Gustav von Sydow on digital advertising, online media and tech start-ups

Finally. Facebook has announced what their Social Ads play is all about. Exhale. Turns out my Behavior Targeting prediction wasn’t correct. Water under the bridge. Anyhow, besides targeting based on user-info (wtf were they using earlier? hahaha), improved analytics (zzZZz…) and the ability to create an official company presence (in case you don’t have a website), Social Ads (including Facebook Beacon) is basically a Word-of-mouth-play.

Word-of-mouth (WOM) was actually all the rage a couple of years back in the marketing community. Books like The Tipping Point, Cluetrain, Anatomy of buzz, WOM Marketing etc. are all great reads, discussing the ins and outs of WOM, why it’s so important and when it isn’t. The Cluetrain manifesto says it best, when claiming that “All markets are conversations”, which is not completely true but close enough.

The fueling idea behind WOM is that advertising is not trustworthy enough to drive our consumption behavior. Instead, we rely on the advice and input (directly or indirectly) of people we trust.

When approaching WOM from a broad perspective, it’s tempting to venture in to the discussion on wether “mega-hubs” are really WOM. Regular hubs are a basic network term, referring to network nodes that have more than one connection. To be WOM specific, hubs refer to people that interact and influence many people on a given subject.

The mega-hub concept was coined by Emanuel Rosen in “The Anatomy of Buzz”. A bit simplified it refers to instances that “broadcast” their choices to many, many, many people that they most likely have no a personal relationship which. Oprah. Tiger. Arrington. Mike. Blah. Blah. Personal publishing platforms such as blogs has certainly blurred the line between hubs and mega-hubs, but I’ll leave that intriguing discussion for some other time or someone else.

There is also the financial dimension to take into account. Oprah has somewhat of an indirect revenue model, involving heavy barter with guests, prizes, publicity etc. for her endorsements. And sometimes it’s a direct revenue model, as with the Oprah Book Club. Blogging also involves a variety of revenue schemes; Amazon affiliates, Payperpost etc.

But today we’re talking Facebook’s Social Ads concept, which includes neither mega-hubs nor obvious revenue streams to those endorsing products. Instead, the driver behind peoples’ recommendations is simple: it gives them social recognition, and if you were right in your recommendation, more trust (which reinforces the previous sequence). Both social recognition and trust favors you in natural selection, so your genes get propagated and that’s basically why we do it in the first place (pretty much like everything else if you believe Richard Dawkins).

Marketers that want to leverage this fundamental consumer behavior insight and create buzz are should follow these steps:

1. Create something worth talking about. Something that is exceptionally good, beautiful, funny etc.
2. Craft a stories around your product. Stories are easier to remember and more convincing when told.
3. Make it dead easy to spread the word.

For example, my Bose QC3 soundproof headphones are an amazing piece of technology that looks stunning (1. Worth talking about. Check.). I tell who ever will listen about how I use them to be undisturbed when working in crowded cafés or noisy parks etc. (2. Story. Check.). In their leather case, there’s a bunch of business cards, which are to be distributed to people inquiring about the awesomeness of them. Which I have actually done, many times(3. Dead easy to spread the word. Check.).

The point here my friends, is of course that my influence on you and other people is of value to the marketer, in this case Bose. And Facebook wants to “monetize” (oh, horrible word) the value that I created. Theoretically, the story for Social Ads is dead on:

1. Word-of-mouth is awesome. Yay!
2. Word-of-mouth is social.
3. Facebook is social.
4. Facebook is Word of mouth.
5. Facebook is awesome. Woot!

Most objections to the Social Ads scheme is that nobody wants Coca Cola as their friend. Integrity. “Real people” will never sell out. Who will have the time to engage with these things. Blah. Blah Blah. Yada. Yada. However, most of these reactions are actually borderline stupid.

• People will add brands as their friend – conspicous consumption is not a theory…. Besides, at Daddy we’ve successfully plugged in characters from our campaigns in both MySpace and Facebook. Lots of friends for them, everyone lived happy.
• Fear about lost integrity? Omg please, all consumer trends point in the exact opposite direction, so for now the privacy issue is a purely academic discussion.
• And people will “sell out”, at least in the sense that they recommend products to other people. One might object to why they do it, but it’s there and doing the job. Reviews, recommendations etc. are all over the net since just about forever.
• No time? But of course we do: Facebook’s popularity (and maybe blogging) is the ultimate proof hahaha

Social recognition is a powerful driver, and it’s interesting to see how Facebook’s play will pan out. My initial prediction is that it will fail, at least if the objective of Social Ads is to become the new Adwords, and Beacon is to become the next AdSense. Wanna know why?

Nuance and choice.

The consumer landscape is not just a happy place. People hate some brands, and some brands seem to hate people. How is Social Ads going to account for the negative value that WOM can have? Store credit? Cash pay out to bashed brands? Because without nuance, no credibility. It’s just that simple.

Logic is that by being the platform that allows the conversation to take place Facebook is entitled to cash payout. But what about me wanting to recommend a brand that isn’t a paying customer? Can I only choose from the companies that are paying to be inside the walled garden of Facebook?

Reminds me a bit of the problems facing Price comparison engines; just substitute “conversation” with “e-commerce transaction”. Same logic applies; comparison engines facilitate the transaction and charges money for doing so. Problem is that charging for being the list raises prices, so some stores don’t want to pay because they can be cheaper without being in the listing. So they skip paying, but the comparison engines can’t boot them off ’cause that would ruin the whole purpose of the engine for users. So they try and balance these different customer tiers against their own interests, and their customers’.

Facebook is far from the first company to realize the value of WOM. But WOM schemes are usually a slippery slope, usually since they focus too much on their own and marketer’s POV, neglecting key factors such as nuance and choice. Real WOM isn’t about money. That’s the whole point. It’s about creating value. Doing something insanely great that puts a dent in the universe. Maybe Facebook’s Social Ads will be a way to decrease friction in spreading the word, but it seems to me that they must follow thru a whole lot more for that to be the case.