Social Media Marketing: Principles and Economics

Social Media Marketing: principles, economics, technologies Ethan Bauley, M80 www.M80im.com ethan@m80im.com @ethanbauley ethanbauley.com

M80 • Online PR • Social Media Marketing: blogs, Twitter, social nets, Flickr, forums, etc • Founded in 1998 by Dave Neupert • Acquired by WPP/GroupM in 2006

Semantic problems with the word “media” • Tools of production? • Artifact? (i.e. “piece of content”)

What isn’t social media?

Is... • Email? • Public access TV? • circa 1994 BBS? • Amateur radio? • Direct message on Twitter? • Air? • IM? • 700MHZ?

Industrial Media • Expensive: requires ﬁnancial capital • Owned by just a few people/ﬁrms • http://en.wikipedia.org/wiki/ Social_media#Distinction_from_industrial_ media (I wrote that; isn't social media fun?)

Social Media • Relatively cheap (computer/phone + connection) • Ownership distributed in the population • Equivalent scale to industrial media The means of production are distributed across the majority of the population

The Wealth of Networks • Yochai Benkler • Introduction = must read

More from Benkler Non-market collaboration and production systems are a) creating an increasing proportion of economic value b) sometimes better at motivating effort than traditional market mechanisms [Wikipedia, F/OSS, etc]

Everything is cheap • Production and distribution used to be bottlenecks/expensive, now they're commodities/cheap • It's very cheap to build software, too The implication is: no one needs commercial aspirations to communicate. Change in expectation, social norms, etc.

Information/Network Economics • High “ﬁrst copy” costs, low reproduction costs • Explosion in quantity creates scarcity of “attention”/time (used to be relatively abundant) • Network effect: value of network increases exponentially as users grow linearly (Reed/ Metcalfe)

Information Rules • www.inforules.com • Hal Varien & Carl Shapiro • Varien = GOOG chief economist • Auction (AdWords) expert

Game Theory: The Science of Strategy • John Von Neumann, John Nash (Beautiful Mind) • quot;Game theory makes it possible to move beyond overly simple ideas of competition and cooperation to reach a vision of co-opetition more suited to the opportunities of our time.quot; • quot;You have to put yourself in the other players' shoes. You have to be allocentric. This doesn't mean you can ignore your own position. The skill lies in putting the two vantage points together: in understanding both the egocentric and the allocentric perspectivesquot; (Co-opetition, Brandeberger/ Nalebuff)

Let’s talk about GOOG • What is PageRank? • How does it work? • How were competitors (YHOO) indexing previously?

Networked people beat ﬁrms • This is why social media is so powerful • Wikpedia vs. Britannica, SETI@home vs. IBM, etc Ask: how can I design a network/market/ community that will grow and manage itself?

Theory of the Firm • Firms exist to minimize transaction (“coordination”) costs • Social media sharply reduce coordination costs • Ergo, dis-integration and reconfiguration of firms. • Past: Big firms for incremental things • Future: Tiny firms for enormous things

What is the pain point in the mediascape? • TMI • Hyperfragmentation Context is king (help me decide: does this suck or not?)

Umair Haque • Your new media/marketing guru: discussionleader.hbsp.com/haque • “The bulk of what connected consumers create isn’t content, it’s context; information about the value of goods and services” • Context and content are complements • Context is created by markets (auctions), networks (AdSense/MySpace), communities (craigslist, Wikipedia)

Typical Umair-ism: quot;I think there's a simpler way to put it. Most ad- supported startups will fail simply because 1) ads suck, and destroy value, and 2) they're not creating new value by making said ads any better. quot;In fact, the less they all focus on making ads better, the worse each of these players is, because the mediascape just gets more polluted. quot;It's a classic example of a negative equilibrium.quot; (game theory reference!)

Welcome to Next-gen Brands! • Using social media, connected consumers discuss excruciating minutia of products/ services in public view • Scripted brands have no utility • Advertising is only as valuable as a) any information it communicates b) entertainment [maybe]

STOP TALKING START LISTENING

Listening Tools • Twitter Search • Google search feeds • Yahoo BOSS • Filtrbox • BackType • Delicious Run ‘em through AideRSS

Listening Tools: Expensive Version • Visible Technologies/TruCast • Radian6 • Buzzlogic • Collective Intelligence

Why aren’t there ads on Google.com?

Anyone marketed on Facebook?

(Benevolent) Sponsorship • Create an interaction • Nike+ • blue.popurls.com • Olympics/Lenovo: http://iainmurray- starsailor.blogspot.com/

Using the Internetworks, how would you market a wedding movie?

Reaching out to Bloggers • There’s a lot of them • Like: A LOT • Think about how you will SCALE your blogger relations programs • Blogs are cool

Blogger tactics! • WRITE A GOOD BLOG YOURSELF (then link out to others) • Leave insightful comments (most publishers read them!) • Always be 100% transparent • Be concise when emailing (and be sure to read the “about” page) • Reverse look-up authors in other media

Researching your blogosphere • Quantcast • Linkrolls/Blogrolls • Delicious • Technorati • Google Blog Search • Blah blah

Blogger engagement strategies • Product reviews (even more context!) • Have them guest-write on your blog (Samsung) • Figure out a sponsorship model • Contests: enter by leaving a comment • Think about incentives

Twittering for $$$ • Tweeting for $$$? • Twitter is just a mini-blog: write good stuff when you’re there • Should it be a real person or the name of the brand? (answer: both)

Customer service is the new marketing • Once you start engaging, being authentic, etc, you’ll ﬁnd that people have problems with your stuff • These are easiest opps to make a sensational story happen that will propagate through the network • First step in cross-functional teams

Crossing internal boundaries • ~ 90% of the time we (M80) want contacts in multiple business units (marcom, cust svc, product experts, investor relations, etc) • Why? • This is improvised and based on listening. Very heterogeneous value propositions/ motivations among connected consumers.

Integrating SM in the Plan • Bootstrap as much SM as you can! • quot;Air coverquot; from corporate PR, advertising is extremely helpful • Use PAID MEDIA to get distribution for your SM initiatives: advertise an interaction/beneﬁt, not just the product • Consult a social media strategist during early stages of product development • Many ways to integrate that are legit and useful • Keep it simple: simple quot;askquot;, simple incentives, simple goals

“ROI” • Sometimes it’s direct purchases • Organic SEO • Business development • Customer service • Replacement cost (think: email list) Most people are still trying to hack this. My advice for now is: look for cost efﬁciencies, too...not just sales growth

Twitter & Cisco • wrote posts linking to prominent DC bloggers, relevant news (during the course of my daily research/listening) • lots of @ messages; let people know I’m not a bot (evidence of humanity) • Most of those bloggers now following • 100% bootstrapped (quot;on specquot;) • combined w/ blog outreach/YouTube program

Results: Cisco Blog/Twitter/ YouTube program • Data center blogger hired at director-level position 5 mos after M80 @ message • Placed Cisco executive on conference panel • Data center executives now exploring book deal w/ blogger • Coverage on 20+ top tier data center blogs (it's a small community ;-) • Unique videos helped spark relationships • Twitter extended relationships, helped generate coverage

What is the problem with Facebook/MySpace?

Twitter, Flickr, and BizDev 2.0 bootstrap EVERYthing...

Reverse Markets & VRM

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Social Media Marketing: Principles and Economics

by Ethan Bauley on Nov 24, 2008

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