Wednesday, July 28, 2010

The Reflex Dilemma

I've just finished listening to an excellent series of presentations on social media hosted by Vocus, and among the speakers was the justly famous (at least in marketing circles) David Meerman Scott.

In suitably rapid-fire fashion David talked about, to quote from his book blurb for Real-Time Marketing & PR, the “opportunities (and threats) inherent in today's always-on, 24x7, instant business environment” His latest opus is all about speed, being first, tempus fugit, etc, etc. Watching him rush about the stage as he presented, you can't help but admire his embodiment of the message he's delivering.

No question, speed is of the essence in marketing and PR: News cycles, product development cycles, sales cycles... they're all shrinking. To illustrate his argument for PR pros, David talked about United Airlines and their infamous PR fiasco over Dave Carroll's broken guitar, as well as Amazon's Big Brother antics pulling Orwell's 1984 off Kindles. He argued – correctly no doubt – that both companies took a geologic era to respond to events that unfolded in hours, and that their reputations were thus badly and unnecessarily damaged.

Lets look at a couple of other, recent anecdotes. Shirley Sherrod, anyone? No question, the White House, the NAACP, Fox News and pretty much every media outlet in the country acted damn fast on this one. And you'd think that many of these politicos would have learned their lessons from the BeerGate nonsense from last year. In both cases, everyone rushed to judgment, desperate to get into the news cycle and desperate to appear to be responsive. Both times, reputations were badly and unnecessarily damaged.

Speed has a price. Reflex PR is a high risk game.

Friday, July 23, 2010

Is social media good business?

Lets compare a couple of stats --

A few months back, audited circulation data showed that subscriptions to the New York Times had fallen below one million for the first time in living memory, and declined a whopping nine percent year-over-year. Around the same time Mashable reported that Twitter traffic was growing at a hyperbolic 1300 percent year-over-year, with over 1.2 billion tweets a month.

Numbers like these are thrown about all the time to illustrate an undeniable shift in the way we consume information, news and a whole load of gossip. The economic consequences for the Dead Tree News Business is dire and well-documented, but what about the business prospects for the social media upstarts that seem to be precipitating all this change? Are they making boatloads of cash?

There's no doubt that the main revenue stream that drives the information economy – advertising – is seeing a shift towards online spending:

Forrester Research data for online advertising revenues.

Looking at the Forrester Research numbers, overall online advertising in the U.S. is expected to have a CAGR of about 17 percent over the next few years, which aint too shabby. Within that, social media advertising will be a rocket ship, with 34 percent CAGR, reaching an impressive $3.4 billion in 2014.

All very nice, but does this all add up to big profits? According Reuters, Facebook made a whopping $800M last year, or about two bucks for every user (let me repeat that – over a full year, Facebook made all of $2 for every active account). Small potatoes you may say, yet this was enough for the company to eek out a $10M profit, at least on paper. Facebook's revenue growth has come as the number of users on its website has exploded: the company started 2009 with the January announcement that it had reached 150 million users and by December that number had swelled to 350 million.

What about Twitter? Bloomberg reported that even on a sliver of revenue from Google and Microsoft, a mere $25M, Twitter is also profitable. They have about 58 million users, so they're getting about 40 cents a user. Poor MySpace, owned by News Corp., has something like 111 million users and made about $360M last year (down from $460M the year before), or about $3.50 per user.

None of this could be described as printing money, in my opinion, and there's a very healthy debate about the long-term viability of social platforms as self-sufficient, profitable businesses. Here's Charles Hugh Smith writing on the investor site Benzinga:

Facebook will never be very profitable, for it is a utility which will never be able to charge its users. Its free functions are more valuable to marketers than its advertising, hence it will never generate big ad revenues.

Bo Peabody in the Washington Post thinks social media outfits will always be “crappy businesses”, while Henry Blodget at BusinessInsider thinks Facebook et. al. are the next Google. They can't both be right, but they could both be wrong.

Most likely, some social media properties will figure out a way to make advertising and other revenue streams pay their way. Some will have frothy IPOs. Most will die slow deaths. What I'm sure about is that none of these companies will duplicate what the New York Times does, nor should they. Whichever way you cut it, the vital statistics for the news business remain terrible.

Thursday, July 15, 2010

What is Buzz?

iPhones do it, bees do it, even educated fleas do it...

Buzz, that is. But in the iPhone sense – the cool-hype sense - what is Buzz? How do you measure it, and when do you know you've got it? 

In marketing terms, we know that “Buzz” is composed of awareness, preference and – with due apologies to Cole Porter – even desire and love. People crave their iPhone, they are quite literally passionate about them – the brand-as-device has become a part of their identity and is valued beyond its intrinsic usefulness. This is a hallmark of Buzz: in some sense it goes beyond logic and reason – it is emotional – and this is why Buzz is so hard to define and to measure.

Most people agree that Buzz originated as a word-of-mouth phenomenon, a kind of groundswell, but beyond that definitions get fuzzy. In her much-cited 2000 HBR article The Buzz on Buzz, Renée Dye calls it “explosive self-generating demand” which doesn't strike me as particularly useful or specific (another takeaway from her article is how faddish Buzz is – her examples of buzziness include the long forgotten Pokemon, Beanie Babies and the movie The Blair Witch Hunt).

Not that others have got more specific since then. In her book Buzz, Mariam Salzman gives us this: marketing; it is centered on conversational value; it is peer driven; it is strategic; and it spreads outward from trendsetter to trend spreaders to the mainstream.

Mark Hughes riffs in a similar vein:

Buzz marketing captures the attention of consumers and the media to the point where talking about your brand or company becomes entertaining, fascinating or newsworthy.

Both these books have a lot of good things to say, but like many other social media tomes they don't really give us a crisp definition of the fundamental commodity at hand. In social science speak, they certainly don't get us to a point where we can operationalize “Buzz” and thus measure it effectively.

This is a failure. How on earth can we have a conversation about Buzz, and all that it entails, if we can't agree on what it is? In many respects, this has echoes of past marketing conversations around another slippery concept, The Brand.

So, Buzz is elusive in nature and elusive to define. This hasn't stopped a boatload of companies claiming it and even naming products after it – Google Buzz, BuzzMetrics, ThoughtBuzz, BuzzTrace, BuzzGain, BuzzFeed and even BuzzLife. Buzz is Buzzy, I guess.

Let me know your ideas on what exactly buzz is...

Wednesday, July 7, 2010

Jim Sterne's Social Media Metrics

I've just finished reading Jim Sterne's new (ish) book, Social Media Metrics, How to Measure and Optimize your Marketing Investment, published by Wiley. I recommend it. “We are what we measure” may be a tired cliché, but Sterne nevertheless brings a fresh perspective to the subject and drives home why measurement may be the foundation for building a successful social media program.

The book does a great job of linking social media metrics to things that matter in business, what Sterne describes as The Big Three Goals of increasing revenue, lowering cost, or improving customer satisfaction. These goals may sound lofty or even unattainable to some, but Sterne is, well, stern in his views: If social media can't make a meaningful impact on the business, why bother at all? This tone distinguishes the book from the many volumes of fluffy nonsense written about social media.

From here, Sterne constructs the book around the logical steps necessary to attaining meaningful business results. At each step the book suggests ways to measure activity and drive toward a desired outcome. I was glad Sterne wasn't afraid to address the real costs associated with a rigorous social media program, and take this on as a metric (borrowed from Avinash Kaushik).

The book has its faults. It could have done with an edit, and I wish Sterne had talked more about the practicality of measuring things, and the tools that can support ongoing measurement. I also found issue with some of the discussion around “identifying influence”, but these are small gripes. If you've ever pondered how to measure the meaningful impact of social media on your business, this is a good book to buy.