“Up until now, we’ve thought a lot about influence in terms of how big someone’s microphone is,” NYU Professor of Business Sinan Aral, tells TechCrunch, “A more important question is, how much does someone’s influence, or their messages, or the things they have to say to us, change our behavior?” The solution, demonstrates Aral in a paper published today in the prestigious journal, Science, is to measure whether users are actually taking action: contributing to a campaign, buying a product, downloading an app, or reading an article. Furthermore, messages must be randomly sent to followers, otherwise we have no idea whether users would have taken an action if they had seen the update or not. Randomization and action-based measures are a high bar, but at least it will get us past knowing whether social media “influence” actually means anything.

Social influence scores, such as Klout, measure how likely the Facebook fans of Mitt Romney are to engage and share his updates with the rest of their social media friends. However, given that many followers of Romney are already die-hard Republicans, would they have already seen a video he shares on the Drudge report anyway? If Romney solicits his followers for money, would they have already contributed through another website? In other words, social friends are sheep-like: they read the same articles, download the same apps, and give money to the same causes and politicians. Aral says that caring about high follower count could be a “waste of money” if so-called “influencers” are not actually changing behavior. According to the paper, it turns out that follower counts and retweets may be much less important than demographics, such as age, personality type, and gender in determining who is influential and who’s susceptible to social media manipulation.

Aral’s experiment looked at how likely Facebook users were to adopt a a movie review app after one of their friends messaged them. “The experiment was conducted over a 44-day period during which 7,730 product adopters sent 41,686 automated notifications to randomly chosen targets amongst their 1.3 million friends,” reads the study. Most importantly, all messages were randomized, so he was able to test whether a message itself led to downloading the app, not because a user knew one of his friends was an avid movie buff and would like an app that spammed his friends with updates.

Aral found a few intriguing results: peers of the same age are most influential on each other, and women are less susceptible to influence than men. He also settled a long standing debate between Malcolm Gladwell and his critics over whether messages go viral due to an army of highly influential broadcasters or after being dropped into a population of share-happy users. According to Aral, a viral campaign needs both. Easily susceptible users tend not to be influential, and influentials tend to be quite stubborn. The trick is finding a population that has enough influencers to spread the message to enough susceptible users.

More important than Aral’s findings are his methods of randomization, which set the scientific foundation for measuring actual influence, rather than relying on follower counts or a Klout score. For instance, much fuss has been made about the “superiority” of Obama’s sizable social media presence. Obama has 14 times as many Facebook fans as Romney (27M vs. 1.9M), yet both presidential contenders get roughly an equal number of likes on their most popular posts. At the very least, this means that follower counts don’t make too much of a difference, and engagement (i.e “likes”) may be equally inconsequential.

Indeed, we’ve argued before that the influence of social media in something like elections is way over-hyped. If no one under the age of 35 had voted for Obama in ’08, he still would have every state except two (in other words, it wasn’t his large army of young social media followers that made a difference).

Social media is still in its infancy. Follower counts and retweets are a cheap, attractive way to identify Twitter and Facebook celebrities. While we still don’t know how exactly to measure influence, we have the scientific tools to start learning. In the meantime, be skeptical of anyone who tells you they know the answer.

Article courtesy of TechCrunch

There’s something interesting going on over there on Fab. The design shopping site found that some of its best customers – that is, those who convert to paying customers the quickest, those who spend the most, and those who return the most often – are mobile users.

The company has known about this data for some time, but wanted more in-depth analysis, so it hired software-as-a-service firm Custora to help them dive in and figure out the lifetime value of the mobile customer, specifically those using the iPad. The results are impressive.

Since the beginning of the year, Fab says it has known that customers with mobile apps are more engaged. The company launched its mobile apps on iOS and Android in October, and by the time it reached one year post-pivot, the company found that over 40% of usage came from mobile applications. Could it be that mobile applications, with their addictive, time-sensitive notifications about Fab’s flash sales draw users in? Or is there something that’s inherently more enticing about the Fab experience when using a mobile device or tablet?

By the start of 2012, it became apparent that mobile customers behaved differently. They purchased more than two times faster, bought more often, and had larger basket sizes than online shoppers.

But Fab noticed just a few weeks ago that iPad customers’ behavior really stood out. With help from Custora, the company discovered that iPad customers convert to making their first purchase exponentially faster than non-iPad users, with over 40% making a purchase by month 3 and over 70% purchasing by month 7.

Fab was also seeing impressive conversion rates for iPad users.

“A lot of really good businesses build their business model around getting to 10% conversion rate to purchasers within 6 to 12 months,” says Fab CEO Jason Goldberg. “It’s simply amazing that we’re seeing 10% conversion to purchase within the first week for iPad users.”

In terms of revenue, iPad users were found to be worth twice as much two-year revenue as non-iPad users. And, even though only 15% of Fab users are iPad users, those customers are expected to generate 25% of Fab’s revenue over the next two years.

That last figure is really remarkable, especially because, in the grand scheme of things, the tablet market is still in its early days. What will these figures look like three years in? Five?

And more importantly, why are iPad users such great shoppers? Is it just that they can afford to be?

As it turns out, that’s actually one of Goldberg’s explanations. iPad users have more disposable income, he notes, and are “just more likely to be design lovers.” But it’s more than just the person on the other end of the device, he says. It’s the device itself, too.

“The tactile touch experience of the iPad more closely resembles being able to physically ‘touch’ a product like physical-world shopping versus the web which can feel more distant when browsing with a mouse or track-pad,” says Goldberg.

Plus, the Fab iPad app itself has been designed to take advantage of the device’s form factor, by focusing on one product at a time, while the Fab web experience allows users to browse across sales and products. The iPad app will soon get another major improvement too – the company is developing its Retina-ready application, which it plans to have out in a few months’ time.

But all this almost makes you wonder if perhaps online shopping sites should begin taking their cues from the iPad to better improve their own experiences. Although computers don’t typically have touchscreens, there are ways that online stores could somewhat mimic the tablet experience through layout choices and navigational flows. Would users balk at a tablet-like interface on the regular ol’ web, or will they eventually come to expect it?

It’s far too soon to know the answer to that, but as far as shopping sites go, expect them – and maybe even Fab – to experiment with the concept in the months to come.

Article courtesy of TechCrunch

What a difference a deal makes. This morning, Groupon launched its first nationwide deal, $25 off a $50 purchase at Gap. The promotion, which was available in every city, briefly crashed Groupon’s servers as deal-happy consumers clicked on the 50% discount and pinged their friends.

Despite the technical difficulties, according to Groupon‘s CEO Andrew Mason, as of 11AM PST (the e-mail blast went out at roughly 6AM in each time zone) Groupon has sold 200,000 Groupons and is currently selling roughly 10 per second. Ten sales per second is an unusually high volume, Mason says, “several multiples above the average.”

If this trend persists, Groupon will likely sell more than 700,000 Gap Groupons by the end of day. Or, roughly $17.5 million in revenues for the daily deal machine. (That will buy you a lot of monkeys.)

Although Groupon has dabbled in multi-city deals, this is the first time they have partnered with a national retailer for a full countrywide roll out. I don’t expect Groupon to stray too far from its bread and butter, which is specialized, localized daily deals, but the Gap deal certainly proves than the occasional, national campaign (with the right partner) does fit nicely into Groupon’s business model. For Groupon, it’s an obvious win situation, the Gap deal enhances the company’s mainstream appeal, its consumer visibility and, as evidenced by the numbers, it also pulls in a lot of cash.

The upside for Gap is a little less cut and dry. Yes, it’s a splashy marketing campaign coupled with the opportunity to push out inventory, but $25 off $50 is a deep cut to margins— especially, when you consider that Groupon typically takes a 50% cut. Thus, from Gap’s perspective, the retailer is effectively dolling out 75% off discounts on sale and non-sale items. That raises a red flag. Did Gap pair up with Groupon to launch a sexy marketing campaign or did they partner with Groupon because they really need to drum up excitement and sales (whatever the margin?).

Indeed, sales have been lackluster since 2008, with Gap North America (Gap flagship brand) same store sales down 6% in July:

An interesting question— coincidentally (or maybe not) we may know the answer soon. Gap releases earnings after the closing bell. To be continued.

UPDATE: After the closing bell, Gap posted profits of 36 cents a share, one penny above expectations. Sales were up at Banana Republic and Old Navy, helping total revenues gain 2% for the quarter. However, there was one noticeable dark spot: Gap North America (aka where your Groupon is valid). As expected, Gap North America was the only segment to post a drop, with same store sales down 4% in the second quarter. Looks like Gap’s flagship line could really use some of that Groupon magic.

I also asked Groupon to disclose the profit margins on this deal, they said as company policy, they cannot divulge the specifics of any deal.

Thanks to our TCTV intern Shirin Ghaffary, who helped pull this glorious image of Andrew Mason.

Article courtesy of TechCrunch