Friday, February 24, 2012

50 Things Every Exec Should Know By Now About Social Media

  1. Your child has a better shot at creating a viral video than does your brand.
     
  2. You cannot post and tweet yourself to marketing success while customers are drowning you out with complaints about your product, service or corporate policies.
     
  3. People sign into Facebook to find out what their friends are up to, not to connect with their favorite brand of gasoline or paper towel. The only way to succeed is to be as interesting and relevant to your customers as their friends are--a tough task, to be sure. Better yet, get friends talking to each other about your brand.
     
  4. Just because surveys show people friend and follow brands to get discounts and deals does not mean you must consistently offer them. Unless you really want to build relationships based on constant discounting and reduced margins, find a different way to be appealing and use discounts sparingly and strategically.
     
  5. When a person follows your brand on Facebook, that does not mean they are going to see everything your brand posts. In fact, they may see little to nothing from your brand. Sorry, that is just the way Facebook's EdgeRank works. (If you do not know EdgeRank, learn about it.)
      
  6. The same thing applies on Twitter. As people follow more people, they pay less attention to their raw tweet stream and focus instead on lists of friends and peers. If your brand wants to be added to customers' lists, it needs to earn its way there--which is much tougher and more important than merely earning the follow in the first place.
     
  7. There is not and never will be a template for social media success. Stop obsessing about finding best practices and work harder to test and create your own.
     
  8. You are not being social if you ignore questions and service requests on your wall and in tweets while posting your key marketing and PR messages into social networks. That's just old broadcast mentality pasted into the new social medium, and it will fail.
     
  9. Speed matters like never before. Customer service issues can turn into PR crises in hours--this morning's Facebook post is this afternoon's Change.org petition. You cannot control it, and trying to create layers of approval processes will only exacerbate the situation. The only solution is to prepare and empower employees to act with greater alacrity and independence.
     
  10. Your organization's Facebook and Twitter administrators are probably talking to more customers, more often with more impact than the vast majority of your firm's executives.
     
  11. People will complain about your brand. Don't freak out over a single complaint (unless it is from a truly influential person).
      
  12. While you shouldn't freak out over a single complaint, you should be very concerned about many complaints. The constant flow of brand gripes can become background noise to decision makers. Do not allow this to happen, because death by a thousand cuts is still death.
      
  13. Social media is not primarily a direct marketing channel. Do not measure it like it is or you will undermine the most powerful strategies that build brands and relationships.
      
  14. Every company worries about detractors in social media. That's good, but they should be more worried about employees in social media.
      
  15. Putting content or functions within a Facebook tab is the Web 2.0 version of the Web 1.0 axiom, "Build it and they won't come." No one visits your tabs--if you want people there, you need to promote the feature and make it very, very, very engaging and sticky.
     
  16. Ralph Waldo Emerson furnished the best social media advice you can possibly get: "Who you are is speaking so loudly that I can't hear what you're saying." To succeed in social media, worry less about what you are saying and more about what your actions say.
     
  17. If you do anything that rewards disinterested people for liking your brand--such as giving away a freebie in a social game or an entry into a sweepstakes that attracts people outside your target audience--you're doing social media wrong. Collecting people with no relation to your brand can actually hurt your social media opportunities rather than help them.
     
  18. If you do not understand the FTC's and NLRB's guidance on social media, you are putting your company at reputation, legal and regulatory risk.
      
  19. Do not jump into a new social property just because it's the flavor of the day. Pinterest, for example, will change the world for some brands, but not all. Knowing YOUR audience's habits and needs is vital; embracing this month's hot new social property is not.
      
  20. You cannot stop employees from accessing social networks from work--they all carry their social networks with them in their pockets.
     
  21. Good customer ratings matter. Evidence has shown that positive ratings on sites like Yelp and TripAdvisor drive business. Provide products and service that earn great ratings, then make it easy for people to furnish them.
     
  22. Do not hesitate to ask your customers to complete ratings and reviews. Replace your comment cards or the survey request on your receipts with an invitation for feedback on an appropriate rating site (such as CNET, Yelp, Epinions, TripAdvisor.com or Angie's List, depending on your category). If you are not confident enough in your product or service to do so, that should be wake-up call.
     
  23. Only talking about yourself in social media sends a message that all you care about is yourself. Check your stream of posts and tweets right now--what is the message behind the messages?
     
  24. You cannot keep corporate secrets about public dealings. Every lawsuit your company files, every supplier you work with, every political donation the organization makes and every environmental and labor practice you have can be shared, promoted, debated, criticized and boycotted. Make decisions with consideration not just for law, policies and short-term financial impact but also for how that decision will play if and when it is revealed in social media.
     
  25. You cannot spend your way to brand success any more. Bank of America spent $1.9 billion on marketing in 2010, yet it could not defeat a 22-year-old part-time nanny and 27-year-old gallery owner who spent absolutely nothing on the Change.org petition and Bank Transfer Day fan page that moved hundreds of thousands to protest new debit card fees.
     
  26. What people say about your brand to each other in close, personal, trusting relationships matters more than what influencers say on their blogs and Twitter feeds (at least deeper in the sales funnel where it matters.)
      
  27. No amount of investment in firewalls, monitoring and social media management systems can protect your brand from employees doing stupid things. Education is vital. So is monitoring.
      
  28. If you are only thinking about how to integrate social media strategies into your marketing, PR and customer service processes, you're at risk of falling behind the curve. If you are not even thinking about where social media fits in your customer service practices, you already are behind the curve.
     
  29. In a world of transparency where customers care as much for who you are as what you sell, the most compelling and defensible point of differentiation is your culture. That is the only thing that cannot be photocopied by the competition and that ensures your brand speaks with one voice.
     
  30. Do not confuse social media influence measurement with true influence. Until the tools improve to a point where Justin Bieber has less Klout than the president of the United States, care should be taken to use influence metrics with discretion.
     
  31. In 1995, success was "Location, location, location." In 2005, success was "SEO, SEO, SEO." In 2015, it will be "Reputation, reputation, reputation." Your brand is crafted far more by the experiences you furnish customers than the advertising you do, and your brand's Net Promoter Score is more important than its marketing budget.
     
  32. Social is just getting started. It has changed PR and communications, and next it will change products, service and business models. Monitor the growth of peer-to-peer and sharable economy business models inside and outside your industry. Some companies that fail to innovate rapidly in the coming years will be left behind by substantial shifts in consumer expectations, habits and behaviors.
     
  33. Social media is not a strategy, it is a channel. If your company does not have a telephone strategy or a postal mail strategy, it doesn't need a social media strategy. And never build a strategy around a social network. Instead, build it around people and their needs, then see what social networks fit. You do not need a YouTube strategy or a Facebook strategy; you need customer service, product, marketing and content strategies that include YouTube and Facebook.
         
  34. People say "Content is king." They're wrong. Content is important, but it is more of an archduke than a king. Brands like Google and Apple didn't succeed by creating and broadcasting content; they succeeded by creating a great product that encouraged others to create and broadcast content--and that drove awareness, consideration, trial and adoption.
     
  35. If you still think your sales funnel ends with purchase, you are missing out on the most important and cost effective marketing strategies available to boost loyalty, retention and advocacy.
     
  36. You visit your brand's wall; your customers do not (in any significant numbers). Your strategies must focus on what happens on your customers' Facebook newsfeed and not your brand's.
     
  37. People trust each other more than they trust you. They even trust each other more than they trust experts and traditional media sources. Don't focus solely on what your brand provides to people but on what your brand provides to people that gets them sharing with their friends.
      
  38. Employees can be fired for what they say and do in social media. If you haven't told them that, you are failing to protect them and your brand.
     
  39. Your managers can get the company in deep trouble for disciplining an employee for something they say and do in social media. If you haven't told your managers and executives this, you are failing to protect them and your brand.
     
  40. If the last two bullet points seem contradictory, go talk to your legal counsel and Human Resources professionals.
      
  41. Whether they know it or not, every employee from your CEO to the intern is a social media employee. The decisions we make, the things we share and the way we conduct our jobs can be reflected, reported and judged in social media.
     
  42. Do not confuse excitement for your brand's advertising with excitement for the brand. Many ads can rack up tens of thousands YouTube views, but most fail to change minds and behaviors. Good advertising isn't good entertainment--it's good persuasion.
     
  43. What if you had no money to spend on advertising and PR? What could you do with your product, packaging, service or earned media that would be so compelling people couldn't help but share and recommend your product. If you start there, then advertising and PR are gravy.
     
  44. Social media can support ad campaigns, but if most of your social media budget is aligned to campaigns, you are doing it wrong.
      
  45. Fans and followers have potential value and not real value. If you do nothing with them, they have no value. It is how you unleash fans and followers that creates value for the brand.
      
  46. When choosing a social media professional as a consultant or a new employee, do not be impressed with the candidate's own social media footprint but with how they have demonstrably helped clients and companies with their social media footprints.
     
  47. Lasting customer relationships are as hard to create in social media as in the real world. Likes and follows deluded some into thinking it is easy, but relationships are crafted not with clicks of buttons but with time, care, trust and exchanges of value.
     
  48. Do not be impressed with a competitor's total fan count without knowing how they earned it. The brand that wins is not the one with the most fans and followers but the one with the most engaged customers and advocates.
     
  49. If you are most focused on how to engage and encourage sharing when people are sitting at their PC, you are missing the place most people are spending and will spend most of their time.  Time spent with mobile applications has already surpassed time spent web browsing.
      
  50. What did I miss?  Happy to add #50 (or #51, #52, etc.), if you'll participate with your own nuggets of wisdom. Do you have any to add?  Did I miss the mark on any of the items in my list?  Please comment below...

Saturday, February 18, 2012

How Facebook Can Improve Upon It's "F" Grade in F-Commerce

A lot of attention is being given to the failure of so-called "F-Commerce." Several brands, including JCPenney, Gap and Nordstrom, have launched and already shuttered Facebook stores after seeing disappointing sales on the Facebook platform.

Retailers launched these Facebook stores with high hopes because, in the words of a Facebook exec, “This is where people are hanging out.” Yes, people hang out on Facebook--Americans spend 100,000 years on the social network every month--but do people want to shop there? Some say no--my former Forrester peer, Sucharita Mulpuru, noted, “It was like trying to sell stuff to people while they’re hanging out with their friends at the bar.” 

I think that is too easy an answer; after all, replace "bar" with "mall" and that statement ceases to make any sense. Malls exist nowadays not merely to give consumers a place to buy products but to provide a physical space for us to get together, be social and shop together. Why shouldn't Facebook be a virtual space for the same sorts of activities that combine social and commerce?

The blame for the failure of the first wave of F-Commerce lies with both the retailers and Facebook. Retailers and the social network seemed to have drawn a straight and direct line between "people spend time here" and "people will buy here." They were wrong--as Sucharita points out, there are venues that are conducive to shopping and others that are not, at least not yet. 

Take the web, for example. There was a time we did not buy things online, even though ecommerce functionality was readily available. A decade ago, the population of web users was exploding and brands were eager to reach this online market directly, yet few consumers were willing to complete transactions via the Internet. Despite the ecommerce hype before and immediately after the dot-com bubble crash, barely 1% of retail sales in US were made online in 2002

Then something changed--the Web went from being a place where people were suspicious of entering their credit card numbers to a place where today most of us store our credit card numbers on e-retailing sites like Amazon. Consumer attitudes changed, and so did online sales. In the last decade, the percent of total US retail that occurs online has grown almost fourfold, enough to change the face of retailing and put some retailing powerhouses out of business.

The Web has become a venue for commerce, so why not Facebook? That change will come, but first both retailers and Facebook must work harder to evolve the channel and overcome consumer doubt.


Facebook can become central to the growth of social commerce, but only if it works much harder to earn consumer trust. It does not have to look far for the model--Facebook can steal from the roadmap used by ecommerce sites over the past fifteen years:

  • Make Facebook more secure: The first order of business is simply to make Facebook more secure. Just three months ago, Facebook made headlines when a widespread spam attack blanketed the social network with inappropriate images. Occurrences like this make it more difficult for Facebook (or retailers on Facebook) to earn trust on the platform.
     
  • Work security and trust into the Facebook narrative: Ask the average consumer why they trust Amazon, and they may speak about the multiple levels of authentication, the icon that tells them a page is secure, the Amazon Bill of Rights and Amazon's easy return policy. Now ask people why they should trust commerce on Facebook... (insert cricket noise here). The social network must do more to ensure it is apparent Facebook is living up to Mark Zuckerberg's promise to "protect you and your information better than any other company in the world."
     
  • Put the user first: Facebook needs to do more to put the needs of users first. For example, when it implemented Sponsored Stories, Facebook did not build into the system a method for alerting consumers or asking permission to turn their posts into ads. Some feel this violates users' privacy, but even if this process works within Facebook's terms and conditions, it reveals a preference to make the social network easier for advertisers and not more trustworthy for users.
     
  • Do more to fight spam and phishing: Can you imagine entering your credit card number into a Web storefront riddled with spam? Neither can I, which is why Facebook has to become far more adept at fighting spam. As for phishing, it is far too easy for a scam artist to steal code and design elements from a retailers' site, launch a look-alike fan page and begin to collect passwords and other personally identifiable information. Until Facebook is less caveat emptor, consumers will carpe diem in other commerce channels.
     
  • Live up to promises with fewer unpleasant surprises: The social network has improved on the unpleasant surprises it springs on its users with unanticipated updates to policies and settings, but waves of such experiences have not encouraged consumer trust. Moreover, the new flood of "frictionless sharing" applications have created more unpleasant surprises--people were disappointed to learn that friends were alerted when they merely read an article on Yahoo! or listened to a tune on Spotify. Frictionless sharing can be a vital part of the social fabric, but only if Facebook informs consumers, leaves them in control and avoids surprises. The fact people still do not know what to expect from Facebook and its app developers is a problem that undermines trust.
      
The problem with F-Commerce is not Facebook's alone. The Facebook storefronts that were shuttered recently lacked innovation. Much like brochureware sites that attempted to take the paradigm of print and paste it into a browser in the early days of the Web, the F-Commerce storefronts were nothing more than typical ecommerce operations pasted into a Facebook tab. Wade Gerten, CEO of a social commerce developer, said it best: “It was basically just another place to shop for all the stuff already available on the retailer websites.”

The failed F-Commerce shops all treated social commerce as if we shopped alone in abandoned malls--they brought the commerce but not the social. Where was cobrowsing? Asking friends for opinions? Sharing finds? Aggregating friends' and strangers' ratings and reviews? Chatting about products in real time? Coordinating shopping lists and purchases? A "like" button next to a product is more of an invitation to advertise and not an invitation to share enthusiasm, tastes and special shopping finds. Just look at Pinterest to see how consumers can be engaged in sharing products in a way that feels authentic and not spammy.

Recreating 2005-style ecommerce functionality on 2012 Facebook does not make shopping social. I am confident shopping online will get more social and Facebook will play a role in social commerce, but not until Facebook earns a great deal more trust and retailers demonstrate considerably more creativity around online social commerce. 

Sunday, February 12, 2012

Why Ratings and Reviews Suck and How to Save Them

The use of consumer ratings and reviews has already been a game-changer online. Ratings and Reviews (R&Rs) were the first true use of social media to support and enhance commerce, predating ads on Facebook, Groupon discounts and viral videos on YouTube. While some of us participated on a BBS or Usenet Board in the early days of the Internet, the first time most people posted anything for strangers to read was not a status update on MySpace but a R&R on Amazon, TripAdvisor or Yelp.

It is the success and maturity of R&Rs that leave me perplexed at how little innovation we have seen in the space and how much more the leaders could accomplish. This was the topic of conversation recently when I chatted with Jeremy Epstein, the new VP of Marketing at Sprinklr, a social media management service provider that Altimeter put on the top of its list of vendors to support large corporations. We both agreed that it is high time for the primary providers of online R&Rs to lead once again with new features that make R&Rs more powerful and reliable.

First, here is what is right about R&Rs: They remain the most trusted form of communication, lagging only recommendations from families and friends. According to Forrester (subscription required), consumer product R&Rs are trusted by 62% of US adults, compared to 57% who trust "expert ratings and reviews," 30% who trust company web sites and 23% who trust what they see on TV.

Here is what is wrong with R&Rs: That high level of trust may be about to evaporate. While I have no data, I sense more people having doubts as to the validity of the R&Rs they read online. These doubts may be well founded; recent articles have raised awareness of dubious or outright deceptive practices such as offering free product in exchange for ratings, people anonymously rating their employers' products, and farms of workers hired to post ratings.

If you are an authentic marketer and really want to get your blood boiling, check out fiverr.com, where people compete to write paid reviews. One person promises "I will leave 3 Amazon reviews from unique accounts that YOU write for $5," and 44 out of 45 reviews are positive. Comments include "I of course do always need more reviews, how many accounts do you have? And can you also do likes?" Obviously reputable brands are not on fiverr.com bidding for fake reviews, but the transparent sleaziness goes a long way to demonstrating the problem with R&Rs.

While those involved are smart enough to avoid saying, "We get paid to do positive ratings," the implication is loud and clear. "I would have done 4 stars instead of 5 without the deal," says one guy who received free product in exchange for his rating. And an employee of one of the R&R-writing services reports, "We were not asked to provide a five-star review, but would be asked to turn down an assignment if we could not give one."

In theory, it is not unethical to give discounts or freebies in exchange for a rating and review, provided a brand does not reward the effusiveness of the rating and--here is the part everyone misses--the consumer discloses the material relationship as required by FTC guidelines. (And just to be clear, it is the brand's responsibility not merely to instruct the consumer to reveal the arrangement but also to monitor that consumers are, in fact, disclosing appropriately.)

While I hope marketers are following the rules, I do not think the purveyors of R&Rs should rely on the willingness of those involved to adhere to rules--the stakes are just too high. For consumers, the temptation is great to earn cash, freebies and discounts in exchange for five minutes of faux exuberance on Yelp or Amazon. The reasons marketers are tempted to engage in dubious R&R practices are also obvious, as one recent study validated what we all intuitively believe about the value of positive ratings--each additional star on Yelp is worth 5% to 9% in incremental revenue.

Perhaps you believe you are a keen observer who can easily separate the fake reviews from the real ones. Turns out researchers have found the average consumer only gets this right around 50% of the time. You can even test yourself with an online quiz on the Marketplace site. (I scored 75% in the simple four-question quiz.) Even if we believe people have the power to spot and discount fake R&Rs, this cannot be the solution--it takes too long to review and assess individual reviews, and given the power of "star ratings" to furnish info at a glance and permit sorting based on score, we clearly need better ways to improve the quality and reliability of R&Rs.

Given the incentives to cheat, why haven't we seen innovations that encourage appropriate reviews and that filter reviews to make them more accurate and believable? A great deal of effort is going into technological advances to suss out fake reviews, but aren't there easier and better ways to accomplish this same goal?

For example, we are each unique, so why do we see the same information on most R&R sites? When I go to the San Antonio Things to Do page on TripAdvisor, the top-rated attraction in the city of the River Walk and Alamo is... a golf course?!? Even if it is accurate that the Palmer Course has the highest arithmetic mean for all of the submitted ratings in San Antonio, why would this matter to me? TripAdvisor knows I am not a golfer--I have made 101 contributions to TripAdvisor, and not one of them is for a golf course or shop.

One way sites like Yelp and TripAdvisor combat this problem is by showing me what my friends have rated. This is good, but I have friends who love golf. What I really want to know are the ratings of other people like me--it would be more informative to see the ratings of other museum-going, water-park-hating, jazz-loving non-golfing strangers who are similar to me. One of the benefits of furnishing ratings based on similar tastes is that it helps to filter out disingenuous raters. (Perhaps those who are paid or get discounts for the ratings they produce would like to see and rely on each other's ratings, but I rather doubt it.)

Another idea Jeremy and I discussed is discounting ratings from raters who only offer positive ratings. If a given user on Yelp or eBay only posts five-star ratings, wouldn't that call into question the authenticity of those ratings? Some may argue that people tend to write reviews when they feel strongly, but if this were true, we would see more ratings at both the top and bottom of the scale rather than the rating inflation exhibited on most sites. eBay data from 2007 demonstrated the median rating for "Item as Described" was 4.8 out of a possible 5; 67% of the ratings on Yelp are four or five stars; and virtually everyone who rates a video on YouTube gives it five stars.

This is when Jeremy offered the idea of using gamification to improve ratings. I am actually not as much of a fan of gamification as most social media pros. Even though I am an avid PC and mobile gamer, I just do not believe most people go through life wishing they could turn their communications, grocery shopping, dining, driving and TV viewing into a competition. In addition, too much gamification is designed to get people being inauthentic, distorting rather reflecting true opinion, influence and engagement. The fact a brand can amass a million followers by giving something away in a Zynga game is not sign of gamification's value to marketers but of its ability to falsify sentiment and destroy the legitimacy of Facebook "likes."

Jeremy's idea was one of the few I have heard that could turn gamification into a force for authenticity: What if reviewers were rewarded for offering R&Rs that most closely match a bell-shaped curve? Wouldn't reviewers' opinions count more to others if they reflected a more statistically accurate normal distribution of opinions? Perhaps discounts should be given not for any review (or positive reviews) but for people who create true value by creating the most believable and accurate content? If most reviewers were motivated to create R&Rs that were unbiased in a statistical sense, it would create greater dispersion of ratings, increasing the spread between the best and the worst products and services, and penalize (or remove the incentive) for paid reviews.

You probably have some of your own ideas for how R&R sites could be improved. The ease with which ideas can start flying as people discuss the problem is an indictment of how little has been done to improve the R&R process. Yelp says its ranking system "already factors in the number of reviews (and) whether they come from experienced Yelpers or first-time reviewers," but they've done little to make this evident.

If today's R&R leaders do not want to end up like Monster and MySpace, lapped by competitors with greater innovation and differentiation, it is time for the early market innovators to put as much effort into improving the usefulness and validity of R&Rs as they do into new marketing and advertising products. As Jeremy noted, "Trust is going to be the primary currency of the linked economy. If you lose it (and eventually you will get exposed), you're going to have a long road back."

Saturday, February 4, 2012

Facebook's IPO Is Not About Owning Facebook

Facebook is going public, but that does not mean purchasers of Facebook stock will own the company in any real way. Instead, investors must know that they are buying an ownership interest not in Facebook, Inc. but a share in the vision, judgment and actions of CEO Mark Zuckerberg.

After the IPO, Zuckerberg will own 56.9% of the voting shares. This means he will still get to call the shots in profound ways; for example, the S-1 filing reveals Facebook will be a "controlled company." That means the board of directors will not have an independent nominating function and may elect "not to have a majority of our board of directors be independent or not to have a compensation committee."

In addition, Facebook will have two classes of stock--Class B shares have ten times the voting power as Class A shares. Zuckerberg has a controlling portion of Class B shares, and his control is likely to rise because Class B shares become Class A shares as Class B owners sell. Moreover, the IPO contains an unusual clause that means Zuckerberg will exert power over Facebook even after death:

"…in the event that Mr. Zuckerberg controls our company at the time of his death, control may be transferred to a person or entity that he designates as his successor... As a stockholder, even a controlling stockholder, Mr. Zuckerberg is entitled to vote his shares, and shares over which he has voting control as a result of voting agreements, in his own interests, which may not always be in the interests of our stockholders." 
Facebook's S-1 makes it clear what this all means to investors: "Our status as a controlled company could cause our Class A common stock to look less attractive to certain investors or otherwise harm our trading price."

And, "Mr. Zuckerberg will be able to effectively control all matters submitted to our stockholders for a vote, as well as the overall management and direction of our company."

And one of the 13 risk factors cited in the filing is: "Our CEO has control over key decision making as a result of his control of a majority of our voting stock."

Should investors be concerned with this? That depends in large part on what you think of Mark Zuckerberg. Many criticize him for Facebook's approach to privacy (and the S-1 notes that privacy laws "are subject to change and uncertain interpretation, and could harm our business.") But there is another side to Facebook's CEO--the one that demonstrates a commitment to grow the company's revenue model steadily and in a way that does not annoy users. Some investors may shy away from Facebook because of this measured approach to advertising growth, but it leaves me feeling more optimistic about Facebook's future.

Every page on Facebook has some advertising, but it tends to be highly targeted and unobtrusive. There are no banner ads, no interstitials, no dancing animated ads, no Flash ads with hidden "close" buttons and no takeovers. Facebook tries to make advertising as relevant as possible, not merely by permitting typical demographic targeting, but also allowing advertisers to target your and your friends' likes. (Admittedly, the way some brands are accumulating "Likes" undermines the authenticity of this sort of social advertising, but I see Facebook working to make advertising more relevant and not less.)

Facebook's cautious approach is even more evident on mobile, which the S-1 acknowledges is a crucial platform for the firm. At this point, there are no mobile Facebook ads despite the fact more than half of Facebook's 845 million MAUs (monthly active users) utilized a Facebook mobile product in December.  Facebook is so careful about launching mobile advertising that the S-1 notes, "Growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results."

I am not a financial adviser and am not dispensing investment advice, but I have already shared my opinion that a social media bubble has formed and is already bursting. My feelings are no different about the Facebook IPO from other social IPOs--the likely price presupposes a pace of growth that Facebook will be challenged (and probably unwilling) to accomplish. I would not be surprised to see the value of Facebook stock drop in the short-run as has happened with virtually every other social IPO thus far.

While I would not buy Facebook in the immediate future, there is every reason to think the stock will make a smart long-term play at some price in the future. Look at Ebay, which two years after its IPO hit a peak of $30.47 and then dropped to less than $8.00 in the dot-com bubble burst. The stock took three years to recover to its pre-crash price, and in the decade following its January 1, 2001 low, eBay rose 237% while the Dow Jones increased 10%.

Some will avoid Facebook due to the level of control Zuckerberg will exert. If that's a concern for a particular investor, then avoiding this stock will make sense, but those wary of the control Zuckerberg retains should note the success of other companies run by Founder CEOs. One study concluded that companies led by Founder CEOs outperformed others and found these firms “invest more in R&D, have higher capital expenditures, and make more focused mergers and acquisitions”

As with everything Zuckerberg touches, even the IPO is being done his way. What this all means is that those purchasing Facebook stock are not so much getting a share of the company as they are making a bet on Mark Zuckerberg. The IPO is carefully crafted to allow investors and employees to trade their shares on the market without altering the ironclad control held by Facebook's founder.

If you want a share of Zuckerberg's vision, you may wish to monitor the stock and jump in whenever you think the time and price are right. But if you do not share Zuckerberg's worldview or do not trust him, then there is nothing in the IPO filing that would suggest this is the stock for you. Even more than Jeff Bezos at Amazon or Marc Benioff at Salesforce.com, an investment in Facebook is an investment in Mark Zuckerberg.


Facebook S 1

Thursday, February 2, 2012

Chrysler, Fiat and the Brand Value of Authenticity

Chrysler's ad was epic and memorable: Grungy unmistakable scenes of Detroit, a gritty voice expressing the poetry of hard luck and hard work; the rising strains of Eminem's "Lose Yourself" accompanied by gospel choir; and finally the man himself emerging from a Chrysler 200 to point at the camera and assert "This is the Motor City, and this is what we do."

Duplicating this recipe perhaps seemed easy to Fiat, but when they mixed together the same sorts of ingredients, the result was a disaster. Authenticity doesn't have a recipe and brands aren't created by photocopying best practices.

Chrysler's ad is a moving, breathtaking, convincing piece of work that combines art and commerce. This is what advertising should aspire to be, yet vast quantities of marketing budgets go into lookalike ads that fail to alter brand perception or market share. You don't need to take my word that this ad is a success--it earned an Emmy and boosted Chrysler's financial results. Said Chrysler's CFO, “It clearly had a fairly big impact also on market levels with [the] Eminem Super Bowl ad being extremely well-viewed on YouTube."

Fiat tried to recreate the Chrysler recipe. Jennifer Lopez is "Jenny from the Block," so having her drive through the Bronx in a new Fiat 500c seemed like a can't miss concept. Better yet, JLo herself offers, "This is my world, this place inspires me."  Ka-ching! The doors of Fiat dealerships must have been ripped from their hinges with the rush of business!

Fiat's outcome with their JLo ads was a bit different from Chrysler's results, however. Fiat sold only 19,769 Fiat 500's in the U.S. last year, less than half their goal. Performance was so bad that the head of the Fiat brand in North America lost her job.

(As if to prove one of my recent posts on how meaningless most social media marketing metrics have become, Fiat at first crowed about the results of this ad, saying they received a 500 percent increase in traffic to their YouTube channel and bump of 47 percent in brand awareness. That's great, but did it increase consideration, sell cars or motivate loyalty--you know, the metrics that matter?)

The reason for the divergent results for Chrysler and Fiat have everything and nothing to do with social media. Brands cannot and never could buy authenticity with a TV ad, but it is possible to earn it with the right advertising campaign. Today in the midst of the social era, authenticity matters more than ever before. There is no "best practice" for how to earn authenticity--it is different for every brand, audience and organization.

Let's count the many ways Chrysler's ad earned authenticity and Fiat's ad did not:

  • Chrysler's ad was about Detroit; Fiat's was about a car. Chrysler's ad doesn't show the Chrysler 200 until 30 seconds into the ad; Fiat's ad puts the car full frame in the fourth second.  Can you imagine the discussion among ad execs at Chrysler--an auto ad that doesn't even show the car for 30 seconds!? That probably sounded risky and dumb, but authenticity isn't earned by impressions and GRPs; it's earned with confidence, context, shared values and history, all of which are on clear display in the Eminem ad.
      
  • Chrysler's ad had chemistry between car and spokesperson; Fiat's did not: Marshall and I don't hang out, so I cannot vouch for the fact he cruises around Detroit in a Chrysler, but you and I probably recognize it's possible. JLo, the queen of bling who arrives to her American Idol appearances in a limo, tooling around in a tiny subcompact car? Ridiculous on the face of it. Chemistry is hard to measure and even harder to fake--Leo and Kate's chemistry made Titanic work while real-life couple Ben and JLo caused Gigli to crash. (Hmm, that makes two times Lopez has failed to bring convincing authenticity to a relationship with a costar.)
      
  • Eminem isn't just "from" Detroit:  Search Google for where JLo lives, and you find answers like Bel-Air and Fisher Island off Miami. Do the same for Eminem and you get results like Rochester Hills, MI and Warren, MI. Eminem isn't just "from" Detroit--he (and Kid Rock) are Detroit for many fans. Eminem gives interviews to eighth graders in Detroit; he is a "Lions fan first and foremost," and  two years before the Chrysler ad, Eminem created a video "Love Letter to Detroit" for the NCAA finals. In contrast, JLo's association with the Bronx is so thin, it likely surprised no one when it was reported that JLo never left Los Angeles to film her scenes for the Fiat ad. JLo's spokesperson said "I don't see a problem" and compared shooting the ad to being on a movie set. Fiat found out the hard way that movies are about fantasy, brands are real and authenticity cannot be faked.
       
  • JLo is brand promiscuous: Authenticity and trust are a currency--the more you spread them around, the less you have. Eminem, for the most part, is picky about lending his credibility to brands, having appeared in ads for Brisk and Chrysler. Lopez, however, spreads herself around--Fiat, Kohl's, L'OrealHarman/Kardon, Gillette Venus, Tous Jewelry, Gucci and her own branded fragrances. The more brands celebs endorse, the less each endorsement means. Some people were surprised Eminem appeared in a Chrysler ad, and that surprise speaks volumes about the value Eminem brought to the brand. No one was surprised to see JLo appear in a Fiat ad, except perhaps that it appeared she was driving in a tiny clown car.
      
Authenticity is rarely earned by doing something the same way as someone else. Chrysler took risks, created something different, and earned the benefits. In both traditional advertising and social media, we can all learn something from Chrysler's campaign--but please don't try to duplicate the recipe!