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The Rise of the Social Economy

Social media has really made it’s mark on 2010. Twitter and Facebook seem to be in the headlines
almost every day, Hollywood is even making a movie about Facebook, and it seems as if every
company is now looking to social media to help propel themselves beyond the aftermath of the
GFC. But there is still a lot of confusion about what social media actually is and where the threats
and opportunities lie.

In this article I take a close look at the social media landscape, describe some of the “platforms”,
examine how these are changing the market place and outline a strategic framework for deploying
social media as a branding, marketing, PR and intelligence tool.

What is social media really?

The big social media brands are YouTube, Twitter, Facebook and LinkedIn but they are just that –
brands, and like any brand they are designed to cater to a certain niche to meet a specific need.

As with any successful product or service the people behind these brands spotted a market need
and developed a solution to it. They then had to work out how to generate revenue. Because social
media is able to generate a huge amount of data about each user (age, gender, place of work,
where they live, things they like, people they know and so on) the most obvious choice was to
provide highly targeted advertising. Facebook is the brand that has managed to do this most
successfully so far. But it is still early days – and Google is yet to weigh in seriously.

The market leaders do not define the market.

Social media is the convergence of technology and the desire people have to be heard and
connected. In an age where people are feeling increasingly isolated, social media has managed to
connect people with old friends, complete strangers and interest groups - or said another way
connect people to the "market segments" they wish to belong to. This has happened in a way no
other technology has been able to do.

We humans are essentially tribal animals and social media has allowed us to gather into these
new 'location free tribes' incredibly fast. What's more, the users of social media like it and want
more.

The march of social media is now unstoppable. There have been times this year where the amount
of time spent on Facebook eclipsed the time spent on Google. This competition is only going to
intensify. Facebook recently released some new tools to extend its reach and influence over the
whole of the web. Recently rumours around a new service called GoogleMe have started to
surface.

Social media is now becoming more than a marketing experiment. By the end of the year the
majority of big name companies will be looking at how social media can be directly integrated into
their brand strategy. It will be the core of any new digital strategy.

Why has it happened?

Networking and collaboration is fundamental to what it means to be human. In our bodies atoms
work together to create cells and cells work together to create our organs. In our brains’ neurons
work together to create our thoughts, feelings and language. In your company people are working
together in a similar way - to create something bigger and more exciting than the sum of it's parts.

We can take this thinking and look at the development of the personal computer and see a very
distinct pattern emerging.

Before anyone had a computer or a smart phone, everything was a social event. Meetings were
face-to-face or over the phone. Communication in general was human-to-human based.

In the last 30 years things changed. Initially the personal computer made everything a private and
secluded affair. Games, for example, could be played without the help of another human and work
could be carried out sitting in front of a screen. The advent of the early internet exposed the power
of a computer network. But from a personal perspective 'computing' was an insular activity.

The first social networks, forums and blogs worked with a huge number of anonymous users.
While this was a step forward in person-to-person networking, the anonymity allowed people to
behave in ways they would never dream of in real life. This constrained many of these networks to
the domain of early adopters and special interest groups. The 'rules' that govern effective social
networks were yet to be developed.

What has happened recently, particularly with Facebook, is that it’s become far easier to transport
your real identity around the web. This means that increasingly people are joining new social
networks with their 'real identity' – their real name, their place of work, and other details that define
them as a person in a movement (sometimes referred to as the 'Open Web'). Naturally this makes
people think more carefully about what they say and how they behave on social networks.
Because they 'own' their comments the common rules of society come into play. When a person's
reputation is attached to what they say it makes them think carefully about what that comment
might mean to others.

Of course people can still misbehave in social networks as they can in real world networks. But the
networks are now being governed by majority rule so this behaviour is quickly dealt with. This
makes cooperation and collaboration much easier. Because of this the barriers to entry are
dropping at an astronomical rate. Companies are starting to feel more secure in setting up their
own networks, knowing that the majority of users will join to get value out of the information that is
provided and quickly deal with other users who lessen the overall value of that network.

So when thinking about why social media has become so widely adopted, and pondering where it
is going, avoid getting distracted by in the leaps in technology. These are important of course but it
is the behaviour of the network and the development of new social norms that are really driving the
progress. Every individual in this massive network is doing what he or she is preprogrammed to do
- communicate, collaborate and continue the march of civilisation's evolution.

The New Web

The age of the "website" as we have known it is coming to an end. People may still go to your site
but they expect information to be tailored for them and available on the social media platform of
their choosing and on any device that connects to the web. What’s more they expect to be able to
comment on almost everything they see. The web is no longer a digital version of print. It is the
space where conversation is facilitated. Websites are becoming applications that feed information
out to various social based platforms. This allows people to receive and consume information the
way they choose.
The more you can utilise your social media presence and leverage the influencers in your network
the better. It is even possible to embed e-commerce and other web based applications directly into
Facebook. Most brands need to start thinking about their websites as a database that organises
and distributes information and features to specific groups within the world of social media.

Owning the data

One way to think about the forces driving the development of social media is the old saying:
“knowledge is power”. To that you need add a more recent motto “and the person with the most
data wins”. Each social media brand-name earns its money from collecting and analysing data.
And they are not too keen on sharing that information.

Obviously there’s a huge amount of data that brands can obtain from the many social media
monitoring tools currently available. But if you really want ‘granular’ information about your brand
you need to devise ways to generate and own your own data. If you are used to thinking about
campaigns and short term goals this might feel difficult. If you take a longer term view however, it
is possible to generate massive amounts of data relevant and specific to your brand, your product
category and your competition.

It’s the economy, stupid

During the 1992 presidential campaign in the USA, Bill Clinton’s campaign strategist coined the
phrase “...it’s the economy, stupid...”. He did this to make the case that Clinton was a better choice
for president because president George H. W. Bush had not successfully addressed the economy,
which had recently undergone a recession. Clinton, of course, won that election.

Nearly twenty years later the world is emerging from a period of economic turmoil that has forever
reshaped important elements of the market place. One of the most significant changes is the
movement of social media into the mainstream. This is far from surprising. Challenging economic
times always induce consumers to carefully assess how they spend. Being a member of a
community where you trust the recommendations of people who are real consumers is an obvious
choice. Technology has allowed this to happen in a measurable way and on a global scale.

We are now in a time where the phrase “it’s the social economy, stupid” could well become a catch
phrase for companies rather than voters. Those that ignore the opportunities social networks
provide may well be putting themselves at a distinct disadvantage.

Fractured or identifiable markets

There has been a lot of talk about how social media is fracturing markets. This is a myth.

Social media doesn't 'create' new markets and market segments. It just identifies them. The
interest groups and needs already existed - we just didn’t know enough about them.

The mountain of data that social media produces can now shed light on who these people are, and
what they like. We now have clearly identifiable and serviceable markets.

Of course this has created an additional layer of complexity. But utilising tools to listen to, and
more importantly, understand these market segments gives you an opportunity to talk to them in
their own language and hear what they have to say. You might say this technology can help you
treat your customers like humans - something that most forms of marketing and communication
have not been good at thus far.

Defining value

A recent survey of the social media activity of major brands, including Nokia, Adidas, Nike, Coca-
Cola and Red Bull, showed that some brands are engaging well with their Facebook fans. The
people who have voluntarily decided to follow what these brands have to say tend to spend
significantly more than non-fans – sometimes more than twice as much. Further, fans were more
loyal and 68% were inclined to recommend the product to their peers. Nike was able to put a value
of $209.83 on each Facebook fan – even though some fans spend nothing at all.

It could be argued that these fans would be loyal brand advocates anyway. But even so social
media has given them a convenient platform to stay engaged and and share their views and
preferences with others.

Starting a social media strategy

With this background we are now equipped to discuss how to form a social media strategy. Before
we start a couple of principles need to be highlighted. First there is no “one size fits all” when it
comes to strategy. Secondly it’s worth taking time to get a strategy right.

Many companies have been adopting an approach to social media based on an assumption that it
is ‘free’. They have set up accounts and hoped it will work. It won’t. Hope is not a strategy, and
social media takes time to get right – so it can’t be free.

So let’s walk through the basic steps…

Define your goal

A brand needs to first define it's goal. Social media can be used for customer service, customer
acquisition, brand awareness or public relations. But trying to do everything will produce unfocused
results. Understanding what stage your company is at and setting goals to propel communications
to your desired stakeholders is the first step.

Listen to gain context

Once you have defined your goal you need to measure what is already happening. Before
meaningful KPIs can be set it helps to know what measurement tools are available and the quality
of the data they generate. These tools can be categorised into three groups.

Site analytics – One of the most important tools you will need to utilise is website analytics - tools
that measure the activity on your website. Google analytics is an extremely good free option but
there are many others depending on what it is you are actually trying to do. Make sure you do your
research get advice and know what option is right for you.

Social media monitoring – There are a number of ways to monitor what is happening in the social
media space. Who is talking to who, who is influential and why the conversations are happening.
There are free tools available but some of these lack precision as the technology is not constantly
upgraded or not enough effort is put into collecting the data. A well developed tool is worth the
investment. Good monitoring tools can give you extremely detailed information – what people are
saying about your brand, who is saying it, details of the demographics of your social media
following and even what people are saying about your competition. The right data allows you to
snare the 'low hanging fruit'.

Data mining tools – To dig deeper into data it may be necessary to employ more advanced tools.
You may need 'text mining' to get an overview of what words or themes seem to be surrounding
your brand online or 'geo-locating' comments to identify potential new markets.

Good choices require knowledge of what type of data is available, and how to best get your hands
on it.

Choose your communication platforms

Platforms then need to be chosen. Twitter, Facebook and YouTube are a few of the big ones but
there are many more. Each is focused on a different demographic. There is also the possibility of
creating your own platform to fulfil a need that may only exist for your market (see Big Exchange
excerpt)

Set KPIs

Once you know your goal, have chosen the tools you will use to measure it and the platforms
through which you will focus your communications you are ready to set your KPIs. There are many
ways of doing this. One of the most effective is aiming to ‘increase positive sentiment’ - basically
getting more people on side.

Define a voice

Finally you need to create a ‘voice’. A tone for how you will communicate. Will you be informative,
humorous or serious? What language will your market respond to? Making the correct choice and
implementing well is important. Get this right and your market will follow.

Get good advice

Ultimately a good social media strategy needs good advice. So make sure you talk to people who
know this space well.

Looking to the future

Social media is here to stay. These methods of communicating have become embedded in our
technologies and culture. Companies will soon be interacting with a generation that will find it
impossible to imagine a time where the individual didn’t have a voice and an ability to exert
influence.
This gives those companies a huge opportunity to be involved in conversations about their brands
and to learn and respond to the views and preferences of their customers.

We are moving into the age of the ‘people organised web’ – information organised by people, for
people and recommended by people in your network. We have moved beyond the ‘industrialised’
view of the world where markets are represented by impersonal statistics. Markets are made of
individuals and they demand to be treated as such.

This is the beginning of the next great step in the evolution of human civilisation. It’s happening.
Time to get on board and be part of that evolution.