Feeds:
Posts
Comments

Sorry, Chris. At the risk of contributing to the fatigue of competing voices, I’ve got to say a couple of things about the Forrester Location-Based Services (LBS) study and public advice for marketers.

At the outset, I haven’t read the study. I’d love to read it, but I’m not ponying up $500  (though I’d be more than happy to provide a thorough review in exchange for a copy). I’ll be confining my comments to the public statements accompanying the release of Location-Based Social Networks: A Hint of Mobile Engagement Emerges, authored by Melissa Parrish with Sarah Glass, Emily Riley, and Jennifer Wise. Some of the things I’m pointing out may very well have been dealt with in the actual report, and if they were, that information should have been included in the public messaging about the release. It wasn’t, and the gist of the public statement is unequivocal.

Cutting to the chase, the author lays out her concluding recommendation and key takeaway for marketers:

But is it time for other marketers to start jumping on this bandwagon?  We don’t think so.  Though many LBSNs are gathering steam, the landscape is fragmented and the programs can’t scale just yet. But with large companies preparing to enter the market (I’m looking at you Facebook and Yahoo!) the time for marketers to get involved is coming.

For the sake of context, “other marketers” are other than those who “experiment with new technologies as a way to stay current and to reach key portions of their consumers” (in this case, those consumers being “young, male, well-educated, and influential”). Let’s set aside the fact that the category of experimental, male-targeted marketers is frickin’ huge, meaning the time is right for a LOT of businesses to get involved with LBS. Let’s also set aside any questions about the size of the data set Parrish worked with, the quality of the sample, or any other concerns about the numbers that underwrite the study’s conclusions. Instead, let’s just consider those other marketers, the one’s whose target customers aren’t early adopters of Foursquare or other location-based applications and platforms.

The crux of my complaint stems from three core beliefs/assumptions, the first two of which are:

1. IF location-based services achieve mainstream adoption and high rates of interaction, marketers and businesses will reap enormous rewards from proximity marketing, including attracting more first-time customers, encouraging more repeat business, and increasing sales.

2. IF marketers and businesses are early adopters of location-based services, the incentives they offer for discovery and patronage will attract mobile users who do not currently derive value from LBS.

Given the admittedly anemic usage statistics for location-based services, at least in comparison to other social media channels, it probably seems intuitive for Forrester to recommend a cautious approach for marketers. With a lot of social media technologies, that’d be the right call. But as far as marketing is concerned, location-based services are a fundamentally different kind of social technology, and from what I can glean from the public statements about the Forrester study, that crucial difference seems to have been missed.

The fundamental distinction between location-based services and other social media technologies is this: one of the principal benefits of location-based services is incentivized discovery and partronage. As such, marketing is hardwired into the genetic code of the technology. To understand this difference, consider another social platform that has businesses scrambling to figure out marketing value, Twitter. I still don’t think Twitter has come up with a decent marketing option, primarily because marketing is an afterthought, and generally perceived as intrusive and viewed with suspicion. Engagement with brands on Twitter is chiefly dictated by consumers, as advocates and critics, and while there’s ample opportunity for interaction, customer service generally prevails over marketing in terms of organizational imperative, scope of engagement, and communication content. In plain English, Twitter users don’t want to be marketed to. Foursquare users, on the other, want and expect to be marketed to.

In a previous post, I explained the value I get from Foursquare – “discovering new places, receiving special offers, serendipitously meeting up with friends while out on the town.” Aside from the social benefits of LBS, which are a distant third among my priorities, my use is primarily driven by desires to discover new places, explore entertainment options, receive loyalty rewards, and reward or punish businesses for customer experiences. In order to realize the full benefit of Foursquare, I depend upon the participation of businesses. I want to know details about your venue, hear about the daily specials, receive special offers, and be rewarded for my patronage. Incentivized participation is one of the principal benefits and primary selling points of Foursquare and other location-based services. Your marketing is welcome here. It actually enhances my experience. How many social media channels can you say that about?

Without reading the report, I think it’s safe to say that Parrish and the other contributors to the Forrester study see the potential value of proximity marketing via location-based services. Who wouldn’t see the value in a channel that functionally allows you to tap your customers on the shoulder while they’re in the neighborhood and whisper an offer they can’t refuse? They see the value, but they urge caution. Here’s where I think the difference between location-based services and other social media channels really matters, and why I think the conclusions of the Forrester study should be reconsidered. Early adoption of location-based services by marketers and businesses is integral to the mainstream adoption of location-based services. Marketing is inextricably bound up with the sine qua non of location-based services, and therefore an essential component of the user experience. Without marketing-driven incentives for participation, adoption will remain limited to the young, male, well-educated and influential audience that primarily derives value from the social, gaming, and other aspects of the experience, aspects that have thus far failed to demonstrate wider appeal. Instead of urging caution, Forrester should be championing early adoption and encouraging businesses to nurture a technology that can make their dreams of proximity marketing come true. They should be warning businesses not to remain on the sidelines, and advising them to take an active hand in the direction of this burgeoning market. Get out there and figure out what works for your target customers. Generate the added value that will drive adoption. I’d love to see the cost calculations that indicate this approach isn’t worth trying.

I’m using Foursquare as an example here, but I’m truly platform agnostic when it comes to my opinions about the potential of location-based services. I like Foursquare because it has a strong and quickly growing user base, dedicated tools that are easily accessible and affordable to most small business interested in reaching a local audience, and offers one of the top 2 or 3 best UI/UX in the market. Will they eventually dominate the space Facebook-style? Will Facebook get it together in time to lay a Google-style smackdown on Foursquare? Is Yelp itching to tag in? Don’t know, don’t care (though I will care in exchange for a financial stake in and/or lucrative engagement with Foursquare, Facebook, Google or Yelp). The marketing tactics that attract the most new and repeat business are unlikely to vary significantly across platforms. Moreover, since this is an emerging market built on fledgling technology, active marketing participation can influence the direction of future application and platform development. What works for marketers will be built into the feature sets of all LBS platforms, because what works will provide the best experience for LBS users. So, you don’t need to wait for a Winner to emerge from the fragmented platform and application marketplace before you incorporate proximity marketing via location-based services into your marketing mix.

Aside from hindering adoption and missing out on the opportunity to influence the direction of the technology and market, the cautious approach recommended by Forrester will unnecessarily extend the learning curve for marketers, and lead to the adoption of inappropriate engagement models. This is my 3rd basic assumption:

3. A platform agnostic approach that encourages early adoption, experimentation and testing offers the best hope for long-term success when the technology matures.

In the public statement accompanying the Forrester study’s release, Parrish suggests that “other marketers” take a wait-and-see approach to location-based services, primarily because usage is low, the user base is monolithic, the market is fragmented, and the future uncertain. I’ll grant that all of this is true. But as I said before, the ultimate Winner’s technology will not be so unique and distinct from Foursquare, Gowalla, Brightkite, Loopt and other existing location-based services as to render obsolete the marketing lessons learned before the victory. If anything, the uniformity of existing users should indicate a need to tailor marketing tactics to particular target customers. As with all social media technology, usage differs dramatically based upon the diversity of users. Learning what works for your particular target customers will be a matter of trial and error. Waiting simply amplifies the pressure to adopt a “previously proven” engagement model once the market matures, one which is unlikely to fit the unique circumstances of your business, product, services, customers, competition, and local market. Marketers should be encouraged to start experimenting with LBS now, while the barriers to entry are relatively low, and the benefits of early adoption so very high.

Aside from pragmatic concerns about the recommendation of caution issued by Forrester, what the study ultimately highlights is the need to preface our research with an understanding of the things that make each particular social technology unique, as well as the particularities of user experiences and expectations of each. Marketing is a critical aspect of location-based services, and recommendations based on any study that fails to put that fact front and center should be highly suspect.

In a recent blog post, Chris Brogan explained why he’s not a fan of location-based social applications such as Foursquare and Gowalla. From a business perspective, these services don’t add any apparent value for Chris, and might even cause problems, such as unintentionally revealing the identity of a client or inadvertently snubbing someone who might want to meet up if they knew he was in town. Personally, Chris doesn’t much care to be the “mayor” of his local haunts, preferring instead to reap the more traditional perks associated with frequent patronage. While Chris’ post hardly qualifies as a “rant”, he’s an incredibly influential guy, and this rather succinct post has already garnered 98 comments, a good portion of which laud him for pointing out the Emperor’s lack of clothing. Unfortunately, and with all due respect, Chris is just wrong about location-based services (LBS).

You’re not Chris Brogan

Let’s assume for a second that Chris is right about the potential professional pitfalls of LBS. His concerns apply to only a very narrow subset of LBS users: those folks who need to keep the reasons for their business travels secret, and are popular enough to have to worry about unsolicited invitations from their hundreds of thousands of followers. I’m going to go out on a limb here and suggest that neither of these apply to the vast majority of potential LBS users. Even for folks like Chris, these aren’t exactly compelling arguments against LBS. Don’t want folks to know you’re in town, whether to conceal a client’s identity or insulate yourself from unwanted contact? Don’t check in. Holy crap, that was easy. It’s not like they implant a GPS chip in your brain that automatically broadcasts your exact whereabouts when you sign up for Foursquare. Selective use of the technology pretty much solves all Chris’ professional concerns.

From the comments on Chris’ posts, it also seems that there is a general misconception about how information on these services is conveyed. Sure, you can post your check-ins to Twitter, Facebook, and LinkedIn, but it’s certainly not required. With Foursquare, for example, only your Foursquare friends will be able to see your check-ins and history unless you intentionally push that information to a third-party platform. You can even check-in “off-the-grid” to hide your whereabouts from everyone but still earn badges, see nearby specials, and otherwise take advantage of the service. If you’re selective about who you choose to “friend” on Foursquare, and how and when you send check-in information to other social sites, you can reap the rewards of LBS without sacrificing your privacy.

We don’t need no stinkin’ badges

It’s funny – in a sad-funny sort of way – that so much of the conversation revolves around badges, mayorships, check-in points, and other social gaming aspects of location-based services. To me, these are utterly beside the point, and certainly no reason to avoid using these services. Not to dismiss the value of these social gaming elements entirely, at least to a subset of potential LBS users, but that’s not why I use Foursquare. Here’s how I put it in my comment on Chris’ post:

I’m sitting at the bar, enjoying a happy hour cocktail, and decide to “check in” via Foursquare (or Gowalla, BrightKite, or any other LBS). A notification appears, informing me that the restaurant next door is offering free appetizers to Foursquare users. I’ve never tried the place, but a quick perusal of reviews that accompany the business listing on Foursquare makes me think it’s a place I’ll like. When I check in at the restaurant, three more notifications appear, one of which is for matinee-priced admission to the next showing of Inception at the theater across the street. A check in at the theater pulls up another half dozen notifications, including a free cocktail at my favorite bar around the corner. And all of this happens without me notifying a single person of my whereabouts, thanks to privacy controls on the LBS platform (sharing locations with other users or the general public isn’t mandatory). What’s not to love?

The benefits I receive from location-based services – discovering new places, receiving special offers, serendipitously meeting up with friends while out on the town – have nothing to do with social gaming. These are practical benefits that improve my offline experiences, from dining and entertainment to shopping, and enhance my appreciation of any local environment. As more users jump on board, and venue and review data becomes more robust, discovery will become even easier. As these services mature and brick-and-mortar businesses become more sophisticated in their use of the technology, the tangible rewards of LBS participation will extend beyond mayors and loyal patrons to include incentives for first-time customers (sorry, Starbucks, but I can’t compete with Johnny the barista in terms of frequency of check-ins, and I HATE Frappucinos, but 30+ check-ins at a half-dozen locations in two months ought to count for something). Even at this early stage of the LBS phenomenon, I’m already “winning,” and that has not a damn thing to do with badges.

Professionally speaking, I have a hard time wrapping my head around Chris’ arguments against LBS. If he’s truly concerned about folks discovering the identity of a client, he might want to remove the Clients link from the New Marketing Labs website. If it’s about maintaining stealth-mode while courting new business – or keeping an existing relationship secret – the concern seems kind of absurd unless he’s talking about traveling to a one-business town. And if it’s the unintentional snub he’s hoping to avoid, doesn’t that same risk occur ever time he shows up for one of his well-publicized out-of-town speaking engagements? If there’s a professional-life argument against LBS in here, I’m not seeing it. On the other hand, I can envision ways LBS participation could be good for business. As a consultant whose business is not quite at the beating-clients-off-with-a-stick stage just yet, I have no problem advertising my arrival in a new city, or letting potential clients know I’m having a coffee down the street from their office. I might not have time to meet, but I sure as hell have time to shake a hand or take a call and make future plans. Seriously, there’s a downside here?

You got your online chocolate in my offline peanut butter! Mmmmmmm!

Setting aside the question of whether you as an individual should jump on board the geolocation bandwagon, there is the more important issue of what the services mean for your business. Put as plainly as possible, location-based services are a mobile marketing dream come true. Imagine being able to reach your target consumers when they’re not just in-market, but right around the corner. For brick-and-mortar businesses, LBS are ideal channels for attracting new customers, rewarding loyal patronage, creating awareness about promotions and special offers, identifying market synergies, and keeping an eye on the competition. Services such as Foursquare have already created tools for businesses, including the ability to offer a variety of specials through the service, promote specials in-store, and track venue performance. Here are just a few examples of businesses taking advantage of the Foursquare opportunity:

  • Village Lantern (New York, NY)
    Everyone who checks in gets a 2 for 1 Svedka cocktail. The mayor receives a free shot of Jameson on Friday.
  • Matcha Box Pop Up Store (NYC, Ny)
    Receive a free matcha tea, or latte when you leave a tip about Matcha Box.
  • Boqueria – SoHo (New York, NY)
    Free Glass of Sangria with your meal!
  • Mermaid Oyster Bar (New York, NY)
    Check-in to claim a FREE side item (limit one per table per visit). DETHRONE THE MAYOR and receive a FREE lobster sandwich! You must show your phone to your server or bartender to activate these promo
  • American Eagle (Ottawa, Ontario)
    Check-in to any AE store and unlock a 15% Off discount towards your next merchandise purchase. Expires 7/31/10. Limit one per customer.
  • Foos Burgers (New York, NY)
    Free game of foosball on your first check in. Beat the reigning champion and win a beer and burger at Lucky Strike. (Mon – Fri 10-6)
  • Emack & Bolio’s (New York, NY)
  • Bobby Berk Home (New York, NY)
    Show us your check-in and get 15% off any regular priced item.

If  your business isn’t already experimenting with proximity marketing through location-based social applications, it should be. Not only are these services great marketing tools in and of themselves, but they are rapidly surpassing more traditional channels. As Brian Solis recently noted,

Local services are realizing, albeit slowly, that increasing visibility in the real world, on the traditional Web and now the social web, is an effective way of competing for attention where it is focused. Foot traffic, Yellow Pages, Google and Yahoo Search are losing favor to new forms of research and referrals. Yelp paved the way for social reviews and referrals, but Foursquare and the like are introducing trusted opinions and real-life networking into the mix that reward exploration and experimentation. Businesses can only benefit by playing along.

Given the massive growth of location-based services over the last year, the only real question here is which service to choose. Foursquare, Gowalla, Loopt and Brightkite are the Big 4 of location-based social applications, with Foursquare dominating the other three in terms of both users, venues, check-ins, business participation, and rate of growth. However, Facebook has made rumblings about joining the geolocation fray, and Yelp has already dipped its toes in the LBS waters, so the future of this market is far from decided. At the moment, I urge clients to remain platform agnostic, and advise that they examine local LBS usage data to determine platform popularity in their local market. Unless promotional participation is cost-prohibitive on a given platform, try them all. Additionally, going with a service that simplifies engagement and tracking is always a good idea. But the bottom line is this: if you’re not already thinking about how location-based services can help your business, you’re missing out on a tremendous opportunity. I wonder if Chris would disagree with that statement?

Don’t believe the hype

If you’re a business owner considering your firm’s social media options, it’s hard not to be distracted by the shiny object that is Twitter. The microblogging service launched in 2006 has purportedly grown to more than 100 million users, been featured on the cover of Time Magazine, and received $48 million a month in free press coverage. If being a media darling signified business value, Twitter would be the Holy Grail of social media. Unfortunately, that’s not the case. For a seemingly simple piece of technology, Twitter is surprisingly complicated – at least insofar as business utility is concerned. Extracting value requires effort, commitment, and an understanding of Twitter’s limitations. Before you cave in to the urge to jump on this social media bandwagon, there are a few things to keep in mind.

Usage statistics are inflated

At April’s Twitter developers conference, Chirp, the company announced their latest usage statistics, including:

  • Twitter has 105,779,710 registered users
  • 300,000 new users sign up per day
  • There are two reasons I suggest these numbers are inflated. First, among these 100,000,000+ registered “users” are single users with multiple accounts and spam accounts. How significant is this phenomenon? According to a study from Edison Research, only 17 million Americans have Twitter accounts, which is an enormous discrepancy even if we factor in Twitter’s claim that 60% of new users are coming from outside the US. Multiple accounts are so pervasive that third-party clients such as Hootsuite, TweetDeck, and Seesmic have made multiple account management a primary feature. Spam accounts not only inflate Twitter’s usage numbers, but also dilute the already anemic follower counts for users (more on this below). Taken together, these factors suggest a high degree of skepticism when it comes to anticipating Twitter’s potential reach.

    Second, and more important than the question of raw user numbers, is the issue of Twitter’s astonishingly low usage statistics. According to a study by Harvard Business Publishing, “among Twitter users, the median number of lifetime tweets per user is one.” The study found that the top 10% of Twitter users account for 90% of tweets, compared to usage statistics for other social networks, where the top 10% account for roughly 30% of contributed content.  A June 2009 report from Sysomos, Inside Twitter: An In-depth Look Inside the Twitter World, found that 85.3% of Twitter users update less than once a day, while only 1.13% of users update more than 10 times  a day.  More than half of Twitter users hadn’t posted a status update in the past week.  According to HubSpot’s State of the Twittersphere report, 54.8% of users have never tweeted. To put this activity data into perspective, consider comparable numbers from Facebook.  According to self-reported statistics, nearly half of all Facebook’s 250 million active users log on daily (48%) and 20% of users update their statuses at least once a day. Media hype aside, Twitter is hardly a hotbed of social activity.

    Twitter takes the “social” out of “social media”

    In addition to Twitter’s inflated usage data, there is the related problem of anemic social connections. One of the primary reasons businesses are excited about social media is the possibility of tapping into the network effects of this new medium – the buzz generated by active, engaged users and disseminated across their peer networks, an amplified version of word of mouth marketing. Unfortunately, Twitter users are among the least connected of any social network. As the Hubspot report notes, 55.5% of users are not following anyone, and 52.71 % have no followers. Moreover, only 18% of all Twitter users have more than 100 followers, and 81% are currently following fewer than 100 people. What this suggests, and as the Harvard Business Publishing study concludes, is that Twitter “resembles more of a one-way, one-to-many publishing service than a two-way, peer-to-peer communication network.” Unless your target audience is among the active 10% of Twitter users, you should probably look elsewhere to capitalize on the network effects of social media.

    Advertising opportunities are extremely limited

    Twitter’s recently introduced Promoted Tweets - a search-based advertising program very similar to Google’s AdWords – marks the company’s initial foray into paid advertising. It’s too early to gauge user reactions or measure the success of this new advertising vehicle, but there are several reasons to approach with caution. Although Twitter boasts 600 million search queries a day, 75% of Twitter traffic comes from third-party applications, which don’t display Promoted Tweets. Twitter’s acquisition of the popular Tweetie iPhone app has led to speculation that promoted tweets will be integrated into the mobile client, and there’s no reason to believe that Twitter won’t pursue integrations with other popular clients, but that hasn’t happened yet. Additionally, Promoted Tweets only appear in search results – not in user’s feeds – although that too may change in the near future. Until that happens, Promoted Tweets will deliver a very limited number of impressions, and user reactions will be difficult to measure. A number of high-profile brands are taking Promoted Tweets for a test run, and businesses would be well-advised to keep a close eye on this emerging advertising opportunity. However, it is far to early for most businesses to allocate precious marketing dollars to this experiment.

    Aside from paid advertising, many businesses are looking to Twitter primarily as a marketing channel, and there’s no shortage of how-to advice from ambitious online marketing mavens. And there are plenty of success stories, to be sure. However, inflated usage numbers and limited network effects make Twitter a less than optimal marketing tool. If you are going to push marketing messages to Twitter users, you would be well advised to follow the approach of Dell and others who have reaped rewards by providing Twitter users with exclusive offers and other incentives. Trying to tailor your brand messaging to the confines of Twitter’s 140 character limit is hardly a recipe for success in and of itself. And if your social media resources are constrained, or you are  under pressure to deliver tangible results, there are other social media outlets that will provide bigger bang for your buck.

    Do the right thing

    So, avoid Twitter like the plague, right? Wrong. Although it’s far from a mature marketing channel, there are some indications that Twitter is a viable component of your marketing strategy. According to comScore’s Q1 2010 e-Commerce Spending Report, 23% of Twitter users follow businesses to find special deals, promotions, or sales. Of that, 14% of Twitter users reported taking to the stream to find and share product reviews and opinions. As users become more active and the social aspects of the site become more robust, marketers are likely to find a number of opportunities to engage consumers. In the meantime, Twitter offers an important case study for the value of social media beyond the marketing silo.

    Customer Service & Brand Equity

    Twitter’s primary business value at this point is derived from the feedback users’ offer about your brand and products. Whether positive or negative, user reviews and recommendations provide valuable insight into your customers’ experiences. A variety of social media monitoring tools make it relatively easy to find out what your biggest fans and harshest critics are saying about you. Companies that are willing to listen, respond, and react to these compliments and complaints have a lot to gain from engagement. Best of all, you don’t have to cultivate a large following or worry about the breadth of your reach to see tangible results.

    Market Intelligence

    Just as customers are talking about your brand, they’re also talking about your competitors. Twitter allows you to learn about consumer needs, capitalize on your competitors’ weaknesses, and draw on their strengths. A well-developed monitoring strategy will allow you to keep your finger on the pulse of consumers, and to stay ahead of the curve when it comes to emerging developments in your market.

    Product Development

    Consumer tweets are not just an index of customer satisfaction, but also a great way to learn about what your customers like – and dislike – about your products and services. Rather than simply reacting to complaints, the most successful companies will proactively respond by incorporating feedback into future development plans. Even a relatively small number of suggestions will provide direction for further investigation through focus groups and other targeted research. Consumer-driven innovation may provide the critical edge your business needs to achieve or maintain dominance in your market.

    These are just a few examples of the real business utility of Twitter as it stands now. Building relationships with influencers and thought leaders in your market, creating relationships with potential strategic partners, and building connections to facilitate sales are also potential benefits that are independent of Twitter’s marketing value. And that’s the main point here: with limited resources and a variety of other social marketing channels available, why spend valuable time and energy trying to make Twitter something that it’s not, when there’s already a lot of value in what it is? So yes, you should be playing with Twitter. Just don’t allow marketing imperatives to skew your focus.

    Note: This is the first in a series of posts intended to help businesses evaluate their social media engagement options. All social media technology is not created equal, and different channels require different approaches. By understanding the benefits and limitations of each, businesses will be in a better position to choose the ones that best fit their budgets and abilities.

    Why focus on Facebook?

    As my grandpa was fond of saying, the best place to fish is where the fish are. In the case of social media, the most populous pond is clearly Facebook. With more than 400 million active users, a vibrant developer ecosystem, integrations across the social media spectrum, and myriad brand engagement opportunities, businesses would be well-advised to make Facebook a focal point of their social media strategies. If your target customers aren’t on Facebook, the chances are they’re not easily accessible through other social media channels. But sheer numbers aren’t the only reason businesses should make Facebook a cornerstone of their social media efforts.

    1. Facebook has a functional, trusted social architecture

    In early 2006, I was hired as a consultant on a social networking platform development project. When I first met with the company’s co-founder, he told me “We want to build the next MySpace,” to which I responded, “Why on earth would you want to do that?” I explained that MySpace had a dysfunctional social architecture. Anemic profile data and search functionality made it virtually impossible to find like-minded peers. Communication tools were severely lacking. Visually assaulting page layouts made for a nightmarish user experience. Proprietary applications stifled innovation, created unnecessary competition with other social media technologies, and confined users within MySpace’s “walled garden”. “It’s an anti-social network,” I told him. Given the massive success and popularity of MySpace up to that point, I was going out on a limb by pointing out its many flaws. When Mashable’s Pete Cashmore declared MySpace’s unassailable dominance and Rupert Murdoch shelled out $580 million to acquire the site, I’m sure everyone was second guessing their decision to listen to me.

    And then came Facebook. What began as a closed social site for students at Harvard eventually expanded to include other universities, then select businesses before finally opening up to the general public in September of 2006. Over the next 6 months, Facebook’s membership doubled, then doubled again only months later. By December of 2008, Facebook surpassed MySpace in terms of monthly unique visitors from the U.S. There are many reasons for Facebook’s meteoric rise to prominence, but none is more important than the fact that they got social right. Facebook allows users to connect with real people, to rekindle friendships lost to time & distance, and to build meaningful relationships online.  “Friends” on MySpace were little more than numbers, and high friend counts merely status symbols. Whereas MySpace’s version of “community” was monolithic and dedifferentiated, Facebook’s networks – based on regions, workplaces, and schools – make community a pivotal point of social organization on the site. Facebook’s News Feed pulls the UX focus away from our own profile pages and shifts it to the activities and interests of our friends, and Comments and Likes on News Feed content introduce us to their friends. Pages and Groups (don’t get me started on Facebook’s Group problem) allow users to connect with strangers over shared interests and form affinity-based communities. Even the shift from an exclusive club to an open society included measures to preserve the privacy and security of existing users and communities. Privacy controls allow users to determine the extent of their publicity, and to control what they share and with whom (Facebook’s recent privacy row notwithstanding, but that’s beyond the scope of this post, and a subject for another). Authenticity, shared affinity, trust and autonomy are all prerequisites to functional, meaningful communities, whether online or in the real world. And as Facebook’s eclipse of MySpace demonstrates, a functional social architecture is a prerequisite to success for online social networks. As long as users are invested in these meaningful relationships and communities, they’ll remain active on Facebook.

    Aside from the fact that Facebook’s social architecture means the site is likely to remain vibrant and vital, why should businesses care about the quality of online social experiences? Simply put, relationships are the heart of social media. Technology enables content generation and sharing, but relationships are the reason we adopt and use social technologies. Social media works when it inspires us to connect, create, and share. Participation and investment go hand in hand. For businesses to tap into the enormous potential of social media, they must look first toward the platforms and applications that foster real relationships. Following from this, businesses should make Facebook a primary point of social media engagement because the site engages users as real people. For the most part, Facebook users don’t hide behind aliases and fake personae. They are real people – friends, family, colleagues, citizens, comrades, and importantly, consumers – able to express their real interests and affinities, and encouraged to explore and expand all aspects of their multidimensional identities. For businesses, this means an opportunity to engage with customers in an environment that mirrors their real world experiences, including consumer activities. Facebook users share ratings and reviews, seek out recommendations and advice, and transform themselves into brand advocates – and vocal critics. Keeping with the fishing metaphor, Facebook users are the blue fin tuna of the social media universe. The coveted social graph – the global mapping of all Facebook users and their interrelationships – is especially valuable because the rich profile data Facebook records for each user – not just demographic data, but interests, affiliations, likes and dislikes – provides businesses with an in-depth perspective on consumer behavior they’re unlikely to find anywhere else. Think of it as the largest, most detailed focus group ever assembled. The benefits to be gained from engaging this particular universe of users are incalculably huge.

    2. Facebook’s open API’s foster innovation and integration

    One of the most significant developments in social media was the introduction of Facebook’s open API’s (Application Programming Interfaces), which allow developers to tap into the social activity of the site to create integrated applications, simplify third-party authentication, and import Facebook data to third-party sites. Unlike MySpace, which adopted a proprietary development philosophy designed to maintain control over applications and features, Facebook’s approach has resulted in a robust developer ecosystem, innovative applications for users, and interconnectivity with other websites. For businesses, this approach allows for innovation and experimentation with novel user engagement strategies. While I’m not the biggest fan of Facebook Pages (no pun intended) as they’re currently constituted and executed – engagement is often thin, the interface is flat, and value to users is rarely added – all of the essential pieces are in place to make them truly engaging interactive brand experiences. Given Facebook’s willingness to allow developer-initiated innovation, there is an opportunity for forward-thinking brands to take the lead and push these novel advertising spaces toward their full potential. Because the developer ecosystem operates in a fairly autonomous fashion, leading edge brands can team up with developers of popular applications to introduce branded versions or components.

    Aside from developing interactive applications native to the Facebook platform, businesses can leverage Facebook’s API’s to improve consumer engagement experiences on their own websites, and across the Web. Facebook Connect, which allowed users to use their Facebook username and password to login to sites and applications across the Web, massively improved registration conversions for third-party sites (it’s recently been abandoned in favor of OAuth 2.o, an open source authentication protocol, but the basic idea – simplified authentication – remains unchanged). Facebook’s Graph API allows developers to “read and write data to Facebook…(and) provides a simple and consistent view of the social graph, uniformly representing objects (like people, photos, events, and pages) and the connections between them (like friendships, likes, and photo tags).” When users connect to third-party sites via their Facebook profile, those sites have access to any publicly available user data – from favorite foods to favorite books – and will be able to take that into account to provide tailored offers and unique consumer experiences. Social Plugins, like the recently introduced portable “Like” button, “make it easy for users to see information from or about their Facebook friends, share things with their friends without leaving a site or going through a time-consuming login process.” One of the most important ways that businesses can improve online interactive experiences for users is to simplify and streamline the engagement process, and with Facebook’s open API’s, there is no quicker and easier way to do just that.

    3. Facebook provides a variety of consumer engagement opportunities

    For those businesses that aren’t quite ready to undertake a full-blown integration strategy, the vast universe of Facebook Applications provide ready-made user engagement tools and toys. Games, quizzes, virtual gifts, and even mobile applications can be dropped into Facebook Pages to provide instant entertainment for visitors. Coupled with videos, blog posts, discussion boards and other brand-centric content, these applications allow even the smallest of businesses to create rich interactive experiences (caveat: unless you’re a top interactive agency of Fortune 500 brand with a sizable social media budget, forget what I said about the problems with Pages – they’re still one of the best social marketing opportunities around). For businesses taking their initial steps into the social media arena, Facebook offers a wide variety of consumer engagement options that can be deployed with minimal effort. Pages, targeted ads, customized social games, and brandable applications allow brands to test engagement tactics before committing significant resources.

    To demonstrate the potential of Facebook Pages, consider the example of Starbucks. In their July 2009 report, Engagement db: Ranking the Top 100 Global Brands, the Altimeter Group’s Charlene Li and Wetpaint’s Ben Elowitz gave Starbucks the highest social media engagement score among the top 100 brands. One of the keys to Starbucks’ success is an awareness of the different dimensions of engagement offered by each social media channel. On Facebook, Starbucks has grown their community of fans from about 200,000 when they initiated engagement efforts in October of 2008, to 3.5 million as of the publication of the Engagement db report, to nearly 8.1 million as of today. Chris Bruzzo, Starbucks VP of Brand, Content and Online, attributes this phenomenal growth to user-initiated interactions unique to the Facebook platform: “Recently, we found that for every four people that interacted with a particular news item, another three people added virally as friends of these people.” What Starbucks discovered is that Facebook is not only about messaging to their fans, but also “allowing fans to talk with each other about their love for the product and experience.” To facilitate user-initiated interactions, Starbucks developed branded applications utilizing Facebook’s API’s. The Starbucks Card application allows users to manage their card balance, view their rewards, and will eventually allow users to surprise friends by reloading their Starbucks cards. The Starbucks Around The World application invites users to share their passion for coffee with users from across the globe. The Starbucks Instant Story application lets users create MadLibs-style status updates – and earn a dollar off their next purchase of Starbucks VIA instant coffee. In addition to these customized branded applications, the Starbucks Page includes off-the-shelf applications, including videos, notes (the functional equivalent of a blog), discussions, polls, links, and even product reviews. There’s no shortage of interactive opportunities for users, and 3,950% growth over the past 23 months certainly demonstrates the success of their approach.

    Importantly, Starbucks’ Facebook success is also a result of their unique perspective on social media engagement. As Bruzzo explains, “If we had approached it not from ‘what you know and love about Starbucks’ but as a marketing channel, we would have taken this down a path that would have been very different…This was not [built as a] marketing channel, but as a consumer relationship-building environment.” The success of this approach is not only reflected in the tremendous growth of their following on Facebook (and other social media channels), but also in the company’s bottom-line revenue. After suffering through a disastrous first half of 2008, during which sales and traffic slipped for the first time in the company’s history, “Starbucks posted its first U.S. same-store sales gain in two years for the last quarter during a time when the company relied on digital and social-media promotions instead of what had become an annual TV blitz.” The critical lesson here is not that social media engagement can translate into measurable financial success, although the Starbucks experience certainly counters this frequently heard complaint from social media skeptics; rather, it is that Starbucks properly understands the differences between social media engagement and traditional marketing strategies. As Bruzzo continues, “It’s not like we started our Facebook community, got to a million people and started pushing offers at them. We built up a community of people who enjoy engaging with our photo albums from our trip to Rwanda, who loved to have these shared moments around their favorite drinks.” Then, fans started asking the company what was going on, and how they could be included. Although Starbucks results may be difficult for other brands to replicate, their experience provides a solid blueprint for businesses venturing into the Facebook space.

    4. Facebook still has room to grow

    As I said earlier, the Facebook platform is not without its drawbacks. The recent privacy fiasco illustrates the need for brands to tread lightly when it comes to utilizing user data. Although the user interface is light years ahead of MySpace, it doesn’t exactly push the envelope of UX possibilities. The structure and organization of Groups just plain sucks. As the Starbucks examples demonstrates, Pages can be done extremely well, but this is the exception rather than the rule, and it takes some effort and ingenuity. Still, Facebook is one of the more promising social media channels for businesses. And as businesses deepen their investment in the site, they will have an opportunity to steer future development in directions that enhance consumer engagement even further. As such, a commitment to the Facebook platform is likely to provide both short-term and long-term returns for forward-thinking businesses.

    For those of you who think the Facebook privacy row has fizzled out, think again. This past week, ten  privacy advocacy groups sent an open letter to Facebook CEO Mark Zuckerberg calling for greater  user control over their own data. Zuckerberg himself has issued his mea culpa for what many  perceive as callous indifference to privacy concerns (a perception that was bolstered by the leak of    Zuckerberg’s personal IM’s dating back to his Harvard days), and Facebook has introduced new  privacy controls designed to assuage critics, but as the open letter from the Electronic Frontier  Foundation and other privacy advocates indicates, the furor is far from over.

    To be sure, the consequences of Facebook’s privacy missteps have not been as dire as some  predicted. There have been some high-profile Facebook account cancellations and even calls for  mass defection from the site, but none of this has amounted to a crippling blow. I don’t agree with  the naïve apologists who attribute Facebook’s weathering of this storm to the irrelevance of privacy  concerns, nor do I think it’s due to the success of Facebook’s damage control efforts. Facebook will  continue to dominate the social networking platform space because privacy issues don’t trump the  myriad things Facebook has done right: enabling users to create trusted personal networks based on  real relationships (what Jeff Jarvis might call “private publics”); creating open API’s to foster a developer ecosystem that delivers sticky apps for users; simplifying content generation and social sharing; and providing brands and advertisers with (relatively) innovative ways to reach and engage with consumers. Facebook’s continued success is also attributable to inertia – users have spent months or years creating peer connections, uploading content, investing time and energy in addictive games, and learning to navigate what for many is an utterly novel online experience. Simply put, moving to another social network would be a pain in the ass even if a better option existed, which at this time it doesn’t.  So, for the time being, Facebook will remain the 800 pound gorilla of social networking platforms. That being said, there remains much room for improvement in their handling of the privacy fracas.

    Plenty has been written about this controversy, and I’m not going to rehash the plethora of arguments on both sides. Instead, I want to make a simple – but important – point: Facebook is missing a HUGE opportunity to further their stated goal of encouraging a more open Web, AND to advance the interests of brands, whose adoption of the platform is critical to Facebook’s financial future. One of the primary objections to Zuckerberg’s aggressive pursuit of openness is that it appears to be a cynical ploy designed to grant corporations access to the wealth of consumer data wrapped up in Facebook users’ social graphs. Instead of denying this ulterior motive or cloaking itself in the noble rhetoric of openness, Facebook should instead shift the terms of the debate by declaring the apparently-not-so-obvious: corporate access to consumer data is a good thing – for Facebook users! If I were Zuck, I’d be making the same couple of arguments over and over to anyone who’d listen:

    1. Advertising happens – but it doesn’t have to suck. Remember the Web of 1998? Pages were plastered with garish banner ads, every spare inch crammed full of ridiculous animated gif’s, the actual content eclipsed by the surrounding noise. We’ve come a long way since then. Online advertisers have become more sophisticated. Content publishers have improved the signal-to-noise ratio of their pages. Targeted advertising has introduced relevance into the mix. And still we have a long way to go. Zuckerberg should be championing the user experience benefits of openness. Letting businesses get a glimpse of your actual consumer habits will help them deliver rich, relevant ads that actually enhance your online experience. And that’s a good thing. Why aren’t we hearing more about this?
    2. The flipside of access is accountability. Companies are falling all over themselves to push marketing messages through social channels, but unlike other media, social technology enables two-way communication. In other words, customers get to talk back, and companies that fail to listen will ultimately lose as more responsive competitors respond to unmet consumer needs. Access to users’ social graphs creates a reciprocal obligation on the part of businesses, which will ultimately benefit consumers. Again, this is a good thing that Zuckerberg should be shouting from the peak of Mount Facebook.

    None of this is intended to excuse Facebook’s many missteps, nor is it to deny that privacy should be the default and sharing a decision left to individual users. However, there’s no reason for Zuckerberg to muddy the debate with calls for greater openness or diatribes about the obsolescence of privacy. Instead, he should provide users with a solid rationale to encourage sharing, a move that would simultaneously advance their interests as consumers and help realize the tremendous commercial potential of the Facebook platform.

    Distribution of Ratings on YouTube

    Distribution of Ratings on YouTube

    M.G. Siegler announced on TechCrunch that YouTube’s 5-star rating system is useless.  And he’s right, insofar as YouTube’s rating system is concerned – it is underutilized and, as the accompanying graphic illustrates (left), not even able to muster an obliquely meaningful bimodal distribution.  However, Siegler extrapolates from the data a much broader claim:

    “And really, the same seems to be true of basically all 1 to 5 star crowd rating systems. It’s easy to know if a video (or anything) is good or bad, but how on Earth do you determine if it’s 2 star, 3 star, or 4 star-worthy? Everyone likely has their own opinions about what would constitute those ratings, and naturally, they’re all completely subjective.”

    With all due respect, this is a gross overgeneralization, one that represents a fundamental misunderstanding of the important distinctions between different social sites and different types of social activity.  As many of the comments to Siegler’s post correctly point out, 5-star rating systems are extremely effective and widely used on social sites such as AmazonYelp, and iTunes5-star rating systems suffer from inherent limitations, as Christopher Allen points out on his Life with Alacrity blog.  However, the tweaks Allen suggests seem a much better alternative than throwing the baby out with the bathwater, or abandoning rating systems altogether because of their inherently subjective nature.  More importantly, Siegler makes the common mistake of assuming that all online social activity is the same. It’s the same kind of broad-stroke generalization that sends companies down rabbit holes in their quest for social media success.

    [Note: This post picks up the discussion of social media strategy introduced a couple of weeks ago. In this post, I elaborate on the first step - setting goals for your social media initiatives – but in the following two posts I’ll skip ahead to step 6 – establishing engagement metrics and deploying tracking tools (and those follow-up posts are coming very soon, I swear).]

    An effective social media strategy begins with clearly defined goals. Social media hype, and the myriad success stories that spawned it, have proven an irresistible temptation to many businesses, and more than a few have ventured into this mostly uncharted territory without a map and compass. What was initially perceived as a cheap (free!) and easy path to customer adoration has turned out to be a meandering, uphill climb over treacherous terrain. Now that the real costs of engagement are coming to light as the result of some of the more disastrous social media expeditions, deflated expectations are forcing a more sober assessment of what it takes to succeed, and what success really means. Goal setting is a way to manage expectations, align social media initiatives with broader organizational values and objectives, guide strategic and tactical decision-making, and measure success.

    Manage Expectations

    When you decide to engage your stakeholders (customers, communities, shareholders, employees, suppliers, vendors, and others) through social media, the first question you should ask (or, if they’re worth their salt, the first thing your social media consultant should ask you) is why social media? What do you hope to accomplish? What do you think social networks and social media tools can do for your business? In short, what are your expectations of social media engagement? Before you answer that question, there are a few things you should consider.

    First and foremost, social media isn’t just another marketing channel. Sure, social media engagement is a great way to reach customers and build brand equity, but it’s also a way to improve customer service, reduce returns and trouble tickets, enhance your products, discover new markets, size up your competition, attract top talent, and tap into the hidden potential of your employees’ personal networks. Before you establish goals of engagement, first know how far you’re willing to go. Is this primarily a marketing effort, or are you looking for across the board results?

    It’s highly likely that the social media push within your organization is being led by subversive elements within your marketing department, and that’s OK. The fact of the matter is that the lion’s share of social media initiatives to this point have been marketing efforts. Social media marketing has garnered significant support from within public and private enterprises, and the bulk of the attention of academics and independent analysts and consultants. It’s likely that the majority of the case studies you’ll rely on for strategic guidance will be examples of marketing-driven social media engagement. Again, all OK. There’s nothing wrong with dipping your toes in the water before you dive in, and given the complexity of this new communication environment, marketing is as good a place as any to start. By applying the lessons learned from a marketing initiative, you’ll be able to set goals and determine appropriate engagement metrics for other social media efforts.

    With that said, from a business perspective, social media engagement may serve a variety of purposes (and this list is far from inclusive):

    Second, social media engagement isn’t a one-and-done campaign. Effective initiatives require a long-term, sustained commitment. The novelty of social media is that it affords you the opportunity to build more meaningful relationships with your stakeholders, to observe and engage in organic conversations, and potentially to transform your customers into your strongest advocates. But none of that happens overnight, and businesses that are looking for a quick fix, or that enter the social arena half-heartedly, are bound to be disappointed.

    Third, while it may look like another messaging channel, social media is as much (if not more) about listening than talking. Independent of your involvement, social media allows consumers to share product recommendations and reviews, applaud or complain about customer service experiences, discuss desired features or design flaws, and talk about other things they like or dislike about your company, your products and services, your competitors, or your market. There is a wealth of critical intelligence already circulating through social media channels, and learning to listen effectively should be a top priority.

    Finally, when you do talk, say something useful. Social media requires a different orientation than most corporate communications. Think of social media users not as an audience, but a collection of conversational partners. The chances are better than even that the conversation you want to enter is already underway. Be respectful of that fact, and avoid the all-too-common pitfall of interrupting with an uninvited and unwanted sales spiel right off the bat. Social media communication is about engagement and building relationships. You do that by listening to the needs of your conversational partners, putting their interests before your own, being authentic and transparent, and speaking with humility and compassion. Be helpful and be human. Otherwise, you might as well just put up another banner ad.

    Align Social Media Strategy with Broader Objectives

    One sure-fire path to social media failure is to try and be something you’re not. As Paul Worthington notes, “The number one thing the Internet does is spot lies and fake-authenticity. If you position yourself against a need that you cannot deliver, or worse yet, that you do not believe in as an organization, people will find you out and make you pay. Nobody respects a liar.” To avoid this potential pitfall, make sure your social media goals are in alignment with your broader business objectives. Think about the first-order goals that drive your enterprise – the values and aspirations that constitute your business identity (and if these aren’t clearly articulated, put your social media planning on hold, because you’ve got more immediate concerns to deal with). Although it’s important to listen to your customers, you shouldn’t lose sight of “who you are, what you believe in and what drives you forward.” As Worthington suggests,

    “Before opening yourself up to the conversation, before engaging outside, start with who you really are, what you as an organization really believe in, and what gets you out of bed in the morning…Then, and only then, should you engage in the wider conversation. With a clear sense of internal purpose and direction you stand a much better chance of using social media and online conversation as a source of competitive advantage rather than disadvantage.”

    With your first-order goals in mind, derive your second-order goals by answering that question you started with – what are your expectations of social media? Are you looking for better marketing reach, more consumer engagement with your brand, market intelligence, new talent, or to establish thought leadership within your market? These second-order goals will help you choose the social media sites and tools that are most appropriate, and establish third-order goals by which you can gauge the success of your social media efforts.

    Guide Strategy & Tactics

    Clearly defined goals will help guide the strategic and tactical choices that comprise your social media initiative. As Michael Mendenhall of Hewlitt-Packard explains, strategic decisions about how best to engage consumers utilizing social media are based upon “what I’m trying to accomplish. Am I trying to achieve brand immersion, brand preference or brand experience? Am I trying to generate a lead and then manage the lead through to a sale? Am I trying to drive e-commerce or build a lifetime relationship with a customer?” These second-order goals will direct your strategy, and the third-order goals that follow from them will allow you to evaluate the success or failure of your chosen tactics.

    When most social media advocates discuss goal setting, they focus on third-order goals. Tamar Weinberg offers a useful riff on the well-beaten horse of a goal setting standard: the S.M.A.R.T. model. According to Weinberg, goals (and although she’s talking primarily about third-order social media goals, but you’re probably familiar with this from other goal setting contexts) should be Specific, Measurable, Attainable, Realistic, and Timely. This is fairly straightforward stuff, and you can’t throw a rock without hitting a social media “expert” who’ll tell you pretty much the same thing, so rather than reiterate what’s already been said countless times, I just want to briefly discuss the last element: timeliness.

    Because effective social media engagement requires a sustained commitment, your third-order goals should include short- and long-term ambitions. Social media is long tail technology, so results may vary dramatically over time. As your engagement extends, the key indicators of success –authenticity, trustworthiness, helpfulness, commitment – will also increase, magnifying the likelihood of success. Couple this with the likelihood that your learning curve will improve with experience and you begin to understand why immediate results are neither likely nor the point of social media engagement. Make sure that your short-term goals account for this lag effect, and avoid allowing your long-term goals to be frustrated by hiccups along the way.

    Measure Success

    Establishing goals and determining appropriate metrics are two sides of the same coin. Together, they comprise the guideposts that will allow you to gauge the effectiveness of your social media strategy. As Marc van Bree put it, the first thing your organization needs to do is figure out what you’re trying to accomplish – “are you spreading a message, building a community, raising awareness, forging relationship? From there, find out what to measure” (the subject of my next post). I’d add that it works in the other direction as well. When it comes to establishing third-order goals, knowing what analytics are available for a particular type of social media engagement will allow you to define your goals more explicitly (remember, ‘S’ is for specific).

    In the next post, I’ll dig into the issue of social media measurement, including a more in-depth discussion of matching goals and metrics.  I hope you’ve found this useful.  I’m excited to hear your feedback, and hope that you’ll help fill in any gaps.  Thanks for reading!

    Share

    Follow

    Get every new post delivered to your Inbox.