For every Like that is made, Facebook is able to correspond a product affiliation to demographic information such as sex, age, geography, and education, as well as social graph data about relationships and influence within a group. With Places, Facebook can even correlate product activity to mobile location data. If mobile payments ever take off, they could get actual sales data as well.

Ad Age recently asked the very poignant question: What Happens When Facebook Trumps Your Brand Site? (alternate title for the article is: How Facebook Became the Biggest CRM Provider). The online article was accompanied by the following graphic showing the top ten brands on Facebook (in terms of total Likes):

Top brands are garnering millions of Likes, yet only driving a couple hundred thousand visitors per year to their branded sites. What this all means is that Facebook has better data about customers than most consumer products companies do. As Ad Age notes:

For many marketers, their Facebook fan bases have become their largest web presence, outstripping brand sites or e-mail programs either because a brand’s traditional web-based “owned media” is atrophying or because more consumers are migrating to social media.

While fan pages may work a lot like a marketer’s traditional “owned media,” they’re not actually owned by the marketers. Facebook hosts the pages and provides analytics for free, but growing marketer dependency on the network for CRM programs, combined with simultaneous declines in traffic for many of their own brand websites, could give Facebook a valuable revenue opportunity.

Of course, it would be difficult to sell granular individual data about users (people would object); however, Facebook could sell aggregate data (trend analysis and market research) and act as a “black box” CRM (Customer Relationship Management) solution whereby companies offer targeted promotions and messaging to individuals with select profile characteristics, mediated through Facebook. Already some companies are using basic Like data to hone their retail strategies. In one example, Urban Outfitters is arranging clothing in its online store based on Like activity and offering select promotions to all those who have liked products. Additionally, Facebook is making information about the Like activity on ads (i.e. “social context” data) available to advertisers on its site. Armed with this data, advertisers can decide to further optimize campaigns by targeting people who have expressed a Like for the ad.

With the Like button, Facebook is benefiting from the power of weak tie relationships (Facebook calls it “lightweight sharing”). Many markets point to the fact that people that Like a product aren’t real fans or brand advocates in the traditional sense. This is s feature, not a bug. By lowering the bar for Liking something, Facebook has opened a channel to—and is gathering data about—ordinary consumers of the brand who otherwise would have no formal connection to the company or its products other than isolated, anonymous purchases. This connection can be potentially valuable in terms of loyalty programs and promotions, market research, and customer support.

A number of factors suggest that the number of Likes will probably continue to grow, including: the continuing growth of the Facebook user base (see chart above, which shows no indication of plateau), expansion in global markets (70% of Facebook users are outside the U.S.), the recent proliferation of the Like button on a range of products and services (the Like button is now on over 350,000 sites), and the growing use of mobile technologies that allow users to Like physical products and experiences. With this in mind, it’s by no means hyperbolic to think that Facebook could be the largest single CRM provider in the world.

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.

I’ve held off writing about Apple to avoid being yet another one of those bloggers who’s doing so, but this latest Fake Steve post bumps the discussion up to a new level. Yes, Apple products run the exact same hardware as PCs, but cost more. Yes, they are aesthetically very well designed. Yes, they tie plastic bags and coffee cups as first-rate examples of planned obsolescence. And yes, I should have a second point in favor of Macs here, but I can’t think of one. What’s going on with the iPhone and iPad ecosystem simultaneously empowers consumers–by giving them access to some powerful and easy to use technology, thanks to some very nicely designed apps–and disempowers them–by casting computers as non-technological sealed-boxes that do only which actions are on a neatly manicured whitelist. People seem to like it: and the devices are selling with little sign of slowing down.

Using the example of the recent signal issues with the iPhone 4 as an example, Fake Steve’s post cuts right to the core of why Apple’s doing so well. People are confused, sell them an answer:

Probably the biggest thing I’ve taught the team at Apple is that people never know what they’re supposed to think about anything. This is true in Hollywood, in the book business, in the art world, in politics. And especially in technology.

So we put out a new phone and everyone is sitting there wondering what they should think about it. What I realized many years ago — and honestly, it still amazes me — is that most people are so unsure of themselves that they will think whatever we tell them to think.

So we tell people that this new phone is not just an incremental upgrade, but rather is the biggest breakthrough since the original iPhone in 2007. We say it’s incredible, amazing, awesome, mind-blowing, overwhelming, magical, revolutionary. We use these words over and over.

It’s all patently ridiculous, of course. But people believe it.

I own a MacBook but won’t ever buy another. Because I own one, and am seen as a tech-savvy guy, it offers legitimacy to this idea “macs are better/safer/faster/more stable/easier to use.” They aren’t. Even still, I’ve had people who admit to knowing absolutely nothing about computers tell me about how macs really are better, and that Microsoft has no idea what it’s doing (Windows 7 is a great OS, really it is). What it amounts to is that the whole computer space is one that’s confusing and overcomplicated to most consumers, and Apple is in the middle of the market with attractive devices that work decently well, saying “we’re better” with confidence and the appearance of authority. People are responding to the message, strongly.

I’m kind of surprised actually that this strategy isn’t found in more places. Fake Steve points out that religions have done a great job honing the strategy, but that discussion is outside the scope of this post. How would consumers react if Toyota or Ford simply stated “We’re better. Buy us.”? In fact, the only example at the front of my mind where there’s such a strong chorus preaching that “the new way is better” is with the Web 2.0 space. Yes, there’s a lot of value in collaborating, but not every 2.0 tech is as world-changing as it is confusing. Many an analyst has made quite a living saying “this is the next big deal, you need to learn it and you need my help.” The truth is that for many companies traditional communications (face to face, phone, email) are still functional and and will continue to be; sometimes older technologies will continue to work just fine. In cases where collaboration technology is desired or beneficial, the purchasing decision doesn’t have to be rocket science.

There’s a lot of money to be made off confusion, I just question how sustainable the approach is. Or maybe I’m just being profoundly naive, and this is the way it’s always been.

The rationale for both services – protection of the organization – is logical. People can and do make mistakes, and can and do engage in deliberate attempts to damage the reputations of their employers (I consider colleges and universities employers of athletes, but that’s another discussion).

I understand that what employees are doing on their own time and on their own pages, where transgressions often occur, can be problematic, but, aside from some seriously awful anecdotes about employees’ misbehavior or mistakes, I’ve not seen data on just how much employee transgressions have actually cost employers.

Personally, I would not feel comfortable knowing that I was being watched away from work. I do not surrender my personal views or friendships or history or social life to my employer when I accept a position.

I wonder whether work at some employers is going to become too much of a risk for some people – those who value their privacy, individuality, and freedom of expression (most people, I imagine). People need and want to work, which can put employers in control when it comes to privacy. If you love your work, you may forgo some freedom at the edges of your life to continue doing it but you also get paid in return for doing something you love. That is still (and I hate this phrase now that just about everyone uses it) a slippery slope. Where do you draw the line on your privacy? Do you stop posting political views? Religious views? Opinions about sports figures? Any and all photos? Do you simply start setting up private groups on social networking sites, vetting the invited friends by asking them to “sign” your own privacy agreement?

When it comes to personal social networking activities, I believe employees should be free from spying activities, regardless of how concerned an organization says it is about loss of IP or any proprietary info on processes, new products, etc. And, while I’m at it, I would view with suspicion any company argument that it’s those Gen Ys with little fear about privacy they are afraid of; I think most Gen Ys know the difference between telling everyone what they did last weekend (which, again, is another issue entirely) and posting information on Facebook about a forthcoming product or breaching confidentiality agreements.

In my opinion, spying on employees’ social networking activities and communications reveals weaknesses in the employer, specifically in its hiring and engagement skills and processes. If an employer does not trust its employees – and this, for me, is all about trust, nothing more and nothing less, regardless of the coating an employer may put on it – it will reap the deserved rewards: lower loyalty and lower engagement, both of which affect productivity and, some research suggests, are directly correlated with lower organizational performance and even lower stock price. With the job market loosening up, monitoring personal social networking activity might even something else: losing an employee or two.

I’m currently reading Jaron Lanier’s manifesto called “you are not a gadget”. While I find myself nodding along with some parts, and occasionally shaking my head at others, my most common reaction to each chapter is that I’ll need several months of quiet reflection to even form a coherent opinion (which, based on what I think I’ve read, is part of the point of his book). It is unquestionably the most thought provoking body of text that I have read this year – and I hope to respond to various parts of it, if and when thoughts hit me, over the coming months.

The part I’ve been thinking about most today is “The transition” section, within the “what will money be?” chapter (page 106). The general idea is to allow people to earn from their “bits” of contributions, such as photos, music, or articles. It’s posed in response to his (very valid) concerned that society is losing its way as the value of “bits” people contribute trends towards zero in the marketplace, and all the rewards (if any) go to the people that aggregate them. If this continues, there will be fewer and fewer bits to aggregate, of worse and worse quality, in a continuous downward spiral that could have disastrous long-term consequences. He explains the consequences, and proposes a few ideas on how to avoid them – but you can read about those in the book.

Why I find this, (and Jaron’s book in general) so interesting is that it’s challenging the new orthodoxy of “the wisdom of mobs”, working in conjunction with powerful algorithms, is superior to the judgment and intelligence of individuals. At first glance, one my primary research areas – prosumer-driven innovation, or customer co-creation – we seem to be right in his line of fire. But as I’ve studied it over the years, my thinking on the subject lines up directly with Jaron more often than not (I think).

This research area was born out of the book Wikinomics by Don Tapscott and Anthony Williams. As the sub-title of the book is “how mass collaboration changes everything”, the idea is often viewed as synonymous with the “wisdom of crowds”. But I’ve went to great lengths over the years to explain how this common interpretation of this is often misguided. It’s often not about a “crowd” collaborating in any meaningful way; instead, it’s about finding the few uniquely qualified minds within the crowd that are both willing and able to make an important contribution. While not a prosumerism example per se, the first story in the book – GoldCorp – is a great example of this. Rob McEwen didn’t enable mass collaboration. He opened up the data about his property in hopes of finding those few people in the world that might know the best way to find the gold. That’s a very big difference.

Such contest models have their own problems built into them, as Lanier references regularly in his book. But at least they point towards some sort of financial compensation for the people that have the best “bits” to contribute, and have very little to do with the problem associated with the “wisdom of mobs.” This indicates a very different set of opportunities, and potential problems. The key challenge, then, is to adapt the model to instances where it’s not a “winner takes all” contest – one where a larger number of people can be rewarded for contributing “bits” to the creation of a new product or service.

I’ve been hypothesizing about this, and waiting for signs that it’s happening, for many years. While much of my research focus has recently been on marketing (which also puts me on the bad side of much of what Lanier talks about), my academic background is in economics – and I have a strong belief that financial compensation for contributors and creators is absolutely vital to the long-term success any prosumer-driven models. But examples of it actually working have been few and far between. That is why I’ve taken a relatively keen interest in Quirky – which I just recently discovered.

Quirky is a platform for social production, founded by Ben Kaufman. The core idea is fairly simple. If you have an idea for a new product, you can submit it to the site (for $99 – which presumably provides a decent “filter” for idea submissions). Each week, a winner is selected (through some combination of community votes and design team input). It then moves into the “influence” phase, where the community can weigh in on everything from specific product design to the logo representing it. Once this phase is completed, it’s handed over to Quirky’s industrial designers and mechanical engineers to create a 3D render. Next up is the pre-sell phase, where a minimum number of purchase commitments must be made before the company invests in moving it into production. If that threshold is met, it then moves into production – hopefully allowing many of the people to cash in.

Why I say “many” is that Quirky currently allocates 30% of revenue from direct sales, and 10% from indirect sales, to the community. What exactly the allocation will be is hard to say (and the company is likely still figuring out the best way to do it), but some “ingredients” include submitting the winning idea (or name, logo, etc.), making insightful comments, voting, rating, and committing to pre-sales. All of this activity is rolled up into an “influence percentage”, which is used to distribute the money. The rest goes to the company itself, which as I referenced above does a lot of the heavy lifting in actually turning an idea into a market-ready product.

Now whether Quirky itself will succeed, I (nor anyone, in my opinion) can really say. I think the biggest challenge comes in terms of scale. As one might expect, the examples provided on the site (to show how much money can be made) typically involve two key assumptions – lots of products are sold, and your individual influencer percentage is high. The end result is lots of money for your effort. Obviously not everyone’s influencer percentage can be high. As (hopefully, for the company) more and more people engage, each individual’s potential influencer percentage might decline further still (in relation to effort applied). If the percentages are small, the potential rewards are low – and thus much of the incentive to engage evaporates.

But at minimum, it’s an interesting idea, and I believe such experiments are critically important to the evolution of web enabled, and prosumer driven, business models. Someday, someone is going to figure it out. And what I find most intriguing is that, at its core, Quirky appears to be trying to find a way to reward individuals for their “bits” of contribution – which I think is absolutely key to making this web-enabled world work, and appears to be something that Lanier might approve of. But the process by which they are figuring out how to do it, which will likely involve layering some sort of algorithm on top of what looks like a “winner takes all” competition platform, seems to be tie directly to approaches he typically disproves of (or not – I’m sure there’s many nuances in the book I’ll have to re-read to capture).

So I’ll personally wait and see – and perhaps even engage in the community to get a real feel for how it works, and whether my own mind is uniquely qualified enough to add value anywhere. But in the end, I’m hoping both Lanier and Kaufman are right – there are ways to reward people for the bits they contribute, and this can be done within the context of a social production model.

 What are the signs of addiction? According to Mayo Clinic, “As your drug use increases, you may find that it becomes increasingly difficult to go without the drug. Stopping may cause intense cravings and make you feel physically ill (withdrawal symptoms).” I’m guessing that includes ‘taking’ fist thing in the morning, or even in the middle of the night.

In fact, nGenera’s Net Generation study from a couple of years ago backs up what the Retrevo study is implying. We asked teenagers to depict visually how they would feel if technology was taken away from them for a month. The results are what you might expect. If not addicted, young people (and I imagine people of all ages) are certainly dependent on technology for entertainment, inclusion, belonging, and sense-making:

In a related study on parenting and social media, Retrevo finds that the vast majority of parents—over 70%—allow their kids to text during family meals. Personally, this is a problem for me, but then again I came from a generation of kids that was told to ignore the phone (the corded one attached to the wall) during mealtime and ask to be excused from the table after dinner. Still, if you think social media addiction is bad now, this type of behaviour means it’s probably just going to get worse from here on in.

For more stats and info-graphics, check out Retrevo Gadgetology and Retrevo Pulse.

The bigger fear, I fear, is a much larger can of worms. This is why I was delighted to see Tim O’Reilly’s weekend post, Putting Online Privacy in Perspective. While O’Reilly’s post itself is largely quotes from search engine expert Danny Sullivan commenting on a WSJ article, it hits on a core issue that is often left below the surface when we’re openly discussing privacy: facebook is only one company that’s collecting data on our activities, there are many others, collecting and crunching data on many other (often ‘private’) activities. One example, as Sullivan explored:

My credit card company knows everything I’ve purchased, which is a pretty personal trail. That doesn’t get “anonymized” after 9 months or 18 months. I have no idea at all what happens to it. I can’t, like at Google, push a button and make it go poof, either. I don’t think I have any rights over it at all.

Credit card companies aren’t the only organizations with access to tons and tons of data about us. Our cellphone service providers know where we are and who we’re calling and texting, and our IM providers keep our conversations for a few weeks. Even in-game behaviors in videogames can be tracked. While a lot of this data collection is justifiable to improve the customer experience, it can all just as easily be used for any number of other purposes.

I think that this is where we need to focus our public dialog about privacy and control. Facebook’s data collection is just one symptom of the direction where society as a whole is moving: to the mass collection, aggregation, and cross referencing of consumer data so that organizations can better understand, target, and market to each and every one of us. From the perspective of the the enterprises, this is where we want to go, and more technology and instrumentation means more, better data. Speaking for myself, as a consumer and citizen, it’s not where I want things to end up. This is a discussion that we need to have.

Most marketers try to understand this collaboration space through sentiment analysis. This gives you a snapshot – are people positive or negative about my brand, product or company. I recently wrote this about sentiment analysis on my own blog:

“The problem of sentiment analysis has generally been something like this – people create double negatives such as not unkind, to mean a positive. And then there is the general sense that people are ambiguous in how they express what they mean.

My problem with sentiment analysis is neither of these. It’s the fact that companies need to connect with people in different ways rather than through a scaled up focus group or opinion survey; and that people are extremely granular in their sentiments. Companies need to know people’s ideas and beliefs at the granular level not at a polarized level.”

Clearly I erred here because sentiment analysis does not yield as much information as a focus group or opinion survey – in both those cases there is granularity, though in  my view the results are too easily manipulated or geared by the interviewer.

For example – and anyone in marketing can answer this: how often are brand recognition surveys consciously or unconsciously biased because the company paying for that work needs to show improvement?

What the web offers is a way to get at volunteered opinion and attitudes.

To that end I and a couple of colleagues have spent the past year developing the global attitudes project, which I hope to share with members of the nGenera/Wikinomics community over the coming weeks.

To do good web analysis means we really have to accept the validity of what people are saying, and accept the web as a bona fide collaboration space where people collectively give meaning to life in the 21st century -  an unparalleled exercise in meaning creation.

In the past meaning creation has been the job of intermediaries – philosophers, trades unions, politicians, writers, teachers, academics, and of course market researchers. But now we’re doing that for ourselves.

Look at it this way – how many studies do you know where researchers have interpolated meaning for us? Most trend studies and projections do this – telling us we are becoming more individualistic or more short term in our actions, or more multitasking, etc. Actually on the web people are telling us what they are and what they believe.

I think the narrative accompanying this new description of what people are about is something like: we still believe in human progress; we don’t necessarily believe society as it is now organized is a vehicle for that progress; we believe in individual betterment but we also believe we are part of an organic “world ecology” with life cycles that rise and fall. We might be in the fall phase so we need to work harder at renewing our human ecology.

I can’t present all the evidence for that in a short blog post but what I want to do is give a small evidence base for one term and one term only.

Before I do that – why is it important? The answer is the Web provides us with deep insights into how people are thinking. You have to care about that if you are in business. You can short circuit that understanding by using sentiment analysis – but be aware it is a short cut and lacks essential insights.

So: Throughout the recession people online have been making increasing use of the term betterment. We know that through a variety of data collections we’ve executed.

We analyzed the use of that term semantically, i.e. asking what meaning are people attaching to it. Here’s a graph:

The graph actually shows you the terms people attach to the term “life” when you use an evidence base made up of blog posts referring to the term betterment. Why does it show “life” at the core?

Because that is the term most used in a selection of blog posts that top the Google blog search returns for the term betterment (as of Mid May 2010).

Sorry if that is confusing. This is an early result and we may yet refine the technique, data, analysis and visualization. I wanted to share it as an example of what can be learned from the web when you go beyond sentiment and polarity.

What it means is that when they discuss betterment, many people in this sample use the term “life” at least once. They use “life” more than they use any other term (there is a refinement to rule out the possibility that people always shoot the breeze about “life” and that rather than betterment is a driver).

And when you look at the semantic family of terms around “life” you see the graph above. It’s mainly constructed of terms that evoke relationships.

What is not on here because the terms are not present enough are terms like God, i.e. people attribute more to the core human temporal aspects of life than they do to religion.

We began this whole area of study with a review of about 20,000 comments on “recession and recovery”. In that study we discovered that people in blog comments tended to interpret recovery and recession in terms that evoked the human side – i.e. by referring to people. In parallel we collected data on how the financial press reported recovery and recession and found, by and large, they focused on institutions.

I make that extra point because the two examples taken together probably tell us we need to retune how we speak about marketing, the web, social media and analytics. Once we look at the world from the vantage point of this constantly emerging philosophy we have to put people and realtionships first.  Marketers need to engage with this non-polarized way people express themselves. More at a later date!

The reason I believe this is fairly simple. When I think of the word “control”, I immediately think of the word “power”. When I think of “power”, I think of “knowledge” (as in the latter is the former). When I think of “knowledge”, I think of “information”. And when I think through what social media enables, from a marketing perspective, time and again I see better information, more knowledge, and more power. In turn, that looks like more control to me – rather than less.

I have more thoughts on this, but wanted to stop there and see if anyone believes this “customer is in control” argument, in relation to social media, might be wrong. And if you want to hear a few more of thoughts on these (and related) marketing subjects, check out my webinar on Tuesday.

To provide some context, one of the big research projects we’re working on in our Marketing program is called The incredibly shrinking marcom expense line. The basic idea is that by enabling, among other things, ambient intimacy, social media is pointing towards a future where marketers can shrink their marcom costs, while at least maintaining current levels of impact. Facebook fan pages, twitter, online communities, and newer services like Yelp all play a hand in this.

In the Nokia presentation, slide 28 starts out by outlining three different ways to optimize your presence in the ecosystem – SEO, SEM, and SMO (search engine optimization, search engine marketing, and social media optimization). It then quickly points out that less than 30% of this is “bought media” – the SEM part. 70% of engagement comes from the other two – 40% SEO, 30% SMO. The first is what they call “own media”; the second is “earned media”.

I really like this idea of “earned media” – and how it’s distinguished from the paid part of ecosystem presence strategies in particular. As referenced earlier, I disagree with the blanket statement that “earned media” is all about conversations – in my mind, it’s all about earning the right to be within an individual person’s ambient network, which is based on offering them what they want (which may or may not be conversations). But the visual presented on slide 39 – where “bought media” shrinks, and “earned media” dramatically increases in the future – is the right message.

Once people start thinking this way, I believe my explanation of why “nothing is holding social network advertising back” becomes clearer. The conversation about approaches to marketing has long been dominated by a spend-centric point of view (i.e. if you don’t spend much on social media, it must not matter). In this world of “earned media”, marcom spend can indeed be low – and many things have no direct costs associated with them. But, the impact can be great – if you earn the right to make the proper connections.

But a much bigger gap exists, often unnoticed by companies: The amount of money contact centers and support organizations spend on social media is nominal compared to the percentage of customers’ queries that hit these emerging channels. This is the “support gap.”

Social media has become a new service and support channel that customers employ to raise concerns about products and services, describe their experiences, seek help from others, post new product insights, and consult for advice on features and functions. For companies, this is not trivial. It means that conversations about your products that would traditionally have occurred in your customer contact center are now occurring in public places. The Consortium for Service Innovation estimates that fully 90% of customer conversations about a company never touch the organization. What’s more, a mere 1% of all customer conversations are assimilated as organizational knowledge.

nGenera’s own Customer Interaction Management solution recently added social media support for its contact center product, but many companies have yet to consider this option. In most cases, if a social media strategy is being implemented by the support organization, it’s on an ad hoc basis with a few employees manually monitoring Twitter and branded Web spaces and responding to customers where appropriate. These interactions, though helpful, are not strategic in that they are not integrated with enterprise systems or contact center processes. Building processes and accountability around these activities is the first step that companies can take today—connecting to CRM systems in a robust and meaningful way will be the next horizon.

The plight of marketing and the plight of the support organization are linked and the two organizations need to work together, using shared information, on a common platform. Traditionally, marketing has been about communicating brand messaging, while the customer service department deals with problems and complaints. But a customer that you’ve engaged through social media for marketing purposes doesn’t see the separation – and customer service is becoming a key aspect of managing customer relationships online (I’ve talked before about how “customer service is the new marketing“). This is not trivial. It means matching the tremendous amount of time and energy spent on other official support channels such as e-mail and phone in order to meet customer expectations for social media and deliver a consistent and authentic customer experience. Those companies that think social media is just a cost-effective way to get the message out are in for a surprise. By marketing on social media you inadvertently open a new support channel as well—get ready!

Groupon.com – a web 2.0 version of collective buying power, where local merchants offer up special deals so long as enough people sign up for them- wasn’t what the founders originally envisioned. They launched a site called “The Point”, where groups of people could form around specific causes and drive social change. Many of the people that came to the site seemed more interested in getting group discounts on products and services. Seeing the opportunity, Groupon was launched, and from a dead start in August the company now has a top-2000 rating on Alexa, is expanding rapidly, and reports to already be profitable. In short, the future is bright.

City Streets was a online version of the classic Monopoly game that Hasbro developed as a marketing tool. It absolutely exploded in popularity – 1.5 million registered players by November 2009, and 1.5 billion page views, made it the 12th most popular massively multi player online game on the web. Amazingly, it did so without incurring any direct marketing costs, and benefited from – among other things – some very engaged prosumers helping them co-create value. However, the future here isn’t so bright – Hasbro shut it down.You can read why, from their perspective, on the site.

Now obviously the two stories come from very different starting points – notably, one company was launching an entirely new business, while the other had a legacy business model to consider. But it’s fair to say that, we believe, this difference is not enough to explain a way the different responses. In both cases, a surprising new business opportunity emerged that the company didn’t originally envision, as the customers led the company towards the type of experience they wanted. In both cases, signs were everywhere that a lot of money could be made (in Hasbro’s case, the multi-billion dollar online game business is kind of flashing in the background here). But in only one case did something good come from it.

That’s a shame. Without getting into all the reasons why, it’s important to remember that when you ask your customers to dance, let them lead – because they might just teach you an interesting new routine that many of their friends enjoying doing as well.

A recent article by Nate Anderson in Ars Technica highlights professor Mayer-Schönberger book, Delete: The Virtue of Forgetting in the Digital Age. The message: “Technology has now made ‘remembering’ the default approach to information, and in doing so, threatens to make ‘forgetfulness’ obsolete.” This is not only a profound change from 20 years ago, it can also be detrimental to our ability to think and analyze information. The article goes on to say: “Selective forgetfulness is a boon to humanity; it keeps us from drowning in our own recorded data. It allows us to sift and sort, then to think at a higher level of abstraction instead of wallowing in detail.”

But, this may all soon change.  Perhaps, computers can learn to forget too.

Researchers led by doctoral candidate Roxana Geambasu, at the University of Washington in Seattle are working on project called Vanish. The idea is to encapsulate data such as e-mails, selected text in messages, or documents that are sent over the Internet. The system would create corresponding keys for decapsulation that are widely available online, but that would deteriorate over time so that the data in readable form would only be available for a certain period of time. The overview page of the Vanish project states, “We strongly believe that realizing Vanish’s vision would represent a significant step toward achieving privacy in today’s unforgetful age.” Mayer-Schönberger suggests a similar solution that uses metadata to tag data objects with expiration dates and cites the work of Lawrence Lessig who has proposed a broader approach to combine policy and software to force privacy compliance.

nGenera’s research project Leading in an Age of Unbounded Data is looking at new sources of data available to the enterprise and how these will lead to new insights, opportunities, and challenges, as well as change enterprise processes and decision-making. One of the assumptions we make is that data will continue to grow and companies, through analytics, will develop a type of ‘sixth sense’ or situational awareness about the organization thanks to information captured from across the business ecosystem. We have already found that the growth of personal information and digital identity data will lead to rich digital profiles containing social graph information. These rich profiles present opportunities to better engage with customers and employees, improve customization, and facilitate knowledge management by anticipating user needs and connecting them to relevant people and information.

Projects like Vanish force us to think about data, not as an asset with an indefinite lifespan, but rather as something that depreciates over time, just like physical assets do. This would effectively reduce the amount of data that we need to manage and improve signal-to-noise ratio as more important facts and information would be retained while less significant information would be deleted. By eliminating the perfect memory of computers, we might also feel less pressure to maintain digital facades and manicure our online profiles. Additionally, the idea of adding expiration dates and metadata to data could accelerate the shift in power away from marketer towards consumer as it would allow individuals to dictate what personal data is used, who has access, for how long, and for what purpose.

But, self-destructing data would also diminish the value of many of the ‘big data’ opportunities that we talk about such as using large data sets to infer the truth about various situations, and using sentiment analysis to mine online customer comments and status updates for market research and product insights. It would confound companies and marketers that store petabytes of information to generate longitudinal trends and rely on usage data to drive Web analytics and build reputation and ratings, as well as improve information management through technologies such as collaborative filtering (e.g. the technology used by Amazon to recommend books to you based on the activity of people with similar behaviors). By collectively deleting our less-than-favorable digital trails, would we also be doing a disservice to future generations of anthropologists that could benefit from a complete digital history and behavior map—both good, bad, and questionable actions—of their ancestors?

The idea that all data should live on forever is a relatively new concept that many people have already taken for granted. In general, I think enterprises, governments, and individuals would benefit from more discussion on the topic instead of seeing it as a foregone conclusion. The idea of having an information lifecycle for all data is a powerful one. Personally, I would welcome more initiatives such as those by the Vanish team and professor Mayer-Schönberger that broach the topic and reintroduce a little forgetfulness into our digital lives.

The first clue that something is off comes from the chart they provided. True, when asked whom do you trust as a credible source of information about a company, friends / peers dropped from 45% to 25% (from 2008 to 2010). However, trust in other sources – TV news, radio news, and newspapers – dropped by almost the exact same proportion, from almost the exact same base (i.e. newspapers appear to have dropped from 46% to 26%, for example). The article gets around to mentioning this, but not until the main message they are trying to send has been established.

This indicates two things to me. One, the article deliberately chose to focus on the one part of the story that seemed most provocative – always suspicious. Two, that the question being used does not appear particularly good at distinguishing trust levels between different channels, in terms of marketing. Setting the 2010 data to the side, there is a lot of data out there indicating that tells a very different story than the 2008 baseline (and interpretation) presented. Commenter Kevin pointed towards one such study, from Nielsen, that showed 90% of online customers either completely or somewhat trusted recommendations from people they know. The importance of “recommend to a friend” has been well established, and validated, for many years. But I’ll come back to that in a minute.

A second clue was the interpretation of the quote provided by Richard Edelman himself – that “the lesson for marketers is consumers have to see and hear things in five different places before they believe it.” That type of message could be viewed as great news for people in the advertising business, who can tell clients they need to spend money everywhere to get a message through (cha-ching!). I don’t buy it. My main interpretation of the chart is that it’s very, very likely that many, many customers indicated they didn’t trust any source, in relation to the given question. Hitting these people with messages from many sources they deem uncredible, and expecting that to turn into a message that they trust, is a bit of a stretch.

A third clue is that the chart provided is primarily focused on news sources (i.e. it’s “radio news”, not “radio”), while the discussion is primarily marketing focused. I think there’s a major disconnect there, which ties into some of the discussion above.

I then thought a bit about how I would respond to the given question – and I realized I’d probably fall in the “not trusting any source” camp. But it’s not because I don’t trust opinions and recommendations from friends and peers – it’s because the question is too generic, and notably I don’t really associate it with marketing and purchasing decisions. The reason is simple – while I may know a fair number of people, most of them are fairly busy. If I want “information on a company”  – a very generic request – that I pick out of thin air, I can’t exactly expect them to have it. It’s also likely that what they know, or could find, would come from the company itself (directly or indirectly). In my opinion, the link between this question, and what marketers should be thinking about, is relatively weak.

This led me to a couple more thoughts that I think need to be taken into account here – from a marketing perspective.

First, let’s start from a different question – Who knows you the best? - and provide the same list of options. I would bet my retirement fund on friends / peers winning this contest, and that if someone chose “radio” it’s unlikely you’d let them in your house. I’d also be willing to assert, with a high degree of confidence, that there are many situations where people trust messages, and recommendations, from this group of people over ads on TV, radio, and newspapers – even though this article would have you think differently. I know that seems like a very simple and obvious point, but it seems like it needs to be made here.

Second, take a context specific approach – and think about a question that more closely ties to influence in relation to marketing, or a specific purchasing decision. For example, “who do you trust to help pick a movie?”, or “who do you trust to help you find new fashions?”. It’s very likely that for any question that ties to personal taste, style, etc., the influence of peer recommendations is important. In other words, I many not trust them as a source of information “on a company” , but I will trust them as a source of information for a specific product or service, in a specific context, in relation to me.

Third, such questions need to account for different platforms that are emerging to influence purchasing decisions – particularly the ones that consolidate numerous different opinions (think Flikster, Yelp, etc.). I might not trust any single individual on there (and thus claim not to trust them in response to a generic question), but I may trust their collective opinion if the sample size is large enough, or even a specific individual’s opinion if (say) their reputation score is high enough. Very hard to tease out of a survey – but very important.

I could go on, but I’ll stop there. Overall, I think there are quite a few issues with what this article presents, and how it is interpreted. Did I miss any big ones – or do you think I’m wrong?

Unlike information taxonomies that catalogue data or data security protocols that either allow access or deny it, context is dynamic; it changes. Advertisers have been thinking about this for many years. An ad for Bud Light Lime might not be all that relevant in the commuter newspaper, but it makes perfect sense behind a urinal in the men’s room of the pub, or on a billboard in cottage country. But that’s still a very 1.0 view of context. What’s missing is the granularity that takes this type of generic contextualizing (e.g. if you’re at the bathroom in a pub, you’ve probably been drinking beer; maybe you’ll like our beer) to a personalized one (e.g. we know you only drink at the pub after work, not during lunch, so at lunch we’ll offer an ad for coffee; after work, we know you’re favourite drink is gin and tonic, not beer, so we’ll suggest a new premium brand of gin).

While advertisers are leading the way, for most enterprises, this type of granular ‘what you need, when you need it’ approach to information is still far from reality. The good news is that the tools to sense and record context—rich user profiles, presence awareness, geolocation data, status updates, and lifestreaming information—are exploding all around us. You might think of much of this as information exhaust—the incidental, or ambient data that is created as a by-product of simply carrying on with our daily lives.

The anthropological view (circa 2007) of ‘exhaust data’ is that it has little information content, but lots of emotional and social content that contributes to identity, intimacy between individuals, and a deeper cultural understanding. However, as tireless machines work 24/7/365 to mine this exhaust data, the information content becomes apparent as well. The data will reveal important trends about individuals and their preferences, thus enabling context-aware machines to sense our needs and respond. What this means for enterprises is greater employee productivity as users spend less time looking for and filtering information, and better customer experiences as contextual information leads to greater customer intimacy and personalization. As Edo Segal notes on TechCrunch:

“These are streams of information bubbling up in realtime, which seek us out, surround us, and inform us. They are like a fireplace bathing us in ambient infoheat. I believe that users will not go to a page and type in a search in a search box. Rather the information will appear to them in an ambient way on a range of devices and through different experiences. [...] Humanity is constructing its own synthetic sixth sense. An ambient sense that perceives the context of your activity and augments your reality with related information and experiences. Increasingly, we will be sensing the world with this sixth sense and that will change the way we collectively experience the world.”

Indeed, Gartner believes context-aware computing will provide significant competitive advantage. I agree. The firm predicts that “By 2012, the typical Global 2000 company will be managing between two and 10 business relationships with context providers.” Technologists, enterprises, and academics are beginning to understand the importance of context and we’re starting to see products and services that reflect this. Consider the following examples:

• MIThril at MIT Media Lab is working on wearable computers that gather contextual information and provide feedback; projects include the Real-Time Context Engine and the Context Aware Cell Phone Project.
• Also from MIT, SixthSense by Pranav Mistry provides the “synthetic sixth sense” alluded to by Segal. This is some of the coolest technology I’ve seen in a while. For a demo, check out the TED Talk video below:

• Cisco Context-Aware Software is a mobile solution that integrates contextual information (including location, temperature, and availability of an asset) with business process applications.
  
• Marcopolo for MAC OS is an open-source, early example of context aware computing that triggers actions based on changes in location or activity.
• Research In Motion (RIM) appears to be pursuing context-aware security for the Blackberry. The company was granted a patent in August of 2009 for a mobile device that can change security settings based on its environment.
• Earthmine uses 3-D mapping to tag the physical world. Imagine having Terminator vision, but displayed on your iPhone. Tags, such as the ones shown in the picture below, could be customized to reflect any context.

 Feel free to share any other context-aware examples you know of.

So at a high level, the major difference between the two is simple. The core of Yelp’s competitive advantage is it’s community of contributors; the core of Milo’s competitive advantage is driven by it’s inventory data. Both, of course, help people find products or services to purchase in their local area. My question to wikinomics readers is simple – given the option, which of the two would you prefer to own – and why? I’ve got a few of my own ideas on this, but would like to hear what other people think first…

There are a lot of reasons for this success – but the one I want to focus on today is around the strategic use of purchasing thresholds. Like Woot.com, Groupon.com applies a maximum threshold to create urgency for customers – buy now before it’s too late! But the more interesting thing Groupon does is use minimum thresholds - the offer is only valid if enough people sign up.

There are two things that make this interesting. The first, and more obvious, ties to viral marketing. It’s typically hard for a company to “make” a marketing message, or sales offer, go viral. But by putting a minimum threshold on the offer (i.e. only valid if 50 people sign up), Groupon creates a natural incentive for interested customers to promote the offer through Facebook, Twitter, the blogosphere, and other channels.

The second ties to the ability to test price discrimination strategies. In these early days, Groupon members represent new customers for most merchants using the platform. In a typical case, if a company wants to test offering a discount to draw in new customers, they do so rather blindly. If (say) only 2 people take you up on the offer, it probably wasn’t worth the effort – let alone the cost if you have to communicate the message through traditional media channels. The minimum threshold gets around this – merchants can select whatever price / quantity combination makes sense for them, and walk away (without paying a penny) if the threshold isn’t met.

There are many other interesting aspects of the Groupon story I’ve been following in our research (you can read about a couple of other companies I’ve been watching closely here), as well as interesting challenges and opportunities the company will soon have to deal with. Given that Groupon has been so successful in using the Web 2.0 to create business around collective buying (while hardly being the first to have tried), they are definitely worth paying attention to.

Each category around the “wheel” represents a different type of conversation. By implication, each type of conversation serves a distinctive business purpose. Solis and JESS3 did the hard work. For each type of conversation they mapped the appropriate collections of social media tools. According to the “Prism”, Facebook and Linked-in serve different types of conversations. Facebook, MySpace and Friendster are Social Networks. Linked-In, Plaxo, Ning and others are Interest and Curated Networks. Most of us lump all of them into the same category.

As one moves around the wheel, other helpful distinctions become apparent. Forums, Reviews and Ratings (e.g. yelp, Epinions, Amazon), SMS/Voice, Lifestreams, Twitter Ecosystems, Micromedia (e.g. Twitter, Yammer), Blog Communities, Blog Platforms, Blogs/Conversations, Crowdsourced Content, etc serve different objectives and different types of conversations. Each conversation has a different collection of social media tools. One readily gets the idea. It immediately makes sense. Each of the twenty-four different types of conversation requires a different type of social media.

The taxonomy also marks a key milestone in the evolution of social media. A key indicator of the maturity of a discipline is the ability to create a meaningful typology. While the creators developed the Conversation Prism from a marketing perspective, the taxonomy applies to many other disciplines and contexts.

Here are some thoughts on how to use The Conversation Prism:

Marketing. Everyone is interested in getting more customer mindshare, establishing meaningful conversations and developing hot communities around products. But how? Distinguishing among the different types of conversations and tools helps to focus effort. Sean Moffitt, one of the key thought leaders in nGenera’s Marketing 2.0 program notes that Facebook, Twitter, YouTube and Flikr are key conversation forums, but one has to also match the conversation to the marketing objectives and the product or service. The Conversation Prism provides a way to rethink which types of conversation reach the best audience and achieve the right message and customer experience.

Enterprise Strategy. I’ve lost count of the many conversation with executives who simply dismiss social media as an irrelevant pastime or an “Extra-curricular” activity. Many think Facebook and MySpace are the sum total of social media when they are not. And often, social media is dismissed out of hand, to the detriment of an organization’s strategy, because everything is lumped together. The Conversation Prism cuts through the clutter and buzz and assigns the role and place of various types of social media. Use this taxonomy liberally for internal business strategy discussions, social media strategy, and most importantly, our soapbox – collaborative enterprise management.

Finance. Yes, finance. What does social media have to do with finance? Take a look at the wheel again. Armed with the taxonomy, the CFO or the controller for that matter can begin to think about where various tools might add value in conveying and explaining financial concepts, policies and performance. For example, quick relay of confidential financial information to small group would use a different set of social media than information disseminated to institutional investors, or retail investors. What type of conversation provides the best result for each constituency?

Information Technology. Increasingly, various groups expect the IT organization to recommend the right social media tool for the right problem. On what basis should these decisions be made? The Conversation Prism enables IT professional to understand the landscape and make recommendations based on desired business outcomes, not simply technical features. Bandwidth, storage, API’s, architectures, apps, widgets, gadgets and price vary by social media type. Some tools require internal infrastructure, other operate as SaaS in the Cloud.

Human Resources. Conversations and social media involve people. Duh. However, employees should understand appropriate use. Often, social media gets a bad name, or experiments fail, because the wrong tool is applied to the wrong circumstance. Ever consider using a text message for a performance review. Some have. Use “the wheel” to teach appropriate use.

The Conversation Prism provides a welcome tool as social media moves into its second stage of development. It surveys and maps the social media landscape. Perhaps other destinations will be added. However, in the mean time, The Conversation Prism, a simple framework, provides self-evident guidance to those who wish to profit from the social media revolution.

Last month I learned about a hierarchical marketing model that sits inside of a social network. The company doing this work is called 6dgr. The basic premise is that you get paid for getting your friends to join a social network. The structure is similar to Facebook: individuals can create profiles, post pictures, blogs, use an inbox, connect with others, everything you’d expect plus you are automatically connected into a hierarchy when you pick your sponsor (the person who recommended you to join). What further differentiates this model is that you attach a bank or credit card account to your profile when you join. That account is used for direct deposit of your funds when your friends join, sign up for a bank or credit card account, and name you as their sponsor.

While there are some ads on the site, the revenue is insignificant and not something 6dgr anticipates pushing for. So, how can they afford to pay you when your friends join? The company partners with banks that offer the accounts and credit cards for direct deposit and share the revenue with the company every time a new person joins. That money is split among sponsors up to six levels down (6dgr for six degrees, as in six degrees of separation). Credit card companies pay $60 and up for approved customers, so even with the split sponsors would still make a few bucks.

By having you name a sponsor when you register, the site is aiming to develop a very large hierarchical group. As more and more individuals join, the site should be able to offer more and better deals to members. Right now the site offers products like person-to-person loans, debit cards, savings accounts and even a tie into mobile wallet technology in the European market. So, while the site offers the same experience as a traditional social network, it also ties in product and service offerings.

The vision is for 6dgr to become a brand, a lifestyle site offering a bunch of different products and services to people. The company negotiates with retailers so that their members are treated like one big buying club and are offered deep discounts on merchandise purchased through the site. The company could private-label products like credit cards and once they hit 100,000+ people they could negotiate decent offers for things like health insurance. Though the company never intends to get into any one specific business, it could become a substantial channel master.

So the obvious question is: If it’s such a great idea wouldn’t Twitter or Facebook want to jump on board? 6dgr has already planned for that and has patented the entire idea of a network marketing hierarchy inside social networks. They have also protected the idea of financial products for social networks. But the biggest protection has to be the barrier to entry – the complexity required to pull this off, including the upfront structure required to develop the hierarchy in the first place as well as all of the behind-the-scenes processes that need to work to make sure the hierarchy remains intact and accurate, members get paid, the vendors are tied in correctly, etc.

It remains to be seen if the concept will take off and what adoption will look like. There are already over 50,000 members, all based on word of mouth; to date no money has been spent on advertising. But as with other online social networks, the member experience will be the key factor in the success or failure of this model. If members feel like they are being constantly sold to, activity will dwindle very fast. However, if the company remains on top of its member experiences, and smart about how members interact, this could become a powerful new way to conduct business and take advantage of the economies of scale that social networking offers.

Gartner’s Hype Cycle for social media classifies Social CRM (i.e. the integration of social media into CRM systems) as a transformational technology that is two-to-five years away from mainstream adoption in customer service applications and five-to-ten years away from adoption in community marketing. While I agree that Social CRM will be transformational, I think the adoption will (and must) happen more quickly. Specifically, our research at nGenera has uncovered new data, new tools, new channels, and a new mindset that are accelerating the trend towards Social CRM.

Data: The data that is included in traditional CRM is limited to very basic identity and transactional information about customers. It does not typically include the type of rich digital profile information contained in places like Facebook and LinkedIn.  Customer feedback is collected through surveys, a method of data collection that is expensive, time-consuming, temporal, and often annoying for customers. But this is all changing. Customer data can be gathered from many sources, some old – such as the contact center – and some new. With respect to the contact center, the amount of unused customer data that is generated is astounding. One interviewee recently confided that his contact center writes the equivalent of a book every day – a book that nobody reads.  A first basic step is to generate organizational learning from contact centers. Once you’ve mastered this, you’re ready to move on to new sources of data. In this case, I’m thinking about reality mining, social networks, forums, blogs, and other digital venues where customers are engaging in behaviors that affect the company’s brand.

Tools: Listening platforms and sentiment analysis tools allow companies to capture customer preferences, complaints, feedback, and queries expressed online, while social network analysis can provide insight into the connections between individuals and identify key influencers. Companies can also track prosumer activity across branded communities and company-sponsored networks. When integrated with CRM databases, this information helps create accurate, up-to-date, and meaningful customer records. Although the CRM systems that currently offer applications to incorporate social media data only include data from a limited number of social networking sites – of which Twitter is the most common – this will likely change. Data will eventually be collected from all public online discussions as the concept of Social CRM becomes more accepted and companies develop strategies to deal with larger volumes of data. Once customer conversations have been successfully captured and incorporated into CRM databases, one can imagine a future where companies will be able to capture other forms of rich data, such as emotional data, photos, voice, and even video content (i.e. not just video metadata). According to a vendor I interviewed, companies can already correctly identify individuals online using available profile data with up to 90% accuracy.  This allows comapanies to find existing and potential customers online and gather new data about them. The contact center of the future will have a much richer digital picture of customers, allowing companies to personalizing product and service offerings, engage customers in meaningful conversations, and generate sophisticated trend data.

Channels: Many contact centers, such as those at Best Buy and Comcast now support social media channels and have dedicated teams devoted to responding to customers and prospects in public and branded digital venues. The question of whether or not to use social media as a listening platform or a contact center channel is major one for organizations as it affects the number of touchpoints that need to be managed and the complexity of customer support operations. However, as sentiment analysis tools get better, and integrate more readily with CRM, we expect this distinction to become less and less of a concern. In the future, the new sources of data (inputs) will be the same as the channels for customer interaction (output). As these channels mature, I fully expect the data and analytics to help “close the loop” with respect to customer engagement metrics – directly connecting social media investments with customer sales information. In this way, companies will be able to measure the value of customer intention and calculate the ROI of social media interactions.

Mindset: The notion of ‘relationship management’ brings with it a particular bias that data is controlled by the party that is doing the managing, rather than ownership of the data by the individual. So, in the case of CRM, it is assumed that the company is managing customer relationships by controlling the data about them and their interactions. New notions of relationship management seem to embrace the idea that ownership of both identity information and the customer-vendor relationship should reside with individuals, not companies.  Exchange of information should be based a two-way value proposition in which individuals selectively share aspects of their rich digital profiles, as well as their discretionary effort in exchange for useful and targeted messages, promotions, and reputation.  Paul Greenberg from ZDNet discusses this in more depth and notes, “Co-creation and mutually derived value, is at the core of Social CRM.” As an example, The Internet Identity Workshop and Project VRM (Vendor Relationship Management) at Harvard is exploring a highly customer-centric view of identity information where the customer controls their data and manages relationships with various vendors.

I’ve heard the argument that traditional CRM “is dead,” but this is far from the truth. In fact, as Brian notes, Social CRM does not replace transactional CRM systems, rather it augments them. What CRM is in desperate need of is new data sources and tools that help integrate and analyze this data. The future vision of CRM also requires that companies get involved in new channels and cede a certain amount of control to the customer – it’s less about management and more about engagement.

If you look at the last few years, one of the most important developments is that various social media tools are allowing brands to connect with customers directly, for free – and that many customers want them to do just that. Unlike traditional mediums, brands can know exactly who they are connecting with, and as pervasive personal identity continues to evolve this will only become more true. It’s ever easier to measure impact directly. Toss in the benefits of location-based information, the evolution of the intention economy (where customers directly express what they want, allowing brands – and others – to respond), pay-for-performance campaigns, the ease at which messages go viral, the proliferation of ways to make customer connections, and the benefits of having “prosumers” do everything from provide information to each other make commercials on the cheap – to me, it all looks like it’s pointing to a structural decline in ad spend.

But that doesn’t necessarily meaning that the impact of advertising will diminish anytime soon. If anything, I expect that it will probably increase - but companies, on aggregate, won’t have to pay as much for it. That’s a winning combination. But there is a counteracting trend as well – tied to the end of the Pepsi statement of “doesn’t get caught up in trying to make everyone like it.” As all these tools evolve, transparency increases – and the truth matters ever more. If a company is not good at what they do, they will likely be in more trouble than ever – but if they are good at what they do, they’ll be better off then ever before. Because in most cases, you can’t make people say they like it – they either like it or they don’t.

One particularly interesting area to watch on this will be in relation to private label goods in retail stores. As the recession took hold, there was the predictable increase in demand for cheaper, private label goods – and in fairness many of them have been rapidly increasing in quality as well. While I can’t find the link, it was this challenge that was featured in an Economist article about P&G about a month ago, as they sought to counteract the private label trend.

One part of this was revisiting selling directly over the Internet – a now “old” strategy that I also think will become “new” again for many manufacturers that have avoided it up until now. But if you look at their use of Innocentive (improved efficiency AND innovation for their R&D), and perhaps a structural decline in advertising spend, there’s a reasonable case to be made that much of the price advantage that private label goods have can be eroded. And from my experience, and I think this isn’t just an advertising-brainwashed brain speaking, most branded products remain superior to their private label counterparts. So long as that is true, social media (et all) should help that message get out – much cheaper than before. And for a company that spends over $3.5 billion a year on advertising while banking about $11 billion in profit annually, that (again) could be a great thing…

This year, at E3 2009, Sony gave a preview of their new PSP game Invizimals, which is to be released in the UK this fall. The game uses augmented reality to capture children’s imaginations and enhance the gaming experience. According to the introductory video in the game, a Japanese scientist created a camera that is more sensitive than the human eye and can ‘see’ invizimals that humans cannot. The game tasks you to find the invizimals using the PSP camera (the screen begins to pulse when the camera detects an invizimal) and to trap them by placing a star shaped card in the vicinity of the invizimal. If done correctly, the Invizimal, a little, wild, computer-generated animal, will appear on the PSP screen on top of the real star-shaped card, as shown in this YouTube video. Once captured, the Invizimals can be battled against each other, and during the battle, players can blow on the screen to create a windstorm or cast a shadow over the screen to create a lighting strike.

Seeing the augmented reality technology used by Sony, I became intrigued with marketing applications for such technology. After some searching, I came across GE’s use of augmented reality in promoting Smart Grid, a project that encourages energy efficiency and the harnessing of renewable energy sources. GE has created a windmill model (shown in the picture above) that is enhanced by augmented reality and can be viewed using a webcam and the ‘marker’ (a 2D bar code) from their Smart Grid website. Although the model is very interesting to view, this use of augmented reality is playing on the novelty of the technology and not using the technology to its full potential.

I later came across a concept that uses augmented reality to enhance marketing for IKEA in an effective way. It’s called My.IKEA. The idea is that augmented reality can be used by IKEA customers to literally ‘picture’ the furniture in their rooms before purchasing. The customer sets up a webcam in their room, prints out markers that are each tied to an item of furniture and places the markers where they would like the furniture. In the example picture above, the marker for the virtual table is visible, but the virtual couch sits on top of its marker. I love this concept for two reasons: one, it takes a lot of guesswork out of furniture shopping and two, it allows people to show concepts to each other, chat online about them and compete for the best designs. The social aspect to this concept makes it interactive and fun for those that are interested in design, and creates a community that is interested in discussing IKEA products.

Another interesting development is using augmented reality with QR codes on billboards and in magazines. When the codes are scanned by a mobile phone, the image in the advertisement would transform on the mobile screen into a 3D augmented reality picture. These ideas, though, have the same issue as GE’s augmented reality model: once the novelty has worn off, they will no longer be of much interest. One area where it could be useful is if when the code is scanned, the advertisement for, say a cruise, could pop up in 3D and allow you to navigate through the cruise ship, taking a 3D tour of the facilities.

I’m interested to know what you think. Will augmented reality become commonplace in marketing in the future?

In turn, I’m happy to report that I think I’ve found a new topic that will really annoy some of those people . Regular readers of this blog (and my site) may recall I’ve been spending a fair bit of time researching how organizations are using Twitter – and if you watch closely you’ll probably also see that I’m an NBA fan. In turn, much like the Sports Guy, I’ve become incredibly fascinated by how twitter (and social media) is changing the experience of NBA fans. And I’ve convinced myself that not only is it an interesting story unto itself, but it can provide valuable insights for organizations of all different stripes trying to figure out their social media strategies.

The primary reason for this is related to the structure of the NBA. At the top you have the league itself, which has worked very hard for many years to portray a certain image to fans. In general, if they couldn’t control it, they didn’t like it. Let’s call that corporate headquarters. Then you have 30 different franchises that comprise the league. Let’s call them, er, the franchises. While bound by certain rules and guidelines holding the league together, each differs in terms of identity, underlying philosophy, market size, success metrics, etc. Sometimes this is most directly tied to the owner (see: BlogMaverick). Other times it’s tied more to the coach (say, Phil Jackson or Mike D’Antoni).

Then you have the players – a.k.a. “the workers” – who are probably the most interesting group for this analysis. They are high profile and wealthy people, and many might argue that a sense of “self-entitlement” comes with their status. But the wrinkle is that most of them are also members of the Net Generation – that pesky group of young workers that critics often blanket with the “self entitlement” stigma as well. So you’ve got a group of people that grew up in the generation where “everyone got a trophy for showing up”, but they were the ones who were actually winning the big trophies – call it self-entitlement squared. And of course, surrounding this league are all the various media properties that bring the NBA experience to fans.

While the Internet has been slowly changing all kinds of things with how the NBA engages with fans, in many ways Twitter has been a bomb that’s gone off – things are changing pretty dramatically, and pretty quickly. And like we’ve seen with many organizations, it’s been mostly driven from the bottom-up: a whole bunch of enthusiastic Net Geners jumping into the fray, with good and bad consequences for themselves, their teams, the league, and the supporting ecosystem.

The aspects of the “good” story tend to be obvious – it’s very cool for a fan to be able to follow, say, The_Real_Shaq or ChrisBosh. In turn, Twitter can enable a deeper connection between fans and players, which (hopefully) leads to things like increased ticket and merchandise sales. But bad stories about how NBA players use Twitter are popping up with remarkable frequency.

For example, Kevin Love tweeted about his coach not coming back next season. Sounds kind of innocent, except for the fact it hadn’t been made public yet – a.k.a. he gave away a company secret. His reaction was (more or less) this is a new world and teams just have to get used to it – but most would argue that employees need to use better discretion. And NBA journalists around the world likely weeped in unison – if players break the stories, what exactly are they going to do?

T.J. Ford didn’t exactly give away a company secret, but the organization he represents (and society in general) may feel that he said to much when the start of an infamous tweet noted – and I’m not joking – that he was going to “takin a dump.” I believe it’s what the kids call TMI.

J.R. Smith jumped on the twitter – and many of his tweets constantly used “K’s” instead of “C’s”. Bad spelling might be a forgivable offense – but the realization that this letter switch is commonly used to to represent affiliation with the Bloods street gang probably isn’t. He’s since pulled the plug on the account.

Then there are the greyer areas. When Charlie V tweeted during halftime of a game, his coach got angry – and told him never to do it again, because he needs to be focused on the task at hand. When Shaq did kind of the same thing (in a joking fashion), his coach said he didn’t care – so long as he was putting up good stats. One argument is that this is just a difference in coaching philosophies; another is that players fulfilling their potential (say, Shaq) get privileges that others (say, Charlie V) don’t. Companies that struggle with how and when to accept their employees engaging with social media during “work hours” know the challenges of dealing with such situations all too well. Does using Twitter at 2 pm mean they’re not focusing on their job? Or might they be using it in a way that actually helps the company generate sales (or team connect with fans)? Can you have different rules for different people?

Then you can dig into what the various teams are doing. If you check out the Laker’s page, they actively promote a number of different accounts you can follow – including @Lakers, @JeanieBuss (EVP), @LakersReporter, and your choice of five players (I assume they watch the account of Ron Artest closely for obvious reasons). If you go to the Orlando Magic page, you can follow more people – including TV hosts, radio hosts, the unofficial Magic Girl, even the Magic Dancers – but not a single player is listed. The latter case is like how a lot of companies work – the workers work (players play), and the support staff does PR / marketing.

Other teams – like my hometown Raptors – are on Twitter, but don’t really seem into it. Their “official” Twitter account link from their home page is to @Raptors_web_guy, who’s bio starts with “coding HTML”, and the account hasn’t been updated this week. Which is kind of odd, since Raptor’s star Chris Bosh is all over Twitter. It’s also notable that the Raptors_Web_Guy has <3,000 followers, while the Orlando Magic’s main account has 426,000. Already working on a metric to accurately gauge which teams are more effective at using Twitter while accounting for things like market size.

And of course, there is also the main NBA account as well. And all the traditional media coverage sites around it. And all the new-ish NBA information sites that are connecting through it. And all the ways twitter connects with various other social media platforms.

Anyways, the detailed research is to follow – but you get the idea. There’s a whole lot going on, many different teams are doing many different things, and I believe the high profile of the NBA coupled with the way it is structured indicates there’s a lot that other companies can learn from them. If you have an interesting stories to share on this front, send them my way (here, or @denisbhancock)– and of course any new research ideas that would involve we doing what many employers would view as a “waste of time” are welcome. It’s a tough job, but somebody has to do it…

Tohato, a Japanese snack manufacturer, launched the “World’s Worst War,” a massively multiplayer online game created to promote the launch of two new spicy snack flavours: “Tyrant Habenero Burning Hot Hell” and “Satan Jorquia Bazooka Deadly Hot”. The flavours were positioned as rivals with each snack claiming to be the spiciest, and the matter was settled on the battlefield. To join the battle, a consumer would purchase one flavour of the snack and with their cell phone, scan the 2D barcode (called a QR code). The consumer would then become a part of either Tyrant Habenero’s or Satan Jorquia’s army, depending on the flavour they had bought. Every 24 hours, there would be a battle at one of the 31 online battlefields and players would receive updates from “War Reporters” on recent battle developments, including who had been captured by the opposing army and who of their comrades had been promoted to a higher ranking officer.

By awarding special mobile standby screens to battle winners and offering an increase in rank as well as improved fighting power to players that recruited friends to their army, Tohato was able to promote the viral nature of the game. The “World’s Worst War” became very popular, with over 10,000 participants in total. Players even created communities online to discuss strategy for upcoming battles. Tohato reported that as a result of the campaign, sales increased significantly and page views on their website increased to 100,000 per day.

The success of this campaign is evidence of the shift in power that has occurred in the marketing world. With TiVo, time-shifting and media available online, consumers have become empowered to decide which advertising they view, and to get their attention, marketers must create value for them. The “World’s Worst War” was able to do just that. It introduced new consumers to Tohato products while providing an entertaining experience that consumers appreciated.

So, if even a CPG like Tohato can integrate their product into an exciting online game of war, marketing through games should be applicable to almost any industry.

Although this innovative campaign has been very successful, I question Tourism Queensland’s choice to retain almost entire control over the candidate selection. A key strategy in the campaign was to engage the public through their interest in the candidates, and there may have been more engagement if they had allowed the public to choose the 10 finalists, instead of a single wild card, from the 50 shortlisted candidates. By shortlisting candidates and by choosing the final winner of the competition from the ten publicly chosen candidates, Tourism Queensland would still be able to ensure that an appropriate candidate was chosen. In addition, allowing the public to be more involved would result in a winner that has great charisma and would be able to create a large following for his/her blog. Would the campaign have been even more successful if the public had been more involved? The question of how much control should be retained by a company and how much should be left to consumers is becoming increasingly important as more companies begin to include consumers in the development of their products and services.

Another interesting example of an organization incorporating public opinion is NASA’s contest to name the new module for the international space station. The name that received the most votes was Colbert, after the popular comedian, Stephen Colbert. Although NASA did ask for public opinion, they reserved the right to name the module themselves and decided on Tranquility, one of the top ten suggestions from the public. In recognition of the winning name, NASA did name the new space station treadmill the “Combined Operational Load Bearing External Resistance Treadmill”, or COLBERT for short. I think that in this case, NASA made the right decision in not allowing a module of the international space station to be named as a result of a joke, but to incorporate the winning name in NASA’a own joke. In other cases, however, it is not as clear, and it will remain a difficult judgment call to decide how much control should be retained by a company working in collaboration with the public or its consumers.