Monday, May 18, 2009

Welch, Drucker, CFOs, CMOs, and the Yin and Yang of Corporate Culture

You don't need to meditate to recognize that the Yin and Yang of American business are out of balance. Layoffs, bailouts, bankruptcies--every day's headlines make it apparent the corporate world is out of equilibrium. Theories and opinions as to the cause are many, but I'd suggest that marketers have failed to hold their ground and acquiesced to those who've demanded ever more immediate results at the expense of long-term brand value.

In our daily lives, we innately understand the value of balance: Mind and body; work and family; self and others. Balance is equally important to business, but over the past three decades the equilibrium that existed between the marketing and finance functions has been disrupted. It is time for marketers to take a stand, return marketing to its crucial place, and restore the balance so vital for long-term corporate health.

Jack Welch, the former Chairman and CEO of GE and "father of the shareholder value movement," set the tone for our aggressively short-term-oriented management culture in a 1981 speech entitled, "Growing fast in a slow-growth economy." "Shareholder value" became the alter at which corporate boards and leaders worshipped, expanding the influence and authority of Chief Financial Officers (CFOs). Once the equal and peer of the Chief Marketing Officer (CMO), the CFO's role as protector of quarterly results and stock prices upset the balance between the long- and short-term and the qualitative and quantitative.

Of course, many have come to believe that business culture is overly fixated on the immediate creation of returns. You don't have to take my word on it; Jack Welch recently offered a reconsideration of "Shareholder Value" when he said:
“On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy . . . Your main constituencies are your employees, your customers and your products... The idea that shareholder value is a strategy is insane. It is the product of your combined efforts – from the management to the employees.”

Before Welch, there was a time when marketers steered the ship and financiers kept the engines stoked. Marketing students used to be taught that virtually all vital corporate functions were the purview of the marketer. Future marketers weren't advised to focus on just one "P"--Promotion--but "Four P's": Product, Place, Price and Promotion.

So important was the place of Marketing to the enterprise that Peter F. Drucker, the father of modern management, once said:
"Because the purpose of business is to create a customer, the business enterprise has two—and only two—basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business."

Of course, Drucker knew why business enterprises exist. He understood the importance of results and measurement, but he also recognized that financials and the short-term wants of owners were subordinate to something else:
"A company's primary responsibility is to serve its customers, to provide the goods or services which the company exists to produce. Profit is not the primary goal but rather an essential condition for the company's continued existence."

Marketing as the distinguishing function of business? Profit a mere condition and not a primary (much less the only) goal of the enterprise? Doesn't sound much like today's corporate culture, does it? What happened, and how has marketing's decline led to the business issues of today? Perhaps the answer lies in ancient Chinese Philosophy, which teaches us that Yin and Yang must be in balance. When one disappears, the other must disappear as well, leaving emptiness.

In philosophy, Yin speaks to the intuitive, the emotional, and relatedness while Yang is logic, reason, and individuality. It is easy to see the corollaries to business culture and roles--the world of finance, ROI, quantity, and CFOs is the Yang of corporate America, while the world of marketing, brand building, quality, and CMOs is the Yin.

Corporate Yin has been diminishing for years, while Yang has risen. It appears the ancient philosophers were right, because to correct the imbalance, Yang has now fallen precipitously. Of course, financial news sources don't refer to it as lost Yang; they call it "our worst recession since the 1930s."

To be clear, I am not suggesting Marketing take a paramount place and Finance a lesser. But it seems evident to me that organizations work best when Yin and Yang--Marketing and Finance; long- and short-term; and qualitative and quantitative--are in balance.

How might CMOs return the Marketing function to its former glory, forge new partnerships with CFOs, and guide corporate culture back to a healthy balance? We'll explore this in my next blog post, "Marketing and Finance in Balance."

Tuesday, May 12, 2009

Blogs in the Marketing Mix: Four Measures of Blog Credibility

In my last blog post, we explored the recent "Social Media Ad Metrics Definitions" report from the Interactive Advertising Bureau (IAB). In this report, the IAB attempts to define metrics for Social Media, including methods for establishing the credibility of blog authors; unfortunately, the report didn't go nearly far enough on this matter.

Since blogs are increasingly important to marketers and because blog credibility is so vital but difficult to establish, it seems beneficial to explore this topic further. Based on research conducted into credibility on the Web, I suggest there are four dimensions that separate the credible and worthwhile blogs from the ones marketers should avoid. These four dimensions are Independence, Affinity, Transparency, and Presentation.

It is easy to see why brands are increasingly turning attention to blogs for marketing and PR purposes. In our newly Social world, blog traffic is increasing while traffic growth to traditional media sites is slowing. In the past year, traffic to Blogger and Wordpress went up 44% and 50% respectively, while traffic to CNN, MSNBC, and the New York Times went up an average of just 17%.

Brands have many ways of leveraging the growing power and reach of blogs. In addition to launching their own blogs, brands may also sponsor blogs, target blogs for outreach and PR efforts, advertise on blogs, recruit bloggers into networks with special access to new products and information, and pay for posts (sometimes called "sponsored conversations.")

But all blogs are not created equal, and brands must proceed with caution, particularly when it comes to participating in networks that promise to play matchmaker between brands eager for blog attention and bloggers interested in a share of marketers' budgets. While third-party blogger networks may give the appearance that purchasing recognition and mentions on blogs is a cinch, the wrong impression on the wrong blog can do more harm than good.

Evaluating which blogs are right for your brand requires consideration of factors that include reach, relevance, and credibility. Reach refers to the audience for a blog, including total number of readers, subscribers, and visits. Relevance concerns the extent to which a blog's content and audience is appropriate to the brand; this can be determined by evaluating the number and frequency of blog posts on a given topic, the blog's organic search results for desired terms, and the percentage of readers or visitors that match desired demographics.

Credibility, the third dimension that determines if a given blog is right for a brand's outreach or sponsorship, is perhaps the most difficult to ascertain. Reach and Relevance can be determined by quantitative measures, but Credibility is more qualitative. Blog credibility has dimensions that include:

Blog Independence

Blogs that are already sponsored--even if the sponsoring brands are not competitors of your brand--have diminished value. In addition to the number of sponsorships, the quality of the sponsors should also be assessed.

Also, marketers should be cautious of working with blogs that have a noticeable number of paid blog posts ("sponsored conversations"). The presence of sponsored conversations can create brand clutter on a blog, but more importantly a large number of paid posts undermines the author's trustworthiness to readers. An endorsement from a blogger that rarely promotes brands is far more valuable than an endorsement appearing on a blog with many posts that begin, "This is a paid, sponsored blog post."

Finally, blogs that have a lot of ads or advertising of poor quality also reduce the perceived independence. In 2002, the Stanford-Makovsky Web Credibility Study found that advertising on a web site caused a reduction in the credibility of the site, and that pops-up ads and advertising that was difficult to distinguish from content caused substantial reductions in site credibility.

Quantitative measures of Independence: Ratio of sponsored conversations to total posts; Number of ads/sponsorships evident on each page.

Qualitative measures of Independence: Types of brands that sponsor or advertise on the blog; types of ads that appear on the blog.

Blog Affinity

A blog may be independent from other brands but still have a mission or point of view that is inappropriate for a particular brand. Unlike Relevance, which measures specific content and key terms that appear on a blog, Affinity is a consideration of how the brand's values match the blog's. For instance, a sponsored conversation about a new SUV will not be considered credible if it appears on an automotive blog that supports environmental causes and frequently criticizes vehicles with poorer fuel efficiency.

Problems of affinity or context are not new in online marketing, and marketers seeking to purchase advertising or sponsored conversations should heed the occasional missteps that have occurred with contextual banner ads. For example, it might have seemed a good idea for a travel company that offers experiences with sharks to use "sharks" as a keyword, until it caused their ad to appear beside the article, "Shark Kills Man Off San Diego Coast." In this case, the lack of affinity between the article and the ad reduced the ad's effectiveness.

Qualitative measure of Affinity: Before sponsoring or attempting to establish relations with a blog, marketers must take the time to evaluate each blog and ensure the correct affinity between blog and brand values.

Blog Transparency

As paid and sponsored conversations grow in frequency, a blogger's adherence to WOMMA ethics disclosure requirements must be an absolute requirement before a reputable brand establishes any commercial arrangement with a blogger. While sponsored blog networks such as IZEA claim to monitor blogs for obedience to rules intended to promote ethical behavior, it is important advertisers understand they and not the networks have the onus to ensure ethical behavior with respect to the advertisers' brands.

There are two reasons marketers should not rely on blog networks to police the ethics and disclosures of bloggers. First, WOMMA's Marketing Ethics Code of Conduct states (emphasis mine), "We require marketers to effectively monitor disclosure of consumers involved in their word of mouth initiatives." Secondly, in the event a blogger is caught passing off sponsored blog posts as unpaid editorial content, the damage will be much greater to the brands involved than to the network.

Quantitative measure of Transparency: One hundred percent of advertising and sponsorship on a blog must be clearly identified as such.

Blog Presentation

You already know this about your own marketing materials and Web sites, but spelling errors, poor grammar, and unattractive or unusable design undermines credibility. In a study of health site credibility conducted by Eysenbach & Kohler, it was found a professional design was strongly associated with perceived credibility.

Even though the standards for grammar and design may be lower on blogs than on brand or mainstream media sites, a recent study, "The Impact of Anonymity on Weblog Credibility," found that "the writer of the well-formatted, error free blog was more credible than the writer of poorly presented blog."

(Interestingly, this same study found that the quality of writing had no influence on the credibility of the blog itself, but the author notes this may be due to the use of students rather than a broader set of study participants. I suspect students are likely to have a much higher tolerance for grammatical errors than would older consumers and professionals.)

Quantitative measures of Presentation: Grammatical and spelling errors are easy to check. You might review a number of recent blog posts manually or use tools such as's free Web Site Spell Checker.

Qualitative measures of Independence: It is recommended brands evaluate whether a given blog meets minimum standards for attractiveness, usability, and professionalism before associating the brand with that blog.

These four attributes--Independence, Affinity, Transparency, and Presentation--are important determinants of a blog's credibility. These are not the only factors that enhance or diminish credibility, but they are among the most important. Other factors that may be important, depending on the blog and brand, include Blog Attribution (the more frequently sites and blogs attribute their sources, the more credible they will be perceived) and Blog Reputation (presence of awards, Diggs, etc.)

In the future, it may be possible for marketers to assess blog and blogger credibility through automated means. A group of researchers in Austria is developing a system that analyzes words in blogs and compares them to words used in mainstream news sites as a means to estimate credibility.

It remains to be seen whether or not automated systems will ever be able to accurately assess attributes such as Independence, Affinity, Transparency, and Presentation, so for now marketers are advised to approach blog advertising and sponsored conversations with caution and to retain the responsibility for evaluating each and every blog. Networks may promise easy access to a large number of blogs, but you've spent too much time and money building, nurturing and protecting your brand to leave its stewardship to others.

Thursday, May 7, 2009

IAB's Lost Opportunity for Innovative Thinking on Social Media Metrics

Yesterday, the Interactive Advertising Bureau (IAB) released a report entitled, "Social Media Ad Metrics Definitions." I appreciate the organization's desire to "stimulate growth by making the reporting of metrics more consistent," but the document left me wanting far more. I felt there were a number of potential missteps and omissions, ranging from the merely annoying to the consequential.

The report doesn't so much outline revolutionary new ways of thinking about Social marketing analytics as it does apply existing advertising models to Social Media. With so many seeking answers to the challenges of Social Media measurement and ROI, I believe the IAB missed an opportunity to take a leadership position with innovative thinking on this topic.

I considered if I was being too critical of the report; after all, it mentions "Ad Metrics" right in the title. The IAB didn't label the report as being about "Word of Mouth," "Buzz," or any of the other labels we apply to Social Media. No, it advertised itself as being about "Ad Metrics," and had the report stuck to that topic, then the approach and information presented may have been right on target.

The problem is that the IAB report doesn't just focus on advertising in Social Media; it invites readers to expect more than just advertising thinking. The report opens with a smart and succinct declaration of how Social Media differs from the online media of the past:
"Social Media has added a participatory element where an individual not only receives information but has the ability to take part in the creation and distribution of content. Furthermore, social media tools have enabled a dialogue and discovery around this content. It is the combination of these unique and appealing aspects that defines the true value of social media."

After reading this, I expected interesting and insightful thinking about how to measure "the true value of social media," but I didn't really see it in this document.

The report starts with a list of General Social Media Metrics, and if the IAB recognizes Web 2.0 as a bold new world, you wouldn't really know it from the metrics cited. The list is heavy with familiar metrics such as Unique Visitors, Cost per Unique Visitor, Page Views, Visits, Return Visits, and Time Spent. The future apparently looks an awful lot like the past.

Among these metrics, I was disturbed to see "pop-under ads" listed as a type of content that may be included in Unique Visitor statistics for Social Media sites. Why include this hated vestige of old-fashioned, one-way, annoyance advertising in a document that should set a bold new direction in participatory marketing? After all, it was the IAB itself that in March reported that pop-unders were the least clicked form of online advertising. Had the IAB wanted to demonstrate that it is setting a new direction by embracing the underlying precepts of Social Media--such as transparency, authenticity, and two-way dialog--then Pop-Under Ads should have been mentioned only to encourage their extinction.

Since the report set the stage with its discussion of "participatory elements," consumer "creation and distribution of content," and "dialogue," it was surprising to see how few of the General Social Media Metrics dealt with anything other than presence at touchpoints. Visitors, Page Views, and even Time on Site cannot reveal anything about the "true value of Social Media." That value instead comes from metrics the report buries in a long bulleted list of "Relevant actions taken," including Messages sent, Invites sent, Newsfeed items posted, and Comments posted.

Having suggested these ways of measuring Social Media dialog, the report punts when it comes to furnishing guidance on how to gather that data. While providing definitions of decade-old Web metrics such as Unique Visitors and Time Spent, the report makes no attempt to describe how to measure those "Relevant actions taken." Instead of focusing on the sort of information one might find in the "Help" section of an Omniture or WebTrends Dashboard, this report could have blazed trails by delving into the more challenging, less understood, and more important questions about how to measure relevant actions that occur across a vast variety of Social Media tools and sites.

Perhaps one of the most concerning aspects of this report is that a reader might get the idea that every action is equal. The report suggests that "Comments posted" are worth measuring, but it says nothing whatsoever about sentiment within those comments. In the entire report, the following words do not appear even a single time: "Sentiment," "Attitude," "Rating," "Positive," and "Net Promoter Score." Apparently the IAB thinks that all comments should be tabulated in aggregate, regardless of whether they are disparaging or complimentary.

The report's neglect for the vital aspects of sentiment in Social Media is also evident in the way the concept of "influence" is discussed. "Influence" is introduced not as the capacity to affect desired change in the actions and attitudes of a specific audience, but instead is defined as "Average number of friends among users who have installed application." The size of one's network is important but hardly is a measure of influence. Think of it this way--if you wanted to change the attitudes of technology decision makers, would you focus on actor Ashton Kutcher or Michael Arrington, founder of TechCrunch? According to the ridiculously narrow definition suggested by the IAB report, Ashton's 1.6 million followers give him more influence on technology (and every other topic) than Arrington, with his meager 550,000 followers.

The report contains other dubious contentions. For example, it is suggested that a blog author's credibility can be ascertained by evaluating attributes such as the length of time an author has been posting on a topic and the number of links he or she has to sites with "conversation phrases from the client’s RFP or IO." To me, these metrics suggest an author's pertinence to the desired topic but say nothing of his or her credibility. Credibility may be ascertained by tabulating the quantity of readers within the defined target audience, number of Diggs and inbound links from high-quality sites, and ratio of posts that are unsponsored versus paid advertising, as well by more qualitative means.

I came to the IAB report with a great deal of interest and high expectations for the knowledge and direction it would provide on the vital topic of Social Media metrics. The fact it fails to advance inventive and farsighted thoughts on the difficult subject of Social Media metrics is a tremendous lost opportunity for the IAB, marketers, publishers, and Social Media sites. I surely did not expect them to have all the answer since the world of Social Media is still young and rapidly changing, but this report did not come close to outlining the kind of thinking around which "all players in the Social Media space will coalesce."

Sunday, May 3, 2009

Social Media In-Stream Ads: How to Lose Friends & Alienate People

If I gave you a nickel, would you say good things about me to your friends on Facebook and Twitter? How about if I gave you ten cents to post a link to my blog with a positive endorsement?

Are you offended? Do you think it's up to me to earn--rather than pay for--your goodwill and recommendations? Is the trust of your friends worth more than a couple of pennies?

That's okay, I agree with you, which is why "in stream" Social Media advertising is about as bad an idea as I've heard since "Social Media" entered marketers' vocabulary. I would not and am not recommending this ad tactic to clients, because I am concerned it could harm brands, increase complaints about advertising ethics, and be a terribly ineffective use of marketing dollars.

Of course, that's not to say that encouraging people to say kind things about our brands isn't vitally important in our newly social world. But let's recognize the cardinal importance of authenticity in Social Media and the Grand Canyon-sized chasm in authenticity that separates paying for Social Media buzz and earning it. Marketers have a wide variety of tools available to them to spark positive sentiment in Social Media, the laziest and most dangerous of which is "in stream" advertising.

The idea behind "in stream" advertising is that you are a media mogul. Yes you! In the age of Social Media, each of us is a mini publisher/broadcaster with our own readers/viewers. Your and my reach may not equal the New York Times' or ABC's, but the idea behind Social Media in-stream ads is that the eyeballs we command are worth no less than those controlled by big media conglomerates.

Of course, those aren't eyeballs; they're friends, peers, and family members. To those who believe in in-stream advertising, that's the holy grail--our friends trust us, and so a product we promote in our Facebook or Twitter status updates comes with built-in attention and authenticity.

But is that really the way it works if the brand is paying for the mentions? Is that authentic? Are you authentic if you engage in this sort of activity? How many times can you spam your friends before they start unfriending you, not just on Social Networks but also in real life? Which brings me to wonder who, exactly, would do this to his or her own friends?

The answer is that, contrary to advertisers' belief they are buying the authenticity that comes from one's friendships with others, the kind of people who prostitute their status updates aren't doing so to friends but to strangers. Since people with larger networks can earn more in-stream ad dollars, this encourages participants to amass "friends" by any means possible.

At best, these in-stream Social Media ad networks encourage people to spam friends, and at worst they encourage spammers to create spam profiles to disseminate spam to wide networks of strangers. (Any ad technique that requires the word "spam" to be used three times in a one-sentence description is clearly on very thin ice.)

And as the cherry on top of this spam sundae, this sort of advertising is unethical unless the people who get paid to post advertising reveal it as advertising. Failing to disclose one is being paid to promote a product is a violation of the Word of Mouth Marketing Association (WOMMA)'s ethics code.

So, what sort of brand would engage in this sort of flawed, dangerous, and dubious advertising technique? Apparently (and disappointingly), brands are lining up. StatusPlug, a new network for spammy Facebook updates, has not revealed any clients as of yet, but TwittAd is bragging about its Land Rover campaign and the other brands who are in discussions for Twitter ads.

In the AdAge article, the CEO of TwittAd says, "We were worried it would be considered spam, but we didn't get a single complaint [about Land Rover]... What that tells me is that our connectors have influence." Funny, what this tells me is that it is easier to unfollow a spammy tweeter than to track down and complain to the spammy Twitter network that paid him or her to spam.

It is easy to see the value (or lack thereof) that TwittAd offers--check out the list of sponsorable profiles on their site. For a mere 58 cents you can sponsor angelguy1's Twitter account; over half of his tweets to date have been about getting paid for advertising in his Twitter feed, which is probably why he has just 14 followers. And for just $918, you can sponsor the misspelled, fraudulent "Official Joe Jonas Brothers" Twitter account, @JoesephJonas. With this sort of quality and authenticity, how could brands possibly lose?

While it's disheartening to see brands jump at the chance to pay for Social Media profile and update advertising, there are many brands who are taking a better route. For example, Ford has recruited 100 "agents" who will be given the new Ford Fiesta to test drive for six months. It is hoped they'll love the car and will share that excitement with their wide social networks. And General Mills has created MyBlogSpark, a network of blogging mothers who will be provided with General Mills product samples to review.

Even these efforts have been the subject of some criticism. For example, the General Mills network requires bloggers to contact the company before posting negative sentiment, which has caused some to question if General Mills is exercising "prior review" and if bloggers will have free rein to say what they want. (A General Mills spokesperson assured Adweek that those in the blogger network "are free to write anything they'd like.") Also, Adweek found a half dozen product review posts that didn't disclose the relationship with General Mills as required.

Time will tell if Ford and General Mills generate the desired success from their campaigns, but it is hard to find fault in their carefully conceived and executed strategies for developing authentic positive buzz in Social Media. Yes, it is more expensive to launch a buzz-sparking campaign of two-way dialog with consumers than it is to buy in-stream ads, but the positive difference in authenticity, transparency, and influence is absolutely worth it.

Of course, there is an even better and more organic way to develop positive sentiment in Social Media: Focus obsessively on having your product or service create a great, memorable, emotional, and brag-worthy experience for consumers.

A report on Social Media sentiment that I received today from notes that Disney garnered a great deal of positive sentiment last week in Social Media. They didn't buy in-stream ads and they didn't give away free vacations; instead, Disney did what Disney does best--create positive consumer experiences. The favorable buzz generated last week came from things like people posting their fun Disney World vacation pix on Flickr, travel bloggers sharing a new Disney World deal, and people praising Disney for planting 2.7 million trees for Earth Day.

Inventor Edwin Land once said, "Marketing is what you do when your product is no good." As a marketer, I clearly don't agree with that, but the thinking behind that statement is more true today than it was decades ago when Land famously uttered those words. The better your product or service, more memorable the experience, and stronger the bonds with consumers, the less a brand needs to even consider paying people to spam their friends!