As I scan articles about the impact of social media on marketing, I commonly come some variant of the statement “the customer is now in control.” But the more I research and think about this statement, the less I believe it – and the underlying message being sent to marketers – is. So today I thought I’d explain why.

My first issue is with the word now. From my perspective, the customer has always been in control – the fate of companies providing products and services in a capitalist economy is ultimately determined by what customers choose to buy. In turn, the analysis shifts towards social media somehow giving customers slightly more control than they had before – a small, but important, distinction.

The typical argument is that as customers have connected with each other through platforms like blogs, Twitter, and Facebook, the opinions they share amongst themselves have increased in importance, while the typical “broadcast marketing” approaches have decreased in effectiveness. While I do believe there is some truth to this, there is another way to look at what’s happening.

For starters, if customers only wanted to hear each other’s opinions, they could do so without engaging companies at all – either in somewhat self-organizing fashion through Facebook and Twitter, or “neutral” services like Yelp. But many, many customers are also opting to directly connect with companies – liking, following, lurking in communities, etc. – through these very same platforms. In doing so, many are effectively asking companies to engage with them.

Second, being “in control” takes time and effort. I would argue that many customers may want to “take control” in relation to certain product and service decisions, for many others they are happy to be passive recipients of messages (and offers) from their preferred brands. For example, the #2 reason given for becoming a Facebook fan (based on a survey earlier this year) was to receive coupons. And while I don’t have time to go into it here, one of the consistent findings from my research is that customers like being “broadcast” to on social media more than many people think.

On a related point, I believe that many customers are being overwhelmed by all the brand-related conversations taking place. For example, many brands on Twitter now commonly send 30+ messages a day, responding to specific people. Many consider this to be engaging. But if you follow (say) 30 such brands, that’s over 900 messages a day – most of which will be of absolutely no interest to you. Perhaps the method will persist for many more years, but perhaps not.

Finally (at least for today), as “word of mouth” marketing has moved online, and more and more data is generated, it’s becoming ever easier for brands to monitor exactly what people are saying, thinking and feeling about various things. I personally believe that all this information points towards a world where many brands can be far more “in control” than they’ve ever been before.

Tying it all together, I’ve taken to asking what someone like Don Draper – the lead character on Mad Men – would think about the rise of social media if he was ported into 2010. Would he look at all the new tools and behaviors and say “wow, I can’t control anything here!” Or would he say “wow, I can influence, monitor and control things more than ever before!”

My sense is that it would be the latter – and many companies would be well served by taking a similar line of thinking. After all, to be in control implies having power; it is commonly said that knowledge is power; and all this information is giving companies more knowledge than ever before.

That “customers are now in control” has become an increasingly common refrain in the marketing world. To be honest, I think I’ve used it a time or two myself. But the more that I think about, particularly in relation to social media, the less convinced I am that it’s actually true. In turn, I’ve been researching a very different hypothesis – that social media allows brands to have more control than ever before.

This hypothesis is at the centre of a webinar I’m doing in a few weeks – contact me if you’d like to check it out. It builds on one of the key research projects I’ve been working on – The incredibly shrinking marcom expense line – which looks at ways that marketers can use social media to reduce marcom expense, while at least maintaining current levels of impact. And what led me to the counter-hypothesis, in terms of control, were some fairly simple thoughts and questions.

In my mind, that customers are in control is not new – they always have been. What they choose to buy, or not buy, has been and always will be the ultimate determinant of success. What they say to each other has been of known importance for some time. So that leads to the question of which way the needle moves because of social media… which led me to jump into my time machine.

Go back in time ten years, and pretend you are a marketer. Somebody tells you that, in 2010, tools will be available that let you directly connect with a large, and growing, percentage of your customers, for free (or at a very low cost). Not only will the tools let you do that, but many customers will opt to allow you to do just that (often enthusiastically). Those that aren’t passionate enough about your brand to evangelize for you can opt to simply “like” you – in full visibility of their friends. At the same time, you can “eavesdrop” on many other conversations being had about your brand, and inject yourself when and where you see fit. Some customers will even co-create with you – sharing ideas for new products and services, or collaborating on new ones all together. And all of this will be happening on a variety of platforms where you can get a pretty accurate picture, increasingly in real-time, of what exactly is going on.

Would you have reacted to this by saying “wow, that’s giving up a lot of control?” Or would you have reacted with something more like “wow, that gives me the opportunity to control far more than I can today?”

I believe there’s elements of truth to both answers – but I personally think I would have fallen in the second camp. Social media offers an extraordinary number of opportunities to marketers, and taking advantage of them, in my mind, isn’t neccesarily synonymous with “giving up control”. And as my research gets into (and future blog posts will cover), I think a lot of brands that have “given up control” might find that many of their customers want them to take it back…

I spend a LOT of time reading about how companies are using social media to build their brands. In most cases, while the language varies widely, it tends to focus on engaging customers in conversations, within a community setting. And more often than not, a lot of attention is centered on getting customers to co-create, and turning them into evangelists (or ambassadors) for the brand.

I’m not opposed to any of this – in fact, I’ve spent a great deal of time studying customer co-creation strategies (what I typically refer to as prosumerism, as defined in Wikinomics), and think that most brands could benefit from adopting them on some level. But at the same time, I have a growing sense that this focus neglects a huge, and important, part of many brands’ customer bases – those that aren’t particularly interested in “engaging” in any meaningful way, but might still like to purchase your products or services.

While this has been a recurring theme on this blog recently, I was reminded of it again when I re-read a report Sean Moffitt wrote for my company (nGenera Insight) last year called “It takes a community – not a campaign – to raise a brand.” It’s a truly excellent piece of work from start to finish. But the chart on page 15 is what got my hamster wheel churning today. It defined nine different types of community members, ranging from “lurkers” – people who merely visit and consume content – to “ambassadors” – people who are immersed to the point they are pseudo employees. Most importantly, he included estimates of what percentage of community members fall in each group that seem about right.

According to the chart, only 40% of community members are at the level he called “socializers” – those that might post a full profile and an occasional message. Only 20% will put in so much effort as to answer a poll. Only 10% will originate content. And less than 0.5% will become true “ambassadors”.

So to me, that says somewhere between 60 and 80% of community members aren’t really “engaged” in any meaningful way – they’re more or less just visiting. That’s a pretty big number. And while I’ve heard many people talk about strategies (using various terminology) to try to increase the “engagement level”, my sense is that most of them will fail. Quite simply, many people just don’t want to connect with brands like that – or at least to all the brands they might use like that.

I think companies need to think deeply about satisfying the needs of this huge group of customers – which is where the title of this post came from. It’s not uncommon to hear story after story about success in building a small network of ambassadors (or co-creators), but it’s rare to hear someone talk about their success in delivering value to, say, lurkers – even though they’re a much larger group. In some cases, doing the first automatically does the second, but in other cases it does not.

Yelp is a classic example of the first case. A small percentage of people  create the vast majority of reviews on the site. By doing so, they collectively create the service that all the other users enjoy. So in that case, Yelp focusing most of their efforts on engaging (and growing) this relatively small group of people makes absolutely perfect sense. Similarly, when Starbucks sources an idea from MyStarbucksIdea.com, the benefits (in terms of new products, services, etc.) should not only accrue to their more passive (from a social media perspective) customers, but also those that might not engage on the web at all.

But other cases are not so clear cut. Whether it’s a company-controlled community, Facebook Fan (or Like) page, Twitter, MySpace, or what and wherever, there’s a very realistic chance that many of the people that come there are not interested in engaging, and not interested in what the other people are saying (or doing) either. But they might want, say, a coupon. Delivering one might not sound as 2.0 as engaging them in a two-way conversation, but it might be more effective (and profitable).

In the traditional media world, this was a very frustrating group of customers – extremely hard to reach, and the cost of doing so often led to a negative ROI if you even bothered to try. But I think those dynamics are changing dramatically, as the cost of connecting with some of them trends towards zero. Not only that, but I believe that some of these customers might turn into the most profitable ones you can have – if you don’t alienate them by focusing all of your efforts on getting them to “engage.”

As I’ve been researching the incredibly shrinking marcom expense line, one of the recurring themes I keep coming back to is that the term”social media” leads many companies down to wrong path. More often than not, it’s defined in relation to broadcast media, which leads everyone to focus on two-way conversations, trying to deepen connections with customers, build a community, etc.

While I think that’s an important part of social media strategy, I also believe that it doesn’t paint a complete picture. Just because the new tools enable two-way communications and conversations, doesn’t mean that is what every – or even most – customers want. There are ways to effectively use the tools that, when stripped down to their bare essence, looks a heck of a lot more like “traditional” broadcast media than is commonly believed.

In turn, I had great interest in a survey that came out last week about why people become Facebook fans. The most interesting chart, to me, is the following:

As you can see, the #1 reason is simple – to let friends know about which products somebody supports. #2 is to get coupons and special offers. Learning about new offerings, or the company, was ranked lower; meeting people with similar interests (i.e. what might look like community building) is lower still.

This type of data is important for companies, and particularly marketers, to keep in mind. If, for example, it turns out the #1 reason a customer becomes a fan of your company on Facebook is to get special offers, not only is a strategy designed around engaging them in conversations (and building community) potentially wrong, it could prove destructive. Quite simply, if all you want is a coupon, having someone pester you over and over to chat can prove annoying.

On a related note, these types of “shallow connections” should be highly valued by companies. In the traditional marketing world, it was typically assumed that only a subset of your most loyal customers would ever “evangelize” for you. But now, it’s possible to connect with a broader group of people who might not “love” your brand – but are more than happy to stay connected, check out offers, and share them with their friends. Making it easy for them to do so is one of the best ways to capitalize on the incredibly shrinking marcom expense line opportunity, because the costs associated with doing so are becoming quite low indeed.

About a month ago I wrote a blog post entitled “social media and the incredibly shrinking marcom expense line“. The basic idea was that, thanks to (among other things) ambient intimacy, marketers can increasingly connect directly with millions of customers, for free – or at a very low cost. Because of this, questions like “what’s holding social network advertising back?” are misguided – as they take the perspective of what is spent on a given channel, rather than what the impact is.

One of my favorite stories in relation to this idea was the “if you vote, Starbucks buys you a coffee” campaign from late 2008. Not only did the company source the idea from one of their customers (BillMac) through their mystarbucksidea.com site, they provided a very early lighthouse into how powerful ambient intimacy can be. The 400,000 + people who watched the YouTube Video, 200,000 + who accepted the Facebook invite, and an estimated 26% increase in viral buzz tied to the campaign were all publicly visible, positive indicators of this.

For the last few months I’ve been speculating that if Starbucks did something similar now, the impact would be even greater. After all, amongst other things, their Facebook fan base has grown from 600,000 to well over 6 million over the last year and a half. Then on Monday, the company announced a very similar initiative to their previous one – a free coffee for anyone that brings a reusable mug to any of their cafes in on Thursday. Seems like a good chance to test my theory.

As far as I can tell, relatively little money has gone into promoting this. But a quick look at their Facebook fan page indicates the message is getting out – in about 48 hours, almost 500,000 people have responded to the Facebook invite (238,000 confirming intent to take them up on the offer, 74,000 saying maybe, and the rest declining). So that’s 1/2 a million people who have responded in a short time frame (i.e. at minimum “aware”). It seems safe to assume that there’s many more who saw it and opted not to respond. And it’s probably safe to assume at least a few of those people that became aware shared the news with their friends, who also opted not to respond directly – and of course there’s many people chatting about it on Twitter (and other places) as well.

So while I don’t know what the exact number of people that have been made aware of this offer through social media, I think that – when all is said and done – it will be comfortably in the millions. To me, that’s a pretty big deal – and is something all marketers should be paying attention to. While product giveaways have been used for ages, most companies have not only had to eat the cost of the giveaway, but spend a lot of money to tell customers they can have something for free. Now, that message can spread far and wide relatively cheaply – and who knows how far a similar offer might reach a few years from now.

Yesterday I offered some of my thoughts around my favorite research topic – the incredibly shrinking marcom expense line. About an hour later, I grabbed my copy of the latest Canadian business. The cover title was “An insider’s guide to the future” – including “your marketing department will disappear (pg. 40)”. Intrigued, I flipped to the article – and wouldn’t you know it, there was a wonderful quote that fits right into my line of thinking.

The quote comes from Richard Musson, The VP of Marketing for Labatt Breweries. It was during a talk about how Bud Light Lime used Facebook to help develop the brand. It was in reference to a comment that silenced a room at the fall meeting for of the Association of Canadian Advertisers. It was wonderful. It was (with a little preamble for context):

Labatt’s success with Bud Light Lime has the company now rethinking how it carries out new product introductions and the “several-million”-dollar budgets of traditional multimedia ad campaigns. “It does raise huge questions about, you know, could you in the future have half the marketing budget and do it differently,” says Musson. “They were a bit shocked at the ACA when I mentioned it,” especially the media executives in the audience. “They weren’t too happy.”

I can imagine they weren’t – but I think Richard is bang on. And the more I think about it, the more clear the opportunity becomes to me. The cost of communications have been dropping precipitously for years. The cost of communicating with customers – i.e. marketing – has not. At least not yet…

A couple of weeks ago Media post published an article called “what’s holding back social network advertising?” In it were what appeared to be some rather jarring statistics – notably that not only do social network ad revenues fall significantly lower than their search and display counterparts, but they are actually forecast to grow much slower as well. Based on this, the article questions whether 2010 is really going to be the year of social media in terms of online advertising – as all the glowing press coverage would indicate.

Why this interested me so much was that it plays directly into one of my main research areas right now – what I’ve been calling the incredibly shrinking marcom expense line. My argument is that when people look at advertising online, they take a spend-centric point of view. Basically if $X is spent on (say) display advertising, $Y is spent on social media, and Y is significantly less than X, than something must be holding it back.

I take a different perspective, based on one two very simple, inter-related observations. One, the value of advertising – from a marketer’s perspective – should be based on the impact it has on customers, not (rather perversely) on how much it costs to reach them. Two, marketers can increasingly connect with their customers for free through the leading social media platforms.

Think about it for a second. If you take the spend-centric view point, placing an ad on Facebook (that costs the company money) is seen as a positive indicator for social network advertising; getting several hundred thousand fans to attend an event (for free) is not. Assuming you can post an ad on Twitter (for a fee) soon, that will be seen as a positive indicator; sending a tweet to hundreds of thousands of fans (for free) is not. And if you extend the same logic out to YouTube, placing a text ad (for a fee) on someone else’s video is seen as positive; having millions of people watch your company’s commercial (for free) is not.

That seems ass backwards to me. Again, looking at it from a marketer’s perspective, the ability to connect directly with customers, for free (or extremely cheaply), is a good thing. Opportunities abound to do just that, each one capitalizing on what I consider to be the most important thing about social media platforms – that they enable ambient intimacy. While I could go into great detail on this, the ability to “friend” and “follow” (among other things) has simply shattered Dunbar’s number.

As noted, one of our key research projects at nGenera Insight – and my personal favorite – is digging deeply into the opportunities surrounding the incredibly shrinking marcom expense line. Some of them stem from using Twitter and Facebook effectively; others link to building effective brand communities – particularly those where prosumers get actively engaged; still others center on emerging new platforms like Yelp. I believe that marketers who successfully take advantage of all the opportunities here will find they can use social media strategies to achieve two, often competing goals – driving long-term growth, and proving short-term ROI.

The details can get complicated, but the underlying story remains deceptively simple. Sometimes, doing for free what you once had to pay for can be priceless. Feel free to contact me – in the comments, @denisbhancock, denisbhancock (at) gmail.com – if you have any thoughts on this (or would like to hear more about it).

I spend most of my working life researching how collaborative technologies – particularly social media – are impacting business strategy. My academic background is in economics. So when The Economist does a special report on something like social networking, it always gets my attention. And as with most articles in the publication, I always find a treasure trove of interesting statements and facts to think about. Over the next little while, I’m going to be exploring a few of them here.

Today I’m going to start with something very, very simple – the statistics they provided on Facebook usage in their lead article. Specifically, each of the following three stats were presented in relation to Facebook becoming so popular:

• 350 million users
• 55 million updates a day
• 3.5 billion pieces of content shared each week

Each is unquestionably a big number, that seems to indicate popularity – but a simple calculation of per-user stats seems to be telling me a slightly different story. For example, 55 million updates a day, across 350 million users, works out to just over one update per week, per user. That doesn’t actually seem like very many – particularly given that, at least from what I have seen, there is a reasonable number of people that update their status quite regularly. Spun a different way, if 15% of people were providing one update per day, that would leave 85% never providing an update at all. I’m not exactly sure how the exact distribution plays out, but in general it appears that providing an “update” on Facebook isn’t something most Facebook users do that often – and certainly less than once a week.

I also find it interesting to contrast the 55 million daily “updates” with the 3.5 billion weekly – or 500 million daily,  just under 1.5 per user – pieces of content shared. So for every update people opt to provide to their network, about 10 other pieces of content are shared. When you think about Facebook as a place where people share with their network who they are (and what they’re thinking), that means personal identity can be defined far more by the types of content being posted then quick little statements.

I’d really like to see a breakdown of what exactly this content is (are such numbers floating out there somewhere?). My initial hunch is that photographs account for a significant chunk of this, but there’s obviously also a lot of news links, videos, events, etc. But again, a VERY unscientific study (basically scanning the recent activity of my own friends) seems to indicate that, unsurprisingly, this activity is very skewed. I’m assuming that, for example, the 52 photos my friend just posted counts as 52 pieces of content… and I notice a handful of people seem to post multiple things daily, while a huge chunk are relatively inactive.

Which all takes me back to one of the research themes I’ve been exploring for awhile. When it comes to social media, a lot of attention is paid to the active people that create a lot of content – and share a lot of information. And since so much attention is paid to them, many social media strategies (often inadvertently) have an underlying assumption that everyone is like that. A lot less attention tends to be paid to the legions of people that are, more or less, relatively passive members of various social networks – perhaps absorbing some of the information from others, but doing little else. The reason I think this is important is that I’ve often heard customers are no longer passively absorbing information, thus the broadcast media model is dead – but the behavior of many people on social networks indicates the reports of death might be premature. Instead, they might just be listening to a different broadcaster, which is a very different story.

A couple of months ago, buried deep within a post about the Memphis Grizzlies’ prosumer experiment, I made reference to how the experience of “Snakes on a Plane” using an innovative social media marketing experiment, and then failing to put butts in the seats, was being misread. In short, people seemed to jump to the conclusion that social media marketing didn’t work for movies – people might talk about it, but they don’t pay to see it. I proposed that it’s possible the movie was just bad, and you can’t blame social media for people not wanting to see it. I then tied this back to what the Grizzlies are doing, saying “remember to distinguish between whether the approach was wrong, or the underlying product was just too messed up to use it effectively.”

I now, finally, have a good example to back up the assertion. The success of the movie “Paranormal Activity” is all over the news. It is a low budget film, that’s used a slow (and staggered) release, driven by input from potential fans, to roll it out in select theatres (160 so far). Last weekend they averaged $49,379 per theatre – about four times as much as Couples Retreat (which, in fairness, was released in 3,000 theatres). You can read all about it doing a search like this, but the basic idea is that people got behind, word of mouth did it’s job, and it was a great, low-cost marketing move.

But the key lesson to me is simple. Social media allows messages to go viral – but you can’t really control the message that is sent around. So if the movie isn’t good, social media isn’t going to help you much. If it is, a lot of good things can happen. And as this trend continues, what’s really going to matter is not how you market yourself – but whether you can indeed come up with a better mousetrap.

I’ve been coming across a lot of different lists of social media predictions for the coming year. One of the things that jumps off the screen is how remarkably similar they are, with messages like “focus on people, not consumers”, “it’s all about conversations”, convergence / cross-platform offerings, etc. I initially nodded along with most of them, but the more that I think about them, the more I not only wonder whether some are quite off base, but also whether many of them aren’t even predictions at all. Instead, they are statements about what has already occurred and/or the current conventional wisdom.

In turn, I wanted to start questioning a few of them. Not in a way to say that they are wrong per se – I’m in no way fully convinced that they are – but to hopefully open up a deeper discussion of what the future might really hold. So today I’ll start with one that really caught my eye recently:

1. It’s About People. I saw this most recently on an excellent post on readwriteweb, but it’s a message I’ve seen come up often – “we’re moving away from ‘users’, ‘customers’, and ’shoppers’. People now seek meaningful connection, self-expression, and a relevant and receptive community.”

So this is a prime example of one I was initially nodding along to, and then stopped. The reason I stopped is that I think the notion that social media is “about people” is not a statement about the future, but a statement about the past/ present. If you look at the major social media platforms like Facebook, Twitter, etc., they were built with a focus on people making meaningful connections, and self-expression, with a receptive community. They certainly haven’t been customer / shopper focused. So how is that a change in 2009? Haven’t we been there, done that, to some extent?

I would argue the more interesting question about the future is slightly different – as social media continues to evolve will the focus remain on people, or will it shift to a model that treats them as users, customers, shoppers, friends, etc. in different contexts?

I believe the gut reaction here from many is that it will/ should remain “on people”, and companies that try to do differently will fail and/or be punished in someway. But when you look at the social media landscape, it’s important to remember that this “focus on the people” hasn’t proven too lucrative yet – Facebook and Twitter again as examples of companies struggling to find the proper business model to support their people-focused offerings. I believe at some point they will figure it out, but in relation to above it will be tied to a model that allows companies (and other entities) engage with customers, shoppers, etc. in a contextually relevant way. Being just “about the people”, as of yet, doesn’t really pay.

So in some ways, I guess I’m arguing that the future may involve taking a step back, and focusing on the business realities these platforms face. How can they maintain a platform that continues to function “for the people”, while allowing them to profit by having certain people engaged as customers, shoppers, etc.? Or will this whole space end up being a big, open, collaborative platform with no distinct owner(s) making serious money?