Wednesday, March 28, 2012

Reciprocity: What Have You Given To Your Customers Lately?

Corporations are not altruistic. By definition, they must be selfish, generating income and protecting the financial interests of shareholders. However, the ones that act as if this is their sole purpose for existence are the ones that will fail in our increasingly social world. Meanwhile, the ones that give more get more. This is not just a "nice" idea; it is the science of reciprocity.

Many years ago, I was scammed--in the nicest of ways. Sitting in a Vegas bar, a couple of young women walked in and started making friends quickly. They had visited a "legendary candy store" and could not wait to share treats from the large bags of delicious goodies. Strangers became friends, drinks were bought, candy was consumed, and everyone was happy.

It only occurred later that these two had invested $10 in bulk grocery store candy and received a 1000% return on their investment in the form of drinks purchased by strangers. Brilliant! Why would someone buy a $15 drink for a person who just shared 25 cents worth of malted milk balls? Reciprocity, and it works for people outside of bars, too.

Forty years ago, Professor Dennis Regan at Cornell University conducted a landmark study that examined the concept of reciprocity. Subjects volunteered to rate paintings, but that was not what the researchers were studying. Rather, a research assistant left the room midway through the exercise, sometimes returning empty handed and other times with a soda, saying, “I bought one for you too.” At the end, the assistant asked the subject to do him a favor by purchasing raffle tickets. You can guess the results--people who received the gift of a soda were far more likely to purchase tickets, even though the cost of the tickets surpassed the cost of the cola.

When you search online for "social media reciprocity," you tend to find many links about personal reciprocity, such as retweeting people so that, someday, they may retweet you. But what about brand reciprocity? Why do brands make so many offers that are unemotional and self-serving? "Retweet us and we'll donate a dollar." "Like us and get a free bagel." That is not reciprocity; that is non-monetary commerce--a straight-up exchange of value.
One example I like is Sharpie. They run contests, as you would expect, but they have dedicated the Sharpie Facebook page to the creative works of their fans. Using your brands' social media platform to promote others' ideas and creativity is like a gift, and Sharpie gets reciprocity in return--3 million fans and 30,000 people "talking about" the brand on Facebook. (Not too shabby for an office product.)
Another example is Wheat Thins "Crunch is Calling" gifts. Sent unexpectedly to folks who mention Wheat Things in social networks, these delicious packages come with no request to tweet or post, but that is exactly what people do when they get the gift of Wheat Thins. A tasty gift is reciprocated, more often than not.
Given the scientific validation of reciprocity, I am surprised more brands don't grab a bag of dime-store candy and start handing it out in bars, metaphorically speaking. Have you seen some good examples of brands giving gifts in social media? Any great case studies of reciprocity you care to share? If so, please comment below.

Monday, March 26, 2012

Three Things Every Employer and Employee Need To Know About Social Media

The topic of employees' right to privacy and expression in social media has been front and center in recent weeks. Social media employment news has included Delta being called out for the non-work activities of an employeeFacebook taking a stand against employers asking for job candidates' social network passwords and the latest in a long line of employees fired for things posted to social networks.

While social media continues to evolve and much will change in the years to come, every employer and employee should by now understand a few simple things. Being ignorant of social media risks, best practices and laws is no excuse for employees making career-ending mistakes or employers stumbling into costly legal and brand reputation errors. Here are three things employers and employees should know about social media:

Three things every employer should know about social media:

  1. Training and communication about corporate social media policies are essential: Some companies do not yet even have a social media policy, but most have come to recognize that existing communication policies are insufficient to protect both employers and employees from the nuances and unique risks of social media. Other organizations have a policy but fail to educate employees on the risks and ramifications of their actions in social media; this is almost as dangerous as having no policy at all.

    Simply put, your employees--particularly younger ones who are social natives--are ill equipped to understand the corporate, regulatory and legal risks of their social media activities. If you are not reinforcing what is expected, what will get them and the company in trouble, and the consequences of mistakes, your brand is accepting needless risks and you are not doing your employees any favors.
  2. The best defense is a good offense--give employees every opportunity to vent in private and appropriate channels: Nothing a company does will prevent some employees from turning to social media to voice complaints; social media sharing is second nature to too many people to prevent every possible social media issue caused by employees. Nevertheless, that should not prevent companies from trying to prevent as many social media problems as possible.

    The answer is not to prevent social media access at work--employees all carry their social networks in their pockets and purses nowadays--but instead to furnish many ways for employees to share feedback within the company. This includes everything from passive solutions such as offering intranet forums where employees may discuss concerns to proactive solutions such as organized employee gatherings and groups to collect feedback. The best solution is nothing new: Strong, active, open and engaged leadership that listens to employees.
  3. Do not ask for candidates' or employees' passwords: Asking for employees' and candidates' social media passwords is problematic for several reasons. First, doing so may expose you to information that the person is in a protected group and open the company up to a discrimination claim. Also, your organization could suffer lost reputation if a candidate or employee shares the practice. In hiring situations, you might lose a qualified candidate concerned your organization demonstrates a hostile and distrustful relationship with employees. Finally, this practice requires employees to violate Facebook's Statement of Rights and Responsibilities, which states, "You will not share your password..., let anyone else access your account, or do anything else that might jeopardize the security of your account."

    Some assert there are legal risks to asking employees and job candidates for their passwords. I am not a lawyer and cannot advise you on the legality of checking social media for information on candidates, but asking for passwords is a dangerous and risky policy.

Three things every employee should know about social media:

  1. If you manage people, NEVER discipline an employee for what you see in personal social media profiles without consulting Legal or Human Resource professionals: Imagine a scenario: You visit an online forum or social network and find your employees disparaging you, your peers, or your company, in full view of prospects, customers and vendors. If you were to discipline the employees or consider a request that they refrain from further criticism, your actions could result in a variety of legal problems, including charges of unfair labor practices by the National Labor Relations Board (NLRB). 
    Some employee complaints are protected by law and others are not. The NLRB is actively shielding workers' rights to use social media to discuss the terms and conditions of their employment and criticize their employer. Recent NLRB decisions have ruled against companies that fired employees for complaining about coworkers' promotions, company policies or managers. 
    Managers cannot know every employment law or ruling, but your Human Resources and Legal resources do--use them and do not take unilateral action that can cause more problems for you than for a whiny employee.
  2. What you say and do in social media can get you fired: You probably know that social media can help you land a job; if so, it should come as no surprise social media can also help you lose one. While the First Amendment may guarantee you the right to free speech, that protects you from government infringement on your rights and does not apply to private companies.

    While the NLRB may be actively seeking to protect workers' rights to use social media to complain about working conditions, that hardly means you have an open invitation to gripe. The NLRB has upheld many employee discharges for social media posts, and chances are you do not and will not recognize the difference between a protected post and an unprotected one. Even if you do, relying on legal recourse rather than common sense is a very bad career idea; it won't help your reputation at your current organization or future employers if you gain a reputation for publicly griping about coworkers, bosses or company policies.

    Do not post anything in social networks--even ones where you presume the right of privacy--that you would not say or send to a boss or coworker. If you have concerns about your employers' policies, you are much more likely to affect positive change and protect your job by communicating these issues within your organization rather than on Facebook or Twitter.
  3. Your employer has a good reason to listen to you in social media: It has been my experience that many employees are concerned about having employers listen to their posts and tweets. This concern is understandable--there is an uneasy element of Big Brother to employer listening--but it is also important to recognize that employers have good and reasonable reasons to do so. A lawyer friend of mine recently said, "Companies do not monitor to pry into the personal lives of their employees. They monitor because they are required to."

    Corporations have a fiduciary responsibility to protect the company's assets, and this includes the reputation of the firm. They also have a legal responsibility to protect everything from trademarks and patents to private information about customers. Moreover, the FTC has indicated that companies must monitor the people who have material relationships with the firm to ensure they disclose the relationship when praising the company in social media. And if your firm is in any sort of regulated industry, there are likely a host of regulatory agencies with rules that require monitoring, record retention and auditing policies.

    Chances are your employer does not care that you love Ron Paul, support Occupy Wall Street or listen to Lady Gaga, but many companies have established or will need to set up listening practices to do what shareholders, governments and regulators expect and require. In fact, if an employer is smart, they will use monitoring to find employees who are participating in social media in concerning ways and counsel those workers before they cross a line that results in lost employment and income.

It may seem to some as if social media has matured and become a way of life. That is far from true--social media will continue to challenge and change laws, regulations, business practices and the nature of the employee/employer relationship. Until the dust settles--and that will not be for many years--both employers and employees are better off proceeding with caution. There are many landmines waiting for companies and workers in our new and evolving social era.

Friday, March 16, 2012

Your Brand and Employees' Repugnant Hobbies: On Delta Air Lines and Dead Polar Bears

Delta Air Lines is facing an organized effort to embarrass the company for one employee's loathsome but legal behavior. The situation once again demonstrates how "transparency" can come in unexpected, unwelcome, uncontrollable and intractable ways.

First, here is the story: Michele Leqve, in a blog post entitled "Mission Accomplished," recounts how she killed a polar bear with a bow and arrow. As an animal lover, I find her tale distasteful. She unleashes dogs to chase and exhaust the animal, tracks it down and shoots the bear with three arrows to end its life.

Michele Leqve and her polar bear -
© 2000 - 2009 WomenHunters™
As the amazing animal perishes at her own hand, Leqve is--get this--overcome with "amazement at the beauty of the bear." I was not there, but I am going to go out on a limb and guess the polar bear was even more beautiful moments earlier when it was alive, not bleeding with three of Leqve's arrows piercing its heart.

I am not the only one disturbed by Leqve's pride in killing an animal whose species is considered Threatened and Vulnerable. A petition posted two days ago has collected over 5,000 signatures. Animal defenders have taken to blogs to criticize Leqve and promote the petition.

While I find it nauseating, Leqve apparently has the right to kill polar bears. And people have the right to criticize her and post petitions. I am less comfortable, however, with the way many are tying Leqve's actions to her employer, Delta Air Lines.

The petition is not targeted at Leqve or the site on which she blogs her brave hunting exploits--it targets Delta Air Lines. Why? Because Leqve is an employee of Delta. There is no evidence Delta supported the hunt in any way, nor does Leqve mention her employer on her blog. Incensed animal lovers discovered the connection by turning to LinkedIn in search of information about Leqve.

The petition doesn't demand any actions of Delta, so I am not entirely sure what petitioners believe the airline should do about the situation. Should Leqve be fired for this legal act? Should Delta request she cease her legal hunting or blogging activities?

Flipping this situation 180 degrees, I wonder if the petitioners want their employers monitoring employees' recreational habits. Would the bloggers currently targeting Delta submit to an evaluation from their employers assessing how workers' personal activities fit with brand and corporate messaging? Of course, almost all employers have some form of employment agreement or policies that prohibit certain activities, such as ones that create a conflict of interest or violate laws, but does anyone really want their bosses reviewing and approving (or rejecting) activities that fall within existing laws?

With greater transparency and availability of tools for social action, we are not likely to see this sort of activity slacken. Employers are going to have to be prepared to deal with criticism of employees' after-work actions. What can an employer do in such situations? There are no clear cut best practices, and every situation will need to be evaluated independently.

For the most part, it is probably best to do nothing unless absolutely necessary. Most customers and prospects will understand that the company cannot be held accountable for employees' legal after-work activities. And, while it is difficult to silently observe mounting criticism, it is helpful to remember that most social media "crises" have a very brief half-life. Should criticism of an employee mount within a brand's Facebook page, it may be necessary to make a simple statement noting that employees' personal activities cannot be discussed in public communication channels.

Despite my strong personal feelings about Leqve's actions, I did not sign the petition. I simply do not believe it is Delta's job to insert themselves into employees' private lives. I hope you agree, but if not, please do not complain to my employer!

Thursday, March 15, 2012

Happy 18th Birthday SXSWi, Now Grow Up!

"I'm going to drop a lot of f%#$ing F-bombs, and if you don't f*#$ing like it, you can f@%!ing leave." Thus began an official session at South by Southwest Interactive (SXSWi). My reaction to this speaker matched my feelings about the entire SXSWi 2012 experience: It's time to grow up.

SXSWi turned 18 this year. SXSW originated as a music festival in 1987 and added SXSW Multimedia to mix in 1994. Although SXSWi now is legally an adult, you would be hard pressed to tell that strolling through hotel lobbies, 6th Street or the Austin Convention Center last week. SXSWi seemed less a conference for interactive and social media professionals than spring break for folks trying very hard to appear the exact opposite of what they really are--executives who work and consult with Fortune 500 companies. I had to remind myself that the guy in line next to me sporting a three-day growth of facial hair, knit cap, indie band T-shirt and overstuffed backpack wasn't a student but a professional who charges $500 an hour to tell CMOs how to build social engagement.

I think it's time SXSWi acts its age. Interactive and social media have moved to the center of corporate strategies, and professionals in this space no longer are lone evangelists fighting against marginalization within corporate structure. Ad spending in social media is up, the size of the social business industry exceeds $100 billion and social media budgets at more advanced enterprises are into the seven figures. As Altimeter's Jeremiah Owyang points out, social media folks are now earning the title of vice president when "two years ago, the average title was manager and director" (or guru and ninja).

We've arrived, but at SXSWi, we don't want to act like it. People are far more likely to tell you about the hot party they attended rather than the hot panel they observed. There was considerably more buzz about Jay-Z's performance than keynotes by Amber Case and Ray Kurzweil. Attendees couldn't wait to show off the great schwag they got, not the great insights they heard. And I was actually embarrassed watching interactive professionals dashing after branded T-shirts tossed from passing buses. My peer, Josh Salmons, hit the nail on the head when he observed, "SXSW is like Mardi Gras for nerds."

Other digital and social conferences are not like this. I have attended great events in the last two years such as the ANA Digital and Social Conference and the Social Media Insiders Summit. People at these conferences have fun, dress down and spend their nights partying, but education, insights and business come first. Maybe Austin brings out the "weird" in people, or maybe business execs feel pressured to fit in next to the rockers, folkies, actors and filmmakers in town for the other portions of SXSW.

Am I a grumpy old man? Perhaps, but I have worked for 15 long years building credibility for digital and social strategies in a world that often viewed them as fluffy and inconsequential distractions, removed from essential business processes. I think it is time for SXSWi to reflect the maturity, professionalism and impact of today's business-driving social and digital strategies.

Do you agree or disagree?  To paraphrase the foulmouthed SXSWi speaker, "if you don't f*#$ing like it, you can f@%!ing leave..." a comment below.

Saturday, March 10, 2012

Peer-to-Peer Lending: The Leading Edge of Social Business

Before Zappos and thrived; before and Beauty Jungle crashed; there was Amazon and eBay. These ecommerce pioneers weren't the first companies to conduct transactions online, but they were the first to take root and grow. Today we know the success stories, but in 1999 their future was hardly certain--while Borders was earning $92 million, eBay cleared just $10 million and Amazon bled $720 million. Ten years later, Borders lost $187 million and the two eCommerce giants earned a combined $3.3 billion.

A decade from now, perhaps we'll look back and speak of two social business pioneers, LendingClub and Prosper, in the same way we today speak of Amazon and eBay. One might argue peer-to-peer (P2P) commerce is nothing new; after all, eBay and Craigslist were both facilitating P2P transactions long ago, but these companies replaced and enhanced existing business models, such as classified advertising and flea markets, by bringing them into the digital age. Today, we see a new wave of social businesses creating forms of commerce that previously didn't exist outside of tiny transactions facilitated between friends and family members.

Never before have we seen scale brought to things like person-to-person lending (LendingClub and Prosper), car sharing (Wheelz and RelayRides) and space sharing (Airbnb). As in 1999, it can be difficult to see how these small companies might alter the world, but I believe these social businesses represent the next wave of change that will challenge traditional business models.

The primary P2P lending sites in the US are LendingClub and Prosper, and both are growing rapidly. Lending Club's 2011 loan volume more than doubled its 2010 totals, and Prosper is growing at a rate of 178% year-over-year. To learn more about the growth of peer-to-peer lending, I interviewed Peter Renton, who blogs at the Social Lending Network.

Renton notes that the strong growth of P2P lending is even more remarkable when you consider these businesses are not legal in all 50 states. "As laws stand right now it would be virtually impossible for any P2P lender to create a model that would please every state," notes Renton.

That may change with new action at the national level. A crowdfunding bill has passed the U.S. House and is gaining support in the Senate. This bill would not immediately make P2P lending legal throughout the US, but it is a step toward bringing P2P lending to every state. "I expect this will happen sometime in the next two to five years," says Renton.

One thing fueling the growth of P2P lending is the influx of institutional investors seeking better yields than they can get from other fixed income options. (Does this mean P2P lending is not really P2P?) "Prosper has received a $150 million commitment from a large institutional investor," notes Renton, "and Lending Club has seen massive growth in the last year in the institutional side of their business."

While investors are lining up, borrowers are not--at least not in large enough numbers to maximize growth for these two sites. Both P2P lending companies could be growing even more quickly if they could attract more borrowers. Renton notes, "There is plenty of money from investors and they continue to reinvest their payments, so there is always new money coming in. But borrowers have to be attracted one at a time."

All this growth in loan volume has not resulted in either company becoming profitable yet, but "Lending Club could be if they wanted--they are just focusing on growth for now," according to Renton. Both companies make most of their money from charging an origination fee of up to 5% for loans and a 1% service fee on all loan payments. With continued growth, Renton expects both sites will achieve profitability by the end of next year.

Will P2P sites someday challenge banks? Maybe, and that depends on what banks do. Even with the impressive growth, LendingClub and Prosper's loan volume is still tiny, Renton points out. "This month both companies combined will do less than $50 million in loan volume. They could do 100 times that and still not make a big dent in overall consumer lending."

Then again, growth like the P2P sites are experiencing demands attention. "If banks ignore it, then eventually they will see some erosion in their core business, but we are many, many years away from that," notes Renton. And, of course, banks could get a piece of the P2P lending action, if they wanted. "Nothing is stopping banks from entering the P2P lending space. In fact, I think when these sites start to get big, one of the leading banks will buy one or both companies."

Watching the growth of new social startups makes me want to party like it's 1999, but whether we will see Amazon-like growth over extended periods is uncertain. I would not discount, however, the level of change or pain that can come from today's nascent P2P lending sites and other new social businesses. As I like to point out, ecommerce represents less than five percent of total US retail, yet this small fraction is enough to undermine margins, threaten established companies and change consumer expectations and habits.

If you're curious about lending or borrowing in the P2P lending sites, Renton does a nice job of covering the business on his blog at Check it out!

Tuesday, March 6, 2012

Six Potential Adverse Consequences of Facebook's fMC Advertising Changes

Last week's Facebook Marketing Conference (fMC) brought a slew of big changes to the platform. Facebook has yet to fully deploy all of the new features, and we will not be able to gauge the true impact for quite some time. The outcomes depend not on what Facebook does next but how users, brands and regulators react.

Here is what Facebook hopes will occur: Users continue to adopt Facebook into their lives, giving advertisers more reasons to purchase new forms of social advertising on the platform. Users win with access to the most powerful, free communications tool in human history; advertisers win with access to consumers where they spend more online time than any other site; and Facebook wins by earning more marketing dollars they need to justify their post-IPO share price.

If the outcomes of Facebook's latest changes are less positive, it would not be the first time an organization suffered from unforeseen reactions. Digg, for example, famously altered its functionality and lost users after a "Quit Digg Day" revolt. I expect Facebook will do just fine as marketers and users adjust to the new fMC changes, but there are some potential unintended outcomes that could develop:

  • FTC pushes for much more obvious disclosure of sponsored ads in users' newsfeeds: Allowing marketers to turn their posts into ads within the newsfeed is not new--Twitter is already doing the same thing with Promoted Tweets--but is the fact these are paid ads obvious enough to users? The Federal Trade Commission (FTC) has a longstanding standard that people must recognize ads as such and cannot be duped into thinking advertising is content. The danger was framed well (inadvertently) by Forbes when it said, "The more Facebook 'ads' look just like the posts people and brands are already making on Facebook, the less they are likely to be seen as intrusive." True, and the more likely they are to run afoul of regulators.

    The Premium on Facebook ad for the Web
    contains a small "sponsored" tag while the
    mobile ad features no disclosure.
    In the fMC presentation, Facebook displayed two versions of Premium on Facebook advertising. The one shown on a desktop browser has a tiny "sponsored" at the end, while the sample mobile ad contained no such disclosure. This may have been an oversight by a graphic designer assembling the fMC presentation, but even the desktop version of these ads could call into question whether consumers can really, in clear and conspicuous fashion, identify advertising from content.

    Search engines struggled with this same problem in the early days of the Web, when some search engines allowed brands to buy their way into the results or to purchase ads that were almost indistinguishable from organic results. A decade ago, Google recognized this was a problem and set itself apart, promising, "Every ad on Google is clearly marked as a 'Sponsored Link' and is set apart from the actual search results." The FTC also recognized the problem and issued a "landmark recommendation to the search engine industry that it should improve disclosure of paid content within search results." It would not surprise me, given the reach of Facebook, if the FTC jumps into this very same issue again.
  • Users revolt and leave Facebook: Facebook is so deeply integrated into users' habits and into web sites that it is hard to imagine Facebook could face an exodus, although some folks seem to predict this with every change Facebook makes to the user interface. Back in 2009, the New York Times ran an article entitled "Facebook Exodus," noting "Things fall apart; the center cannot hold. Facebook, the online social grid, could not command loyalty forever." While the obituary was wildly premature, the article closes on a cautionary note as relevant today as three years ago, asking, "Is Facebook doomed to someday become an online ghost town, run by zombie users who never update their pages and packs of marketers picking at the corpses of social circles they once hoped to exploit?"

    MySpace and Facebook took
    divergent paths years ago.
    I do not foresee Facebook losing users, but if people revolt due to increased advertiser presence, it would not be the first time a social network lost for this reason. According to Alice Marwick, a researcher with Microsoft Research, "MySpace felt a lot of pressure to monetize quickly after it was sold to News Corp. And I think as result, they added advertising, they added things we might consider to be spammy, things users found intrusive." If users find Facebook spammy, I am sure Google would be more than happy to welcome new and returning users to its sagging Google+ social network. (The discouraging news on G+ keeps coming; just this week, Chitika Insights is reporting an overall 32% decline in activity when comparing current Google+ traffic levels to four months ago.)
  • Users revolt and unfriend large brands: Of course, Facebook users do not need to abandon Facebook and their existing social graphs if they object to seeing ads in their newsfeed--all they need to do is unfriend the advertisers. When using Premium on Facebook advertising, only a brand's fans will see the sponsored story in their home page newsfeeds; someone not connected to the brand will see the story in the right-hand side of their homepage where, as we all know, it is unobtrusive and easy to ignore. The fewer brands you like, the fewer sponsored stories you will see in your newsfeed.

    Of course, Facebook would argue--with great merit--that these sponsored ads are really just brand posts that might have organically appeared in fans' newsfeeds in the first place. It is likely Facebook users will not object to seeing sponsored posts from the brands they truly like, provided those posts are relevant and Facebook keeps the mix of brand-to-human posts lean. The onus is on the advertisers to make sure the posts they make and select are interesting to the audiences they target, or else brands could see fan counts shrinking for the first time in Facebook's comparatively brief history.
  • Brands may not adopt Facebook's new ad media in large numbers: It seems unlikely, but it is possible that marketers are just not prepared for the dynamic new ad model Facebook has unveiled. This is not your father's advertising with long lead times and carefully crafted creative. Instead, brands will need to monitor the effectiveness of their organic content, strike when the iron is hot and create an ad out of a post that is demonstrating great engagement.

    Agility is not exactly the strong suit of most large marketing organizations. Says Bryan Wiener, CEO of 360i, “The industry is not set up to support the new world order... Facebook is making it incredibly difficult for these companies.” He predicts Facebook's approach may require big disruptions in the way marketers and their agencies work.
  • Brands may demand powerful ways to unfriend fans: Many brands accumulated "friends" with little to no relationship with the brand. They offered Farmville items or sweepstakes entries in return for new "likes," which seemed like a good idea when it boosted brands' fan counts. But now Facebook is increasing the importance of paid media relative to earned media, and that means that brands with more fans will pay more. If you are Starbucks and your fans are true fans, Reach Generator may be worth the investment, but if your brand has a million fans who cared more for the freebie they got than for the brand, you're about to find out how expensive a mistake you have made.

    Augie does not like Gerber.
    I once "liked" the Gerber brand even though I have no children and couldn't care less about Gerber. I did so because I wanted to vote for a friend's child in a photo contest. Now, if Gerber wishes to use the new Facebook Reach Generator, the brand is stuck paying to serve ads to me--a truly and thoroughly disinterested consumer.

    What should a brand do if it accumulated many disinterested fans? It is not clear since there are no tools for managing your fan base in meaningful ways. Facebook is not like email--you cannot delete fans who have failed to open or click on your posts, nor can you target your posts based on source codes. Gerber and brands like it that engaged in a race for inauthentic "likes" may soon demand Facebook offer tools to pare fan counts in order to increase their advertising effectiveness.
  • More investment in owned communities: Some social media professionals have been questioning if owned communities have a role in a world dominated by Facebook. Why invest in your own Lithium or community, they ask, if you can build a community on the platform already used by almost one billion people?

    I have never bought this line of reasoning, because Facebook never really offered brands the opportunity to build true community. With the new timeline design reducing the prominence of fans' posts, it is an even weaker community-development platform today. Done right, Facebook and owned communities are not competitive but collaborative.

    Facebook's changes could push more companies to consider the value of building their own communities because brands will see an increase in cost to communicate with customers on the Facebook platform. In a New York times piece, Ben Winkler, chief digital officer of OMD, said it nicely, “The Facebook platform is undeniably incredible, but we must acknowledge that our customer relationships there are not owned — they’re rented.” Facebook may have just made it evident how important it is for brands to own their fans, not merely rent them.
Newton's Cradle
For every action there is an opposite and equal reaction. Newton's Law of Motion works just as well in marketing and social media as it does with physics. Facebook just released a metal ball in one of the world's most valuable Newton's Cradles. A reaction is all but certain, but exactly what that reaction might be is unknown.

What do you think? Will Facebook's changes cause no stir among regulators and users? Will marketers adapt to a new way of real-time social advertising? Are there other reactions we might expect in the coming months? Please share your thoughts in the comments below. 

Monday, March 5, 2012

Did Facebook Just Kill Earned Media?

Facebook says using Reach Generator will
increase the volume of engagement with
your brand (likes, comments and shares) by 2x
At last week’s Facebook Marketing Conference (fMC), the company announced new timeline features and ad programs, which are thoroughly explored in great summaries by TechCrunch and Attention. Marketers are atwitter (pun intended) over new opportunities for social media at scale, but the announcements made me wonder if Facebook was diminishing the power of earned media and elevating old-fashioned paid media.

Let me start with a simple question:

Which brand do you believe deserves to win in the social era: The one that earns the most attention through its products, services and brand, or the one with the biggest advertising budget?

Now, read what Attention has to say in its overview of Facebook's new timeline:

"Thus far, brands have invested in fans. And brands have invested in content to engage them. Now, by investing in Reach Generator and Premium on Facebook, brands have the ability to guarantee that fans see this content. While brands are paying for distribution, brands are receiving significantly more engagement. This will greatly increase a Page’s EdgeRank score, which will, in turn, grant a greater ROI as more of a brand Page’s content will be viewed over time."

Michael Lazerow, CEO of Buddy Media, said it even more succinctly on AdAge:

"While you're paying for distribution, you're getting significantly more engagement. This engagement is 'Facebook gold,' as I like to say. Your EdgeRank score will be juiced."

Wait a sec--brands that invested in fans and content now must invest in paid media? And paying for distribution will increase a brand's content's EdgeRank, Facebook's method for (authentically?) recognizing the content that fans most want to see in their newsfeeds? It sounds as if earned media has just taken a knee to the groin from old-fashioned Advertising 1.0.

I have mixed feelings. On the one hand, I think Facebook has finally given to marketers the tools they need  to drive success on the Facebook platform--the combination of Open Graph, new action types, richer fan pages, Reach Generator and Premium for Facebook furnishes a powerful (if still complex) marketing suite. On the other hand, I also cannot help but think back to the tenants of social media as expressed in the Cluetrain Manifesto: "We are immune to advertising. Just forget it..." Not so quick there, Cluetrain! There's a new sheriff in town--and he looks a lot like the old sheriff in a new uniform.

Different observers have different opinions what this all means, but I believe one thing is certain--Facebook users will see less organic brand content in their newsfeed and be exposed to more paid brand content. No, that is not exactly what Facebook execs said on stage at fMC; instead, they launched Reach Generator which, according to Ad Age, "lets you pay money to guarantee that your Posts get to at least 75% of your fans each month" instead of the 16% Facebook says sees wall posts currently. Facebook is also launching Premium on Facebook, which allows brands to insert their posts into fans' newsfeeds (both in the browser and mobile versions), saving brands the hard work of earning their way into fans' attention.

Facebook guaranteeing impressions can only mean one of two things. The first is suggested by The New York Times, which says we will see a great deal more ads: "Facebook’s hundreds of millions of users could soon be faced with a lot more advertising — in their newsfeed, on their mobile devices and even when they log off." I'm betting on option number two, which is the less dangerous one for Facebook: The number of brand impressions will stay more or less steady, but paid impressions will push earned media out of the way.

We all recognize that people don't sign into Facebook  to see what brands are posting. A little bit of that goes a long way, and too many brand posts--sponsored or organic--could easily get people packing their bags and heading to Google+, Path or another social network with less advertising (for now). If Facebook wishes to increase paid impressions while avoiding a user revolt against greater brand presence, the answer is easy: Simply decrease the opportunity for brands to speak within fans' newsfeeds for free in order to make room for the brands that pay. (Now, c'mon, you didn't think Facebook existed to allow companies to make money by collecting customers and communicating in powerful new ways for free, did you?)

Maybe this isn't an either-or situation but instead marks a new synergy between paid and earned media; after all, these new Facebook ads all begin their lives as posts, not traditionally-designed ads. Or maybe Facebook just eviscerated the difference between earned, owned and paid media (for better or worse). Michael Lazerow thinks so: "The lines between what marketers now refer to as paid, owned and earned media are now officially gone. Goodbye. Gone."

Still, if the way a brand gets noticed in social media increasingly depends on its checkbook, this seems to mark a new phase in the evolution of social media. Are we seeing the passing of the era of earned media so soon? Is Facebook now like television, putting challenger brands and small brands with limited budgets at a disadvantage against the brands that can invest liberally to get their messages distributed? And can we say that earned media is, in fact, earned if most people see it only because it is paid?

As I watch for Facebook's bold changes to be deployed more widely, I hope that earned media does not become locked behind a paywall. Mike Hoefflinger, Director of Global Business Marketing of Facebook, said Facebook is bringing back the relationship between customers and brands to the “good old days” when the guy behind the pharmacy counter knew your name. He then added that ”Premium offers on Facebook are the best way to get your stories in front of more people, more often…This is your opportunity to express your identity and tell your stories.”

Funny, but I remember the shop owner earning the relationship with me, not buying it.