Official Rockstar YouTube channel: 1.5 million subscribers
Official Grand Theft Auto V Facebook page: 4.3 million likes

These numbers are only about the official Rockstar and GTA V accounts. There are many more unofficial pages with thousands of likers and followers as well. The unofficial accounts frequently tend to copy the news or updates from the official accounts. This simply means that even more people than the numbers above stay in touch with the game. I’ve been following one of these pages myself for the last years and what I noticed was that from the moment Rockstar started the production of GTA V, they have frequently been giving updates about the production process of the game. The closer the game came to its launch date, the more frequent Rockstar published facts about the game. These facts included beautiful screenshots, amazing videos and pictures of the game’s characters. Because Rockstar gave so many updates, the fans went crazy about the game.

I think this is a very smart way of staying in touch with your fans during such a long period of time. By constantly sharing so much content of a beautiful looking game, you make your fans very enthusiastic and they can’t wait to start playing the game. That’s probably why so many people bought the game on its first day. So the success of GTA V of course has multiple reasons. But one of the main reasons this game was a great success, is the way Rockstar used this form of social advertising.

Sources:

http://news.cnet.com/8301-1023_3-57603533-93/grand-theft-auto-v-earns-record-breaking-$800m-in-24-hours/

http://www.youtube.com/

http://vgsales.wikia.com/wiki/Grand_Theft_Auto

http://www.rockstargames.com/

Please rate this