Experience: The Blog

Google+ and Top Brand Engagement: My Own Small Study

2012-05-21T07:00:00.000-05:00

While the rest of the world is obsessed with Facebook's IPO, I thought I might be a contrarian and focus on Google+. At times, I have felt as if Google and others share G+ data and analysis not to enlighten but to convince. When Vic Gundotra, Google’s vice president for engineering, says that Google+ has 100 million monthly active users (or MAUs) compared to Facebook's 901 million MAUs, I find myself wanting to see the data and dig into methodology, because assertions such as this do not always meet my "gut check."

Google+ data seems to come in one of two flavors--either statistics that support the Google-Plus-is-a-ghost-town argument or figures that lead to headlines such as "Google+ brand pages seeing adoption, engagement growth." The truth is certainly somewhere in between, but I have to say the more sober numbers and analysis seem to have a greater ring of truth.

A recent study of brand pages on G+ furnished optimistic findings such as:

64% of the Interbrand Top 100 now have an active Google+ Brand page.
22% of the brands now have circler counts over 100,000, up from 13%.
More brands are posting more frequently: 43% are posting over 3X a week (up from 15% in February).

The folks behind the study offer services to help brands evaluate and improve their Google+ brand presence, which means they have a horse in the race. That does not mean their data is inaccurate, of course--in fact, I am sure the data is factual--but are the analysis and findings complete and thorough? Do conclusions such as these help marketers and social professionals evaluate the importance of G+, or do they subtly encourage brand adoption of G+ (and, by extension, adoption of the study sponsor's services)?

At a glance, the study seems to imply that brands are beginning to flock to G+, but even without doing any independent research, it seems there is a less glowing way to consider the same data. For example, while 64% of the top 100 brands have an active Google+ page today, 61% of them already had their page one month after G+ launched, so there has been almost no additional adoption in the past six months. And while the number of brands with 100,000 fans is up almost 75% in three months, two-thirds of the top 100 brands in the world have fewer than 5,000 "circlers" on G+. (To put that into perspective, AJ Bombers, a locally owned burger joint in Milwaukee, WI, is connected to more people on Facebook than the vast majority of top 100 worldwide brands are connected to on Google Plus.)

I thought I would do my own small examination of the engagement enjoyed by the top ten brands on Interbrand's list. Here is what I found comparing the Facebook and Google Plus presence and engagement of the ten most valuable brands in the world:

Brand	Facebook Fans	Google+ Circlers	# of FB Posts (4/24 - 30)	# of G+ Posts (4/24 - 30)	Avg # of FB Likes/Post (4/24 - 30)	Avg # of G+ +1s/Post (4/24 - 30)
Coca-Cola FB, G+	41,943,732	523,783	2*	3	5,637	44
Microsoft FB, G+	1,779,336	202	10	0	522	NA
Google FB, G+	9,586,681	594,677	6	17	1890	323
GE FB, G+	313,473	2,004	7	5	148	7
McDonalds FB, G+	19,680,889	10,198	7	0	4,388	NA
Intel FB, G+	10,165,230	374,339	6	4	7,295	68
IBM FB, G+	119,648	5,745	5	0	138	NA
Apple FB, G+	6,240,280	NA	NA	NA	NA	NA
Disney FB, G+	35,650,607	NA	5	NA	32,404	NA
HP FB, G+	1,804,691	190,109	6	5	238	11

* Coke's Facebook page didn't seem to be working like other Facebook pages when I tested it. I had great difficulties getting older posts to load, so I'm not certain this is an accurate number.

In order to compare the number of fans/circlers and likes/+1s on an apples-to-apples basis, I computed averages based only on the brands that are actively maintaining a presence in both social networks. I have noted the current averages in the chart below.

Brand	Facebook Fans	Google+ Circlers	# of FB Posts (4/24 - 30)	# of G+ Posts (4/24 - 30)	Avg # of FB Likes/Post (4/24 - 30)	Avg # of G+ +1s/Post (4/24 - 30)
Coca-Cola	41,943,732	523,783	2*	3	5,637	44
Google	9,586,681	594,677	6	17	1890	323
GE	313,473	2,004	7	5	148	7
Intel	10,165,230	374,339	6	4	7,295	68
HP	1,804,691	190,109	6	5	238	11
Average	12,762,761	336,982			3,042	91
	+3,687%				+3,257%

Of note is that:

Fifty percent of the world's top ten brands are absent from Google+, while nine are present on Facebook. Apple is the lone holdout on both platforms.
The activity on G+ brand pages is much less than would be expected, based on Google+'s and Facebook's Monthly Active Users. With Facebook at 901 million MAUs and Google at 100 million MAUs, one would expect brand pages on Facebook to have 800% more activity than on G+; instead, the brands present in both social networks have almost 3700% more fans/circlers and over 3200% more likes/+1s on Facebook than Google Plus. What would cause a brand's social graph and engagement to be much less than expected on Google+ compared to Facebook? The discrepancy is not due to a lack of activity on the part of brands--the number of posts made by brands to both platforms is quite similar. There are three possible explanations, and I suspect all three may be correct to one extent or another: G+ users are significantly less interested in engaging with brands on the social network; those who use G+ are far less active than the folks who use Facebook; and the number of G+ MAUs has been exaggerated. (Much has been written about how Google counts as an active user any Google+ registrant who uses Google services such as YouTube or Search when they're logged in, which would seem to exaggerate the number of active and actual users of Google+.)
Perhaps most telling is this: Google gets substantially greater engagement with its brand page on Facebook than its brand page on its own social network. Despite posting significantly more content to G+, Google's Facebook presence has 1500% more connections to consumers and its posts receive almost 500% more engagement on Facebook than G+.

My own small evaluation of the top ten brands is not the only sign that Google+ is failing to get wind under its wings. In recent weeks:

An RJMetrics analysis found that the average post on Google Plus receives just 0.77 +1s, 0.54 replies and 0.17 reshares.
The same study found that 30 percent of users who make a public post on G+ never make another. Even after making five public posts, there is still a 15% dropoff before the sixth post.
A Nielsen study found that over 70% of US moms who went online in March visited Facebook. The study also lists percentages for Blogger, Twitter, Wordpress and Tumblr, but the study omits Google+. It is hard to imagine that if moms were visiting G+ in any significant numbers that Nielsen would have excluded Google+ from this study.
Janrain reported that Facebook is approaching 50% penetration among social login services. As recently as 18 months ago, Google held a tremendous advantage as the social login of choice among consumers, but today 45% of consumers use their Facebook accounts to log into third-party sites and only 30% use their Google credentials to do so.
A recent Pew Internet study found that 73% of search users said they would not be okay with a search engine keeping track of their searches and using that information to personalize future search results because they feel it is an invasion of privacy. The idea of search as a social signal is a core tenet of Google's social strategy, but it seems few consumers are comfortable with the concept.
Experian Hitwise recently tweeted that G+ experienced traffic growth of 5% from March to April 2012, which sounds pretty impressive until you consider the same company reported 27% traffic growth from February to March and a 55% month-to-month growth rate in late 2011. It seems G+'s adoption is decelerating rapidly less than a year after its September 2011 launch.

I am not trying to pile on Google Plus, but I would like more transparency from Google and others when it comes to data about G+ usage, engagement and growth. As a social media leader at a Fortune 500 firm, I must evaluate the benefits of dedicating resources to maintain a presence on Google Plus, and I would like to be armed with real data to make the right decision. For now, our choice about Google+ is informed by the fact that our brand has a mere 230 +1s on G+ , 0.1% of our total fan count on Facebook.

Perhaps Google+ will someday succeed at becoming a major social network, social layer, or whatever other social strategy Google chooses to pursue. For now, it seems to remain a niche social network with little engagement and stagnating growth. I am happy to proven wrong, but it is going to take thorough, accurate and transparent G+ data to do so--something in short supply at the current time.

Social Media Questions I'm Asking These Days

2012-05-14T11:40:00.000-05:00

I'm puzzled, and perhaps you can help answer some of the questions that are bedeviling me lately:

Why are there so many blog posts about how Facebook Timeline changes brand interactions when so few people actually visit brands' walls? (One recent study found that 75 percent of Millennials “liked” a brand but 69 percent rarely or never return to fan page.) Shouldn't we be more focused on how we break through to fans' newsfeeds and encourage interaction there?
Who the heck cares what Mark Zuckerberg wore when he visited Wall Street? Why are we surprised that a young man whose empire is built on the ways power is shifting away from institutions and toward people demonstrated his indifference (or lack of recognition) to the old conventions of power? More importantly, why does it matter? Would a tie on Zuckerberg increase Facebook's number of users? Would a suit coat have added to the engagement on the Facebook platform? Perhaps wingtips would have increased the number of sites that integrate Facebook plugins? The future of Facebook and Zuckerberg's wealth doesn't depend on his attire but on the way Facebook continues to bring value to users, advertisers and partners. (And, BTW, didn't we recently decry the way stereotypes about hoodies brought violence to one young man? Perhaps Zuck is to be applauded for demonstrating that the hoodie doesn't make the man.)
If Klout is supposed to be about connecting brands with influencers, why are so many Klout perks made available to those with scores as low as the 30s? People with scores in that range have a social media profile and a pulse, not influence of any particular scale. Don't get me wrong, I'm glad that most folks interact in social media without regard for the influence they create and perks they can receive--that makes them authentic--but what is the point of using Klout to distribute swag to just anyone? A form on a web site could accomplish the same thing in much cheaper fashion.
Why is there such obsession with the price and timing of Facebook's IPO on social media blogs and news sites? Few, if any, of us will be able to participate in it, and whether Facebook's market cap is $75 billion or $125 billion won't affect our social media strategies one iota. The number of likes on our brand pages is a far, far more important data point than the price of a share of Facebook stock.
Why does it continue to amaze people that an individual's social media posts, broadcast freely to the world, may be used for unintended reasons? Some folks manage their social media profile to create the biggest footprint possible, yet gripe when influence-measurement services assign them a score. Others recognize their social media posts may help them land a job, yet complain when their employers listen to what they share. And others whine when law enforcement use their photos of violent events to do what we pay police to do--solve crimes and arrest perpetrators. How long until we recognize that a more open society means a more open society?
Isn't it time for the Google+ hyper-fanboys to admit they were wrong (or, at the very least, wildly overoptimistic)? You know who I'm talking about: The people who, just days after G+ launched into its private beta, predicted the death of Facebook, published blog posts with near-vertical lines of growth for G+ and insisted businesses needed a Google+ strategy, even though Google had yet to release a business offering for G+. I'm all for ballsy predictions that are occasionally incorrect, but I also think the folks who were so wrong owe an authentic accounting of what caused their predictions to be so wildly inaccurate. Are they hungrier than the average consumer for something new? Do they have biases that prevent an honest evaluation of Facebook? When they wrote their G+ raves, were they perhaps more interested in creating traffic-generating content than accurate insight?
Closely related to the prior item, shouldn't we expect Google to play a little straighter with their Google+ facts and data? Perhaps the issue is one of semantics--as a social network, it is clear G+ is not setting the world on fire, but as a "social layer," well, the jury is out. What's the difference? A successful social network requires people to actively use it as a sharing and interaction network, while a "social layer" may passively collect (and make available to others) information about peoples' surfing or digital habits. As Google has announced ever more impressive numbers, those actually monitoring Google Plus accounts are left scratching their heads. Where is all this activity when so little seems to be happening on G+? (Example: On Facebook, Starbucks has 30 million fans and routinely gets 15,000 or more people interacting with posts, while on Google+, Starbucks has half a million fans and rarely exceeds 200 people interacting with its posts.) The answer is that Google has an awfully wide (some might say misleading) definition of an active user--it seems Google is counting every time a person logs into Gmail, YouTube, Google.com or Picasa as an active user of G+. Couldn't social media professionals make better decisions about social strategies if they knew how often people used, visited and shared on G+ versus merely interacted with a Google product? I cannot shake the feeling the way Google is reporting G+ usage is misleading and un-Google-like.
Where are the business results delivered by social media? There is no doubt that smart social strategies carefully measured deliver real business value, but you'd have a hard time telling from the endless parade of blog posts and conference presentations in which social media pros crow about the number of new likes, retweets or pins. There is a huge difference between getting people talking and getting them engaged with your brand. (Case in point: The Simpsons is the most "liked" TV show on Facebook yet isn't even the most watched show in its time slot--the number of "live plus same day" viewers of the show is less than 10% of its Facebook fan count.) Every brand interaction is not created equal--a person who likes your brand because you gave them a free widget in a social game is not the same as the person who likes your brand because, you know, they like your brand. In the two years since I shared Forrester's balanced scorecard approach in the report, The ROI of Social Media Marketing, I've been disappointed with how little the conversation around measuring success has advanced. Where are the financial outcomes? The brand lift? The risks mitigated? Who cares that your latest TV ad campaign garnered a half million views on YouTube if your brand hasn't gained new customers and you haven't shifted market share? Is anyone else tired of engagement for engagement's sake?

These are just a few of the thoughts banging around my brain these days. Feel free to help me gain insight and understanding with some responses in the comments below.

Matching Name to Purpose: IMC2 Becomes MEplusYOU

2012-05-03T08:52:00.000-05:00

As a former agency leader, I find it fascinating to observe and learn from the ways agencies foster their own brands. After all, agencies exist to manage clients' brands, so they ought to bring the full force of their knowledge and experience to maximizing their own brands. Alas, like the fabled cobbler's children, agencies often don't do a very good job of dedicating resources to managing their own brands. This is why I took notice when IMC2 announced a name change to MEplusYOU.

I had the opportunity to speak with agency leaders about the reasons for the change. The journey IMC2 took to become MEplusYOU speaks not only of the passion and vision of the agency leaders, but also of the changes occurring to marketing in the age of the digital, mobile and social consumer.

I have had the good fortune to know Ian Wolfman, CMO, and Doug Levy, CEO, of IMC2 for some time. I first became acquainted with the agency's work while I was at Forrester covering interactive marketing, and several of its programs made their way as case studies into my reports. IMC2 impressed me with the way its work engaged emotions and delivered results.

A favorite IMC2 example that I've often shared (and was included in my report, The ROI of Social Media Marketing) is the program for P&G's Secret deodorant. You can imagine the challenge encouraging consumers to "friend" their underarm deodorant, but IMC2 brought a sense of meaning to the brand with “Let Her Jump,” a petition to let Lindsey Van and other female ski jumpers compete in the 2014 Winter Olympics. I dare you to watch the evocative video and not get choked up. The program engaged emotions, drew consumers to friend the Secret brand on Facebook and delivered a significant and measurable increase in purchase intent.

IMC2 has a solid reputation built from years of successful client work. So, why change the name of the agency and risk confusion in the marketplace? I had a conversation with Levy about the reasons behind the rebranding to MEplusYOU.

Levy insists the name change merely reflects the work the agency is already doing, and he points to the ebook, Winning in the Relationship Era: a New Model for Marketing Success that the agency first published two years ago. The free book (which is a very brief and worthwhile read) conveys IMC2's view that the product and consumer eras have given way to a new Relationship Era. Levy wrote in Winning in the Relationship Era that "The brand must know its authentic self before it can engage in sustainable relationships with people" and the starting point for brands was to be "clear on their purpose, the reason for the brand’s existence."

According to Levy, one of the factors in the transition from the consumer era to the Relationship Era is the disintegration of mass media. I probed if Levy really believe mass marketing was dying, and his answer was interesting and paradoxical. "Mass marketing is definitely dying, and at the same time traditional paid media can be very effective for marketers."

Levy explains: "First, there is no doubt that mass is dying. Forty years ago, marketers were able to reach a sizable portion of the population with a single TV spot on a major network. Now, blanketing all of the major networks reaches a fraction of those eyeballs, and 40% of the people on the receiving end of TV ads have DVRs that they can use to speed through the commercials. Attention is split among thousands of cable channels, Hulu, Netflix, X-Box, YouTube. Magazine ad revenue has dropped $5 billion since 2007. Young people are choosing digital music over radio. And, only a tiny fraction of Web sites are able to charge for ad space. In every mass channel, mass is giving way to fragmentation.

"Yet, marketers can and do benefit from paid media. It can complement other aspects of marketing and help brands reach people where they hang out. We recommend an approach to marketing that is built on a combination of paid, owned, shared, and hopefully earned media. Paid plays a role. In today’s increasingly complex marketing landscape, it’s just not the whole shebang."

Levy foresees that successful marketing will look and feel different than what consumers, brands and agencies have experienced over the last several decades. "The shift to a Relationship Era approach suggests a decreasing reliance on the traditional use of mass media to influence and persuade a passive audience to buy more of whatever the marketer is trying to sell. Relationship Era marketers embrace approaches that build stronger relationships between their brands and people."

Campaigns have been the building block of marketing for decades, and I was curious how MEplusYOU believed episodic marketing might change in the Relationship Era. "We tend to think less about campaigns that end and more about cultivating never-ending communities of like-minded people. When communities are in place, we plan ‘ignitions’ to activate the community in areas of shared interest."

What's an "ignition?" Levy pointed to the work that MEplusYOU has done for Secret. The "Let Her Jump" program was one such ignition; others included an effort to back 60-year old distance swimmer Diana Nyad and an initiative focused on replacing bullying in schools with niceness. These ignitions engaged the Secret community around their shared interest in helping women be fearless. As a result of these ongoing programs of engagement and community building, nearly 1.5 million fans have chosen to connect with Secret. (If an antiperspirant can engage that many people, what's your brand's excuse?)

I asked Levy if he thought every brand would need to embrace the Relationship Era or if some brands might differentiate on other attributes, such as price or convenience. "Differentiation has more to do with how a brand acts and what it does," notes Levy, but he contends the Relationship Era is about purpose. "Purpose has to do with why a brand exists. Brands that are clear on their purpose and act upon that purpose have more engaged employees, more loyal customers, and healthier financial results than others, according to a variety of data sources. The most successful brands deliver exceptional products and services that are proof of their why."

Says Levy, differentiation without purpose creates unsustainable brands. "A brand could certainly differentiate in a purposeful way based on being cheaper or faster than their competition. When competitive advantages such as those are born out of a heartfelt understanding of why the brand exists, the competitive advantages are much more sustainable than the one-upsmanship of more typical marketing."

IMC2 has been delivering programs that "foster deeper and more purposeful interaction and build more enduring connections" between clients' brands and their consumers. This is the reason for the change to the new name. Levy wants marketers to recognize that MEplusYOU delivers a different sort of marketing for a different era--"something that is ultimately as meaningful as it is effective, building both trust and transactions that help brands endure and thrive. In many ways, the re-launch of the agency allows our name and public persona to catch up with where we are."

Taking a page out of his own book (literally), Levy felt his agency needed a name that reflected its purpose. "As we have evolved, we thought it was important to have a name that best represents the agency we are today and one that encompasses our purpose—to advance relationships. We have taken a firm stand for our purpose and our work in advancing relationships between brands and people, and we wanted a name that reflects it."

I asked for an example of the sort of work MEplusYOU is doing that demonstrates how marketing is done in the Relationship Era. Levy pointed to the World Series Bat Drop, a program for Louisville Slugger, whose purpose is to "make players great." The agency used digital and experiential approaches to deepen the connection between the brand and its fans.

The Louisville Slugger World Series Bat Drop took place on the Saturday immediately following the 2011 World Series victory by the St. Louis Cardinals. Armed with an SUV, a few iPhones and 45 commemorative Louisville Slugger World Series bats, a team of MEplusYOU staffers took to the streets and dropped each of the bats in secret locations across the greater St. Louis metropolitan area. As each bat was “dropped,” the crew posted clues (including riddles, trivia and pictures from the bat’s perspective) to the Louisville Slugger Facebook and Twitter pages.

St. Louis residents spent hours in their cars, crisscrossing the city, camping out at popular tourist destinations and following the “bat drop” SUV. Facebook fans not able to physically “hunt” offered virtual support by helping to solve riddles and identify locations for hunters. Fans posted pictures with their commemorative bats, messages to one another about the brand and answers to clues to Louisville Slugger’s social media channels.

The results: Over the course of eight hours, the Louisville Slugger fan base increased by 143%; the Twitter fan base increased by 163%; and the new Facebook metric, “talking about this,” increased by 834%.

Asked to sum up the agency's rebranding, Levy noted, "We exist to advance relationships. We have discovered that effective marketing starts with introspection and clarity of beliefs and purpose--the ME part. From that place of clarity, brands are ready to build authentic relationships with people--the plusYOU part."

Hard to argue with the logic of focusing on building relationships and not just messages in today's world. I wish MEplusYOU luck with their new name and old focus on helping their clients succeed in the Relationship Era.

Winning in the Relationship Era - A New Model for Marketing Success

The Demographic Social Tidal Wave About to Swamp Your Business

2012-04-30T08:41:00.002-05:00

Many of the changes of the digital era came because older folks ("digital immigrants" like me) adopted new behaviors, but most of the inertia for business evolution occurred when a wave of "digital natives" came of age. What will happen when the current batch of young "social natives" reach their adult years? A lot, and this will require businesses do far more than just add to the IT stack and hire a couple community managers.

In the mid- to late-2000s, the Gen Y cohort--people who almost could not remember a time (and could not function) without PCs and the Internet--joined key advertising demographics, reached voting age and entered the workforce. Many companies anticipated this and had deployed digital strategies early, but some waited for the mid 00s before shifting significant ad dollars online, adopting email and online service channels and developing new digital products and business models. Companies bound to old business models struggled to adjust to new realities as their customer demographics rapidly changed.

One example of how the last major demographic shift swamped an industry is the photo business. Shutterfly and Ofoto, two early photo-sharing sites, launched in 1999 at a time when Kodak had a market cap of almost $22 billion. The startups foresaw the wave of change to come with young people adopting digital photography. Kodak waited two more years before getting into the photo-sharing game (by purchasing Ofoto, later renamed Kodak Gallery), but it never really understood how Gen Y was changing the photo business. Kodak Gallery didn't permit sharing in the same way as its upstart competitors, kept photos locked behind a registration screen, and in 2008--just as the use of mobile phone cameras was exploding--Kodak implemented an ill-fated program requiring customers to purchase items or lose their stored photos.

How did that work for Kodak? Since January 2005, when Kodak launched its rebranded online photo-gallery service, its stock is down over 99%. Currently, Shutterfly is acquiring Kodak Gallery for a mere $23.8 million and Kodak is restructuring. Shutterfly was the only bidder in a sad auction for Kodak Gallery, which gets fewer than a million visitors a month, down 29 percent in one year.

Source: MinorMonitor

So, what will happen within the next few years when "social natives" enter key buying demographics, join the workforce and begin voting? We'll find out soon. Facebook launched a high school version of the service in 2005 and opened to the general public (13 and over) a year later. Of course, many teens had already adopted social behaviors before Facebook via services like Myspace and Friendster, which hosted millions of accounts as early as 2003. This means that by 2015--just three years from now--the average 18 year old won't remember a time without online social networks. (And before anyone points out that 2015's new adults will only have been legally able to use Facebook for five years, it is worth noting that over 38 percent of children with Facebook accounts are below Facebook's 13-year-old limit.)

Many of today's leaders do not understand what it will mean to serve, sell to, market to or employ the new generation of social natives. The answer is not merely to have a corporate Facebook presence, advertise with Promoted Tweets and host a community on the company intranet. Social natives will bring vastly different attitudes and expectations into their adult years, and this will force changes in the way we steer our brands, conduct business, set policies, devise organization structures and manage employees.

Soon, we will need to employ and build relationships with people who are disconnected and awake less than an hour a day. (Any longer and it "creates an unnerving sense of disconnectedness.") We all know business hasn't been 9-to-5 for a long time, particularly for global brands, but serving a generation constantly connected and demanding of non-stop brand care and interaction is going to require an even greater focus on deploying a 24/7 enterprise.

Think of how quickly this single aspect of social demographic behaviors is changing our world. On a personal level, few of us employed in marketing, PR or social media ever truly disconnect any longer, and on a business level, most large organizations already deploy community management well beyond old-school "working hours." Still, few companies have significant numbers of service staff deployed round the clock.

Soon, it will take more than a skeleton second- and third-shift crew to meet the needs of never-disconnected "social natives." The customer who tweets a customer service question at 1 am will likely have no different an expectation about response time than the one who tweets at 1 pm.

The generation of social natives also evaluates its brand preferences differently than their parents. TV advertising? It's not dying, but neither is it going to be as effective as in the past. ComScore recently found that millennials are less likely to say they found a TV ad interesting, believable or likeable, and they are more likely to call it irritating.

Source: Bazaarvoice

If younger folks don't believe in TV ads, what do they rely upon? It sure isn't corporations--37% of millennials claim to distrust big business. Instead, social natives trust others; Millennials are 50% more likely than boomers to say that recommendations from strangers influence their opinions.

Another way millennials are different than preceding generations is that they aren't afraid to voice their opinions and act when unhappy. Whereas Gen Xers were more inclined to reject institutions that failed to serve their needs, millennials are far more likely to take action to force change. This isn't just the case for brands they use and buy but also for their employers. In an Ad Age article, economist Neil Howe, who coined the term "millennial" in the early '90s, notes:

"If you ask a bunch of Gen Xers [born in the '60s and '70s] what they would do if they didn't like where they worked, most would say 'leave.' But if you ask millennials that question, their attitude is, 'Someone will fix it.' They'll start IM-ing each other, a few will get Mom and Dad on their cellphones, someone will call the local media, another will alert the congressman."

Source: Edelman Trust Barometer 2012

And woe be to brands that think they can compete merely through operational excellence. Great products and services are table stakes to a generation that expects transparency. Edelman's most recent Trust Barometer study found that trust in CEOs and government officials experienced record declines in the last year while trust in other consumers and regular employees skyrocketed. Moreover, when it comes to building trust, the agency notes:

"The 16 attributes... responsible for shaping current business trust levels are largely tied to business competence, and those that will build future trust are more societally focused. Listening to customer needs, treating employees well, placing customers ahead of profits and having ethical business practices are all considered more important than delivering consistent financial returns."

The differences between social natives and previous generations go on and on. In Zipcar's fascinating study of millennials and driving (embedded below), researchers found that younger consumers:

Source: Zipcar

Find physical interaction less vital--nearly seven in ten say sometimes talk to friends online instead of driving to see them.
Are willing to drive less if options are available--those under 34 are almost twice as likely than people over 55 to be willing to drive less, provided public transportation, car sharing or convenient carpooling is available.
Are ready to buy less and participate more in the sharing economy--compared to consumers over 55, those under 35 were approximately five times more likely to participate in car sharing and home- or vacation-sharing programs.

Is your enterprise prepared to sell to, rent to and employ a generation that is always on, empowered and prepared to take action, highly networked, more influenced by peers than ads, distrustful of big business, unforgiving of companies that aren't transparent, disinclined to conduct business with organizations that do not stand for something and more willing to share and rent than buy and own? What will happen when the current generation of ROI-maximizing, privacy-protecting, production-oriented, quarterly-obsessed CEOs runs headlong into a new generation that expects organizations to listen, make the world better, be transparent and commit to long-term societal missions?

Explore more EK Data at Wikinvest

Explore more SFLY Data at Wikinvest

Many companies think they know the trends and are comfortable planning for change in the future, but they are not really prepared. In 2008, when Kodak was comfortable with its decision to make sharing difficult and to force users to buy something or have their photographic memories deleted, it had a market capitalization of over $5 billion and Shutterfly was worth less than $200 million. Today, Shutterfly has a market cap of $1.1 billion and Kodak is in bankruptcy with a market cap of $77 million. Of course, even innovators need to play by market rules, and later today Shutterfly announces its latest quarterly earnings; it may have bested the giant Kodak, but with social natives seeing no need to print photos given Facebook's (not to mention Twitter's, Instagram's, and Flickr's) free storage services, even Shutterfly could get crushed in the next demographic wave.

In very short order, social natives will be your customers and employees. Time is not a luxury today's businesses can enjoy when considering the evolution required in the next five years.

Millennials and Driving: A Survey Commissioned by Zipcar

View more PowerPoint from Zipcar_Inc

Social TV Saving Live Television

2012-04-24T08:20:00.000-05:00

For decades, technology has chipped away at TV. VCRs, streaming Internet video, file sharing, DVRs, on-demand cable and mobile video provided TV alternatives, decreased TV's audience, increased time shifting or encouraged ad skipping. One of the intriguing things about social media is that it is the first technological advance that really benefits TV without specifically being about TV.

Of course, television was social before we had social media. TV shows drove "water cooler" chatter since Lucy Ricardo gave birth to "Little Ricky"--71.7% of all American TV sets were tuned to "I Love Lucy" the night Lucille Ball's character gave birth in 1953. Crowdsourcing is not new to television, either; letter writing campaigns to save TV shows date back to at least 1968 when fans got NBC to renew "Star Trek" for another season. The fact TV viewing is innately social makes it the perfect match for today's social media and mobile technology.

With the real-time sharing that happens via social media, it once again seems exciting and necessary to watch live TV. No one wants to see spoilers of their favorite shows--a recent TV Guide study found that 27 percent of us are watching more live TV to avoid plot and reality spoilers revealed on social networks. People may hate them, but don't expect TV networks to make it any easier for you to avoid those spoilers; hashtags are popping up in the corner of TV screens to encourage viewers to join the dialog on Twitter. According to Chloe Sladden, Twitter’s director of content and programming, those perpetual hashtags can at least double the amount of activity and could drive as much as 10 times the tweets.

The desire to join the conversation is a huge way social media is driving live TV viewership. What fun is it to tweet your love, shock or disappointment in an episode days after everyone else has seen it? Tweeting about last week's episode of Fringe makes as much sense as tweeting, "OMG, Mulder just told Scully that he loved her!" In our fast-moving world, it doesn't matter if it was last week or last decade--it's all ancient history as of this moment.

The power of real-time social media to drive TV viewership was demonstrated last year when Charlie Sheen made an 11th-hour appearance on CNN's "Piers Morgan Tonight." Though the show had almost no advance promotion, social networks lit up once the interview began, and 45 minutes into the show, viewership in the 25-to-54 demo was up 61%.

Networks are also encouraging real-time social media engagement with their shows by making stars and reality TV contestants available to fans. The competitors on The Voice are encouraged to tweet and connect with their fans, quite a change from when American Idol prevented contestants from having active Myspace pages or Twitter accounts. In addition, more and more networks are increasingly featuring stars in Twitter chats while their shows are broadcast.

The growth of mobile technology is powering multitasking and sharing while watching TV. According to Elizabeth Shaw's recent Forrester report, almost two-thirds of Gen X and three-quarters of Gen Y consumers go online while watching television. Further evidence comes from Nielsen, which found that 88 percent of tablet owners and 86 percent of smartphone owners used their devices while watching TV at least once during a 30-day period. It turns out this behavior is extremely common--roughly two-thirds of these folks use their device while watching television at least several times a week.

Today's Social TV is being powered by more than just Twitter and Facebook; new sites and tools such as GetGlue are focused on increasing social engagement around live TV. GetGlue only has 2 million users, but it has already driven 100 million check-ins (although entertainment check-ins have a long way to go to catch Foursquare's 2 billion location check-ins.) Many other tools, including some created by the networks themselves, seek to drive more Social TV activity. Other sites and apps include MTVWatchWith, NBC Live, IntoNow, Miso and show-specific apps such those for Bones, Celebrity Apprentice and New Girl.

Between GetGlue, Twitter, Facebook, blogs and boards, lots of us are talking about TV, and this is not just common among teens; in fact, according to Nielsen, people who talk about TV shows online skew older. The 25- to 34-year-old demographic accounts for just 17 percent of the overall social media population but is responsible for 29 percent of those on sites talking about TV.

All the check-ins, tweets and posts are having an effect. TV Guide's study found that 17 percent of respondents say they have started to watch a show and 31 percent say they have continued to watch a show because of a social impression.

Another study by NM Incite, a Nielsen/McKinsey Company, found a complex relationship between social media buzz and TV ratings. Buzz most closely correlated with increased TV viewership in consumers aged 18 to 34; in this demographic, a 9% increase in buzz volume around the time a show premiered correlated to a 1% increase in ratings, but as the season wore on, the relationship between the two variables weakened. However, with older viewers, social buzz had a greater impact on ratings toward the end of the season than at the beginning or middle.

In addition to driving attention and viewership in shows, TV networks are also using social media data to tweak their shows to be more appealing to viewers. The producers of the 2010 MTV Video Music Awards focused more attention on Lady Gaga after her meat dress became a trending topic on Twitter. Simon Cowell, who once criticized celebrities on Twitter by asking, "Why would you want to talk to people like that?", now uses audience feedback from Twitter to influence the format of The X Factor and tweets regularly at @simoncowell. New services such as Trendrr.TV are giving networks reams of data to measure viewer affinity not just for shows but also for granular attributes such as plotlines and characters.

The opportunities in Social TV will only continue to grow as more case studies demonstrate success. The 2012 Video Music Awards (VMAs) is one such success story. MTV pushed the #VMA hashtag using a Promoted Trend and on-screen text during the broadcast. It also hosted an online “Twitter Tracker” site during the award ceremony and displayed the results during commercial breaks to attendees in the theater to encourage their participation online. MTV's microsite even featured a seating chart of the theater to see the spots from which celebrities were tweeting.

The social promotion effort worked. Twitter saw over 10 million VMA Tweets, and the Promoted Trend had a 16% engagement rate, driving 27 times the average mentions of MTV’s Twitter account and adding 128,000 new followers to MTV’s Twitter account on the day of the event. The social media activity contributed to the success of the 2012 VMAs broadcast--it was the largest audience ever for any telecast in MTV’s history.

How will social TV continue to evolve and change television? That is like a season-ending cliffhanger: You will just have to tune in next season to find out.

Open publication - Free publishing - More social media

Where Are the Social Business and Sharing Economy Jobs?

2012-04-23T08:30:00.000-05:00

If you follow me on Twitter*, you may know that I am seeking a new job.**  Given where we are in the maturity of social business and social media, I expected I might find opportunities focused on the social business transformation that is underway, but instead those jobs are few and far between.

The world is changing, and social media is already altering consumers' relationships with the products and services they purchase and use. What is evolving is not just the way social changes marketing and communications but how social revolutionizes the products and services themselves. I have written about the profound social business transformation that is underway (such as in "The Past of eBusiness and the Future of Social Business" and "Eight Ways Social Business and Mobile Tech Are Changing Your Business"), but you do not need to take my word for it. You can check out great articles about the evolving world of social business and collective consumption in The Week, FastCompany, Mashable and Forbes.

Many companies need to retool the way they do business, because yesterday's business models will not work for tomorrow's consumers who are adopting and growing up with new sharing behaviors. In the same way the new "digital natives" of the past decade changed how we buy, consume and use news, music, photos and books, tomorrow's "social natives" will bring substantive changes to the way we use and buy (or don't) cars, financial services, durable goods, hospitality services and more. Given this, you would think that it might not be too difficult to find a job focused on social business and not merely on social media marketing and communications. I am finding quite the opposite.

If the sharing economy is about to throw a wrench into many industries, where are the jobs that will help to facilitate this transformation? Today's enterprises are full of positions that manage the processes, channels and systems brought by the last major wave of digital change, but there are few opportunities for those who will manage the next wave of social media change.

Search SimplyHired.com for "e-business" and you will find almost 800 jobs posted in the last 30 days. Search for "Social Business" and you will find only 150 jobs, and these jobs are considerably more junior than the e-business openings--most of the e-business jobs are in Fortune 500 firms and require more than 10 years' experience, while few of the social business jobs are in Fortune 500 firms and the vast majority require less than five years' experience. Leadership jobs that require social media skills do not measure up to Web counterparts, either. A search for Vice President jobs with digital, interactive or internet requirements yields over 800 openings; there are less than half as many Vice President openings that require social media or social business skills.

With rapidly changing demographics, social behaviors, social technologies and sharing habits, the growth of the sharing economy is nothing to take lightly. One need not look far to recognize the dangers of failing to keep our business processes and products in line with changing customer tastes, expectations and habits. Research in Motion stock is down 73% in five years; Kodak is down 96%; Borders Group is down 97%; Sears down 72%; Nokia down 85%; and in the five years before its acquisition by HP, Palm stock lost 61% of its value. Blockbuster, Tower Records, AOL, Polaroid, Virgin Megastores, Myspace, Gateway, Yahoo, Sega, Circuit City, Hummer, Oldsmobile--it simply is not hard to see how quickly profitable and well-established companies can fail if they hesitate to keep up with changing consumer habits, tastes and expectations.

So, where are the jobs to lead this next wave of change? Are existing leaders bringing this change to their organizations, eliminating the need for professionals with deep expertise in social business? Are today's social media managers evolving from a focus on social communications to a focus on social business models? Are companies simply not investing in the sharing economy as of yet? Or will this change only be led by vendors who offer social media tools and services (such as social media management and commerce suppliers) and startups who strive to compete against the established players (a la Amazon vs. Borders circa 1995?)

What are your thoughts? I would appreciate your input and dialog.



* If you are not following me on Twitter, why not?

** I love USAA, its mission and my team, but my wife and I are struggling to adjust to San Antonio and are seeking to return to large city with livable urban options and big-city amenities and activity.

The Past of eBusiness and the Future of Social Business

2012-04-09T09:11:00.001-05:00

While social media may today feel mature and fully integrated into our world, we have only seen the start of the changes social technologies and behaviors will bring to our personal and business lives. Profound evolution is coming that will alter how we operate our businesses, buy products, manage money, attain status and establish and protect our identity.

It is instructional to look at how the Web developed, because it provides a means to understand how nascent social media still is and how much change is ahead. In 2011, the number of US adults that use social media sites surpassed 50% for the first time. To put that into a historic perspective, the Web surpassed the 50% adoption mark in 2000. Now consider the amount of change the Internet has brought to business and our lives since 2000, and you get a sense for the substantial transformation that social media and social business will create in the next decade.

Some of the changes social media and social business will deliver will be welcome, but some of it not. After all, the Web brought many changes we all cherish (Free email! Real-time news! Videos of cats playing piano!) but many we do not (Connected to work 24/7; loss of privacy; online bullying). Exciting and difficult times are coming.

As my friend, Neff Hudson, likes to say, “There’s a lot of future in the past.” We cannot predict the future of social media and social business with certainty, but the trends and outcomes become much clearer as we compare and contrast the Web experience of the past 15 years to the social experience we can expect in the coming 15 years.

PHASE ONE: Businesses and Most People Pay No Attention

The Web: The advent of the Web was not the first time people used computers to communicate and access information on networks; Bulletin Board Systems had existed since the 70s and were hardly setting the world on fire. When Prodigy and AOL opened up the Internet to the public in 1995, the world greeted this momentous event with a yawn. Most people said they had no interest and found it dangerous; business dismissed the Web as a place for geeks and kids; and naysayers predicted people would never purchase $2,000 PCs and rewire their homes just to use the Internet. Still, some people recognized the trends and invested in the future; in 1995, while bookseller Borders sat confidently on hundreds of millions of dollars of investment in their retail stores, a guy named Jeff Bezos launched Amazon.com and sold his first book, “Fluid Concepts and Creative Analogies.”

Social Media: The advent of Friendster, Myspace and Facebook was hardly the first time people used the internet to connect and share; sites like Geocities and SixDegrees.com permitted people to update personal web pages and share connections, and these sites were hardly setting the world on fire. When Facebook opened its gates and became a public social network in 2006, the world greeted this momentous event with a yawn. Most people said they had no interest and found it dangerous; business dismissed Facebook as a place for geeks and kids; and naysayers predicted people would never embrace online social sharing widely. Still, some people recognized the trends and invested in the future. It is too early to tell who may be the Jeff Bezos of social business, but at a time when few people saw social media as a business platform, Shelby Clark started RelayRides, Chris Larsen launched P2P lender Prosper, Renaud Laplanche initiated LendingClub, and Perry Chen, Yancey Strickler, and Charles Adler created crowdfunding site, Kickstarter. (Only time will tell if these names are mentioned alongside Bezos' ten or fifteen years from now.)

PHASE TWO: Consumer Media Consumption Habits Change and Marketers (Slowly) Take Notice

The Web: In the late 90s, the Web was growing. Adoption was strong, particularly among younger consumers. Most in the business world still shrugged, but the Marketing Department took notice. The shift of marketing dollars into the online channel substantially lagged behind the shift of consumer online media consumption, but marketers cautiously began to invest in banner ads and search ads. Marketers also launched their companies’ first web sites, but they did not embrace the fundamental principles of this new medium. Early sites took the text and images used in existing print collateral and pasted them into static, non-functional Web pages, resulting in the term “brochureware” to describe the first generation of Web sites.

Social Media: In the late 00s, social media was growing, led by blogs, Facebook and Twitter. Adoption was strong, particularly among younger consumers. Most in the business world still shrugged, but the Marketing and PR Departments took notice. The shift of marketing dollars into the social channel substantially lagged behind the shift of consumer social media consumption, but marketers cautiously began to invest in blog advertising, sponsored conversations with bloggers, and Facebook advertising, with 70 billion display ads appearing on Facebook in the first quarter of 2009. Marketers and PR professionals also launched their companies’ first blogs, fan pages and Twitter profiles, but they did not typically embrace the fundamental principles of this new medium. Early blogs and social media profiles took existing press releases and pasted those social media sites, and some marketers treated blogs as they would paid media and were embarrassed when their efforts to buy their way to blog success were revealed, resulting in the term “splog” to describe spam blogs.

PHASE THREE: New Business Ideas Attract Investment Faster than Customers

NASDAQ's two-year 188% dot-com climb

The Web and e-Commerce: By the late 90s, a dot-com boom was underway. As early Web retailers like Amazon grew rapidly, the business world took notice and got scared. Old-line business worried that it was out of step with a “new economy” defined by clicks and users and not earnings per share, and investors feared they were missing something big and threw money at any entrepreneur with an online business idea. For example, dozens of online pet stores launched and competed to gain users quickly and at any cost; Pets.com raised $300 million of investment capital and bought expensive Super Bowl advertising in the land grab for new online customers. The focus of all this attention was not really on robust e-business but specifically on e-retail; Amazon and Pets.com sold physical goods, just like the book and pet stores on the corner, and most business leaders obsessed over how the internet would affect price, selection and delivery of existing products rather than on how it might create new products and services. Then in 1999, Sean Parker launched Napster and sent shockwaves through the music industry, demonstrating that the Internet was not just a medium to market and sell physical CDs.

Social Media and Social Commerce: A social media stock boom has and may continue to occur. As Facebook’s share of the display-ad market grew from 2% in April 2009 to 20% in April 2010, the business world took notice and got scared. Old-line business is worried it is out of step with a “new economy” defined by retweets and likes and not earnings per share, and investors fear they are missing something big and are throwing money at any entrepreneur with a social idea. For example, many group-buying and -discounting sites have launched and are competing to gain users quickly and at any cost; by the end of 2010, Groupon had turned down a $6 billion offer from Google, raised almost a billion dollars in venture capital and was buying expensive Super Bowl advertising in the land grab for new social customers. The focus of all this attention is not really on robust social business but specifically on social retail; Groupon and Facebook advertising are largely driving people into existing businesses like the book and pet stores on the corner (and to online retail sites) that sell existing products, and traditional retailers such as Gap and JCPenney launched early F-commerce stores on Facebook. While not as headline grabbing as Groupon’s, LinkedIn’s and Facebook’s IPOs, small peer-to-peer business companies are showing strong growth and demonstrating social media can be a medium for collaborative consumption and not just a medium to market and sell existing products.

PHASE FOUR: Stock Values Crash While Business Value Widens

NASDAQ's one-year 63% dot-com crash

The Web and e-Business: As it turned out, profits and earnings per share mattered. The dot-com bubble burst in painful fashion, destroying $5 trillion in market value between 2000 and 2002. The correction even caught the winners of the Web 1.0 era—after five years, Amazon had yet to make its first dollar of profit and could not build earnings quickly enough to justify its exorbitant stock price, and shares plunged from $107 to $7. Startups like Pets.com with weaker business models never made money and evaporated completely. However, what crashed were stock values and not the value of the Internet, and out of the ashes of the dot-com disaster grew something bigger and stronger. Consumers continued to adopt the web, broadening both the demographics and the use of the medium.

Online consumers had different expectations and demanded more—they wanted more product information, access to account information and service in their channel of choice, and they wanted it now. Online advertising and e-retail continued to grow, but something more substantial was happening—brochureware sites were replaced by rich, functional web sites, and the Web evolved from a focus on marketing and retail to a focus on business value throughout the enterprise.

Social Media and Social Business: I believe we are in the midst of a slow-motion social media market correction. Profits and earnings per share matter, and soon investors will care that Zynga and Groupon are struggling to attain and sustain profitability. Groupon is already trading near its all-time low price, almost half of its peak price five months ago, and a recent analysis demonstrated that just three of 2011’s twelve social IPOs were beating NASDAQ. I expect the social media bubble burst to be less painful because exuberance is not as great today as it was in 1999, but it still would not surprise me if the correction caught the winners of Web 2.0 era, causing Facebook’s post-IPO price to plunge as it struggles to build earnings quickly enough to justify its stock price. However, even as the market reconsiders the valuation of social media companies, something bigger and stronger is growing. Consumers continue to adopt social media, broadening both the demographics and the use of the medium.

Social consumers have different expectations and are demanding more—they want access to the objective opinions of other consumers, demand companies respond to their complaints posted to social networks and expect organizations to be more transparent about corporate practices, and they want it now. The first F-commerce sites failed because they didn't bring true social benefits to the shopping experience, but social commerce can be expected to grow. In addition, advertising on social networks will explode as marketers continue to shift more dollars to the channel where consumers spend so much time. But, something more substantial than just social ads and retail is happening today—PR-oriented corporate social media profiles are being replaced by robust communities and dialog where companies engage consumers (and consumers engage each other) around business policies, service needs, new product ideas, employment, and more. Social media is evolving from a focus on marketing and PR to a focus on business value throughout the enterprise.

PHASE FIVE: Now It Gets Interesting: New Products and Business Models Challenge Old Ones

Estimated Quarterly US E-commerce Sales
as a Percent of Total Quarterly Retail Sales

The Web and e-Business: For all the headlines and investor enthusiasm about e-retail in 1999 and 2000, the percentage of total US retail that occurs online did not surpass two percentage points until two years after the dot-com crash. Since then, the growth has been steady, but despite the fact online retail has shaken retail to its core and forced former powerhouses like Borders into bankruptcy, e-retail still represents just one of every twenty retail dollars spent in the US. Of course, online retail is wildly uneven, affecting some categories far more than others; digital sales of music surpassed physical sales just last year.

While the impact of e-retail has been significant, that is not the big story of this phase; rather, in recent years the Web has fundamentally changed consumers’ relationships with products and services. We used to buy CDs and listen to music in cars and at home—now thanks to iTunes, iPods and cell phones, folks download music and listen throughout the day. Many said they would never give up the joy of a paper book, but just a few short years after the creation of tablets and e-readers, one in five adults read an electronic book in the last year and Amazon already sells more e-books than print books. Mobile wallets, digital photography, real-time communications, online news, delivery tracking—the Web is no longer a way to market and sell traditional products but the foundation for completely new ways to conduct business.

Social Media and Social Business: Social media will bring great change to our products, services and business models over the next ten years, just as the web did in the last ten years. This won’t happen quickly—Amazon was selling books online for 16 years before e-books surpassed print books, and Napster demonstrated that consumers would download music 12 years before digital music sales exceeded physical ones. The companies that led these changes tended not to be the big, traditional, existing ones but the startups. Barnes and Noble has been remarkably nimble for an old-school organization, launching its first web site two years after Amazon.com and deploying the Nook two years after the first-generation Kindle, but today Amazon has diversified its business and enjoys a market capitalization more than 100 times greater than Barnes and Noble.

This trend repeated across categories—Kodak was too committed to print photography to lead in digital photography, and Apple handed the record industry its butt because it was unencumbered by physical music models. Today, for example, banks may be too invested in physical branches to lead in the social business space for financial services; no banks have launched or invested in peer-to-peer unsecured lending (Prosper and LendingClub), direct peer-to-peer lending between friends and family (National Family Mortgage) or alumni-to-student college loans. The nascent Sharing Economy and Collaborative Consumption models promise to change consumers’ relationship with products ranging from cars (RelayRides and Wheelz) to lodging (AirBNB) to lawnmowers and drills (Rentalic and NeighborGoods). Perhaps big companies will get smarter this time around—U-Haul has already launched a peer-to-peer model to finance the purchase of new trucks and GM has partnered with RelayRides.

PHASE SIX: New Technology Rewires People and Society

The Web: You might have thought Phase Five was the end, but the web has done more than just change products and services—it has altered consumers’ attitudes about themselves and the world. Our world is smaller, faster and more connected today than 15 years ago. We never want for communications or entertainment. We are never disconnected from our friends or our jobs, no matter the time of day or day of the week. The web flattened corporate structures and altered organizational dynamics--business leaders are no longer protected by Administrative Assistants, work relationships are more casual and the speed and pressure of business have increased.

The Web made the world flat, instantly furnishing insight into happenings around the globe but also creating downward pressure on US salaries as outsourcing became exponentially easier. The Web put spectacular power into the hands of people, giving them the capacity to launch businesses, communicate widely and build reputation but also providing a platform for bullying, coordinating terrorist attacks and stealing identity. The Web has brought us together to raise record amounts of money for victims of earthquakes and tsunamis, but it has also furnished a way to drive us further apart as we reject news and information offered by a handful of media conglomerates and consume hyper-local, hyper-niche and hyper-partisan content.

The web has made parenting more difficult. Children grow up faster, can get themselves in more trouble, are exposed to more worrisome content and are impossible to monitor and protect as in the past. Parents cannot punish children by sending them to their room, because those rooms contain access to more information and entertainment than a TV network control room had three decades ago. Kids never have to negotiate for access to limited resources--homes that 15 years ago had one way to communicate externally and one screen for entertainment today have options too numerous to count. (Go ahead and try.)

The Web has affected how we go to school, date, work, age, retire and play. Absolutely nothing happens today that isn't caused by, planned, hosted, captured or shared on the Web. Without the Web, there would be no Tea Party or Occupy Wall Street, no multi-tasking, no telecommuting, no smartphones, no iPad, no World of Warcraft, no Angry Birds, and arguably no President Obama, Kim Kardashian, Lady Gaga, Justin Bieber or green movement.

Social Media: Social media has already affected communications in substantial ways, but the advent of peer-to-peer and sharing economy business models will do more than affect the communication networks we maintain. It will change:

Our sense of identity: We are constantly connected to others, communicate in real time, and have more and stronger “soft relationships” (but some argue weaker “hard relationships”). Our identity is increasingly created not in quiet moments by ourselves but in constant and pervasive social interactions. A strong majority of Millenials say they are so connected they are never really alone.
Ownership: Already, many people rent music via a subscription model rather than buying and owning audio tracks, and over half a million people have used Zipcar’s 8,900 vehicles. This is not just changing the way we get products and services—it alters long-held attitudes. Teens are less inclined to get drivers licenses than in past in part because they are more open to public transportation and often choose to spend time with friends online rather than driving to see them. Cash-strapped consumers are finding they don't need to own certain categories of things, they only need to access, borrow and rent them in real-time.
Status: As Collaborative Consumption rises, we will be defined less by what we drive, wear and own and more by our experiences and sharing—already more than half of Millenials agree with the statement “What I post online defines me.”
Privacy: In the past we cherished our privacy, but in the future many will happily sacrifice privacy in order to gain access to sharing economy goods and services. We may soon elect to add our credit history and driving record to our online personas so that others will be more willing to rent us their cars, lend us money, allow us to stay in their spare room or rent us their hedge trimmers. Consumers will come under pressure to sacrifice privacy for transparency, but not because Facebook or some shadowy marketing research firm wants your data but because we will come to expect it of each other.
Pricing: The more transparent we become, the more fluid prices will be—if you rent your car, would you charge the same to someone you can identify with a strong reputation, transparent credit score and open and clean driving record as you would to @HotGuy1992? Who we are, the trust we engender, the influence we create and our actions online won't just affect our access to sharing economy goods and services but also will influence the prices we are charged. The drive to earn our way to lower pricing with better behavior and more transparency will be a powerful force that encourages smarter financial decisions in the future.

We are just scratching the surface of the changes social technologies and behaviors will bring to our lives. For individuals, the future belongs to those willing to embrace both the welcome and difficult aspects of a more social, transparent world.

The same is true for business; the future belongs to those who see and invest in the future and not merely protect today's business models or chase this quarter's ROI. Amazon.com moved while others ignored the trends; it saw a business platform where others only saw retail and marketing; it invested for six years to achieve its first dollar of profit; and then it put its predominant revenue stream at risk with a bold new vision for how consumers would consume content in a digital and wireless world. Today, founder Jeff Bezos' personal wealth stands at $18 billion while the combined market caps of Barnes and Noble and Borders is just $730 million.

“There’s a lot of future in the past.”

Reciprocity: What Have You Given To Your Customers Lately?

2012-03-28T08:18:00.000-05:00

Corporations are not altruistic. By definition, they must be selfish, generating income and protecting the financial interests of shareholders. However, the ones that act as if this is their sole purpose for existence are the ones that will fail in our increasingly social world. Meanwhile, the ones that give more get more. This is not just a "nice" idea; it is the science of reciprocity.

Many years ago, I was scammed--in the nicest of ways. Sitting in a Vegas bar, a couple of young women walked in and started making friends quickly. They had visited a "legendary candy store" and could not wait to share treats from the large bags of delicious goodies. Strangers became friends, drinks were bought, candy was consumed, and everyone was happy.

It only occurred later that these two had invested $10 in bulk grocery store candy and received a 1000% return on their investment in the form of drinks purchased by strangers. Brilliant! Why would someone buy a $15 drink for a person who just shared 25 cents worth of malted milk balls? Reciprocity, and it works for people outside of bars, too.

Forty years ago, Professor Dennis Regan at Cornell University conducted a landmark study that examined the concept of reciprocity. Subjects volunteered to rate paintings, but that was not what the researchers were studying. Rather, a research assistant left the room midway through the exercise, sometimes returning empty handed and other times with a soda, saying, “I bought one for you too.” At the end, the assistant asked the subject to do him a favor by purchasing raffle tickets. You can guess the results--people who received the gift of a soda were far more likely to purchase tickets, even though the cost of the tickets surpassed the cost of the cola.

When you search online for "social media reciprocity," you tend to find many links about personal reciprocity, such as retweeting people so that, someday, they may retweet you. But what about brand reciprocity? Why do brands make so many offers that are unemotional and self-serving? "Retweet us and we'll donate a dollar." "Like us and get a free bagel." That is not reciprocity; that is non-monetary commerce--a straight-up exchange of value.

One example I like is Sharpie. They run contests, as you would expect, but they have dedicated the Sharpie Facebook page to the creative works of their fans. Using your brands' social media platform to promote others' ideas and creativity is like a gift, and Sharpie gets reciprocity in return--3 million fans and 30,000 people "talking about" the brand on Facebook. (Not too shabby for an office product.)

Another example is Wheat Thins "Crunch is Calling" gifts. Sent unexpectedly to folks who mention Wheat Things in social networks, these delicious packages come with no request to tweet or post, but that is exactly what people do when they get the gift of Wheat Thins. A tasty gift is reciprocated, more often than not.

Given the scientific validation of reciprocity, I am surprised more brands don't grab a bag of dime-store candy and start handing it out in bars, metaphorically speaking. Have you seen some good examples of brands giving gifts in social media? Any great case studies of reciprocity you care to share? If so, please comment below.

Three Things Every Employer and Employee Need To Know About Social Media

2012-03-26T08:33:00.001-05:00

The topic of employees' right to privacy and expression in social media has been front and center in recent weeks. Social media employment news has included Delta being called out for the non-work activities of an employee, Facebook taking a stand against employers asking for job candidates' social network passwords and the latest in a long line of employees fired for things posted to social networks.

While social media continues to evolve and much will change in the years to come, every employer and employee should by now understand a few simple things. Being ignorant of social media risks, best practices and laws is no excuse for employees making career-ending mistakes or employers stumbling into costly legal and brand reputation errors. Here are three things employers and employees should know about social media:

Three things every employer should know about social media:

Training and communication about corporate social media policies are essential: Some companies do not yet even have a social media policy, but most have come to recognize that existing communication policies are insufficient to protect both employers and employees from the nuances and unique risks of social media. Other organizations have a policy but fail to educate employees on the risks and ramifications of their actions in social media; this is almost as dangerous as having no policy at all.

Simply put, your employees--particularly younger ones who are social natives--are ill equipped to understand the corporate, regulatory and legal risks of their social media activities. If you are not reinforcing what is expected, what will get them and the company in trouble, and the consequences of mistakes, your brand is accepting needless risks and you are not doing your employees any favors.
The best defense is a good offense--give employees every opportunity to vent in private and appropriate channels: Nothing a company does will prevent some employees from turning to social media to voice complaints; social media sharing is second nature to too many people to prevent every possible social media issue caused by employees. Nevertheless, that should not prevent companies from trying to prevent as many social media problems as possible.

The answer is not to prevent social media access at work--employees all carry their social networks in their pockets and purses nowadays--but instead to furnish many ways for employees to share feedback within the company. This includes everything from passive solutions such as offering intranet forums where employees may discuss concerns to proactive solutions such as organized employee gatherings and groups to collect feedback. The best solution is nothing new: Strong, active, open and engaged leadership that listens to employees.
Do not ask for candidates' or employees' passwords: Asking for employees' and candidates' social media passwords is problematic for several reasons. First, doing so may expose you to information that the person is in a protected group and open the company up to a discrimination claim. Also, your organization could suffer lost reputation if a candidate or employee shares the practice. In hiring situations, you might lose a qualified candidate concerned your organization demonstrates a hostile and distrustful relationship with employees. Finally, this practice requires employees to violate Facebook's Statement of Rights and Responsibilities, which states, "You will not share your password..., let anyone else access your account, or do anything else that might jeopardize the security of your account."

Some assert there are legal risks to asking employees and job candidates for their passwords. I am not a lawyer and cannot advise you on the legality of checking social media for information on candidates, but asking for passwords is a dangerous and risky policy.

Three things every employee should know about social media:

If you manage people, NEVER discipline an employee for what you see in personal social media profiles without consulting Legal or Human Resource professionals: Imagine a scenario: You visit an online forum or social network and find your employees disparaging you, your peers, or your company, in full view of prospects, customers and vendors. If you were to discipline the employees or consider a request that they refrain from further criticism, your actions could result in a variety of legal problems, including charges of unfair labor practices by the National Labor Relations Board (NLRB).

Some employee complaints are protected by law and others are not. The NLRB is actively shielding workers' rights to use social media to discuss the terms and conditions of their employment and criticize their employer. Recent NLRB decisions have ruled against companies that fired employees for complaining about coworkers' promotions, company policies or managers. Managers cannot know every employment law or ruling, but your Human Resources and Legal resources do--use them and do not take unilateral action that can cause more problems for you than for a whiny employee.
What you say and do in social media can get you fired: You probably know that social media can help you land a job; if so, it should come as no surprise social media can also help you lose one. While the First Amendment may guarantee you the right to free speech, that protects you from government infringement on your rights and does not apply to private companies.

While the NLRB may be actively seeking to protect workers' rights to use social media to complain about working conditions, that hardly means you have an open invitation to gripe. The NLRB has upheld many employee discharges for social media posts, and chances are you do not and will not recognize the difference between a protected post and an unprotected one. Even if you do, relying on legal recourse rather than common sense is a very bad career idea; it won't help your reputation at your current organization or future employers if you gain a reputation for publicly griping about coworkers, bosses or company policies.

Do not post anything in social networks--even ones where you presume the right of privacy--that you would not say or send to a boss or coworker. If you have concerns about your employers' policies, you are much more likely to affect positive change and protect your job by communicating these issues within your organization rather than on Facebook or Twitter.
Your employer has a good reason to listen to you in social media: It has been my experience that many employees are concerned about having employers listen to their posts and tweets. This concern is understandable--there is an uneasy element of Big Brother to employer listening--but it is also important to recognize that employers have good and reasonable reasons to do so. A lawyer friend of mine recently said, "Companies do not monitor to pry into the personal lives of their employees. They monitor because they are required to."

Corporations have a fiduciary responsibility to protect the company's assets, and this includes the reputation of the firm. They also have a legal responsibility to protect everything from trademarks and patents to private information about customers. Moreover, the FTC has indicated that companies must monitor the people who have material relationships with the firm to ensure they disclose the relationship when praising the company in social media. And if your firm is in any sort of regulated industry, there are likely a host of regulatory agencies with rules that require monitoring, record retention and auditing policies.

Chances are your employer does not care that you love Ron Paul, support Occupy Wall Street or listen to Lady Gaga, but many companies have established or will need to set up listening practices to do what shareholders, governments and regulators expect and require. In fact, if an employer is smart, they will use monitoring to find employees who are participating in social media in concerning ways and counsel those workers before they cross a line that results in lost employment and income.

It may seem to some as if social media has matured and become a way of life. That is far from true--social media will continue to challenge and change laws, regulations, business practices and the nature of the employee/employer relationship. Until the dust settles--and that will not be for many years--both employers and employees are better off proceeding with caution. There are many landmines waiting for companies and workers in our new and evolving social era.

Your Brand and Employees' Repugnant Hobbies: On Delta Air Lines and Dead Polar Bears

2012-03-16T08:26:00.000-05:00

Delta Air Lines is facing an organized effort to embarrass the company for one employee's loathsome but legal behavior. The situation once again demonstrates how "transparency" can come in unexpected, unwelcome, uncontrollable and intractable ways.

First, here is the story: Michele Leqve, in a blog post entitled "Mission Accomplished," recounts how she killed a polar bear with a bow and arrow. As an animal lover, I find her tale distasteful. She unleashes dogs to chase and exhaust the animal, tracks it down and shoots the bear with three arrows to end its life.

Michele Leqve and her polar bear -
© 2000 - 2009 WomenHunters™

As the amazing animal perishes at her own hand, Leqve is--get this--overcome with "amazement at the beauty of the bear." I was not there, but I am going to go out on a limb and guess the polar bear was even more beautiful moments earlier when it was alive, not bleeding with three of Leqve's arrows piercing its heart.

I am not the only one disturbed by Leqve's pride in killing an animal whose species is considered Threatened and Vulnerable. A Change.org petition posted two days ago has collected over 5,000 signatures. Animal defenders have taken to blogs to criticize Leqve and promote the petition.

While I find it nauseating, Leqve apparently has the right to kill polar bears. And people have the right to criticize her and post petitions. I am less comfortable, however, with the way many are tying Leqve's actions to her employer, Delta Air Lines.

The Change.org petition is not targeted at Leqve or the site on which she blogs her brave hunting exploits--it targets Delta Air Lines. Why? Because Leqve is an employee of Delta. There is no evidence Delta supported the hunt in any way, nor does Leqve mention her employer on her blog. Incensed animal lovers discovered the connection by turning to LinkedIn in search of information about Leqve.

The Change.org petition doesn't demand any actions of Delta, so I am not entirely sure what petitioners believe the airline should do about the situation. Should Leqve be fired for this legal act? Should Delta request she cease her legal hunting or blogging activities?

Flipping this situation 180 degrees, I wonder if the petitioners want their employers monitoring employees' recreational habits. Would the bloggers currently targeting Delta submit to an evaluation from their employers assessing how workers' personal activities fit with brand and corporate messaging? Of course, almost all employers have some form of employment agreement or policies that prohibit certain activities, such as ones that create a conflict of interest or violate laws, but does anyone really want their bosses reviewing and approving (or rejecting) activities that fall within existing laws?

With greater transparency and availability of tools for social action, we are not likely to see this sort of activity slacken. Employers are going to have to be prepared to deal with criticism of employees' after-work actions. What can an employer do in such situations? There are no clear cut best practices, and every situation will need to be evaluated independently.

For the most part, it is probably best to do nothing unless absolutely necessary. Most customers and prospects will understand that the company cannot be held accountable for employees' legal after-work activities. And, while it is difficult to silently observe mounting criticism, it is helpful to remember that most social media "crises" have a very brief half-life. Should criticism of an employee mount within a brand's Facebook page, it may be necessary to make a simple statement noting that employees' personal activities cannot be discussed in public communication channels.

Despite my strong personal feelings about Leqve's actions, I did not sign the Change.org petition. I simply do not believe it is Delta's job to insert themselves into employees' private lives. I hope you agree, but if not, please do not complain to my employer!

Happy 18th Birthday SXSWi, Now Grow Up!

2012-03-15T08:11:00.000-05:00

"I'm going to drop a lot of f%#$ing F-bombs, and if you don't f*#$ing like it, you can f@%!ing leave." Thus began an official session at South by Southwest Interactive (SXSWi). My reaction to this speaker matched my feelings about the entire SXSWi 2012 experience: It's time to grow up.

SXSWi turned 18 this year. SXSW originated as a music festival in 1987 and added SXSW Multimedia to mix in 1994. Although SXSWi now is legally an adult, you would be hard pressed to tell that strolling through hotel lobbies, 6th Street or the Austin Convention Center last week. SXSWi seemed less a conference for interactive and social media professionals than spring break for folks trying very hard to appear the exact opposite of what they really are--executives who work and consult with Fortune 500 companies. I had to remind myself that the guy in line next to me sporting a three-day growth of facial hair, knit cap, indie band T-shirt and overstuffed backpack wasn't a student but a professional who charges $500 an hour to tell CMOs how to build social engagement.

I think it's time SXSWi acts its age. Interactive and social media have moved to the center of corporate strategies, and professionals in this space no longer are lone evangelists fighting against marginalization within corporate structure. Ad spending in social media is up, the size of the social business industry exceeds $100 billion and social media budgets at more advanced enterprises are into the seven figures. As Altimeter's Jeremiah Owyang points out, social media folks are now earning the title of vice president when "two years ago, the average title was manager and director" (or guru and ninja).

We've arrived, but at SXSWi, we don't want to act like it. People are far more likely to tell you about the hot party they attended rather than the hot panel they observed. There was considerably more buzz about Jay-Z's performance than keynotes by Amber Case and Ray Kurzweil. Attendees couldn't wait to show off the great schwag they got, not the great insights they heard. And I was actually embarrassed watching interactive professionals dashing after branded T-shirts tossed from passing buses. My peer, Josh Salmons, hit the nail on the head when he observed, "SXSW is like Mardi Gras for nerds."

Other digital and social conferences are not like this. I have attended great events in the last two years such as the ANA Digital and Social Conference and the Social Media Insiders Summit. People at these conferences have fun, dress down and spend their nights partying, but education, insights and business come first. Maybe Austin brings out the "weird" in people, or maybe business execs feel pressured to fit in next to the rockers, folkies, actors and filmmakers in town for the other portions of SXSW.

Am I a grumpy old man? Perhaps, but I have worked for 15 long years building credibility for digital and social strategies in a world that often viewed them as fluffy and inconsequential distractions, removed from essential business processes. I think it is time for SXSWi to reflect the maturity, professionalism and impact of today's business-driving social and digital strategies.

Do you agree or disagree? To paraphrase the foulmouthed SXSWi speaker, "if you don't f*#$ing like it, you can f@%!ing leave..." a comment below.

Peer-to-Peer Lending: The Leading Edge of Social Business

2012-03-10T07:31:00.000-06:00

Before Zappos and Dell.com thrived; before Pets.com and Beauty Jungle crashed; there was Amazon and eBay. These ecommerce pioneers weren't the first companies to conduct transactions online, but they were the first to take root and grow. Today we know the success stories, but in 1999 their future was hardly certain--while Borders was earning $92 million, eBay cleared just $10 million and Amazon bled $720 million. Ten years later, Borders lost $187 million and the two eCommerce giants earned a combined $3.3 billion.

A decade from now, perhaps we'll look back and speak of two social business pioneers, LendingClub and Prosper, in the same way we today speak of Amazon and eBay. One might argue peer-to-peer (P2P) commerce is nothing new; after all, eBay and Craigslist were both facilitating P2P transactions long ago, but these companies replaced and enhanced existing business models, such as classified advertising and flea markets, by bringing them into the digital age. Today, we see a new wave of social businesses creating forms of commerce that previously didn't exist outside of tiny transactions facilitated between friends and family members.

Never before have we seen scale brought to things like person-to-person lending (LendingClub and Prosper), car sharing (Wheelz and RelayRides) and space sharing (Airbnb). As in 1999, it can be difficult to see how these small companies might alter the world, but I believe these social businesses represent the next wave of change that will challenge traditional business models.

The primary P2P lending sites in the US are LendingClub and Prosper, and both are growing rapidly. Lending Club's 2011 loan volume more than doubled its 2010 totals, and Prosper is growing at a rate of 178% year-over-year. To learn more about the growth of peer-to-peer lending, I interviewed Peter Renton, who blogs at the Social Lending Network.

Renton notes that the strong growth of P2P lending is even more remarkable when you consider these businesses are not legal in all 50 states. "As laws stand right now it would be virtually impossible for any P2P lender to create a model that would please every state," notes Renton.

That may change with new action at the national level. A crowdfunding bill has passed the U.S. House and is gaining support in the Senate. This bill would not immediately make P2P lending legal throughout the US, but it is a step toward bringing P2P lending to every state. "I expect this will happen sometime in the next two to five years," says Renton.

One thing fueling the growth of P2P lending is the influx of institutional investors seeking better yields than they can get from other fixed income options. (Does this mean P2P lending is not really P2P?) "Prosper has received a $150 million commitment from a large institutional investor," notes Renton, "and Lending Club has seen massive growth in the last year in the institutional side of their business."

While investors are lining up, borrowers are not--at least not in large enough numbers to maximize growth for these two sites. Both P2P lending companies could be growing even more quickly if they could attract more borrowers. Renton notes, "There is plenty of money from investors and they continue to reinvest their payments, so there is always new money coming in. But borrowers have to be attracted one at a time."

All this growth in loan volume has not resulted in either company becoming profitable yet, but "Lending Club could be if they wanted--they are just focusing on growth for now," according to Renton. Both companies make most of their money from charging an origination fee of up to 5% for loans and a 1% service fee on all loan payments. With continued growth, Renton expects both sites will achieve profitability by the end of next year.

Will P2P sites someday challenge banks? Maybe, and that depends on what banks do. Even with the impressive growth, LendingClub and Prosper's loan volume is still tiny, Renton points out. "This month both companies combined will do less than $50 million in loan volume. They could do 100 times that and still not make a big dent in overall consumer lending."

Then again, growth like the P2P sites are experiencing demands attention. "If banks ignore it, then eventually they will see some erosion in their core business, but we are many, many years away from that," notes Renton. And, of course, banks could get a piece of the P2P lending action, if they wanted. "Nothing is stopping banks from entering the P2P lending space. In fact, I think when these sites start to get big, one of the leading banks will buy one or both companies."

Watching the growth of new social startups makes me want to party like it's 1999, but whether we will see Amazon-like growth over extended periods is uncertain. I would not discount, however, the level of change or pain that can come from today's nascent P2P lending sites and other new social businesses. As I like to point out, ecommerce represents less than five percent of total US retail, yet this small fraction is enough to undermine margins, threaten established companies and change consumer expectations and habits.

If you're curious about lending or borrowing in the P2P lending sites, Renton does a nice job of covering the business on his blog at http://www.sociallending.net/. Check it out!

Six Potential Adverse Consequences of Facebook's fMC Advertising Changes

2012-03-06T08:27:00.000-06:00

Last week's Facebook Marketing Conference (fMC) brought a slew of big changes to the platform. Facebook has yet to fully deploy all of the new features, and we will not be able to gauge the true impact for quite some time. The outcomes depend not on what Facebook does next but how users, brands and regulators react.

Here is what Facebook hopes will occur: Users continue to adopt Facebook into their lives, giving advertisers more reasons to purchase new forms of social advertising on the platform. Users win with access to the most powerful, free communications tool in human history; advertisers win with access to consumers where they spend more online time than any other site; and Facebook wins by earning more marketing dollars they need to justify their post-IPO share price.

If the outcomes of Facebook's latest changes are less positive, it would not be the first time an organization suffered from unforeseen reactions. Digg, for example, famously altered its functionality and lost users after a "Quit Digg Day" revolt. I expect Facebook will do just fine as marketers and users adjust to the new fMC changes, but there are some potential unintended outcomes that could develop:

FTC pushes for much more obvious disclosure of sponsored ads in users' newsfeeds: Allowing marketers to turn their posts into ads within the newsfeed is not new--Twitter is already doing the same thing with Promoted Tweets--but is the fact these are paid ads obvious enough to users? The Federal Trade Commission (FTC) has a longstanding standard that people must recognize ads as such and cannot be duped into thinking advertising is content. The danger was framed well (inadvertently) by Forbes when it said, "The more Facebook 'ads' look just like the posts people and brands are already making on Facebook, the less they are likely to be seen as intrusive." True, and the more likely they are to run afoul of regulators.

The Premium on Facebook ad for the Web
contains a small "sponsored" tag while the
mobile ad features no disclosure.

In the fMC presentation, Facebook displayed two versions of Premium on Facebook advertising. The one shown on a desktop browser has a tiny "sponsored" at the end, while the sample mobile ad contained no such disclosure. This may have been an oversight by a graphic designer assembling the fMC presentation, but even the desktop version of these ads could call into question whether consumers can really, in clear and conspicuous fashion, identify advertising from content.

Search engines struggled with this same problem in the early days of the Web, when some search engines allowed brands to buy their way into the results or to purchase ads that were almost indistinguishable from organic results. A decade ago, Google recognized this was a problem and set itself apart, promising, "Every ad on Google is clearly marked as a 'Sponsored Link' and is set apart from the actual search results." The FTC also recognized the problem and issued a "landmark recommendation to the search engine industry that it should improve disclosure of paid content within search results." It would not surprise me, given the reach of Facebook, if the FTC jumps into this very same issue again.
Users revolt and leave Facebook: Facebook is so deeply integrated into users' habits and into web sites that it is hard to imagine Facebook could face an exodus, although some folks seem to predict this with every change Facebook makes to the user interface. Back in 2009, the New York Times ran an article entitled "Facebook Exodus," noting "Things fall apart; the center cannot hold. Facebook, the online social grid, could not command loyalty forever." While the obituary was wildly premature, the article closes on a cautionary note as relevant today as three years ago, asking, "Is Facebook doomed to someday become an online ghost town, run by zombie users who never update their pages and packs of marketers picking at the corpses of social circles they once hoped to exploit?"

MySpace and Facebook took
divergent paths years ago.

I do not foresee Facebook losing users, but if people revolt due to increased advertiser presence, it would not be the first time a social network lost for this reason. According to Alice Marwick, a researcher with Microsoft Research, "MySpace felt a lot of pressure to monetize quickly after it was sold to News Corp. And I think as result, they added advertising, they added things we might consider to be spammy, things users found intrusive." If users find Facebook spammy, I am sure Google would be more than happy to welcome new and returning users to its sagging Google+ social network. (The discouraging news on G+ keeps coming; just this week, Chitika Insights is reporting an overall 32% decline in activity when comparing current Google+ traffic levels to four months ago.)
Users revolt and unfriend large brands: Of course, Facebook users do not need to abandon Facebook and their existing social graphs if they object to seeing ads in their newsfeed--all they need to do is unfriend the advertisers. When using Premium on Facebook advertising, only a brand's fans will see the sponsored story in their home page newsfeeds; someone not connected to the brand will see the story in the right-hand side of their homepage where, as we all know, it is unobtrusive and easy to ignore. The fewer brands you like, the fewer sponsored stories you will see in your newsfeed.

Of course, Facebook would argue--with great merit--that these sponsored ads are really just brand posts that might have organically appeared in fans' newsfeeds in the first place. It is likely Facebook users will not object to seeing sponsored posts from the brands they truly like, provided those posts are relevant and Facebook keeps the mix of brand-to-human posts lean. The onus is on the advertisers to make sure the posts they make and select are interesting to the audiences they target, or else brands could see fan counts shrinking for the first time in Facebook's comparatively brief history.
Brands may not adopt Facebook's new ad media in large numbers: It seems unlikely, but it is possible that marketers are just not prepared for the dynamic new ad model Facebook has unveiled. This is not your father's advertising with long lead times and carefully crafted creative. Instead, brands will need to monitor the effectiveness of their organic content, strike when the iron is hot and create an ad out of a post that is demonstrating great engagement.

Agility is not exactly the strong suit of most large marketing organizations. Says Bryan Wiener, CEO of 360i, “The industry is not set up to support the new world order... Facebook is making it incredibly difficult for these companies.” He predicts Facebook's approach may require big disruptions in the way marketers and their agencies work.
Brands may demand powerful ways to unfriend fans: Many brands accumulated "friends" with little to no relationship with the brand. They offered Farmville items or sweepstakes entries in return for new "likes," which seemed like a good idea when it boosted brands' fan counts. But now Facebook is increasing the importance of paid media relative to earned media, and that means that brands with more fans will pay more. If you are Starbucks and your fans are true fans, Reach Generator may be worth the investment, but if your brand has a million fans who cared more for the freebie they got than for the brand, you're about to find out how expensive a mistake you have made.

Augie does not like Gerber.

I once "liked" the Gerber brand even though I have no children and couldn't care less about Gerber. I did so because I wanted to vote for a friend's child in a photo contest. Now, if Gerber wishes to use the new Facebook Reach Generator, the brand is stuck paying to serve ads to me--a truly and thoroughly disinterested consumer.

What should a brand do if it accumulated many disinterested fans? It is not clear since there are no tools for managing your fan base in meaningful ways. Facebook is not like email--you cannot delete fans who have failed to open or click on your posts, nor can you target your posts based on source codes. Gerber and brands like it that engaged in a race for inauthentic "likes" may soon demand Facebook offer tools to pare fan counts in order to increase their advertising effectiveness.
More investment in owned communities: Some social media professionals have been questioning if owned communities have a role in a world dominated by Facebook. Why invest in your own Lithium or Salesforce.com community, they ask, if you can build a community on the platform already used by almost one billion people?

I have never bought this line of reasoning, because Facebook never really offered brands the opportunity to build true community. With the new timeline design reducing the prominence of fans' posts, it is an even weaker community-development platform today. Done right, Facebook and owned communities are not competitive but collaborative.

Facebook's changes could push more companies to consider the value of building their own communities because brands will see an increase in cost to communicate with customers on the Facebook platform. In a New York times piece, Ben Winkler, chief digital officer of OMD, said it nicely, “The Facebook platform is undeniably incredible, but we must acknowledge that our customer relationships there are not owned — they’re rented.” Facebook may have just made it evident how important it is for brands to own their fans, not merely rent them.

Newton's Cradle

For every action there is an opposite and equal reaction. Newton's Law of Motion works just as well in marketing and social media as it does with physics. Facebook just released a metal ball in one of the world's most valuable Newton's Cradles. A reaction is all but certain, but exactly what that reaction might be is unknown.

What do you think? Will Facebook's changes cause no stir among regulators and users? Will marketers adapt to a new way of real-time social advertising? Are there other reactions we might expect in the coming months? Please share your thoughts in the comments below.

Did Facebook Just Kill Earned Media?

2012-03-05T08:30:00.001-06:00

Facebook says using Reach Generator will
increase the volume of engagement with
your brand (likes, comments and shares) by 2x

At last week’s Facebook Marketing Conference (fMC), the company announced new timeline features and ad programs, which are thoroughly explored in great summaries by TechCrunch and Attention. Marketers are atwitter (pun intended) over new opportunities for social media at scale, but the announcements made me wonder if Facebook was diminishing the power of earned media and elevating old-fashioned paid media.

Let me start with a simple question:

Which brand do you believe deserves to win in the social era: The one that earns the most attention through its products, services and brand, or the one with the biggest advertising budget?

Now, read what Attention has to say in its overview of Facebook's new timeline:

"Thus far, brands have invested in fans. And brands have invested in content to engage them. Now, by investing in Reach Generator and Premium on Facebook, brands have the ability to guarantee that fans see this content. While brands are paying for distribution, brands are receiving significantly more engagement. This will greatly increase a Page’s EdgeRank score, which will, in turn, grant a greater ROI as more of a brand Page’s content will be viewed over time."

Michael Lazerow, CEO of Buddy Media, said it even more succinctly on AdAge:

"While you're paying for distribution, you're getting significantly more engagement. This engagement is 'Facebook gold,' as I like to say. Your EdgeRank score will be juiced."

Wait a sec--brands that invested in fans and content now must invest in paid media? And paying for distribution will increase a brand's content's EdgeRank, Facebook's method for (authentically?) recognizing the content that fans most want to see in their newsfeeds? It sounds as if earned media has just taken a knee to the groin from old-fashioned Advertising 1.0.

I have mixed feelings. On the one hand, I think Facebook has finally given to marketers the tools they need to drive success on the Facebook platform--the combination of Open Graph, new action types, richer fan pages, Reach Generator and Premium for Facebook furnishes a powerful (if still complex) marketing suite. On the other hand, I also cannot help but think back to the tenants of social media as expressed in the Cluetrain Manifesto: "We are immune to advertising. Just forget it..." Not so quick there, Cluetrain! There's a new sheriff in town--and he looks a lot like the old sheriff in a new uniform.

Different observers have different opinions what this all means, but I believe one thing is certain--Facebook users will see less organic brand content in their newsfeed and be exposed to more paid brand content. No, that is not exactly what Facebook execs said on stage at fMC; instead, they launched Reach Generator which, according to Ad Age, "lets you pay money to guarantee that your Posts get to at least 75% of your fans each month" instead of the 16% Facebook says sees wall posts currently. Facebook is also launching Premium on Facebook, which allows brands to insert their posts into fans' newsfeeds (both in the browser and mobile versions), saving brands the hard work of earning their way into fans' attention.

Facebook guaranteeing impressions can only mean one of two things. The first is suggested by The New York Times, which says we will see a great deal more ads: "Facebook’s hundreds of millions of users could soon be faced with a lot more advertising — in their newsfeed, on their mobile devices and even when they log off." I'm betting on option number two, which is the less dangerous one for Facebook: The number of brand impressions will stay more or less steady, but paid impressions will push earned media out of the way.

We all recognize that people don't sign into Facebook to see what brands are posting. A little bit of that goes a long way, and too many brand posts--sponsored or organic--could easily get people packing their bags and heading to Google+, Path or another social network with less advertising (for now). If Facebook wishes to increase paid impressions while avoiding a user revolt against greater brand presence, the answer is easy: Simply decrease the opportunity for brands to speak within fans' newsfeeds for free in order to make room for the brands that pay. (Now, c'mon, you didn't think Facebook existed to allow companies to make money by collecting customers and communicating in powerful new ways for free, did you?)

Maybe this isn't an either-or situation but instead marks a new synergy between paid and earned media; after all, these new Facebook ads all begin their lives as posts, not traditionally-designed ads. Or maybe Facebook just eviscerated the difference between earned, owned and paid media (for better or worse). Michael Lazerow thinks so: "The lines between what marketers now refer to as paid, owned and earned media are now officially gone. Goodbye. Gone."

Still, if the way a brand gets noticed in social media increasingly depends on its checkbook, this seems to mark a new phase in the evolution of social media. Are we seeing the passing of the era of earned media so soon? Is Facebook now like television, putting challenger brands and small brands with limited budgets at a disadvantage against the brands that can invest liberally to get their messages distributed? And can we say that earned media is, in fact, earned if most people see it only because it is paid?

As I watch for Facebook's bold changes to be deployed more widely, I hope that earned media does not become locked behind a paywall. Mike Hoefflinger, Director of Global Business Marketing of Facebook, said Facebook is bringing back the relationship between customers and brands to the “good old days” when the guy behind the pharmacy counter knew your name. He then added that ”Premium offers on Facebook are the best way to get your stories in front of more people, more often…This is your opportunity to express your identity and tell your stories.”

Funny, but I remember the shop owner earning the relationship with me, not buying it.

50 Things Every Exec Should Know By Now About Social Media

2012-02-24T09:47:00.005-06:00

Your child has a better shot at creating a viral video than does your brand.
You cannot post and tweet yourself to marketing success while customers are drowning you out with complaints about your product, service or corporate policies.
People sign into Facebook to find out what their friends are up to, not to connect with their favorite brand of gasoline or paper towel. The only way to succeed is to be as interesting and relevant to your customers as their friends are--a tough task, to be sure. Better yet, get friends talking to each other about your brand.
Just because surveys show people friend and follow brands to get discounts and deals does not mean you must consistently offer them. Unless you really want to build relationships based on constant discounting and reduced margins, find a different way to be appealing and use discounts sparingly and strategically.
When a person follows your brand on Facebook, that does not mean they are going to see everything your brand posts. In fact, they may see little to nothing from your brand. Sorry, that is just the way Facebook's EdgeRank works. (If you do not know EdgeRank, learn about it.)
The same thing applies on Twitter. As people follow more people, they pay less attention to their raw tweet stream and focus instead on lists of friends and peers. If your brand wants to be added to customers' lists, it needs to earn its way there--which is much tougher and more important than merely earning the follow in the first place.
There is not and never will be a template for social media success. Stop obsessing about finding best practices and work harder to test and create your own.
You are not being social if you ignore questions and service requests on your wall and in tweets while posting your key marketing and PR messages into social networks. That's just old broadcast mentality pasted into the new social medium, and it will fail.
Speed matters like never before. Customer service issues can turn into PR crises in hours--this morning's Facebook post is this afternoon's Change.org petition. You cannot control it, and trying to create layers of approval processes will only exacerbate the situation. The only solution is to prepare and empower employees to act with greater alacrity and independence.
Your organization's Facebook and Twitter administrators are probably talking to more customers, more often with more impact than the vast majority of your firm's executives.
People will complain about your brand. Don't freak out over a single complaint (unless it is from a truly influential person).
While you shouldn't freak out over a single complaint, you should be very concerned about many complaints. The constant flow of brand gripes can become background noise to decision makers. Do not allow this to happen, because death by a thousand cuts is still death.
Social media is not primarily a direct marketing channel. Do not measure it like it is or you will undermine the most powerful strategies that build brands and relationships.
Every company worries about detractors in social media. That's good, but they should be more worried about employees in social media.
Putting content or functions within a Facebook tab is the Web 2.0 version of the Web 1.0 axiom, "Build it and they won't come." No one visits your tabs--if you want people there, you need to promote the feature and make it very, very, very engaging and sticky.
Ralph Waldo Emerson furnished the best social media advice you can possibly get: "Who you are is speaking so loudly that I can't hear what you're saying." To succeed in social media, worry less about what you are saying and more about what your actions say.
If you do anything that rewards disinterested people for liking your brand--such as giving away a freebie in a social game or an entry into a sweepstakes that attracts people outside your target audience--you're doing social media wrong. Collecting people with no relation to your brand can actually hurt your social media opportunities rather than help them.
If you do not understand the FTC's and NLRB's guidance on social media, you are putting your company at reputation, legal and regulatory risk.
Do not jump into a new social property just because it's the flavor of the day. Pinterest, for example, will change the world for some brands, but not all. Knowing YOUR audience's habits and needs is vital; embracing this month's hot new social property is not.
You cannot stop employees from accessing social networks from work--they all carry their social networks with them in their pockets.
Good customer ratings matter. Evidence has shown that positive ratings on sites like Yelp and TripAdvisor drive business. Provide products and service that earn great ratings, then make it easy for people to furnish them.
Do not hesitate to ask your customers to complete ratings and reviews. Replace your comment cards or the survey request on your receipts with an invitation for feedback on an appropriate rating site (such as CNET, Yelp, Epinions, TripAdvisor.com or Angie's List, depending on your category). If you are not confident enough in your product or service to do so, that should be wake-up call.
Only talking about yourself in social media sends a message that all you care about is yourself. Check your stream of posts and tweets right now--what is the message behind the messages?
You cannot keep corporate secrets about public dealings. Every lawsuit your company files, every supplier you work with, every political donation the organization makes and every environmental and labor practice you have can be shared, promoted, debated, criticized and boycotted. Make decisions with consideration not just for law, policies and short-term financial impact but also for how that decision will play if and when it is revealed in social media.
You cannot spend your way to brand success any more. Bank of America spent $1.9 billion on marketing in 2010, yet it could not defeat a 22-year-old part-time nanny and 27-year-old gallery owner who spent absolutely nothing on the Change.org petition and Bank Transfer Day fan page that moved hundreds of thousands to protest new debit card fees.
What people say about your brand to each other in close, personal, trusting relationships matters more than what influencers say on their blogs and Twitter feeds (at least deeper in the sales funnel where it matters.)
No amount of investment in firewalls, monitoring and social media management systems can protect your brand from employees doing stupid things. Education is vital. So is monitoring.
If you are only thinking about how to integrate social media strategies into your marketing, PR and customer service processes, you're at risk of falling behind the curve. If you are not even thinking about where social media fits in your customer service practices, you already are behind the curve.
In a world of transparency where customers care as much for who you are as what you sell, the most compelling and defensible point of differentiation is your culture. That is the only thing that cannot be photocopied by the competition and that ensures your brand speaks with one voice.
Do not confuse social media influence measurement with true influence. Until the tools improve to a point where Justin Bieber has less Klout than the president of the United States, care should be taken to use influence metrics with discretion.
In 1995, success was "Location, location, location." In 2005, success was "SEO, SEO, SEO." In 2015, it will be "Reputation, reputation, reputation." Your brand is crafted far more by the experiences you furnish customers than the advertising you do, and your brand's Net Promoter Score is more important than its marketing budget.
Social is just getting started. It has changed PR and communications, and next it will change products, service and business models. Monitor the growth of peer-to-peer and sharable economy business models inside and outside your industry. Some companies that fail to innovate rapidly in the coming years will be left behind by substantial shifts in consumer expectations, habits and behaviors.
Social media is not a strategy, it is a channel. If your company does not have a telephone strategy or a postal mail strategy, it doesn't need a social media strategy. And never build a strategy around a social network. Instead, build it around people and their needs, then see what social networks fit. You do not need a YouTube strategy or a Facebook strategy; you need customer service, product, marketing and content strategies that include YouTube and Facebook.
People say "Content is king." They're wrong. Content is important, but it is more of an archduke than a king. Brands like Google and Apple didn't succeed by creating and broadcasting content; they succeeded by creating a great product that encouraged others to create and broadcast content--and that drove awareness, consideration, trial and adoption.
If you still think your sales funnel ends with purchase, you are missing out on the most important and cost effective marketing strategies available to boost loyalty, retention and advocacy.
You visit your brand's wall; your customers do not (in any significant numbers). Your strategies must focus on what happens on your customers' Facebook newsfeed and not your brand's.
People trust each other more than they trust you. They even trust each other more than they trust experts and traditional media sources. Don't focus solely on what your brand provides to people but on what your brand provides to people that gets them sharing with their friends.
Employees can be fired for what they say and do in social media. If you haven't told them that, you are failing to protect them and your brand.
Your managers can get the company in deep trouble for disciplining an employee for something they say and do in social media. If you haven't told your managers and executives this, you are failing to protect them and your brand.
If the last two bullet points seem contradictory, go talk to your legal counsel and Human Resources professionals.
Whether they know it or not, every employee from your CEO to the intern is a social media employee. The decisions we make, the things we share and the way we conduct our jobs can be reflected, reported and judged in social media.
Do not confuse excitement for your brand's advertising with excitement for the brand. Many ads can rack up tens of thousands YouTube views, but most fail to change minds and behaviors. Good advertising isn't good entertainment--it's good persuasion.
What if you had no money to spend on advertising and PR? What could you do with your product, packaging, service or earned media that would be so compelling people couldn't help but share and recommend your product. If you start there, then advertising and PR are gravy.
Social media can support ad campaigns, but if most of your social media budget is aligned to campaigns, you are doing it wrong.
Fans and followers have potential value and not real value. If you do nothing with them, they have no value. It is how you unleash fans and followers that creates value for the brand.
When choosing a social media professional as a consultant or a new employee, do not be impressed with the candidate's own social media footprint but with how they have demonstrably helped clients and companies with their social media footprints.
Lasting customer relationships are as hard to create in social media as in the real world. Likes and follows deluded some into thinking it is easy, but relationships are crafted not with clicks of buttons but with time, care, trust and exchanges of value.
Do not be impressed with a competitor's total fan count without knowing how they earned it. The brand that wins is not the one with the most fans and followers but the one with the most engaged customers and advocates.
If you are most focused on how to engage and encourage sharing when people are sitting at their PC, you are missing the place most people are spending and will spend most of their time. Time spent with mobile applications has already surpassed time spent web browsing.
What did I miss? Happy to add #50 (or #51, #52, etc.), if you'll participate with your own nuggets of wisdom. Do you have any to add? Did I miss the mark on any of the items in my list? Please comment below...

How Facebook Can Improve Upon It's "F" Grade in F-Commerce

2012-02-18T17:13:00.000-06:00

A lot of attention is being given to the failure of so-called "F-Commerce." Several brands, including JCPenney, Gap and Nordstrom, have launched and already shuttered Facebook stores after seeing disappointing sales on the Facebook platform.

Retailers launched these Facebook stores with high hopes because, in the words of a Facebook exec, “This is where people are hanging out.” Yes, people hang out on Facebook--Americans spend 100,000 years on the social network every month--but do people want to shop there? Some say no--my former Forrester peer, Sucharita Mulpuru, noted, “It was like trying to sell stuff to people while they’re hanging out with their friends at the bar.”

I think that is too easy an answer; after all, replace "bar" with "mall" and that statement ceases to make any sense. Malls exist nowadays not merely to give consumers a place to buy products but to provide a physical space for us to get together, be social and shop together. Why shouldn't Facebook be a virtual space for the same sorts of activities that combine social and commerce?

The blame for the failure of the first wave of F-Commerce lies with both the retailers and Facebook. Retailers and the social network seemed to have drawn a straight and direct line between "people spend time here" and "people will buy here." They were wrong--as Sucharita points out, there are venues that are conducive to shopping and others that are not, at least not yet.

Take the web, for example. There was a time we did not buy things online, even though ecommerce functionality was readily available. A decade ago, the population of web users was exploding and brands were eager to reach this online market directly, yet few consumers were willing to complete transactions via the Internet. Despite the ecommerce hype before and immediately after the dot-com bubble crash, barely 1% of retail sales in US were made online in 2002.

Then something changed--the Web went from being a place where people were suspicious of entering their credit card numbers to a place where today most of us store our credit card numbers on e-retailing sites like Amazon. Consumer attitudes changed, and so did online sales. In the last decade, the percent of total US retail that occurs online has grown almost fourfold, enough to change the face of retailing and put some retailing powerhouses out of business.

The Web has become a venue for commerce, so why not Facebook? That change will come, but first both retailers and Facebook must work harder to evolve the channel and overcome consumer doubt.

Facebook needs to earn more trust from consumers. A recent study demonstrates more than half of consumers are not comfortable sharing their credit card info on a social networking site. Another study found that 53% of consumers do not believe Facebook storefronts are committed to protecting them against fraudsters and 23% were unsure about Facebook’s fraud prevention tactics.

Facebook can become central to the growth of social commerce, but only if it works much harder to earn consumer trust. It does not have to look far for the model--Facebook can steal from the roadmap used by ecommerce sites over the past fifteen years:

Make Facebook more secure: The first order of business is simply to make Facebook more secure. Just three months ago, Facebook made headlines when a widespread spam attack blanketed the social network with inappropriate images. Occurrences like this make it more difficult for Facebook (or retailers on Facebook) to earn trust on the platform.
Work security and trust into the Facebook narrative: Ask the average consumer why they trust Amazon, and they may speak about the multiple levels of authentication, the icon that tells them a page is secure, the Amazon Bill of Rights and Amazon's easy return policy. Now ask people why they should trust commerce on Facebook... (insert cricket noise here). The social network must do more to ensure it is apparent Facebook is living up to Mark Zuckerberg's promise to "protect you and your information better than any other company in the world."
Put the user first: Facebook needs to do more to put the needs of users first. For example, when it implemented Sponsored Stories, Facebook did not build into the system a method for alerting consumers or asking permission to turn their posts into ads. Some feel this violates users' privacy, but even if this process works within Facebook's terms and conditions, it reveals a preference to make the social network easier for advertisers and not more trustworthy for users.
Do more to fight spam and phishing: Can you imagine entering your credit card number into a Web storefront riddled with spam? Neither can I, which is why Facebook has to become far more adept at fighting spam. As for phishing, it is far too easy for a scam artist to steal code and design elements from a retailers' site, launch a look-alike fan page and begin to collect passwords and other personally identifiable information. Until Facebook is less caveat emptor, consumers will carpe diem in other commerce channels.
Live up to promises with fewer unpleasant surprises: The social network has improved on the unpleasant surprises it springs on its users with unanticipated updates to policies and settings, but waves of such experiences have not encouraged consumer trust. Moreover, the new flood of "frictionless sharing" applications have created more unpleasant surprises--people were disappointed to learn that friends were alerted when they merely read an article on Yahoo! or listened to a tune on Spotify. Frictionless sharing can be a vital part of the social fabric, but only if Facebook informs consumers, leaves them in control and avoids surprises. The fact people still do not know what to expect from Facebook and its app developers is a problem that undermines trust.

The problem with F-Commerce is not Facebook's alone. The Facebook storefronts that were shuttered recently lacked innovation. Much like brochureware sites that attempted to take the paradigm of print and paste it into a browser in the early days of the Web, the F-Commerce storefronts were nothing more than typical ecommerce operations pasted into a Facebook tab. Wade Gerten, CEO of a social commerce developer, said it best: “It was basically just another place to shop for all the stuff already available on the retailer websites.”

The failed F-Commerce shops all treated social commerce as if we shopped alone in abandoned malls--they brought the commerce but not the social. Where was cobrowsing? Asking friends for opinions? Sharing finds? Aggregating friends' and strangers' ratings and reviews? Chatting about products in real time? Coordinating shopping lists and purchases? A "like" button next to a product is more of an invitation to advertise and not an invitation to share enthusiasm, tastes and special shopping finds. Just look at Pinterest to see how consumers can be engaged in sharing products in a way that feels authentic and not spammy.

Recreating 2005-style ecommerce functionality on 2012 Facebook does not make shopping social. I am confident shopping online will get more social and Facebook will play a role in social commerce, but not until Facebook earns a great deal more trust and retailers demonstrate considerably more creativity around online social commerce.

Why Ratings and Reviews Suck and How to Save Them

2012-02-12T13:19:00.001-06:00

The use of consumer ratings and reviews has already been a game-changer online. Ratings and Reviews (R&Rs) were the first true use of social media to support and enhance commerce, predating ads on Facebook, Groupon discounts and viral videos on YouTube. While some of us participated on a BBS or Usenet Board in the early days of the Internet, the first time most people posted anything for strangers to read was not a status update on MySpace but a R&R on Amazon, TripAdvisor or Yelp.

It is the success and maturity of R&Rs that leave me perplexed at how little innovation we have seen in the space and how much more the leaders could accomplish. This was the topic of conversation recently when I chatted with Jeremy Epstein, the new VP of Marketing at Sprinklr, a social media management service provider that Altimeter put on the top of its list of vendors to support large corporations. We both agreed that it is high time for the primary providers of online R&Rs to lead once again with new features that make R&Rs more powerful and reliable.

First, here is what is right about R&Rs: They remain the most trusted form of communication, lagging only recommendations from families and friends. According to Forrester (subscription required), consumer product R&Rs are trusted by 62% of US adults, compared to 57% who trust "expert ratings and reviews," 30% who trust company web sites and 23% who trust what they see on TV.

Here is what is wrong with R&Rs: That high level of trust may be about to evaporate. While I have no data, I sense more people having doubts as to the validity of the R&Rs they read online. These doubts may be well founded; recent articles have raised awareness of dubious or outright deceptive practices such as offering free product in exchange for ratings, people anonymously rating their employers' products, and farms of workers hired to post ratings.

If you are an authentic marketer and really want to get your blood boiling, check out fiverr.com, where people compete to write paid reviews. One person promises "I will leave 3 Amazon reviews from unique accounts that YOU write for $5," and 44 out of 45 reviews are positive. Comments include "I of course do always need more reviews, how many accounts do you have? And can you also do likes?" Obviously reputable brands are not on fiverr.com bidding for fake reviews, but the transparent sleaziness goes a long way to demonstrating the problem with R&Rs.

While those involved are smart enough to avoid saying, "We get paid to do positive ratings," the implication is loud and clear. "I would have done 4 stars instead of 5 without the deal," says one guy who received free product in exchange for his rating. And an employee of one of the R&R-writing services reports, "We were not asked to provide a five-star review, but would be asked to turn down an assignment if we could not give one."

In theory, it is not unethical to give discounts or freebies in exchange for a rating and review, provided a brand does not reward the effusiveness of the rating and--here is the part everyone misses--the consumer discloses the material relationship as required by FTC guidelines. (And just to be clear, it is the brand's responsibility not merely to instruct the consumer to reveal the arrangement but also to monitor that consumers are, in fact, disclosing appropriately.)

While I hope marketers are following the rules, I do not think the purveyors of R&Rs should rely on the willingness of those involved to adhere to rules--the stakes are just too high. For consumers, the temptation is great to earn cash, freebies and discounts in exchange for five minutes of faux exuberance on Yelp or Amazon. The reasons marketers are tempted to engage in dubious R&R practices are also obvious, as one recent study validated what we all intuitively believe about the value of positive ratings--each additional star on Yelp is worth 5% to 9% in incremental revenue.

Perhaps you believe you are a keen observer who can easily separate the fake reviews from the real ones. Turns out researchers have found the average consumer only gets this right around 50% of the time. You can even test yourself with an online quiz on the Marketplace site. (I scored 75% in the simple four-question quiz.) Even if we believe people have the power to spot and discount fake R&Rs, this cannot be the solution--it takes too long to review and assess individual reviews, and given the power of "star ratings" to furnish info at a glance and permit sorting based on score, we clearly need better ways to improve the quality and reliability of R&Rs.

Given the incentives to cheat, why haven't we seen innovations that encourage appropriate reviews and that filter reviews to make them more accurate and believable? A great deal of effort is going into technological advances to suss out fake reviews, but aren't there easier and better ways to accomplish this same goal?

For example, we are each unique, so why do we see the same information on most R&R sites? When I go to the San Antonio Things to Do page on TripAdvisor, the top-rated attraction in the city of the River Walk and Alamo is... a golf course?!? Even if it is accurate that the Palmer Course has the highest arithmetic mean for all of the submitted ratings in San Antonio, why would this matter to me? TripAdvisor knows I am not a golfer--I have made 101 contributions to TripAdvisor, and not one of them is for a golf course or shop.

One way sites like Yelp and TripAdvisor combat this problem is by showing me what my friends have rated. This is good, but I have friends who love golf. What I really want to know are the ratings of other people like me--it would be more informative to see the ratings of other museum-going, water-park-hating, jazz-loving non-golfing strangers who are similar to me. One of the benefits of furnishing ratings based on similar tastes is that it helps to filter out disingenuous raters. (Perhaps those who are paid or get discounts for the ratings they produce would like to see and rely on each other's ratings, but I rather doubt it.)

Another idea Jeremy and I discussed is discounting ratings from raters who only offer positive ratings. If a given user on Yelp or eBay only posts five-star ratings, wouldn't that call into question the authenticity of those ratings? Some may argue that people tend to write reviews when they feel strongly, but if this were true, we would see more ratings at both the top and bottom of the scale rather than the rating inflation exhibited on most sites. eBay data from 2007 demonstrated the median rating for "Item as Described" was 4.8 out of a possible 5; 67% of the ratings on Yelp are four or five stars; and virtually everyone who rates a video on YouTube gives it five stars.

This is when Jeremy offered the idea of using gamification to improve ratings. I am actually not as much of a fan of gamification as most social media pros. Even though I am an avid PC and mobile gamer, I just do not believe most people go through life wishing they could turn their communications, grocery shopping, dining, driving and TV viewing into a competition. In addition, too much gamification is designed to get people being inauthentic, distorting rather reflecting true opinion, influence and engagement. The fact a brand can amass a million followers by giving something away in a Zynga game is not sign of gamification's value to marketers but of its ability to falsify sentiment and destroy the legitimacy of Facebook "likes."

Jeremy's idea was one of the few I have heard that could turn gamification into a force for authenticity: What if reviewers were rewarded for offering R&Rs that most closely match a bell-shaped curve? Wouldn't reviewers' opinions count more to others if they reflected a more statistically accurate normal distribution of opinions? Perhaps discounts should be given not for any review (or positive reviews) but for people who create true value by creating the most believable and accurate content? If most reviewers were motivated to create R&Rs that were unbiased in a statistical sense, it would create greater dispersion of ratings, increasing the spread between the best and the worst products and services, and penalize (or remove the incentive) for paid reviews.

You probably have some of your own ideas for how R&R sites could be improved. The ease with which ideas can start flying as people discuss the problem is an indictment of how little has been done to improve the R&R process. Yelp says its ranking system "already factors in the number of reviews (and) whether they come from experienced Yelpers or first-time reviewers," but they've done little to make this evident.

If today's R&R leaders do not want to end up like Monster and MySpace, lapped by competitors with greater innovation and differentiation, it is time for the early market innovators to put as much effort into improving the usefulness and validity of R&Rs as they do into new marketing and advertising products. As Jeremy noted, "Trust is going to be the primary currency of the linked economy. If you lose it (and eventually you will get exposed), you're going to have a long road back."

Facebook's IPO Is Not About Owning Facebook

2012-02-04T17:14:00.000-06:00

Facebook is going public, but that does not mean purchasers of Facebook stock will own the company in any real way. Instead, investors must know that they are buying an ownership interest not in Facebook, Inc. but a share in the vision, judgment and actions of CEO Mark Zuckerberg.

After the IPO, Zuckerberg will own 56.9% of the voting shares. This means he will still get to call the shots in profound ways; for example, the S-1 filing reveals Facebook will be a "controlled company." That means the board of directors will not have an independent nominating function and may elect "not to have a majority of our board of directors be independent or not to have a compensation committee."

In addition, Facebook will have two classes of stock--Class B shares have ten times the voting power as Class A shares. Zuckerberg has a controlling portion of Class B shares, and his control is likely to rise because Class B shares become Class A shares as Class B owners sell. Moreover, the IPO contains an unusual clause that means Zuckerberg will exert power over Facebook even after death:

"…in the event that Mr. Zuckerberg controls our company at the time of his death, control may be transferred to a person or entity that he designates as his successor... As a stockholder, even a controlling stockholder, Mr. Zuckerberg is entitled to vote his shares, and shares over which he has voting control as a result of voting agreements, in his own interests, which may not always be in the interests of our stockholders."

Facebook's S-1 makes it clear what this all means to investors: "Our status as a controlled company could cause our Class A common stock to look less attractive to certain investors or otherwise harm our trading price."

And, "Mr. Zuckerberg will be able to effectively control all matters submitted to our stockholders for a vote, as well as the overall management and direction of our company."

And one of the 13 risk factors cited in the filing is: "Our CEO has control over key decision making as a result of his control of a majority of our voting stock."

Should investors be concerned with this? That depends in large part on what you think of Mark Zuckerberg. Many criticize him for Facebook's approach to privacy (and the S-1 notes that privacy laws "are subject to change and uncertain interpretation, and could harm our business.") But there is another side to Facebook's CEO--the one that demonstrates a commitment to grow the company's revenue model steadily and in a way that does not annoy users. Some investors may shy away from Facebook because of this measured approach to advertising growth, but it leaves me feeling more optimistic about Facebook's future.

Every page on Facebook has some advertising, but it tends to be highly targeted and unobtrusive. There are no banner ads, no interstitials, no dancing animated ads, no Flash ads with hidden "close" buttons and no takeovers. Facebook tries to make advertising as relevant as possible, not merely by permitting typical demographic targeting, but also allowing advertisers to target your and your friends' likes. (Admittedly, the way some brands are accumulating "Likes" undermines the authenticity of this sort of social advertising, but I see Facebook working to make advertising more relevant and not less.)

Facebook's cautious approach is even more evident on mobile, which the S-1 acknowledges is a crucial platform for the firm. At this point, there are no mobile Facebook ads despite the fact more than half of Facebook's 845 million MAUs (monthly active users) utilized a Facebook mobile product in December. Facebook is so careful about launching mobile advertising that the S-1 notes, "Growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results."

I am not a financial adviser and am not dispensing investment advice, but I have already shared my opinion that a social media bubble has formed and is already bursting. My feelings are no different about the Facebook IPO from other social IPOs--the likely price presupposes a pace of growth that Facebook will be challenged (and probably unwilling) to accomplish. I would not be surprised to see the value of Facebook stock drop in the short-run as has happened with virtually every other social IPO thus far.

While I would not buy Facebook in the immediate future, there is every reason to think the stock will make a smart long-term play at some price in the future. Look at Ebay, which two years after its IPO hit a peak of $30.47 and then dropped to less than $8.00 in the dot-com bubble burst. The stock took three years to recover to its pre-crash price, and in the decade following its January 1, 2001 low, eBay rose 237% while the Dow Jones increased 10%.

Some will avoid Facebook due to the level of control Zuckerberg will exert. If that's a concern for a particular investor, then avoiding this stock will make sense, but those wary of the control Zuckerberg retains should note the success of other companies run by Founder CEOs. One study concluded that companies led by Founder CEOs outperformed others and found these firms “invest more in R&D, have higher capital expenditures, and make more focused mergers and acquisitions”

As with everything Zuckerberg touches, even the IPO is being done his way. What this all means is that those purchasing Facebook stock are not so much getting a share of the company as they are making a bet on Mark Zuckerberg. The IPO is carefully crafted to allow investors and employees to trade their shares on the market without altering the ironclad control held by Facebook's founder.

If you want a share of Zuckerberg's vision, you may wish to monitor the stock and jump in whenever you think the time and price are right. But if you do not share Zuckerberg's worldview or do not trust him, then there is nothing in the IPO filing that would suggest this is the stock for you. Even more than Jeff Bezos at Amazon or Marc Benioff at Salesforce.com, an investment in Facebook is an investment in Mark Zuckerberg.

Facebook S 1

Chrysler, Fiat and the Brand Value of Authenticity

2012-02-02T22:30:00.001-06:00

Chrysler's ad was epic and memorable: Grungy unmistakable scenes of Detroit, a gritty voice expressing the poetry of hard luck and hard work; the rising strains of Eminem's "Lose Yourself" accompanied by gospel choir; and finally the man himself emerging from a Chrysler 200 to point at the camera and assert "This is the Motor City, and this is what we do."

Duplicating this recipe perhaps seemed easy to Fiat, but when they mixed together the same sorts of ingredients, the result was a disaster. Authenticity doesn't have a recipe and brands aren't created by photocopying best practices.

Chrysler's ad is a moving, breathtaking, convincing piece of work that combines art and commerce. This is what advertising should aspire to be, yet vast quantities of marketing budgets go into lookalike ads that fail to alter brand perception or market share. You don't need to take my word that this ad is a success--it earned an Emmy and boosted Chrysler's financial results. Said Chrysler's CFO, “It clearly had a fairly big impact also on market levels with [the] Eminem Super Bowl ad being extremely well-viewed on YouTube."

Fiat tried to recreate the Chrysler recipe. Jennifer Lopez is "Jenny from the Block," so having her drive through the Bronx in a new Fiat 500c seemed like a can't miss concept. Better yet, JLo herself offers, "This is my world, this place inspires me." Ka-ching! The doors of Fiat dealerships must have been ripped from their hinges with the rush of business!

Fiat's outcome with their JLo ads was a bit different from Chrysler's results, however. Fiat sold only 19,769 Fiat 500's in the U.S. last year, less than half their goal. Performance was so bad that the head of the Fiat brand in North America lost her job.

(As if to prove one of my recent posts on how meaningless most social media marketing metrics have become, Fiat at first crowed about the results of this ad, saying they received a 500 percent increase in traffic to their YouTube channel and bump of 47 percent in brand awareness. That's great, but did it increase consideration, sell cars or motivate loyalty--you know, the metrics that matter?)

The reason for the divergent results for Chrysler and Fiat have everything and nothing to do with social media. Brands cannot and never could buy authenticity with a TV ad, but it is possible to earn it with the right advertising campaign. Today in the midst of the social era, authenticity matters more than ever before. There is no "best practice" for how to earn authenticity--it is different for every brand, audience and organization.

Let's count the many ways Chrysler's ad earned authenticity and Fiat's ad did not:

Chrysler's ad was about Detroit; Fiat's was about a car. Chrysler's ad doesn't show the Chrysler 200 until 30 seconds into the ad; Fiat's ad puts the car full frame in the fourth second. Can you imagine the discussion among ad execs at Chrysler--an auto ad that doesn't even show the car for 30 seconds!? That probably sounded risky and dumb, but authenticity isn't earned by impressions and GRPs; it's earned with confidence, context, shared values and history, all of which are on clear display in the Eminem ad.
Chrysler's ad had chemistry between car and spokesperson; Fiat's did not: Marshall and I don't hang out, so I cannot vouch for the fact he cruises around Detroit in a Chrysler, but you and I probably recognize it's possible. JLo, the queen of bling who arrives to her American Idol appearances in a limo, tooling around in a tiny subcompact car? Ridiculous on the face of it. Chemistry is hard to measure and even harder to fake--Leo and Kate's chemistry made Titanic work while real-life couple Ben and JLo caused Gigli to crash. (Hmm, that makes two times Lopez has failed to bring convincing authenticity to a relationship with a costar.)
Eminem isn't just "from" Detroit: Search Google for where JLo lives, and you find answers like Bel-Air and Fisher Island off Miami. Do the same for Eminem and you get results like Rochester Hills, MI and Warren, MI. Eminem isn't just "from" Detroit--he (and Kid Rock) are Detroit for many fans. Eminem gives interviews to eighth graders in Detroit; he is a "Lions fan first and foremost," and two years before the Chrysler ad, Eminem created a video "Love Letter to Detroit" for the NCAA finals. In contrast, JLo's association with the Bronx is so thin, it likely surprised no one when it was reported that JLo never left Los Angeles to film her scenes for the Fiat ad. JLo's spokesperson said "I don't see a problem" and compared shooting the ad to being on a movie set. Fiat found out the hard way that movies are about fantasy, brands are real and authenticity cannot be faked.
JLo is brand promiscuous: Authenticity and trust are a currency--the more you spread them around, the less you have. Eminem, for the most part, is picky about lending his credibility to brands, having appeared in ads for Brisk and Chrysler. Lopez, however, spreads herself around--Fiat, Kohl's, L'Oreal, Harman/Kardon, Gillette Venus, Tous Jewelry, Gucci and her own branded fragrances. The more brands celebs endorse, the less each endorsement means. Some people were surprised Eminem appeared in a Chrysler ad, and that surprise speaks volumes about the value Eminem brought to the brand. No one was surprised to see JLo appear in a Fiat ad, except perhaps that it appeared she was driving in a tiny clown car.

Authenticity is rarely earned by doing something the same way as someone else. Chrysler took risks, created something different, and earned the benefits. In both traditional advertising and social media, we can all learn something from Chrysler's campaign--but please don't try to duplicate the recipe!

Your New Year's Resolution for 2012: Write!

2012-01-31T22:55:00.002-06:00

Is it a little late to make a New Year's resolution? By the first week of February, most of us are already well on our way to breaking our promises to lose weight, quit smoking or get out of debt, but here's a resolution you can and should keep: Write. Religiously. Every week. Starting right now.

I would recommend that you blog, but if (for now) you lack the confidence to share your ideas and observations with the world, start by writing for yourself. Select a topic--I'd recommend a professional one, but you can choose any topic in which you have passion and curiosity--and commit to capture your thoughts every single week.

A young peer recently asked me if I would recommend returning to school for her MBA. I was surprised by the question but more surprised by my answer. I told her I thought she would get more personal and professional benefits if she committed that same time every week to read and comment on others' blogs, watch TED Talks, keep up with news, develop her ideas in a blog and build a network. Since then I have questioned if dismissing education was really the right call, but this soul searching has left me even more convinced that I have gained more through writing this blog than I ever could sitting in a classroom.

Writing was not an easy habit at first, but now it has become so essential that in those periods when I have trouble finding time to write, I become uneasy. The ideas start piling up. I begin to capture them in snippets of text that I email myself. I can actually begin to lose sleep because I lay in bed composing in my mind the blog posts I am not producing. It is not rare for me to wake from a fitful sleep with a developed line of thought, head directly to my PC and furiously type before I lose the idea and perspective. (As with most dreams, sometimes those ideas stand up but other times they melt under the morning light.)

Do I sound like an addict? Perhaps, but there are worst things than being addicted to a habit that leaves you empowered, educated and improved. I have experienced strong and demonstrable benefits because of my work on Experience: The Blog. Here are the ways you might benefit by making a commitment to write regularly:

Reaffirm and strengthen the ideas you bring into the world: The process of blogging forces me to take an idea that I think is fully developed and discover the holes--and trust me, some of your strongest beliefs begin to look awfully shaky as you convert a string of ideas into a cohesive viewpoint. As I compose a blog post to convince others of my perspective, I must first convince myself. I do this by filling in the blanks, taking time to conduct research and citing links that substantiate my arguments. Once the blog post is fully baked, it not only becomes a piece of content for my blog but also a fervently held principle in my brain--one I can call upon in meetings, when I am presenting or when developing strategies on the job.
Discredit ideas before someone discredits them for you: You know those scenes in old movies when the frustrated writer rips a sheet of paper from his or her typewriter and tosses it into a pile of crumbled ideas around the wastebasket? Well, that happens in real life, too. For every four blog posts I publish, I begin and discard one more. I frequently find that something I believed to be a solid and thorough concept is really just a bundle of random notions. Sometimes, I even discredit my own hypothesis--the opinion I was certain would change others' minds is so flimsy it fails to convince even me. There is true value in destroying your own ideas; better you do it while writing alone then have someone else do it for you.
Develop a point of view: We recognize that brands are strengthened not when they are all things to all people but when they focus on one important and meaningful perspective for one important and meaningful audience. Writing helps you focus your thinking in a way that develops your personal brand. When you write--particularly when you blog for others--you begin to think about who you want to read your content and what you want them to think and do. As I have focused my blog's topics, I have also been focusing my thinking and developing a point of view. My blog and my audience force a discipline in the things I read, research and think that I otherwise may lack.
Improve your writing: This benefit is obvious: the more you write, the better you write. I hesitate to say this because you may be thinking, "But Augie, you suffer from run-on sentences, passive voice and just misused the colon in the last sentence." All may be true, but I have come to realize that people inflate the fear of grammar but too often discount the fear of weak thinking. In the midst of a strong and persuasive argument, most will overlook (and not even notice) a missing comma or dropped preposition, but the best grammar in the world cannot save a weak idea. I can look back at my early blog posts and easily recognize the ways my writing and proofreading have improved. Any embarrassment I may feel about my past writing skills is more than compensated by the realization I'd still be stuck at that level had I not started and committed to my blog.
Build a network around ideas: The world is full of curators; millions of Twitterers share links to interesting articles and blog posts. Curating is valuable service, to be sure, but without creators, there would be nothing for curators to curate. At this stage in social media development, it is no longer easy to develop a following by curating--too many people share too many of the same links--but the world can always use more creators. Creators are the people who stop (or decrease) social media from merely being an echo chamber, and creators also earn the most attention. There is no more powerful way to bring attention to you and build an engaged network than by giving others content and ideas to think about, to react to or that they can share with others.
Create your own database of news and statistics: Ever have the experience of vaguely recalling an interesting statistic or survey but being unable to locate the content when you need it? Blogging is a great way to create your own personal database of the content you want to find again in the future. If I find interesting data or the results of a pertinent study, I write about it and link to it, and that means I can always find it by returning to my own blog. Take my last blog post, "Eight Ways Social Business and Mobile Tech are Changing Your Business": That one blog post contains 39 links; as a result, I will never have to waste time searching for the study that found teens sometimes opt to meet friends online rather than drive to meet them in real life. Whenever I need a data point for a deck I'm compiling, I will often use the search engine on my blog rather than go to Google--my blog has better and more helpful results (at least as far as I'm concerned).

So now you know my secret--I write as much for myself as I do for you. Of course, if you and others didn't get value from my content, then this would be an unvisited and unread online diary and not a blog.

I wish the same benefits for you. The process of reading others' content, developing your own ideas, legitimizing your point of view and connecting with others is its own reward.

I hope many of my blog posts change minds, at least a little, but nothing would make me happier than to have someone thank me a year for now for encouraging them to write, share and connect in 2012. You may not get thousands of readers right off the bat, but there are people who are waiting to hear your voice. Do not disappoint them--or you.

Eight Ways Social Business and Mobile Tech Are Changing Your Business

2012-01-30T00:07:00.000-06:00

We are still very early in the social media era, and it will take years for social and mobile technologies and behaviors to affect fully the way business operates. However, some changes are already evident if you look close enough. Is your business watching for these changes and investing so that it is prepared when consumers are ready for new business models?

Today, many companies have happy customers and a sound business model, and they are confident that social media will have a nominal impact on their organization. If this sounds like your enterprise, beware! This was the mindset of companies like Borders and Kodak at the dawn of the Web era, but these organizations scrambled--and failed--to catch up to competitors that were quicker to understand, invest and evolve into new business models.

Whether your company will be Borders or Amazon (or Blockbuster or Netflix) (or MySpace or Facebook) will depend on whether it is willing to continually invest and adapt to fundamental changes in consumer mobile and social behavior over the next decade. Here are eight ways the business landscape will change:

Your purchase funnel becomes more complex and mutable: We already know that social media is affecting the way consumers become aware of products and narrow their consideration set. Brands like McDonald's, Ford and Kellogg's have made social media a substantial part of their strategy to raise awareness in the early potion of the funnel. As an example of using social tools to improve the end of the funnel, Forrester (my former employer) notes that USAA (my current employer) is effectively using ratings and reviews to increase conversions. (Sorry, a subscription is required to read the Forrester report.)

Some say the funnel is dead, flipped, irrelevant, a maze, or a dozen other analogies. They are all right and they are all wrong, which demonstrates the complex, ever-changing world in which we operate. Attracting and binding consumers to your brand will take far different strategies than have worked in the past. The brands that succeed will be the ones that recognize they need agile strategies to capture different customers in different ways and to exploit moments of opportunity as they arise. Think Old Spice, which realized it had a hot property with Isaiah Mustafa's TV spots and rapidly deployed a real-time social media campaign that doubled sales.

Inflexible multi-year marketing plans that focus on traditional tactics and media and that do not connect directly to product development and customer service will result in a disjointed and anemic funnel for the enterprise.
Your employees need new skills: Today's employees, who seem to spend every waking moment updating their Facebook wall or Twitter stream, may seem like they possess the skills your enterprise needs in the social business era. That assumption is wrong--it is akin to saying that people who text friends on their cell phones are prepared for the mobile technology and business models of the future.

A skill gap is forming. Take the banking industry, as an example. For decades, the single deciding factor that people used to select a bank was the location of branches and ATMs, so banks put the vast majority of their channel dollars into branches. Times are changing quickly, and most banks are not altering their strategies accordingly. In Branch Today, Gone Tomorrow, Brett King predicts the number of bank branches will shrink by 50% in the coming years. Few of today's banks are prepared to differentiate on the products and services they furnish in mobile and social channels rather than the location of or service in their branches.

What new skills will today's change-counting, window-staffing branch employees need tomorrow, and what will happen to employees who do not develop the right skills? Tough times are head for some. Brett King points out that the four largest banks employ just under 1 million people in North America while the three top tech firms manage with only 150,000 employees--and the tech firms earned 37% more profit last year. The employees of banks contribute $22,256 each to the profit of their employers, while the tech employees contribute $195,973 each. Banks must shrink, and they are not alone, so the imperative to adapt or be left behind is no less pressing for individuals than it is for organizations.
You must be (or try to be) early adopters or face dire consequences: Social and mobile technologies are increasing the speed of business. Though many firms identify themselves as "fast followers," the speed of today's business has killed this concept. Today's true "fast followers" are companies that thought and invested as if they would be a leader but got there behind a speedier competitor. If a firm thinks it will sit on the sidelines, watch what develops, and start to invest after new business models and processes are proven, the best they can hope for is to be a laggard and not dead. The business cycle will be increasingly unforgiving to companies who try to follow rather than lead.

We live in a world where consumers on social networks expect answers in hours and where PR disasters evolve in real time. However, this is not just about the speed of your PR and customer service; it is also about the shrinking life cycle of your products.

In 2006, Pure Digital Technologies unveiled the Flip Video camera, and product reviewers and users quickly hailed it as an amazing and revolutionary innovation. In 2010's Empowered, Josh Bernoff and Ted Schadler shared how one employee armed with a cheap Flip video camera rewrote the rules of training at Black & Decker. Yet in April 2011, Cisco announced it would cease to produce the Flip. Forget the "hype curve," this is the survival curve: From groundbreaking, jaw-dropping innovation to yesterday's stale product in just five years. How will your products keep up in the future?
Your products must be social: Social is not something you turn to at the end of a product development cycle merely to promote your new product. In the future, if your product is not innately social, it's nothing. Admittedly, it is difficult to make consumables like chewing gum or bananas more social, but what about the durable goods with which we interact every day?

Cars seemed like an unlikely product for the integration of social, yet innovative automakers are leading the way with social technologies built into their product. You have already seen ads promoting cars such as the Chevy Cruze that permit drivers to interact with social networks. Even more ground breaking is Mercedes-Benz' new telematics app, CarTogether, which allows drivers to find people with whom to share rides and helps to cut down on emissions by reducing the number of car rides people have to make.

Too many brands seem to believe that inserting a "Share This" button or implementing a Facebook widget on their site makes their brand social. Instead, they need to consider why consumers share, when they are most likely to share, and how the brand can facilitate this process from within the product and service experience. For example, after you book a restaurant through OpenTable, the company sends a timely email asking if you would consider rating the restaurant while your memory is still fresh. Another example is Amazon, which gives customers a one-click method to share their recently completed purchase with friends. The key to social won't be to have the most creative social media marketing campaign but to make it easy for your customers to share from within the product or service experience.
You must prepare for significant shifts in people's perceptions of ownership and status: In the Western world, things have come to define us: our address, the car we drive, the clothes we wear, the computer we use. (Everyone wants to be Justin Long and no one wants to be John Hodgman--except me, apparently.)

The status of things will not go away, but today's teens are demonstrating different priorities--they get status from their networks and access to things, not just ownership of things. Ask a parent of a teen what their child's attitude is towards driving, and you are likely to hear a different story than when you were young. A study by the University of Michigan Transportation Research Institute finds that the percentage of 19-year-olds with driver's licenses dropped 14% in the past 18 years. Younger teens have seen an even greater decrease; today 33% fewer 16-year-olds have their driver's licenses compared to 1983.

The decrease in driver's licenses for teens may be due to legal or parental restrictions, but a study by ZipCar suggests that teen and young adult attitudes are considerably different from prior generations. Millennials are twice as likely to be open to public transportation, car sharing and carpooling as seniors. More than half of Millennials drive less in order to protect the environment. In addition, almost seven in ten Millennials say they sometimes choose to spend time with friends online rather than driving to see them. Finally, 18- to 34-year-olds are roughly twice as likely as those over 55 to participate in media sharing, car sharing or home sharing programs.

Can we still call consumers "consumers" if they are actively adopting ways to consume less? And what does this mean to your business model?
You must show consumers what you stand for, not just what you sell or make: Anyone in the world of brand strategy knows that consumers have always considered what your brand stands for when evaluating competitive products. That much is not new, but it has changed in two ways. The first is that who you are has never been more important. As Bob Garfield and Doug Levy shared in Ad Age, the 2006 Edelman Trust Barometer demonstrated that "quality products and services" was the top response in identifying the standard of trust, but by 2010, "quality" had dropped to the third slot. "Transparent and honest practices" is the new number one, with 83% of respondents citing it.

Not only is your reputation more important than ever, your organization has never had less say in your reputation. In the mass media era, your organization was largely defined by your advertising and PR in few tightly controlled media channels. Today, consumers define your brand with their interactions in social networks, rating sites and other online communities (not to mention their face-to-face influence in the real world). Bank of America invested $1.9 billion in marketing in 2010, yet it could not defeat a cost-free groundswell of angry consumers led by a 22-year-old nanny and a 27-year-old gallery owner.

Apple will make an interesting case study in the years to come. To date, it has been the gold standard for how your brand benefits when it means something more to consumers. Apple is the most valuable company in the world, yet for all its wealth the company has escaped the indignation heaped on rich corporations by the Occupy movement. That may be about to change--recent articles have questioned Apple's environmental policies and a blistering New York Times article last week made disturbing accusations about Apple's treatment of workers overseas. Apple CEO Tim Cook has refuted the article, but some observers fear Apple is following a traditional course of PR management by denying the accusations and responding narrowly.

Apple will not retain its valuable place atop the list of trusted brands without a different course of action. Even then, it will be consumer reaction to Apple's policies and not letters from Tim Cook or slick advertising that determine Apple's fate in the future.
Your enterprise must prepare to be on the right side of a new wave of disintermediation and reintermediation: Social and mobile business will affect every enterprise, but some will be more impacted than others will. I predict three broad groups of businesses will be affected sooner than others:

Companies that own assets and make them available to consumers for rent: Hospitality and car rental companies face new competition from peer-to-peer models. In New York, hotels now compete against 10,000 rooms, apartments and even spare couches offered by consumers on Airbnb. (I find Airbnb's self-reported claim that the average New Yorker is making $21,000 per year renting on the social service highly dubious, however.)

For most consumers, their car is one of the most expensive assets owned, yet the average consumer uses their car just 8 percent of the time. It is this low utilization that is leading some to offer their cars for rent, and RelayRides reports the average person using the service makes $250 a month renting their car. (I find this claim less dubious but still would like to see the data.) And as consumers get access to the cars they need when they need them, ownership becomes less attractive; one study found that people who use car sharing services were 72% less likely to buy or lease a car in the future.

For both hotels and cars, more supply means lower costs for consumers and less revenue for providers. In addition, the new social business competition has a vastly different cost structure from traditional providers--Airbnb and RelayRides do not need to purchase, own or maintain assets, while IHG Group holds more than $1.5 billion of fixes assets and Hertz owns more than $13 billion of fixed assets.
Companies that facilitate business between consumers: If you are in the business of earning fees to take something from one customer and get it to another customer, social business models will challenge your business. I am not talking eBay or Craigslist--they already are the standard for peer-to-peer (P2P) disintermediation and reintermediation, having killed newspapers' classified ad business.

Instead, look at banks, which take money from savers and lend it to borrowers. Today, savers get little, but this is not the case for folks lending money on Prosper and LendingClub. Yes, the risks are higher, but so are the rewards (which, any economist will tell you, is the basis for capitalism.) While the regulatory hurdles for being a "bank" are high, companies are skirting the regulations and bringing down costs to consumers with new mobile wallet, P2P money transfer and P2P lending models.
Companies that manufacture durable goods: We have already discussed how younger consumers are less interested in obtaining drivers licenses and prefer to meet friends online and to decrease miles in order to save the environment. It is clear that P2P and sharing business models will affect the auto business (and related industries such as auto parts and auto insurance).

The buck does not stop there, however. Take, for example, garden and home tools. Some people are avid gardeners or DIYers around the house, and these people will want to own their own tools. But what about the average consumer? Must every household in every neighborhood own a circular saw or hedge trimmer--equipment that the owner uses for just a handful of hours each year? Today, many neighbors borrow from one another, but watch for social business models to put this on steroids. If consumers can share what they own more easily, widely and with a profit motive (and not just a neighborly intent), ownership of some durable goods could drop.

It would not surprise me if in ten years Home Depot or Lowe's (or some upstart competitor) made more money from renting or facilitating P2P lending of equipment than from selling durable goods outright. While retailers that move quickly can have a key role in the future of social business, what about manufacturers? What does it mean if the market changes so that millions go from wanting to own an underutilized piece of equipment to merely wanting to rent it in real-time? Answer: Fewer items manufactured and sold and a shift in the market toward commercial-grade products that can withstand more punishment and usage.

You must prepare for consumers empowered with greater information about you, competitors and their own money: Social and mobile business models have a way of empowering consumers to make better decisions. For example, as car owners, we tend to think of short trips as cost free, but this is not the case; we give little thought to how each trip means more costs for gas, maintenance and insurance, so the cost of a single trip is not immediately obvious or relevant to our decision to make that trip. Conversely, when we rent a car and must pay for the trip immediately and directly, the cost becomes a significant part of our decision.

People who rent cars through car-sharing programs make better decisions, combine trips and find alternatives. This is the finding of a ZipCar study one year after introducing the service in Baltimore. The company surveyed customers and found that the number taking five or more car trips in a month decreased from 38 percent to 12 percent, and the number driving fewer than 500 miles per month increased by more than 17 percent.

Mobile wallet applications will have the same affect on consumers by allowing constant monitoring and control of credit card and checking balances. Today, consumers spend by swiping a card, with no immediate feedback; tomorrow, each swipe of our NFC-enabled phone will show our credit balance rising or debit balance falling. In addition, applications can help us track spending to budget, manage cash flow in real time, collect discounts, create more usable records of our spending and furnish a host of benefits that permit better control of our money. In addition, using our phones as barcode readers holds can furnish real-time access to competitive prices, product reviews and, perhaps, to additional information such as the environmental or labor policies of the manufacturer.

Social and mobile business tools hold the promise of making consumers more aware of the effect of each spending action. Will this newfound power overcome the innate human desire to impulse buy? Who knows, but it seems we will all be more empowered and informed in the future.

I am excited about the next decade. Better-informed consumers will have more access to information in real time and can avail themselves of new social and mobile business models that save money. Companies will scramble to keep up with lean new competitors and consumers' rapidly changing technology habits and sharing behaviors. The companies that quickly create a vision and begin to invest against it are the ones who will succeed, but the organizations that take a wait-and-see attitude put their stakeholders' interests in considerable danger.

Ten #Fails in Professional Twitter Profile Pictures

2012-01-26T22:45:00.000-06:00

Not everyone is on Twitter for professional reasons. If not, get the heck off my blog and go read The Oatmeal or TMZ or something. However, if you are on Twitter to create a professional network, learn, educate and build your reputation, let's talk about your profile pic.

I am consistently surprised by the way some professionals portray themselves on Twitter. You have precious few ways to introduce yourself to new people on Twitter. Before someone can access the pearls of wisdom in your tweets, they first need to follow you, recognize you and want to know you. What impression do you create in the split second someone takes to consider following? And when people scan their tweet stream, what does your profile picture do to lend credibility to your tweets?

People who wish to achieve professional goals on Twitter must select profile pictures that advance, not hinder, those goals. Of course, if you are on Twitter to have fun, all of the following advice is null and void, but if you are spending time to construct a professional persona and create a professional network, here are ten ways your profile picture may undermine that effort:

Illustrations: Remember when Mad Men had that app that converted your picture into a hip illustration? That was cool--in 2009. Creative, artful versions of yourself are fun, but if your goals are professional, do you really want to be defined by a cartoon character?
Logos: If you are a company, a logo is fine for a profile picture, but if you are a person, ditch your employer's logo (except, perhaps, a tiny one in the corner). You do not introduce yourself at professional events as "Hi, I'm XYZ Corp," so do not do so on Twitter.
Significant Others: We're so happy that you found your soulmate, but unless you're surgically joined at the hip, think with one mind and have a single conjoined career, two heads are not better than one. Save the romantic couple pictures for your desk, not your Twitter avatar. (And do not get me started about wedding shots as profile pics--it was the happiest day of your lives, not your most professional.)
Crop Crap: If your profile picture contains a mysterious disembodied hand or shoulder or, worse yet, you cropped off your ear to eliminate another person from the shot, it is time to smile for the camera and take a new picture. Severed body parts are for horror movies, not your profile pic.
Webcam: Webcams are amazing devices--for capturing video. If your profile picture is a dark, muddy shot of you hunched over your kitchen table staring into a fish-eye lens, then take a real picture with a real camera already.
Boobs: I am not being sexist--this advice applies to both men and women: Button it up and cover your chest. Twitter is not Match.com. If you do not want people staring at your chest at work, you should not want them to stare at it on Twitter.
Outdated: Ever meet someone in person that you have only known online and thought, "What the hell happened to you?" Your first meeting IRL should not leave people wondering if you borrowed someone else's photo or had a disfiguring accident. If your photo is more than three years, 25 pounds, or two hairstyles different from reality, update it.
Animation: I don't see this often, thank God, but please omit animation from your profile picture. Yes, it makes your avatar more obvious and grabs attention--so much so that many people will unfollow you to avoid the blinking annoyance.
Frequent Changes: Staying fresh is important, but remember that your profile picture is your face to your Twitter friends. When people scan their tweet stream, it is your photo and not your name they are most likely to recognize at a glance. Consistency may be last refuge of the unimaginative, but it is also the best way to be recognized in a sea of tweets and avatars.
PURE ENERGY!!!! You think your wide-open mouth and eyes convey that you are energetic, exciting, and unafraid to express yourself; instead, it tells us you may be slightly crazed, prone to emotional outbursts and apt to break into Richard Simmons' routines. Unless your profession is cheerleading, impress us with your competence, not your exuberance.

I considered the profile pictures of the people I follow most closely, retweet most often and with whom I've built the strongest relationships. With very few exceptions, they all share one thing: Their profile pictures feature high-quality headshots.

It may be a digital world, but your face still matters. It conveys trust and personality more quickly and effectively than your 160-character Twitter bio. Be sure to put your best foot, er, face forward.

The Role (and Death) of Marketing in the Social Media Era

2012-01-24T22:21:00.001-06:00

The other day I noticed that my December 2009 blog post, "2010: The Year Marketing Dies," was my blog's most popular article. Here it is, 2012, and CMOs are still employed and Marketing Departments still exist. Oops!

Should I be embarrassed? Before you answer that, I would like to make the case that Marketing is already dead, but marketers just don't know it yet. Like Wile E. Coyote after he has dashed off the edge of the cliff but before gravity has kicked in, I think the profession of Marketing is hovering and waiting for a fall.

I will cop to employing some hyperbole in both my December 2009 blog post and the one you are reading now, but less than you might think. Exaggeration aside, the discipline of marketing has some profound and painful changes coming.

Just this week, we witnessed yet another in a long string of marketing blunders. McDonald's promoted the #McDStories hashtag as a way to get people talking about their McDonald's experiences. People talked, all right--they used the hashtag to vent on everything from poor service to the chain's treatment of animals. Marketing observers can add this faux pas to a long list of recent marketing missteps:

Earlier this month, Taco Bell irked customers with an insanely misguided promotional tweet on Martin Luther King, Jr. Day about the "dream" of "eating @TacoBell."
In November, Qantas Airlines blundered badly with a hashtag marketing campaign that people appropriated to gripe about the carrier having canceled flights and stranded passengers.
In September, Unilever sparked a "Ragu Hates Dads" meme with an insulting ad campaign that slighted fathers.

It is important to note that I am not citing cases of mistakes or service blunders that became social media disasters (a la PayPal/Regretsy, Chrysler's F-bomb or GoDaddy's Elephant-Killing CEO). Nor are these examples of consumers taking to social media to rail against corporate policies (such as Greenpeace/Mattel or Bank of America's debit fee). Rather, all of these blunders are something entirely different--companies deploying marketing strategies and tactics that consumers reject, resulting in brand damage.

Prior to the social era, it was damn near impossible to have a marketing campaign head south. About the worst that could happen was nothing--a brand might waste its marketing budget on a campaign that fell flat and failed to move consumers. Nowadays, every month brings another story of a marketing campaign that not only fails to help the brand but bites it.

It is at this point in similar blog posts about the state of marketing that the blogger usually says something like, "In the social media era brands cannot control the message, but in reality brands never could." That is a nice narrative--and it is complete horse manure. Whether it was the power of mass media, unsophisticated consumers or a society more willing to trust authority, the truth is that marketers wielded incredible power back in the day. Thanks to pervasive and often misleading marketing, consumers thought smoking was safe and pale skin was unhealthy for decades before the dangers of cigarettes and suntanning were revealed.

Just look at Kodak. They were the poster child for how marketing can create a brand. More than ten years ago, I read an article on branding that contained a line I still recall: "Kodak is memories; the other guys are just film." That was pure, marketing success--a generic product with a powerful brand that delivered decades of protected market share and higher margins.

Today, Kodak is bankrupt. Branding expert Al Ries believes Kodak's problem was not that they failed to adapt to the digital era but that "Kodak means 'film' photography; Kodak doesn't mean 'digital' photography." I believe Ries is wrong--if brands were that inflexible, then Apple would be a defunct desktop computer manufacturer instead of the company that just reported a record quarterly profit of $13 billion derived mostly from sales of music, music players and phones.

The comparison between Kodak and Apple is instructive. Almost every single person who reads these words owns an Apple product, I'd venture, but what about Kodak cameras? I am a photo buff who bought thousands of roles of Kodak film in my lifetime, but I'm on my fourth digital camera and have never once been tempted to purchase a Kodak camera. They were never as small, fast, affordable or feature rich as comparable Nikon, Canon and Fujifilm models. In fact, look at ZDNet's annual holiday buying guides for compact digital cameras in 2008, 2009, 2010 and 2011: out of the thirty cameras listed, just one is from Kodak.

The problem that Kodak faced--that all brands face today--is that marketing in the social era increasingly works only for brands that first furnish a positive experience. In the social era, marketers can amplify brands that create positive experiences with products and services, but great marketing cannot save mediocre products and services.

If the company is unable or unwilling to differentiate the product or service experience, what is left for marketers to do? For brands with little positive sentiment to amplify and an army of empowered consumers ready to pounce at disappointing products and clueless marketing, the best marketers can hope for is to build buzz not about the product or service but about the marketing itself. "Don't like our burgers? Then here's a free social game that will get you buzzing about something other than our burgers." Marketers for undifferentiated products and services can create retweets, likes, comments, engagement and shares--everything except actual improvement in consumer consideration, intent or purchase behavior.

Certainly, there are some great recent examples of marketing that works. I've been impressed with the work being done by P&G, RadioShack, USAA (my employer) and others, but their success begins with the right product and service. P&G's Let Her Jump campaign would not have soared if women didn't trust Secret antiperspirant; RadioShack's #UNeedANewPhone hashtag campaign would have backfired if the retailer didn't carry the phones consumers wanted; and my employer's evocative TV ads wouldn't create trust if our service failed to earn trust in the first place. In recent weeks, USAA has been named the top firm in Forrester's Customer Experience Index, ranked by JD Power among the top auto insurance companies in customer satisfaction, and named a People's Choice insurance company in a study by Insure.com. At USAA, marketing is the icing on a cake baked with great products and services.

Marketing is creaking like an aged man leaning on a cane. The real power to create or destroy brands now rests with product managers and service leaders. If marketers are unable to influence the strategies, investment and staffing that impact customers' product and service experience, they are (much like Wile E. Coyote) running in place in thin air, hoping to gain traction.

I've argued my case. Now I'll repeat the question at the top of this blog post: Should I be embarrassed by my December 2009 blog post, "2010: The Year Marketing Dies"? Feel free to shame me in the comments of this blog post.

Postscript

There is a little story behind my post, "2010: The Year Marketing Dies," that you may find interesting. Shortly after accepting my offer from Forrester's Interactive Marketing team, I received a call from my new boss about a change in their blogging policy. The research firm wanted analysts' content and wisdom in one place rather than spread across hundreds of personal blogs, and so they asked me to give up my personal blog and instead write for Forrester's Interactive Marketing blog.

The strategy made sense, but I was concerned Forrester might not appreciate some of my wilder material. My new boss assured me that Forrester had no interest in censuring bloggers, so to test the waters, I decided to write a blatant provocation: as my first blog post as Forrester's new marketing analyst, I announced marketing would die in the coming year.

I shared my proposed blog post, confident a speedy rejection was forthcoming; instead, the blog post was approved without edit. It was a terrific sign as I started my new job that Forrester would be a great fit. And it was!

That blog post may have been intended as a deliberate affront, and I admit I was exaggerating the point, but I'll still stand by that article. Marketing professionals need to help firms build their brands first with products and services and second with advertising, influencer programs and imaginative social media marketing campaigns.

The Incredibly Difficult and Important Job of Community Manager

2012-01-23T10:10:00.001-06:00

Happy Community Manager Appreciation Day! The idea for this worthy annual event came from Jeremiah Owyang, and it is a terrific idea. Most organizations truly have no idea how much authority and power they have imparted on their Community Managers, and recognizing the people who fill these difficult and important roles seems very appropriate.

This blog post is dedicated to and inspired by the community managers on my team at USAA, who execute their duties with energy, creativity, passion and grace. Analisa, Jessica and Raul, with the support of Josh and Julie, have taught me a great deal about the challenges and rewards of the job. I would like to share that wisdom with you.

One of the great challenges of being a Community Manager is that few people seem to notice when you do something right, but everyone seems to know when a rare mistake is made. When your Community Managers keep all the spinning dishes from crashing to the ground, the outcome is an engaged community that grows steadily, avoids inflaming detractors and creates loyal customers. We ought to celebrate that with banners every day because those are the results that matter, but instead we tend to heap attention on those who spend the brand's dollars on a program that delivers 250,000 retweets or "likes."

When do Community Managers get attention? Their work becomes the focus of leaders and fodder for case studies when an uncommon mistake is made. Answer a thousand difficult and sensitive questions and you may get a pat on the back, but mistakenly post a personal message to the brand Twitter feed or respond with a frustrated and very human message on Facebook, and everyone from the President to the maintenance crew hears about it.

Another challenge that Community Managers face on a day-to-day basis is how much of themselves to bring to the job. A million blog posts tell brands the importance of being "real," "personal" and "human" in social interactions, but what does that mean where the rubber meets the road?

When your Community Manager is sitting at a computer looking at the brand's Facebook page or answering a question in a brand community, is it "I" or "we"? Are humor and emoticons appropriate or not? Can a Community Manager say "I'm sorry" or does that impart legal responsibility and risk to the company? Even with written brand standards, balancing the voice of the brand against the need (and desire) to make human connections is not easy.

The Community Managers at USAA are very cognizant of the need to balance their voice with the brand's. In the past, my team has debated things like whether or not they should append their names to the end of Facebook comments on the brand page. (We do so, now.) And when, in preparation of Community Manager Appreciation Day, I suggested we make a Facebook post to let our community get to know the team a little better, our Community Managers wrestled with whether or not it was appropriate to bring this much attention to themselves. We decided that our Community Managers embody the personal commitment USAA employees have for the military community, so later today we'll introduce our community folks with a post to the USAA Facebook page.

It is one thing to struggle with the balance between being personal and being the brand voice, but it's another thing when your customers make that choice for you. We had one customer accuse one of our Community Managers of manipulating a Facebook contest to benefit her friends. The accusation was baseless and an expression of frustration by a person upset her entry was not receiving more votes, but no matter how much one can logically explain a customer's angry and accusatory post or tweet, it is still difficult and frustrating when it is directed at you personally. There is no situation in which it is more important nor more difficult to set aside personal feelings and bring the brand's voice.

I've shared some of the frustration of the job, but what about the benefits of being a Community Manager? There are some career advantages to being employed at the cutting edge of how brand building is changing; for example, USAA's Community Managers have had the opportunity to directly teach the association's president and other leaders about social media. It also is exciting to be part of every single campaign or important communication initiative within the organization. Plus, one important bonus for handling consumer concerns and needs in social channels is the opportunity to see detractors become advocates.

And finally, there's the autonomy and importance of the job--Community Managers are creating and reinforcing the brand through hundreds of public interactions a week. Your brand's advertising and PR is reviewed by a dozen executives before it is released, but the tweets, posts, comments and replies that fashion your brand in social media go directly from the hearts and minds of your Community Managers to your customers. There are few if any people within the enterprise who so personally epitomize and feel ownership of your brand like your Community Managers.

I hope the USAA Community Managers know how much I appreciate their hard work every day, but I am sure I fall short of bringing this to my daily interactions with Analisa, Jessica and Raul. Today my challenge to you isn't merely to thank your Community Managers on Community Manager Appreciation Day but to consider ways to bring appreciation throughout the year.

In your communities, every day is Community Manager Appreciation Day. Shouldn't it be the same inside your organization?

The Shrinking Half-Life of Never

2012-01-17T23:28:00.000-06:00

"The future belongs to those who see possibilities before they become obvious."
- John Sculley, former CEO of Apple

There are many reasons why people fail to see the future, even when it is pounding down their front door. Some are too busy in the now to see the world changing around them; some see trends and mistake them for fads; and some are simply too invested in today's skills and business models to consider their evolution. No matter the etiology of the disease, the symptom is usually the same--bold and unassailable declarations such as "I will never..." and "Our customers will never..." If you hear these words, recognize them as the danger signs they are.

The threat of overlooking vital market trends is certainly not a new phenomenon. Just ask the powerful railroad companies of the early 20th Century, which failed to understand the changing needs and technology of society. Stuck in the mindset that they were in the rail business and not the transportation business, railroad companies watched as rail passenger travel declined 84 percent between 1945 and 1964. In the first half of the 20th Century, the Pennsylvania Railroad was the largest publicly traded corporation in the world, but by 1970 the merged Penn Central declared bankruptcy.

The forces that undid Pen Central 40 years ago are the same forces that torpedoed Borders in recent years. As recently as two years ago, Borders Group operated 511 superstores across the globe; late in 2011, the company liquidated its last store. Unwilling to see (or adapt) to the way media sales first went online and then went digital, the company struggled. It first turned to Amazon as its online store provider, but by the time Borders tried to establish its own online store in 2008, it was too late.

How do highly compensated executives--recognized and experienced experts in their field--miss profound change on this scale? You do not need deep insight into the railroad or book selling business to understand how this phenomenon works. If you are over 40, you've experienced it firsthand. Chances are you have repeatedly declared (either aloud or silently) "I will never..." only to prove yourself wrong time after time:

In 1994: I will never own a personal computer.
In 1997: I will never waste time on the information superhighway.
In 1999: I will never be tethered to a mobile phone every hour of my life.
In 2001: I will never submit my credit card number through a Web site.
In 2003: I will never need a smartphone--my email can wait until I get to my PC.
In 2007: I will never share my personal information on those crazy social networks.

Never isn't what it used to be. It took most of us no more than two to five years to move from "I will never..." to "I am doing it religiously..." for all of these behaviors.

Many of those who laughed at the nerds typing away on their Atari STs and Commodore Amigas are now on their third generation of personal computing, having transitioned from desktops to laptops to tablets and mobile. The people who declared they would never be stupid enough to trust their credit card number online are today storing their Visa numbers on Amazon and checking their investment accounts on their cell phones.

When we personally misjudge the future, the implications are relatively minor. The folks who mocked Treo and Blackberry addicts changed their minds, bought iPhones and Androids, and caught up to the early adopters. Conversely, the organizational implications of misjudging the future are far more serious. "I will never..." too easily becomes "Our customers will never..." which is expressed as "Our organization will never..." By the time "never" becomes "OMG!," it is too late to steal market share from more agile and established competitors; it is even more difficult for a fading brand to recover lost trust and convince consumers it is still relevant. Buy books at Borders? That is so 2007!

Today, what are you saying you will never do? How will your 2017 self prove your brash and ignorant 2012 self wrongheaded and shortsighted?

How about, "I will never lend money to a stranger through a peer-to-peer (P2P) web site?" Many bankers today think peer lending is a minor blip, but with the leading P2P lending sites growing more than 100% per year, this may well be a social business model many will regret discounting. (Given all that goodwill many of the big banks have accumulated, I'm sure they have nothing to worry about.)

Other executives say "I will never spend more on social media than traditional advertising," even though the transition is already well underway; Coca-Cola has shifted 20 percent of its marketing budget to social, for example. The trend toward social will not abate soon. Forrester reports that 55 percent of marketers expect "created social media" to grow in effectiveness while 21 percent expect the same of television and just 10 percent anticipate radio advertising effectiveness to rise.

The cure for the disease of business myopia is quite simple: Never say never. Recognize that the half-life of "never" has never been shorter. The quicker we appreciate that "never" is not a very long time in today's environment, the sooner we can start leading our organizations to embrace the remarkable changes ahead.