Category: Strategy

Doc Searls, Michael Wolff and The Facebook Fairy

I spend a fair bit of time puncturing organisations’ belief in The Facebook Fairy.  This is the belief that having ‘conversations’ and ‘engagement’ with a handful of your customers or consumers is a sensible thing to do because The Facebook Fairy will sprinkle some magic dust such that this ‘engagement’ will spread to all of your customers or consumers who also happen to be on Facebook.  (Note: this doesn’t mean that you shouldn’t have conversations with your consumers in Facebook – just not the type of conversations that are predicated on creating a business benefit via the ability to spread a small conversation to lots of people).

I have also been critical of Facebook’s long-term viability because its’ business model is based on the idea that it is a form of media, when in fact it is an infrastructure (or even a form of behaviour).  However, until this point I had never really questioned its utility as an advertising platform, albeit a platform that would never be able to fulfil the revenue expectations its current valuation suggests.  But then I read this piece by Doc Searls and also the article by Michael Wolff that Searls’ references.  The Michael Wolff piece is a withering exposure of the viability of the ad-supported web, largely based on research into the decreasing effectiveness of on-line advertising, whereas Doc Searls’ piece probes more deeply into the idea that advertising decreases in effectiveness as it becomes more targeted and personal – important given that increased personalisation is assumed to be the on-line salvation of advertising.  He cites two posts by Don Marti looking at the phenomenon.  Marti says in one of these pieces:

The more targeted that advertising is, the less effective that it is. Internet technology can be more efficient at targeting, but the closer it gets to perfectly tracking users, the less profitable it has to become.

The profits are in advertising that informs, entertains, or creates a spectacle—because that’s what sends a signal. Targeting is a dead end. Maybe “Do Not Track” will save online advertising from itself.

Marti also suggests that the value of advertising lies in the fact that it is, well – advertising: something that puts a single message in front of lots of people.  Its value as a statement – a signal as Marti puts it – derives from its scale and lack of personalisation.  Or to put it another way, not only does The Facebook Fairy of network influence not exist, neither does the Facebook Fairy Godmother of on-line advertising.

This idea that advertising only really works as a way of talking to lots of people seems to make eminent sense.  I am always telling people to recognise that traditional media and social media are different – what works in one doesn’t work in the other.  Social media really only works when you are dealing with small groups of people – therefore, as a business – you need to create a benefit other than that which is derived from reaching a significant proportion of your audience.  You can’t rely on the Facebook Fairy to spread your Facebook activity across the Facebook world, as though it were a media platform or channel.  These benefits have to be based on the ability to consult with, or respond to, your audience (something which an ad cannot do) and this response has to be based around what people are doing (behaviour) not who they are or what channels they are using.

This brings us onto the second part of Doc Searl’s piece.  His contention is that the role for organisations that wish to perform some sort of intermediary between individual consumers, or between institutions and consumers, lies in the area of  Vendor Relationship Management (VRM).  This is the idea that the business opportunity lies in providing customers or consumers with the tools and data they need to manage their relationships with brands / organisations: basically a reversal of the current approach where value is assumed to lie in the ability for brands to hold the data in order to control the consumer relationship.  It is an approach supported by Sir Tim Himself.  VRM is indeed a fascinating subject – but I am not yet convinced this is the way to go.  While it is almost certain that one of the principal shifts inherent in ‘The Social Media Revolution’ is the ability for individuals (consumers or citizens) to connect with each other to either manage, or by-pass, their relationships with institutions (governments or business), this doesn’t necessarily mean that the response from institutions should be to co-opt, or even support, this process.

Rather than become involved in the business of helping consumers connect with each other, I think business has to start from a recognition that consumers have, or will become, connected and deal with the challenges and opportunities that this presents.  Increasingly I think the real ‘paradigm shift’ businesses need to take is making the break from thinking about channels, tools and messages (and to a large extent VRM is still a channel / tool based approach) and think instead about identifying and responding to behaviours (see these recent posts in response to Altimeter’s Dynamic Customer Journey and also digital influence).

The Dynamic Customer Journey – is it a channel problem or is it a behaviour problem?

The Altimeter Group is doing some research on what it is calling the Dynamic Customer Journey.  It is inviting people to contribute their thoughts.  Here are mine.

The basic premise, outlined here in a post by Jeremiah Owyang, is that reaching the customer has become more complicated.  The growth in information sources, channels and technolgies has, he has calculated, resulted in their now being 525 different permutations of channel for reaching an individual.  Complicated indeed.  However, could it be that this complication is created by the way we are defining the problem?  Perhaps we are making one of the classic mistakes that many are making when trying to enter the social digital space, namely restricting our ability to understand the new space by our desire to make it appear and behave like the old space we understood?

Here is what I mean.  The complexity of the problem stems from the fact that we are seeing it as a channel problem.  We are assuming that the challenge is to reach our customers and to therefore find the most effective channels to do this.  However, this is a traditional marketing way of undrestanding the situation and the one thing we are now starting to realise is that dragging traditional approaches into the social digital space very rarely works – because the social digital space works in a very different way. The interesting thing about the social digital space is that it is not really behaving like a series of channels.  99.99% of everything that is going on out there is not actually organisations reaching out to individuals, or even individuals reaching out to organisations – it is individuals making connections with each other. This is the activity that we should seek to understand in order to frame effective relationships with our customers, rather than focusing on the tiny part of the space that is available for organisations to use as a channel to reach people.

The critical thing about this activity is that it is driven by behaviours and context, not by channel.  It is therefore realistic to assume that the problem – and therefore solution – is not a channel one, it is a behaviour one.  Here is what I mean.  I am fond of saying that there are only 10 people who are critical to your business and social media can help you find them.  This is a promise that every traditional media / channel planner would love to be able to make, but can’t.  The catch is that these people are not defined by who they are (and therefore who can be identified and reached via a traditional channel based strategy) – they are defined by what they are doing at any given moment in time.  And, of course, as time moves on and the context changes, so some people will pass out of this group and more people will enter it.  Over a period of time a very considerable number of customers may pass into the space, but at any given time, it is only a small and therefore manageable number.

You identify these people by what they are doing, not be who they are, or by the channels you need to find them. This also has implications for the currently fashionable discussion on digital influence and digital influencers. As I posted a couple of days ago, digital influencers are not actually that important.

If you re-frame the problem of the Dynamic Customer Journey as being a behavior identification problem, not a channel identification problem – it suddenly becomes a whole lot easier to solve.  It is about digital spaces, not digital places or channels.  In essence it revolves around tuning into and dealing with what I see as the four key digital space: those spaces where people are

  • Saying something nice about your brand
  • Saying something nasty about your brand
  • Asking a question for which your brand is the answer
  • Making a suggestion as to how to make your brand better

In summary, the customer journey needs to be understood not by the route customers take (channel), but by what they do along the way (behaviour).

Anyone who wants to make their own contributions to the research can do so via this form.

Content: what content?

(This is a rather long post, so you can download it as a pdf to read in bed or in the bath.  If you stick with it I hope it will change the way you think about social media).

People are talking a lot about Engagement and Content at the moment.  These concepts are up there on the pedestal as examples of what you need to do when you are ‘doing’ social media.  “Content marketing is the new … err … marketing” people are saying.  And “we must use social channels to drive greater engagement with our consumers”. However, the real question is “what type of engagement and what type of content?”  A piece of content can be anything from a tweet, to an expensive piece of video – which makes generic exhortations about the importance of content largely meaningless until such time as we drill down an define exactly what type of content we are talking about.

Likewise with engagement.  At best this is a very hazy term.  It is a bit like the term Reform, something that inherently seems like a good thing, even if we don’t understand what it means, something which politicians are highly adept at exploiting.

So, of late, I have been on a mission to really get under the skin of Content and Engagement in relation to social media, because I have a suspicion that no-one really knows what they are talking about when they use these terms.

First the theory: it’s a bit bot boring, but it is very important.  Until the advent of social media, distributing information (media) was expensive.  This had two implications for anyone who wanted to spread information.  First, you had to keep the message short and snappy.  Second, you needed to get that message in front of all of the people you wanted to reach.  Your ability to tailor or segment a message was pretty restricted because it was either still quite expensive to reach a tailored group, or because the media or channels just didn’t exist to service small groups of people.  This conditioned the way in which we did marketing.  It was a reductive process – reduce your brand down to narrow proposition.  And it was a mass process – you needed to get the proposition (ad, key message, campaign) in front of lot of people, often repeatedly.

Then social media came along.  All of a sudden, distributing information became virtually free.  Therefore the problem that all of marketing had adapted itself to deal with, stopped being a problem.  And now that information was no longer locked-up in, and conditioned by, specific distribution channels – content could basically kiss media (distribution) goodbye.

The relevance of all of this is the critically important recognition that everything we have done in marketing and communications up until this point, has been adapted to a set of conditions that no longer exist, when you are in the social media space.  It is therefore reasonable to assume that, when you go into the social media space, if you are still doing what you used to do when you were in the traditional media space, it probably won’t work (or work very well).  It is a bit like the travelling across the land and the sea.  It is perfectly possible to travel across both, provided you understand the different.  Take a car into the ocean and no matter how well you may try and adapt it, it’s not going to work anywhere near as well as a boat.  Likewise, you can’t take a boat to the supermarket.

The theory therefore tells us that the type of content that we have been doing up until now is probably the wrong type of content for social media.  It would likewise suggest that how we defined the concept of engagement in the one-to-many mass marketing world won’t be relevant in the social world.

But that’s just the theory.  What about the reality?

The best way to understand the reality is take the trouble to look at what is going on in social media – how The People (defined as consumers, citizens or customers) are actually using it.  When you do this, you recognise that something in the order of 99.99 per cent of everything that is happening in this space concerns individuals making connections with other individuals, frequently within spaces that can be seen as a form of small community.  These people often already know each other, or have will have some form of potential or actual close connection as a result of a shared interest.  The bit of social media that relates to organisations ‘reaching out’ to individuals, or individuals contacting organisations is the 0.01 per cent.  The interesting thing is how few organisations have actually taken the trouble to study this reality.  Thus rather than use social media in a way which reflects how The People are actually using it, they focus on the tiny bit that accords with how they would wish to use social media – the bit that looks like, or can be understood as, a traditional media channel.

As a result we see organisations, for example, trying to use Facebook pages as a form of website.  The logic goes something like this: “We don’t really understand how You People are using Facebook and can’t work out what, if any, role we might have in all of this.  However, we do understand websites, so if we can make Facebook work like a website, we can then understand it and make it work for us.  Hurrah! Job done! Tick box! Pay digital agency!”  It is a way of super-imposing a desired reality (desired by brands, agencies and Facebook) on top of an actual reality – i.e. in reality, it’s a fantasy.

What would you say to a media agency that drew-up a media plan that ignored 99.99 per cent of the available audience?  Social media, of course, is not really a form of media, it is better understood as an infrastructure, but the point still holds.  Why choose not to use the infrastructure in a way which reflects how the people we want to engage with are actually using the infrastructure?

The answer is that to do this is awkward and difficult.  It involves breaking down what we have done to date and reconstructing it in a different form.  It is uncomfortable and disruptive and no-one likes disruption.  We all desperately want social media to be a new space within which all the old techniques will still work, with minimal adjustment (“we used to run promotions via advertising, so now let’s runs them in Twitter!  Hurrah! Job done! etc”).  There are also plenty of organisations with a vested interest in maintaining the comfortable fantasy, not least amongst them Facebook, Twitter and Google themselves, because they can only monetise themselves as a form of media or content platform, not as a form of infrastructure. (This isn’t strictly true, since they can create a viable business model as an infrastructure, but this kind of a model cannot justify the sky-high valuations to which these businesses now have to aspire).

So, what is the relevance of this for content and engagement.  Let’s look at content first and examine how The People are ‘doing’ content, because logically, this should inform the content that organisations should produce.  The theory tells us that this content won’t look like the type of content we have been accustomed to produce, but what about the reality?  Well, the reality is that the most valuable piece of content in the world tells you how to donate a car in Dallas.  Or more precisely, this piece of content is what the world’s leading social content manufacturer, Demand Media, worked out would generate the most revenue via associated advertising back in October 2009 (as highlighted in this excellent Wired article).   This wasn’t something that Demand Media derived via a lengthy or complex piece of research, it just happened to be the piece of content that its algorithms defined as the most valuable at that particular time.  Today, the answer will be different.  Demand Media doesn’t have an agenda other than making money by producing content.  It doesn’t have any editorial or subject considerations, it simply has a set of algorithms which tell it which bits of content to make in order to garner the most associated advertising revenue. It is not a newspaper or TV station, its content doesn’t live in a place or on a site, it lives only in search.  But the content that it makes, therefore, is actually a very good indicator of what content is actually popular and actively circulating within the digital space.  And this content is simply the answers to questions, because this reflects what is really happening within social media.  People are asking each other questions: “how do I do this?”, “where do I get one of those?”, “what about this?”  These are very specific questions demanding very specific answers.  Critically, almost none of the content organisations are accustomed to producing is anywhere nearly relevant or specific enough to provide these answers, because, in accordance with the old rules of mass marketing, we produced single messages that were designed to be seen by lots of people at the same time.  We didn’t (couldn’t) produce highly tailored messages designed to be picked-up by very few people at any one time, albeit something which could attract a larger audience over an extended period of time.

Here is a practical illustration.  I have been doing some work with a large firm of lawyers.  Their digital approach to date had been, sensibly enough, aligned against a search strategy that assumed that people were looking for a large firm of reputable lawyers.  The problem, though, was that in the social space, no-one was asking this question.  There was no place where a conversation about the best large legal firms was actually happening.  But was happening was that people were asking questions about specific aspects of the law – either within defined communities or via Google.  Simply rocking-up to those places and trumpeting about what a great firm you were or what expertise you had, wasn’t going to work.  The only basis for establishing a credible presence in these spaces was by answering the questions people were asking.  Thus the strategy that we put in place was a process which allowed individual lawyers to start responding to these questions and, once you have created an answer to a popular question, you don’t need to keep repeating it, the answer becomes ‘socialised’ and thus remains current in all future conversations, even if the original creator is not actually present.

That is it really – content, in social media, has to be based around answering the questions people are asking.  It is no good rolling out swathes of traditional ‘look at me’ editorial, publishing huge amounts of stuff simply because you now can publish huge amounts of stuff.  We used to make 30 second ads.  Now we can make 30 minute ads, because the space we have is not limited by the need to rent an expensive distribution channel.  But that doesn’t mean we should make 30 minute ads – it would be better to make sixty 30 second answers.

It is strange how few organisations are taking the trouble to work out what questions people are asking for which their business can provide an answer.  Well, I guess it is not strange really, because this is not necessarily something we want to know about, either because providing the answers that are specific enough is not something we are set-up to do, or because the answers are not really sexy.  We would much prefer to continue to tell everyone how great we are, even if this is an answer to a question no-one ever asked.

This neatly takes us on to engagement.  I recently took a look at P&G’s UK and Ireland Facebook page for its Pampers brand.  Here it is.  It lands you on a custom built tab – i.e. a place which allows P&G to make the page look as much like a website, and as least like a Facebook page, as possible, except for the command to press the Like button, thus giving P&G a data capture opportunity.  I don’t support this approach, but let’s ignore that for the time being.  I then went to the more important place – the Wall.  (Update: this post was written pre the introduction of Facebook Timeline so the design is a little different now – however, the basic principle is the same).  This is important because the Wall allows you to get a sense of what is really happening around the page.  What was going on was quite interesting.  P&G were doing some bog-standard ‘Like harvesting’  – i.e. a post declaring “Click like if you would like an exclusive preview of something new and exciting from Pampers.” They were also doing other forms of data capture – running promotions to incentivise people to send them their email address.  But they were also doing stuff that was much more social.

  • Every Wednesday they convene a Pampers Coffee morning where people are encouraged to have a chat.  The last one of these gathered 108 comments or contributions.
  • They were hosting a webinar to discuss the issue of getting their baby a good night’s sleep.
  • They were also helping spread advice: “Hi everyone! Sarah, one of our mums, would like your advice.  Here 13 month LG screams really high pitched for no particular reason.  She wants to know how she can break this habit.  Has anyone else experienced this and what did you do?”  This gathered 63 responses.
  • They were also asking questions such as “What fun words does your LO ask or get mixed up can’t say properly?” (125 comments), or “What gets your baby excited?” (124 comments).

If you checked out Everyone’s posts, as distinct from the default Pampers’ posts, you could see that people were using the space as a place to ask each other questions – the issue of sleep again seemed to be the recurring theme.

All good stuff.  In many ways you could see this as text book usage of social media.  The brand was encouraging people to talk, it wasn’t pushing messages at them.  It was obeying the rules.  It was generating a good response – an average of 120+ responses on a post is pretty healthy.  It was perhaps being a little anti-social through its rather underhand data capture techniques and there is a possibility that the questions it was asking were linked to the nascent creation of future campaigns, either for Pampers or for other P&G brands.  But that is just a quibble really.

The big question though, the question that I suspect is increasingly going to be asked about social media, is So What?  How was all this engagement actually selling more Pampers?  While the levels of response Pampers was generating was quite large in a social context they were tiny in the context of the total number of actual or potential Pampers consumers.  There was also the question of relevance.  Most of the stuff they were talking about was of relevance to the ‘target audience’ as Pampers would define it, i.e. parents with babies.  But it wasn’t relevant to the product – i.e. nappies / diapers.  So both the quantity and quality of engagement they were generating was low.  For a nappy, manufacturer to host a conversation with a few hundred mothers about getting babies to sleep, isn’t going to move the needle on anything – because it is neither relevant nor achieving scale.  It was OK to do this sort of stuff, essentially sponsoring conversations, when you were doing it in a mass distribution environment where all your audience could see it.  But Facebook is not a mass distribution environment.  The fact that a conversation is happening in a social network doesn’t mean that any positive sentiment you are generating will magically spread throughout the network and thus reach a significant proportion of your target audience.  The very nature of social media, small groups of people connecting with each other, makes it a very difficult medium to use to spread messages to lots of people, unlike traditional media which was designed to do this in order to overcome the economics of expensive distribution.

There is an exception to this, of course, and that is the ability of social media to spread contagion.  It is a paradox really, that 99.99% of everything that happens in social media stays within the boundaries of small groups and conversations.  But very occasionally things can break out of these confines, and when they do, they can spread incredibly rapidly, at a scale and cost effectiveness far greater than could have been achieved with any traditional media network.  However, the fact that these viral effects appear to be relatively common should not fool us into believing that they are anything but highly exceptional.  The only reason they appear ubiquitous is because of the incredible explosion in the quantity of information that is now being produced.  Virals are a bit like successful rock bands: there appear to be a lot of them around, but for every one successful band there are thousands of wannabees who never make it.  None-the-less, despite the exceptional nature of contagious activity, it is tremendously seductive to brands.  There are two reasons for this.  First, there is an obvious appeal in generating what is seen as free media.  In the old world, we made an ad and then had to spend many times the cost of making that ad buying the media to distribute it.  Now, we can make something and it costs us nothing to distribute it.  This is the attraction that is cited by the likes of P&G when talking about their Old Spice campaign of 2010.  P&G sees this campaign as being a success because, for a relatively small additional outlay, it created 1.8 billion impressions.

The second, perhaps more important, reason that viral activity is seductive, is because of its’ comfortable familiarity.  In the old world, marketing was based around putting single things (campaigns, messages, ‘impressions’ as P&G put it) in front of lots of people.  Getting the numbers was critical to success.  In social media, you can’t get the numbers, except by becoming viral – hence the conclusion that viral is the way to go in social media.  It allows us to delay the recognition that the social digital space is very different and continue to persist with the same types of activities, thinking and behaviours we are familiar with from the world of traditional marketing.  The problem, of course, is that you can’t base a strategy on the quest for contagion, in the same way as it would be foolish to plan your life on the basis of becoming a successful rock musician.

The other problem with contagion is that it not necessarily social.  A while back I was asked to speak at a beauty and cosmetics conference and therefore did some research into examples of usage of social media in this sector.  Naturally, I looked into the assumed success of the P&G Old Spice campaign to try and understand how this was working and what benefit it was likely to bring to P&G.  The interesting thing that I uncovered was that, despite the fact that the stated aim of the campaign was to create conversation between men and women about male fragrance, a quick monitoring exercise revealed that none of this was happening.  The vast majority of the conversation was about the ad or activity associated with it, such as creating spoofs.  No-one was talking about the brand and the only way the brand had worked out to talk to consumers was by pretending to be the man in the ad.  It did this either directly – making more than a hundred video responses featuring Isaiah Mustafa standing in a bathroom – or via a Twitter and Facebook presence where ‘the brand’ assumed the voice and attitude of a cool, black, sports jock.   So, the brand got its ‘impressions’ and the conventional brand benefits likely to be associated with this, but didn’t create anything that could be seen as social or sustainable.  In fact, the pretence involved in hiding behind an advertising character could be seen as actively anti-social.  It was also unable to repeat the exercise – subsequent ads and builds on the campaign have all basically flopped in the social digital space.  Also, alongside the cute spoofs made by 11 year-old boys as a present for their mum, there was stuff like this, which happened to be number three in a Google search for “Old Spice ad spoof” at the time I was looking.

Thus P&G, via its Old Spice and Pampers activity, neatly illustrates the problem with engagement in social media when you approach it without embracing how and why social media is different.  You either end up doing anti-social in front of lots of people, with minimal guarantees of success, or you do social in front of small groups of people in a way which doesn’t scale or create any other form of commercial benefit.

I think I will say that again in bold and italics.  You either end up doing anti-social in front of lots of people, with minimal guarantees of success, or you do social in front of small groups of people in a way which doesn’t scale or create any other form of commercial benefit.

How, therefore, should we ‘do’ engagement in social media.  We need to recognise that the type of engagement that is associated with large numbers is different from the type of engagement you can create with small groups.  When you are seeking big numbers, you can only ever expect, on average, very low levels of interest and engagement.  This is fine if this is enough to make sufficiently large numbers of people just a little bit more receptive to your offering, versus your competitors’.  And if you want to do large numbers, you should do it in an environment best adapted to work this way – i.e. the traditional one-to-many mass media and marketing environment.  Social media doesn’t ‘do’ big numbers, except in very exceptional circumstances (viral).  This doesn’t mean that you abandon the quest for contagion, you just don’t bet the farm on it.  Likewise it doesn’t mean that you can’t graft social media elements onto traditional campaigns – but what will happen when you do this is that social media invariably ends-up as your measurement metric, it won’t be the principal engine of engagement.  As one marketing director recently said to me, “I think Facebook is great because it allows me to see how people are reacting to my latest ad”.  Just because your Facebook likes are going up, this isn’t necessarily down to anything you are doing in Facebook, it is just a reflection of how people are feeling about your brand.  Likewise, chasing likes for their own sake, is a waste of time, other than for data capture (which is not, I would suggest, an especially social or sustainable use of Facebook).

This takes us to small groups.  Funnily enough, through our experience in traditional marketing, we already know how to ‘do’ small groups.  We call them focus groups – i.e. small groups of people, representative of our target audience, with whom we can have a great deal of engagement.  Crucially, the type of engagement we seek from focus groups is advice on how to do things better.  We don’t try and sell to the focus group, or see it as a sampling opportunity, because we know we can’t create sufficient scale to make this worthwhile.  We understand that when dealing with small groups, we have to do something else other than just make them feel nice about us, if we are create any commercial benefit.  However, we haven’t been able to export this learning into the social media space.  We somehow believe that because the (focus) group is now in Facebook, any warmth we generate will magically spread across a significant segment of our audience.  It won’t.  It may spread a bit more than was the case in a conventional focus group, but not that much more.  Instead, we end up generating the sort of engagement that only ever creates a benefit at scale – but without the scale (as in P&G Pampers).

So how do you get a scale effect, when dealing with small numbers?  Specifically, how do you do this in social media?    You do this by either finding the small group of people who are prepared to go out of their way to do something for your brand, or by responding to those people who have something to say about your brand.  It is important to realise that the former will only ever be a small group, although you may be able to reach the majority of them, and the latter will be a small group at any particular time, albeit one which potentially constitutes the whole of the larger group.  Or to put it another way, all of your consumers may, at some point, have something to say to you, but only a very small group of your consumers will ever want to have a significant or sustained relationship with you.  You will never be able to have a significant relationship with all of your consumers (#Kevin Roberts, #Lovemarks, #Fantasy, #Sorry).  This doesn’t just apply in social media – it is a basic truth of marketing, albeit one we never had to deal with when we lived in the hot-house environment of the expensive one-to-many mass message.

Looking first at your enduringly small group.  These are the people who are your real fans, those for whom the otherwise usually silly marketing lexicon of “passion” and “loyalty” actually applies.  (If you look at my previous discussion with Jonathan Mildenhall from Coca Cola – these were defined by the Man with The Red Van with the Coke Logo painted on it).  Within traditional marketing we were not really able to do anything with these people.  It was great to have them, but like Facebook likes, they represented the end of a process, not the beginning of one.  Even if we could find ways of reaching out to them, what we could get them to do was relatively limited.  They were probably consuming our product or service at maximum level.  Even if we could up their rate of purchase, this group would never be big enough for this to create a measurable increase in sales.  We could try and get them to be ambassadors or advocates, but again, it was difficult to link this to a multiplier effect which would have an impact on either sales or brand reputation.  So we tended to try and turn the spotlight on them, often by putting some of them in an ad or using their endorsement in other marketing messages, or else we just said thanks and left it at that.  Often, we didn’t even say thanks.

But now, with social media, we start to have that multiplier or, perhaps more importantly, we have the power that comes from connection.  These people can stop being individual fans and become connected fans – and connected fans can be encouraged to do stuff, beyond just sharing their interest or “passion”.  One of the first, but still also one of the best, case studies of how to do this is Lego Mindstorms.  They got groups of their most devoted fans to start to design new products.  Connected fans can become your eyes, ears and innovators – simply because they will enjoy doing this sort of stuff.  I often say that social media is actually best understood as a way in which you can get people, whom you don’t pay, to help you run your business.  Another famous example is Dell’s Idea Storm community – a process that crowdsources innovation.

Dell have extended this idea much further with their Customer Certified Solutions programme – a process whereby customers solve each-others’ problems.  This example also highlights another fact, which is that despite all the money and attention given to b2c social media ‘campaigns’, social media often works much better in the b2b environment, simply because the levels of shared interest and importance of service are actually much higher in b2b.  For example, “I got thirsty, I wanted a Coke, I drank the Coke, I got on with my day”, versus “I got sued, I needed a lawyer, I won my case, my business survived”.  Within b2b you frequently find a much higher order of needs (or technically a lower of needs if you follow the Maslow approach) and also, many more things to actually talk about (which is also relevant to the content issue).

This isn’t to say you can’t use social media to create engagement in the b2c environment (as Lego showed), but it does indicate that a b2c brand may be better advised to focus on the other type of engagement – i.e. the group drawn from all of your consumers, but defined by their desire at any given time, to actually say something about your brand.  Rather inconveniently, what they usually want to say, or the conversations they might want to have, are rarely the type of conversations you might want to have with them, in public anyway.  I.e. they will be asking questions (those questions again) such as “why isn’t this working?” or “when is the service going to be fixed?” or “why can’t you do this?”

Here is another example.  At the moment I am doing some work with a large, international, media organisation.  One of their stated objectives for social media, was to increase the size of their Facebook fan base.  They also wanted to look at crisis management, specifically what to do when people wrote negative things on their Facebook pages.  What we have done is challenge and unpick these objectives, recognising that people putting negative things on your Facebook page is only a crisis if you are trying to make your Facebook page a website – i.e. a destination to which you want to drive the maximum number of people, to receive highly crafted, one-to-many mass messages about the brand.  If you set the page up as a place where people can come to critique your product (TV programmes in this instance), negative comments are not a crisis, they are indicative of successful customer service – provided that you deal with them correctly.

It is interesting to study how customer service and complaint work in social media.  In at least nine times out of 10, you will find that what starts as a vitriolic rant about a product or service, ends-up very amiably, even if the original problem wasn’t fixed.  Once people discover that they are not dealing with a remote, inflexible, arrogant, anti-social organisation, their whole perspective changes.  They re-appraise the whole terms of engagement that they have with that organisation, once they know that it is available to talk to them at the times and in the places of their own choosing (not at the times and places of the brand’s choosing).

Now, at this point, you may well say, “where is the scale effect in that – surely this is just the same as P&G Pampers having those chats about sleeping babies on Facebook, or what we already do with our customer service phone line”.  The answer can be told via this advertising fairy tale.  Imagine there was a creative director who came to you saying they had created an ad so overwhelmingly compelling, that only one single exposure to it was all that was required to totally transform a potential customers’ or consumers’ engagement with the brand.  But, there is a catch – this ad can only ever be seen by one person at a time, if more than one person sees it, it just turns into a lemon (a bit like Cinderella’s coach after midnight).  However, the good thing is that there are still hundreds, maybe thousands, of opportunities that occur every day, to get this ad in front of individual people.  At this point, you are likely to be thinking – wow, shame we can’t just buy a super-bowl slot and rule the world, but if I can reach 1,000 of my potential consumers or customers, every day, 365 days per year.  And if the value of exposure to this is perhaps 100 times more effective than a standard “impression”, this starts to look pretty interesting.

Of course, the “ad” in this fairy tale is actually a genuine customer service conversation.  The problem with customer service, up until the advent of social media, was that it wasn’t scalable.  It was locked up in certain distribution channels – email and phone lines.  These distribution channels conditioned, or restricted, what we understood customer service to be, in much the same way as traditional media channels restricted our understanding of what content was.  Customer service was something we needed to do as one of the things necessary to preserve brand reputation, but it was never, of itself, going to move the needle upwards on brand reputation.  Therefore, it became a marginal activity, not a front-line marketing or communications tool.  However, social media has liberated customer service from these channels.  However, as with all traditional techniques, this doesn’t mean that the way we ‘do’ customer service in social media is simply to drag our old approach and techniques into the new space.  What we can now understand is that there is a huge customer service space out there, but we were never able to access the opportunities it presented when we were restricted by the usage of certain channels.  This was because we just never got exposure to 99.99 per cent of those occasions when people had questions or issues about our brand, and the tiny bit we did get exposure to was crippled by its requirement to use particular channels and had no multiplier effect attached to it.

But social media now gives customer service the multiplier effect – and that effect, as per the creative directors’ fairy tale, is that one exposure is 100 times more powerful than an ‘impression’ and we can do it thousands of times every day.  OK, to do it thousands of times per day requires some resource, but not as much as a super-bowl slot costs.

So, just imagine, instead of P&G Pampers hosting conversations about crying babies, Pampers was able to say to all of its consumers “if you want to talk to us about anything to do with nappies or our product – we are there.  You can use whatever channel you want, you don’t have to come and “join a conversation on our Facebook page” or follow us on Twitter, just throw your issue out there and we will pick it up.”  If any brand were able to make that claim, just think about how your relationship with it would be changed.  In fact, it is such a compelling claim, that I might feel inclined to make an ad about it – which also highlights another important point.  Advertising (and all the rest of traditional one-to-many mass marketing) hasn’t stopped working because social media has arrived.  The two approaches are completely different.  Ultimately, the key to successful marketing and communications going forward is to figure out how the two can complement each other, rather than try and turn one into the other.  Social media will change traditional marketing by allowing it to become much more adapted to what it does well (single message in front of lots of people), in much the same way that radio allowed newspapers to focus on what works best in print and TV allowed radio to focus on the strengths of its own particular means of distribution (i.e. the ability to listen to one thing while doing something else).  To use my favourite analogy, traditional media is like a fireworks display and social media is like a bonfire.  The two can work well side by side, but don’t try putting your fireworks on your bonfire.

This post is now far too long.  So, just to sum up.

Social media is different, it has a different set of rules and solves a different set of problems.  We therefore have to use it in a way that reflects these differences rather than trying to make it work like traditional media.

The best way to figure out how to use it is to take your lead from how the people you want to reach are using it, rather than using it in the way that accords with how we are accustomed to using traditional media channels.

The content you make has to be based around understanding and answering the questions for which your brand provides an answer – high volume but also highly specific, there is no point in simply pumping out a greater volume of traditional ‘look at me’ type editorial.

Social media hardly ever gives you numbers, so viral should never be the strategy.  The only thing that has really gone viral is the concept of customer service.

There are only two ways to generate commercial benefit from engagement: you either do something very in-depth with the very small group of people who represent your real brand loyalists, or you engage with potentially all of your consumers or customers, but only on their terms when they have something they want to say to you.  You don’t force a conversation upon them.

Very few organisations seem to have embraced these points – even the likes of P&G – although, no doubt, P&G will think they have cracked social media, after all 1.8 billion impressions is pretty cool.  I think the reason for this is that embracing and acting upon these points is uncomfortable and disruptive.  It means unlearning what we have learnt, and there are also many players out there who want to keep us in a state of ignorance.  However, it could be that P&G is right and I am wrong – I guess only time will tell.

In social space no-one can hear your marketing budget scream (or why being a marketing director is a bit like being a fund manager)

Being a marketing director is like being a fund manager.  You have your marketing budget, something you strive to increase year-on-year, in the same way that a fund manager has funds under management, which they also look to increase.  The challenge for both is where to allocate this money in order to maximise returns.  The fund manager has their asset categories and within these decisions about individual stocks or products.   A marketing director has a range of media assets or channels and then a decision about what type of campaign or message to put within each.

The problem that marketing directors face is that the yield available on these assets has been relentlessly declining year-on-year.  There is no safe stock, such as gold, or a way to play against the market.  Instead, they desparately need to find a new asset category, partly as a way of improving the ROI on conventional assets by reducing demand and thus forcing the price down, but also in search of higher yields.

In this environment social media can seem, superficially at least, very attractive.  Here is a whole new space to spend your money in – and there are no shortage a players looking to take it from you: digital agencies who will build you community platforms, social media agencies who will create social media campaigns, or Facebook itself who will accept big fat cheques for helping you “integrate your brand into consumers’ life stories”.  However, the yield problem remains.  In-so-far as we have been able to work out the yield on financial investment in social media (and that isn’t very far), it isn’t proving to be startling better than that available in the old media assets.

The reason for this is the unfortunate fact that the only bits of social media that are worthwhile are not available for sale.  You can’t buy social media, you can only participate within it.  To paraphrase the slogan of a famous sci-fi thriller “In social space, no-one can hear your marketing budget scream”.  The asset you need to participate in social media is people – and people are seen as a toxic asset in most businesse these days: a guarantied way to get fired is to increase headcount and a guarantied way to get promoted is to “take costs out of the business” or any of the other various euphemisms for making people redundant.

Until businesses create permission to invest in the asset that is people,  the social media space is never going to yield a productive return.

 

Why a social media strategy is very different to a marcoms strategy

The single most important thing to realise about social media is that it is different.  Almost all of the mistakes being made in social media occur because organisations do not fully appreciate this and simply look to drag their existing marketing and communications ideas, campaigns and ways of thinking into the social media space.

Strategy is no exception to this.  A social media strategy is different to a marketing communications strategy for the following, simple reason.  A marcoms strategy has as its output a piece of communication (expressed as an ad, a press, release, a brochure, a campaign – essentially one single ‘thing’ that is presented to the whole target audience).  However, a (successful) social media strategy has as its output a form of behaviour or a process. Continue reading

Facts, lies and probability

Politics in the USA has become tainted by lies, or more specifically by the willingness of large sections of the media to manufacture or circulate lies for political ends.  This is because there is not a BBC in the USA, maintaining a basic standard of rigour in interogating claims and validating facts and it is why the BBC is, in my opinion, an institution every British citizen must fight, to their dying breaths, to preserve from the assaults of government, media barons and “free” market fundamentalists.

(As an aside : it is no co-incidence that the greatest incidence of lying in the British media occurs within the tabloid press, i.e. the area of the media where the BBC doesn’t operate – note the revelations currently tumbling forth from the Leveson Inquiry.)

As a consequence of endemic lying, there is a great deal of focus in the USA on the opportunity for citizens to become involved in fact-checking – note the recent efforts by Jeff Jarvis and Craig Newmark, summarised in this Huffington Post article.  The points that Craig make are all very good, but I can’t help thinking that the solution he is advocating – a huge database or network of networks – may prove unworkable because it represents another form of institution (albeit one managed more collaboratively) to supervise the current institutions which are deemed to be failing.  This seems to swim against the tide of what is happening in social media where trust is being swept out of institutions into transparent processes.   Perhaps, therefore, we already have the tools we need – the databse already exists, it is the social digital space – it is more a question of thinking how we design processes, rather than the technologies, to validate facts.

This brought me back to a slide I presented at a #Phonar workshop at the Coventry University School of Art and Design a couple of weeks ago.  The slide (in all its messy build(ed) complexity) is below.

This was an attempt to use the normal distribution curve to explain or understand the future of media, or more precisely the future of mediation and fact checking.  The basic assumption behind this is that the way institutionalised media has worked to date is a reductive process.  It seeks to cut-away the facts that it sees as not relevant or ‘worthy’ of publication and focus on its own, necessarily restricted interpretation, of what is news or what we need to know.  “All the news that is fit to print”, as the NY Times famously put it – albeit it a more accurate presentation of this might be “All the news that it is profitable to print”.  This because media space is a precious and expensive resource – there is no space within it to contain everything. As a result, the institutionalised media focuses on what it perceives to be “the norm”, that which clusters around a median point which it has set.

But the thing about social media is that it is not restricted – it can contain the entire data set – and the issue therefore is how to create a process that allows us to form a judgement about information that exploits this abundance.  It seems to me that this cannot be a process based on saying “this is right” and “this is wrong”, or setting an arbitrary median point around which to focus, to the exclusion of that which falls outside – this is an institutionalised response.  Rather it has to be a process that allows us to see where on the curve everything sits – based around how many people support a particular fact or truth (the two are different) and sufficient transparency to see who these people are.

The example I used to illustrate this, drawn from an earlier part of my presentation, was the recent #superinjunction furore that struck the UK media in which certain celebrities (e.g. footballer Ryan Giggs) sought, to protect themselves from the intrusive behaviour of the tabloid media via the use of legal injunctions.  A quick examination of Twitter and other social media networks, revealed that the vast majority of people were actually not interested in Ryan Giggs’ love-life.  This, of course, clashed with the agenda of the tabloid media who wished to splash this in salacious detail across their front pages.  In other words readers of the tabloid press saw the Ryan Giggs affair as sitting on a very different part of the curve to that of the tabloid media, who saw it as worthy of acres of newsprint.  This lead me to the observation that one of the reasons many tabloid journalists hate social media is because it deflates their ability to titillate.

What we need to focus on are therefore the processes that allow us to see where on the curve something sits, rather than classifying it as right or wrong, fact or lie.  We also need to take care about what we call truth.  The comments that follow Craig’s Huffington Post piece demonstrate the tendency for many to equate the opposite of a lie as being the truth.  Returning to original exercise, the opposite of a lie is a fact.  Facts and lies are absolute things, whereas truth is a relative thing.  Democracy is about preserving a world that supports many truths – establishing single truths is the business of fundamentalism.

This insight doesn’t give me the answer – I can’t, as a consequence, design a process that allows us to re-establish trust in information presented to us (by the media or Twitter).  However, I hope it does illustrate the direction of travel.

Bacon and the art of brand engagement (in social media)

Last month a piece of bacon gave me the answer to a question that has been plaguing me.   The bacon in question sat atop a potato salad served up on a Eurostar train from London to Brussels and the question was “how can a mass consumer brand use social media to generate engagement”.

First the bacon.  The issue was, it was poorly cooked.  Call me a food snob, but I believe that if you are to serve cold bacon, especially with cold potatoes, the bacon has to be well cooked, so the fat on it is rendered, crisp and tasty.  In fact, I don’t believe this is a matter of opinion, I suspect there is not a single chef of any repute who would disagree with me on this point.   Which is why I was disappointed to find that Eurostar, in its Business Premier class, was serving poorly cooked bacon.  This wasn’t a culinary disaster, but it was an indicator of poor performance.  It was something that, if I were CEO of Eurostar, I would want to pick up and address.

So – I took a picture of said bacon and put it in a tweet to @EurostarHere it is.  I didn’t receive a reply.  This caused me to think about my relationship with the brand Eurostar – my ‘engagement’ with Eurostar to use a term that the social media revolution has now made a permanent fixture in the lexicon of marketing-speak.  Continue reading

Stop wasting money on social media (and social media agencies)

As an advocate of social media, I am becoming increasingly frustrated at the amount of money and effort that is now being wasted on it.  There are so many car crashes occurring as organisations drive recklessly and desperately into this space (I have been called to the scene of a few) that I have been prompted to try and define what is happening and why – with a view to help minimise the damage.  In doing this I have drawn from my own experience and observations, but also an analysis of the services offered (and case studies) of a number of the UK’s ‘leading’ social media agencies.

My conclusion is that there are three basic stages to successful adoption of social media and only one of these involves wasting money.  Unfortunately this is the phase most organisations are in at the moment. Continue reading

Google versus Facebook: a battle for social consent

The recent launch of Google + has prompted much commentary on the battle between Google and Facebook and the need for Google to establish a foothold in the social space where people, rather than algorithms, do the work.   Google + has still not gone on general release, but the consensus seems to be that it is a good product which stands a better chance of success that Buzz or Wave – Google’s previous ‘Big Social Thingies’.  The smart money is saying that it might not kill Facebook, but it could kill Twitter.  Ultimately though, it doesn’t matter what the digerati think, a social tool only becomes relevant when it secures mass adoption, or, as Clay Shirky has put it – tools only become socialy interesting when they become technically boring.

All this speculation his has prompted me to think again about the whole Google versus Facebook battle and conclude that we are missing a trick here.  This isn’t simply that the business model for both companies is based on the assumption that both are forms of media and thus advertising platforms, when in reality Facebook in particular is more akin to an infrastructure (as previously blogged here and here in relation to LinkedIn).  It extends to the fact that society as whole has not developed a form of social consensus around the business models of Facebook and Google (et al).  Basically Google and Facebook have not yet acquired a social licence to operate and, potentially, may not be able to secure such a licence.

This may sound a pretty abstract concern and I can bet  considerations of social consensus have not worried the awfully clever chaps at Goldman Sachs when they have been devising their models for valuing Facebook.  But I think they should be worried about it, and this is why.

There is a form of social consensus that has developed around the business model of the traditional media.  This is based around the recognition that being a conventional media business involves a lot of cost – not just in making the content, but because distributing the content is expensive.  This high cost of distribution is what actually creates the high cost of producing the content – it has to be high quality / mass interest in order to make it worthwhile putting into expensive distribution channels.  Therefore if we want to receive the content the mass media produces, we have to give something in return – we either pay for it, or we allow our consumption of it to be interrupted by advertising.  This basic social contract is hardwired into our understanding and behaviour.  Even if individual citizens don’t connect all the dots, society as a whole has worked this one out and thus this business model has gained social consent.  It is a balanced relationship – what we give is reflected in what we get: advertising revenues or subscriptions cover the production and distribution costs – with a modest margin on top which represents the media’s profits.

How much money is enough?  Why Craig Newmark is smarter than Sir Martin Sorrell

A few years back, when Craigslist was eating up the classified advertising lunch of regional newspapers in the US, Craigslist and founder Craig Newmark drew the ire of the likes of Sir Martin Sorrell, boss of WPP, the world’s largest advertising and media network.   He accused Craigslist of destroying value, in the sense that here was a market that was worth billions and Craigslist was taking it apart and not replacing it with a model that yielded similar billions.  For a chap like Martin Sorrell this just seems inconceivable – why waste an opportunity to make billions for yourself.  Craig Newmark himself was often asked why he wasn’t making more money from his idea.  His response to this was incredibly revealing in more ways than one.  He simply said “I don’t need that much money”.  Now while Craig, unassuming chap that he is, may have meant that he, personally, didn’t need or want  billions of dollars; his reply actually reveals a much more profound truth.  Craiglist, quite literally, didn’t need that much money.  It replaced something that cost a great deal of money to organise (regional newspapers and classified advertising) with something that largely organised itself, requiring only some software, some rules of participation and some server space.

The rules of basic economics dictate that in a functioning market economy, in the medium to long-term you cannot make super-profits. A couple of hundred years ago David Ricardo proved why this is the case, based on the theory that marginal revenues can never significantly exceed marginal costs.  If you apply Ricardo’s theory to Craigslist, Craig may have been able to charge millions for his service initially, but because the costs of being Craigslist and entering this market are so minimal, it was always going to be easy for a competitor to set up an offering at a lower price and relatively soon the market will stabilise at a point where the price of using the service (value opportunity) sits pretty close to cost of providing the service.  And because the cost is minimal the value opportunity will also be minimal.   Craig Newmark was not destroying value, he was actually liberating capital to be employed more efficiently elsewhere.  Mr Sorrell, arch defender of capitalism and the free markets that he is, really should have known that Craigslist is capitalism and free markets in action, even if Craig himself eschews the behaviours of a traditional capitalist.

Why is this relevant to social consent, Facebook and Google? Neither of these organisations are making super-profits.  Google is certainly making healthy profits almost all of which comes from advertising around its core search product.  Facebook had estimated revenues in 2010 of $2 billion and while we don’t know how this translated into profits this figure seems very low when compared to a valuation of $41 billion.  Well, as with Craig Newmark you have to ask the question “how much money do you they really need” – what does it actually cost to deliver Google or Facebook.  And the reason this question is important is because it is this – the true marginal cost – that will ultimately determine what it is that people will be prepared to give them in return. Of course we think that we don’t give Google or Facebook anything, because they don’t charge us to use their services.  However, in reality we do give them something.  We give them information about ourselves.  This is where the problem starts, because we are only just beginning to understand the implications of giving away vast amounts of personalised information, not just through our usage of Google and Facebook but actually via our participation in the social digital space.  It is not just a question of the commercial value of this information it is also a question of understanding a whole host of implications – both positive and negative – that stem from giving away this data.  In all probability no-one, not even Google or Facebook, really has a thorough grasp on the implications of a world where so much personalised data in being generated and has the potential to be used either by themselves, sold to, or otherwise obtained, by interested parties.  One thing is for certain, the individual users of Google and Facebook have no idea about the consequences of giving away so much knowledge about their lives.

Understand the true cost of Google and Facebook

If you want to start to get a handle on exactly what these implications are, a very good place to start is Eli Pariser’s book The Filter Bubble.  The Bubble in question is a unique to each one of us, individually crafted via our actions and choices as tracked via our digital activity.  This bubble not only controls what information comes in to us, it also reflects an image of us to the outside world – albeit an image that has huge potential for distortion, manipulation or mis-use.  Pariser does a very good job of highlighting the dangers of creating highly personalised worlds,  showing how this can isolate us from the experiences and serendipitous encounters that are necessary both to develop a balanced world-view and also generate creativity and innovation.  He also touches on the dark side – the potential for personalised digital information to be used either in ways which are far removed from the intention or original usage when we decided to share this in the first place, or to create identities of ourselves which are either misleading or far more revealing than we would wish (or believe we have given consent for).   One example that caused me to thumb-mark a particular page was the fact that banks can, or are, using social data to determine creditworthiness.  And this is not just derived from data you may have shared about yourself, but data derived from your network of friends or contacts.   Thus, if you have friends who have not paid their bills, this will have a negative impact on your own credit score.  This one single fact should be enough to make anyone think twice about their participation in social networks.

The other, rather scary thought, is that there is no one single ‘digital file’ held on all of us.  Neither Facebook or Google can easily pull their own files on a particular user – largely because that file is so big and distributed.  Instead information is pulled out through windows shaped by the questions that are asked – you can isolate specific characteristics, but you can’t get the whole picture.  At the moment, in the case of Google and Facebook, these questions are framed by advertisers and the need to become more targeted in the selling of products and services.  Advertisers don’t really need to know the whole picture, they only need to know the bits of it relevant to what it is they are selling.

Where this becomes more worrying is in areas where it is in someone’s interest to make broader or more significant conclusions about an individual.  Take the example of a government intelligence agency.  All of us share a very great deal in common with your average terrorist or member of an organised crime syndicate.  We go to the same shops, buy similar clothes, eat the same food, listen to similar music etc.  In fact, the vast majority of what we do makes us look exactly the same.  It is of course, a very few but highly significant, differences that mark us apart.  The problem is that the instinct and abilities of most intelligence agencies are not to try to find evidence to disprove who is a terrorist or criminal – it is to look for similarities in patterns of behaviour and then search for more evidence to confirm these initial suspicions.  This means that it is theoretically possible for you or I to very easily end-up on a list of terrorist suspects, despite that fact that there may be huge amounts of available evidence to dissprove that conclusion, were anyone actually looking for it.  But because we don’t know we are on the list in the first place; neither we nor anyone else, really understands exactly what activities got us onto that list and no one is looking for the easily available evidence to get us off it – on the list we remain.  We, and to extent even our interrogators, are powerless because no-one really knows what ‘the internet’ thinks of us, we can only derive an imperfect picture of ourselves based on the question we ask it.

We give more than we receive: re-negotiating a social contract with social media

I could go much further into this whole issue – but the important conclusion from all of this is that the implications and value of what we are giving away is far greater than what we imagine it to be.  To take us back to the issue of social consent and the bargain we have struck when using ‘free’ social media services – we are giving away much more than we are receiving in return.  This fact is already implicit in the business models or valuations of both Facebook and Google.  In the instance of Facebook it is reflected in the fact that its valuation is many times greater than its current earnings would suggest.  In the instance of Google it is the fact that Google is probably making super-profits – but they are hidden.  Taken in isolation, its core search product is hugely profitable – but the organisation is using these profits to sustain investment in acquisitions and in developing range of ancillary products that are loss making, but which it believes are necessary to creating a sense of lock-in to the Google world, or which have the potential to generate more data and thus improve the proposition to advertisers.

The question therefore is what will happen as society as a whole develops a greater awareness of the value and implications of giving away information?  What will happen as we collectively comes to negotiate, or re-negotiate a social contact with social media?  What is unlikely to happen is that Google or Facebook will have to increase their offer.  People are not going to say that the best way to even up the relationship is for Facebook and Google to give us more.  Instead it is far more likely that people will start to demand that Google and Facebook take less – and how much less they have to take brings us back to Craig’s question and how much money Google and Facebook actually need in order to provide their services.

In Facebook’s case, the answer is probably “not a lot”.  What it took to create Facebook was a clever geek, a couple of good insights and some server space.  Outside of the actual costs of running the servers and developing the product – Facebook has added more cost, but this is related largely to the ability to generate revenue via advertising and these costs are essentially discretionary or are derived from the business model Facebook has decided to pursue, rather than the business model it has to pursue (albeit in reality the business model it has to pursue has now been set via the value it has placed on itself via the selling of shares in the business).  In essence, Facebook now needs to generate a lot of cash to fulfil its valuation expectations – but it doesn’t need a lot of cash to actually ‘be’ Facebook in the same way that Craigslist didn’t need a lot of cash to ‘be’ Craigslist.

In Google’s case the answer is more complicated.  Google is technologically a far more sophisticated set-up that Facebook.  Its core search algorithm and its associated technical processes have a great deal more intellectual property within them.  However, Google is not the only search engine, but it is the most popular search engine.   At one level you could point to the existence of several much less popular alternatives as evidence to demonstrate that in order to secure the profits Google makes from search, it is necessary to carry the costs of providing the rest of Google World thus creating the necessary lock-in or search loyalty.  It is difficult to make this call, and in many ways, the difficulty in getting a real handle on the business models of Google and Facebook stems from the absence of a real competitor.  Maybe it is not so much the absence of a competitor, but the absence of a genuine market within which the rules of competition have become established.  And implicit in the creation of a genuine market is the necessary element of social consent – or perhaps, in light of everything discussed thus far, informed social consent.

Taking less – why this may be the key to comparative advantage

Both Facebook and Google have grown up, and shaped their business models, in a digital world characterised by the absence of rules.  The social digital space in particular is new, it’s very different, and we are only starting to work out how to deal with it.  It is therefore quite likely that as we start to develop the necessary rules and as genuine markets start to emerge, this will be an environment that is increasingly hostile to the business models of the pioneers than opened up the space in the first place.  For example, as society starts to recognise the implications associated with giving away data, rather than demand more in return, it will instead demand far more restrictions around how personal data is used.  This may  manifest itself in demands for greater privacy or control from the likes of Google and Facebook – demands that these companies may not be able to satisfy and still continue to operate to their current business models.  But what is more likely to happen is that competitors will emerge – but these won’t be like Google or Facebook.  The main reason they won’t be like Google or Facebook is that they won’t have to generate the quantity of cash Google and Facebook need – either to sustain an artificial valuation or to preserve an enormous corporate empire, 90 per cent of which is loss making.  They will be able to approach consumers and say “we can do everything that Facebook does (because it is not difficult or expensive to do this) but what we don’t need to do is sell your data”.  And because of the emerging sensitivity about giving away data, this benefit will have a high perceived value.  In effect, these new players will be the ones that have the competitive advantage necessary to negotiate the necessary social licence to operate.

Predicting the demise of Google and Facebook may seem a little far-fetched, especially as they currently are the masters of the digital universe.  However, it is worth taking note of a couple of things.  First, in relation to this idea of social consent, we have recently seen some tumultuous events within the traditional media – the phone hacking scandal that has engulfed News Corporation.  Amongst other things this has caused News Corporation to close the News of the World, the UK’s largest circulation Sunday newspaper.  The reason it was forced to do this was due to the fact that the News of the World lost its social permission to operate.  It was also forced to abandon its bid to acquire all the shares in Sky TV – again not because it was forced to do so, but because it became clear that it failed to create the necessary social consent.

Second, we are starting to see the signs that the whole issue of usage of personal data is emerging out of the shadows.  Facebook has obviously had problems about privacy in the past – the introduction of Beacon being the best example of where it has already had its fingers burnt.  Google has escaped significant attention, probably because its products are less social and therefore seen as less intimate or revealing about the nature of their users.  However, take a look at this ‘viral’ presumably released by Microsoft – characterising the Gmail Man as the postman that reads all your mail and then tries to sell you products.  This is a clear indication that privacy has been identified as Google’s Achilles Heel and is an issue worthy of competitive exploitation.  We can expect more of this.

I might also suggest that Google has already been weakened by its desire to collect data in that, pre Google + it has not scored too many successes with its recent product launches.  My suspicion as to the reason for this is that its product development has not been sufficiently driven from a fundamental understanding about what ‘social media citizens’ really want, but more by Google’s desire for them to use certain types of products  – in large part products which will yield useful data.  A good example of this is the now largely forgotten Sidewiki.  As I identified at the time, the sting in the tail of this particular product was the fact that it required you give Google access to your browsing history.

Does this mean that Google and Facebook are wilfully manipulating us?

Probably not.  Google in particular has been very transparent about its ambitions to create a personalised web.  At worst you could accuse Google of a level of naivety in not fully understanding the social consequences of what they are doing.  This is not surprising since Google is at heart a technology company run by geeks – and geeks are notoriously bad at understanding social consequences.  Google also is popular and has a range of fantastic products.  It can therefore generate some comfort that it is ‘doing the right thing’.  Facebook is much less transparent, but there again it offers much less than Google and has much more it needs to gain – because it isn’t sitting on top of super-profitable search algorithm.  Facebook is also much easier to replace than Google and we are already starting to see Facebook alternatives that are explicitly making a play about data protection and privacy.   In both instances the driving commercial imperative is around capturing as much attention and usage as possible – thus making themselves harder to replace.  In essence it the Wild West 2.0 – staking out as much territory as possible before civilisation and its attendant wagon train of rules and regulations catches up.  This isn’t wrong or evil, it is just competition and capitalism.

Should we be worried?

We should probably be vigilant, rather than worried.  When revolutions happen, they tend to generate good stuff and bad stuff in equal measures.  The trick is to be alert so the bad stuff can be managed or controlled and the good stuff enhanced.  At the end of the day, it is going to come down to the construction of some new rules and regulations – either those that are legislated or which derive from social permission (as in fact most rules of society do – we don’t ‘not do stuff’ simply because it is illegal, unless you are a hedge fund manager).  We need to play a part in shaping those rules.

On the other hand, it is probably Facebook and Google which should be most worried.  The Wild West is not going to be wild much longer and they need to start developing a business model which is not simply based on squeezing-out the competition but is based on a world where people attach a much greater value to the data they decide to share.  And this doesn’t mean demanding more bang for their byte – it means either sharing less bytes or demanding much greater control over where those bytes end up.

Twitter makes You stupid (but Us clever)

Here is a very thought provoking post (sorry, article) by Bill Keller, executive editor of the NY Times.  I especially like the historical perspective and connection to Gutenberg – something which is not debated or understood enough.  We cannot really understand social media unless we also understand history, which is why I always begin my “What is social media?” presentations by looking back 600 years so that we can understand the extent to which our world has been shaped by the enforced marriage between information and expensive distribution technologies – a marriage which social media is ending (because media – the ability to distribute information – is no longer expensive and information is now liberated).

In much the same way as Keller highlights the cognitive trade-offs that have occurred as technology has developed (books effectively reducing our capacity to remember for example) it would seem logical that there will be some form of trade-off associated with social media.  And it may well be that the trade-off is that collectively we become more intelligent and powerful, but individually we become more stupid.  Perhaps it may be that stupid is not the word – rather we will become become more dependant – not just on the technology itself but the forms of community it is bringing into being.   We become a bit of number of brains rather that a brain in itself.  This may be a good thing, or it may not – but it important that we are aware that it is happening and adapt to its implications.