Wednesday, November 25, 2009

#102 - Social Networks: A Marketer’s Perspective

Corporate marketers around the world have been nothing short of amazed by the explosive growth and power of today’s social networks, although many have been disappointed by their own ventures into this area. More significantly, even the most successful social network with a massive audience can have a very hard time making money.

Why Social Media has cause for concern

Reason #1 - Lack of Confirmation: While many successes online are obvious, the failures are often quite obscure. Everybody notices big deals like Facebook, LinkedIn and Twitter; but there is almost no public (or private) documentation of the thousands of other sites and networks that have failed. This hurts our learning curve., for example, has been around since the ‘90’s. Yahoo! 360 was a very early entrant that got a lot of attention. But, neither of these has ever gained traction. How many others like them are out there? The truth is, we really don’t know. This is still a crap shoot for many marketers as the paradigm shifts slowly and media reorganizes. For businesses, it’s time to “turn on” to the "always-on" generation.

Reason #2 - Low Value Audiences:
An impression on a social network can be worth as little as 1/20th the value of an impression at a top content (brand) website. While this may seem confusing, there are good reasons it is true.

Reason #3 - Eyeballs do not equal consumers: Consumer value is derived not just from identity, but also from intention. While an affluent mother of three might be an avid Metallica fan or an enthusiastic snowboarder, but w
hen she’s at the PTA meeting, she’s focused on her kids - not her hobbies.

Reason #4 - Intrusion: On sites that carry “branded content,” consumers understand and expect to see advertising. But the new social networks are consumer-driven and advertising intrusion on them is resented (just ask the owner of Facebook ). People accept ads on TV (unless their DVR remote is handy) and in newspapers, but they but don’t want advertisers breaking into their homes. Facebook is where many people “live” today.

Reason #5 - Engagement: A media brand is only valuable if people believe in it. Part of what advertisers pay for is an association with a believable brand. So, while social networks are powerful, basing business on or in social media is far from a sure thing.

How today's businesses can improve the odds
They can use more "Cluster" targeting.
The biggest successes have started out as small communities. Facebook was initially limited to a single university; MySpace became popular within the LA rock scene. For a social network to succeed it must saturate one entire community before it can spread effectively to others. Open network architecture allows people to keep their friends - even on competing social networks – and in allowing this, the networks does consumers a favor and increases its own value. By effectively integrating social components into their brands, marketers get the best of both worlds.

As audiences become more engaged, they actually start adding to the discussion, which can help to decrease customer service requests and lower advertising costs.

Source: "The Anatomy of Buzz Revisited," by Emmanuel Rosen.

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