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).

My job as executive editor at nGenera Insight involves doing a lot of research about new business models and start-ups tied to the Web 2.0. Over the next few weeks, I’m going to be sharing a high level overview of some of the work I’ve been doing recently. Today I’m going to start by talking about the story we see emerging from a little company called The Hipstery.

The idea behind The Hipstery is simple. Instead of offering a bunch of t-shirts for customers to pick from, the company invites customers to fill in a survey. They then take these results, apply an “innovative style algorithm technology” to them, and select a t-shirt that seems to suit the customer. Think of it as a way to surprise yourself with a gift.

We’re cautious not to overstate what The Hipstery is actually doing here – the humorous tone of the site makes it appear that the algorithm might be part of a joke. But there’s no reason it need to be. We think the idea behind it points towards an interesting opportunity popping up all over the web.

Without getting into the details of the framework (which is where the Johari Window, among other things, comes in), the idea is to create “blind spot” – things you can no about your customers, but they don’t know about themselves – and capitalize on them. Doing so requires data, and analytical capability. We’ve already seen this happen in online dating – while sites like Facebook offered certain advantages over services like Match.com, it’s eHarmony that captured the blind spot opportunity (and found a business model). If you squint a bit, you can make the argument that The Hipstery model is to Threadless in the clothing industry what eHarmony is to Facebook in online dating.

There’s of course much more to the story than that. But the overall message is that The Hipstery is a very interesting company to check out, and many organizations should consider looking for their own “blind spot” opportunities to exploit.

I do research for a living. A lot of it tends to centre on the Web 2.0. And the Chairman of my research group wrote Wikinomics. So I spend quite a bit of time out looking for new companies and business models, with a particularly keen eye for things that are “opening up”. But to be honest, there are quite a few situations where it becomes obvious that being open isn’t always a great thing.

For example, one easy technique for locating new “lighthouse case study” ideas is searching through various contests that are floating around out there. Two of the more well-publicized ones recently are the TechCrunch 50, and the Mashable Open Web Awards. The first provides a nice list of start-ups to consider, and the various stories swirling around them point to many more. Great resource. I also had high hopes for the Mashable Open Web awards as a pointer towards great case studies. But thus far have been mostly disappointed.

The reason is that I suspect the system is being gamed, and I don’t know what to make of many of the results I’ve seen. For example, I was really interested in “Twitter user of the year”, particularly since there are many, many interesting Twitter users out there. I watched the updating list for a few hours last week. @ivetesangelo proved quite popular. In fact, my rough count indicated @ivetesangelo was getting about 60% of the votes. @sookiebontemps and @tommcfly were also quite popular. I greatly suspect that the system was being gamed. I scanned through a variety of other lists, saw voting patterns that defied all logic (at least in relation to what the contest intended), and moved on.

In some ways it’s not really fair to compare the two directly – but since both are seeking to identify the “best” in a relatively similar space, I think the difference between the two experiences is important. By applying some structure, expertise, and filtering, TechCrunch provides a lot of value to me; by being almost entirely open, the Mashable Web Awards are left open to gaming, and various different interpretations of what’s going on. I have a hunch of some expert panel had narrowed down a list of the best things going on out there (perhaps guided by voter input) and let people work from there, the output would be more interesting – and useful.

I see this kind of thing pop up a lot. In general, I find open to be good – to a point. But there’s a reason things like hierarchies emerged out of self-organizing systems.