Assertion

Online social networks will become increasingly important and will increasingly function like and have the significance of our more traditional real-world ("meatspace") social interactions. As advertising loses both its viewership and its impact, the desire to use corporate social networks to replace more traditional means of influencing potential consumers is increasing. And yet even high-traffic online social networks will not directly translate into means of selling products or communicating with customers. Since the IT group will ultimately maintain corporate social networking sites, it will be necessary for them to have a deeper understanding of consumer behavior, consumers' desire for information, and the sources of consumers' trust.

Contents

OPINION BY ERIC K. CLEMONS

The Situation -- The Crisis in Traditional Advertising

The use of social networks is exploding, at precisely the time that traditional means of advertising and of corporate communications are losing their impact. Online social networks did not cause the problems faced by traditional media, but they are emerging at a time when traditional media are under assault, and traditional media firms are turning to them with a mixture of well-founded desperation and as-yet-unfounded hope.

Traditional advertising is losing its impact and its ability to influence consumers. The statistics on the fragmentation of television, the move to premium channels, the move away from afternoon print to television news and then from television news to the Internet, the move to time-shifted viewing and skipping of commercials, all suggest that viewership of traditional advertising is at an all-time low. Likewise, research suggests that even those viewers who actually see ads and commercials no longer believe them; the credibility of advertising is also at an all-time low.

Advertisers believe they need some way to reach their customers. They have relied on push-based messages and paid-for monologues beamed out at their customers since the start of the Industrial Revolution. Moreover, manufacturers and retailers believe that their need for advertising has been amplified by the long tail of resonance marketing. Where once we had a single vendor of energy bars, we now have several hundred varieties from which to choose. Which is perfect for me? Do I know enough to know if I want low-carb or high-protein? Or one specialized for golf or weight gain or weight loss? Where once the increasing consolidation of the beer industry in the US suggested that my only choices soon would be restricted to which brewer's American lager I would drink, we now have several hundred brewers and thousands of specialty craft beers from which to choose. Again, do I know enough to know if I want an American IPA, a Belgian Strong, or a German Doppelbock?

Media moguls see their future, and they don't like it. The loss of viewers, combined with the loss of ad credibility among the remaining viewers, inevitably means the loss of ads and the loss of revenue. Since ads are the principal source of revenue for print media, and commercials are the principal source of revenue for traditional broadcasters, this change in advertising is catastrophic for their profits.

Online social networks seem to offer the next best hope both to advertisers and to the traditional media companies through which they reach their customers. Unlike the decline in television viewership, social networks are enjoying massive increases in participation. World of Warcraft, the leading multiple-user participatory gaming site, has sold more than 6 million copies of its game. Second Life, the most popular virtual reality world, now has over 8 million residents. The obvious thought is to try to harness social networks as a new medium for delivering the traditional advertising message.

The American Marketing Association certainly accepts this. It notes enthusiastically that millions of young Americans use Facebook and MySpace and that young Americans shop online. They conclude that since teens do not shop on Facebook or MySpace and that, for the most part, teens don't shop based on recommendations received through Facebook or MySpace, these two Web sites are leaving billions on the table. It is this sort of unexamined enthusiasm that has led to acquisitions like Google's purchase of YouTube for $1.67 billion and News Corporation's acquisition of MySpace for $580 million -- and then to Rupert Murdoch's subsequent claim only months later that MySpace could now be sold for $6 billion. 1

There are some early complications -- like at any given time there are probably only 30,000-40,000 people on Second Life, and many of them appear to be youths online from Korea or China, rather than the desired audience of consumers of mainstream American products. That is, Second Life just does not have the viewership among prime target audiences that advertisers have traditionally sought from mass media. For now, let's assume that this will change and that at least some social networking Web sites will attract large, stable, loyal followings, like the best American prime-time programming of previous decades.

I believe that transferring advertising from old media to new online social networks will not be straightforward and that success will not be assured. Online social networks are not designed to market anymore than traditional social networks are. People do not join square dancing clubs, golf clubs, bowling leagues, inner-city tutoring programs, or the PTA either to offer or to solicit product recommendations. Online it is effortless to flit from a social network like World of Warcraft to a recommendation system like TripAdvisor; online networks seem even less likely than traditional social networks to be harnessed by advertisers.

And yet it appears likely that all companies will explore mechanisms for creating online communities and for using them to communicate. Some will indeed use social networks for advertising; others will try to influence clients by means other than advertising; and still others will attempt to form a self-reinforcing community of loyal customers, swapping recommendations for how to use the company's equipment, recipes for working with the company's products, or simply opportunities for sharing memorable experiences. Below I explore the real limitations to the growth of social networking as a substitute for traditional mechanisms for corporate communications. I focus principally on advertising, since this is the area that has seen the greatest interest, the fastest growth, and the most hype.

The Complications -- Limitations to Harnessing Social Networks for Advertising

There are three complications, immediately obvious, that suggest limits to replacing traditional advertising with social network distribution of promotional messages:

  1. Putting up a social networking Web site does not guarantee loyal viewership.

  2. Loyal viewership does not guarantee trust in promotional messages.

  3. Trust is fragile and can easily be destroyed.

The fragility of trust in turn suggests two further problems:

  1. Content cannot be controlled. Attempting to censor users and exercise control over the content they post is not compatible with trust. Users will say what they want, which is not necessarily what producers want said.

  2. Trust cannot necessarily be monetized. Attempting to charge companies for promotional messages and then offering to pay users to promote products to virtual friends online will be catastrophic.

In particular, hidden manipulation violates the basic norms of behavior in social networks, whether they are face-to-face or online. The Internet is more transparent, and experience is shared more rapidly online even than through gossip in a small town, and attempts at online manipulation or misrepresentation quickly become visible. Censoring content and paying for viral marketing and anonymous sock puppeting 2 will quickly destroy trust and, with it, any value the Web site might have enjoyed as a means of product promotions.

The Resolution -- What We Know So Far

I believe that I now understand the conditions for obtaining and retaining loyal viewership. A social networking Web site must offer characteristics of a real-world meatspace social network.

  • Personal. Networks must be relevant and interesting to me.

  • Participatory. Networks must offer opportunities for participation and interaction.

  • Plausible and believable. Like interactions in our real world, online interactions must follow some sort of predictable, plausible rules. We know how gravity works, and we know when humans are angry, or generous, or amused, or bored. We begin to learn how our Warlock partners will behave and the characteristics of the various monsters we encounter on our quests.

  • Possibility of physical transition. Of course in our real-world social networks, we have an almost effortless transition from the in class to the guys after class; some people will be in one network or the other, while some will be in both. Some social networks, like online dating sites, require the ability to make a transition from the online network to the real-world network. For some social networks (e.g., Facebook), this may occur regularly, while for others it may be very rare (two Second Life avatars may meet on a virtual beach, only to discover that one belongs to a person in California while his counterpart is actually in Korea).

We call these the Four Ps of Online Social Networking.

The Resolution -- What We Still Need to Learn

I am less certain of how to harness YouTube, MySpace, or Second Life.

  • Does paid placement really work? Do you want the actors in the next Harry Potter movie to break out of character and try to sell you toothpaste or a new car? Do you care if the Mindless Zombie you attempt to kill is wearing a pair of D&G jeans? Do you care if the lovely avatar you are trying to make it with in Second Life appears to be drinking an Absolut on the rocks?

  • Does word-of-mouth advertising work in virtual worlds? Would you be influenced if a virtual friend from MySpace started talking to you about detergent? Would you trust this? Would it affect you if you knew that Rupert Murdoch and his News Corp. owned MySpace? Would it affect you if you knew that News Corp. had paid over $600 million for MySpace and was getting paid by Procter & Gamble to push Tide detergent? What if you knew that News Corp. was paying people to push products on MySpace in return for payments from their manufacturers?

I think not. That does not mean that social networks cannot influence shopping behavior, but heavy-handed attempts to sell are so outside the role-playing of games and the norms of behavior that they will fail. Moreover, a Blood Elf or Undead Priest is not where I go to get information on good wine, a good accountant, or a good daycare center; I have other networks for that, where I know the individuals providing the advice, and I have reasons to believe the individual providing it will have experience and preferences similar to my own. Worse yet, when an office colleague gives me advice there is a very high probability that he truly is my colleague and that he is not getting paid for the recommendation. The mere attempt to monetize referrals in MySpace would probably destroy the commercial value of recommendations.

Likewise, we in the research and business communities still have much to learn about how firms can best create and harness their own social networking Web sites.

  • Clearly, organizations will need to learn how to promote and encourage personal and participatory designs, allowing real people to post and respond to content of interest to them, even if the content is not of interest -- or worse yet, is unflattering -- to the hosting firm.

  • Content must be plausible, which means that it must be believable, which in turn means that it needs to be outside of the control of the hosting firm. Some censorship is mandatory, since posts that are libelous, illegally damaging to competitors, or truly offensive to the public need to be removed. But editing must be limited, since censorship and content creation solely for the benefit of the host destroys the site's credibility.

  • Most importantly, we are all still learning how individuals use online content and online reviews in their selection and purchasing behavior. Car buyers use comparison Web sites primarily to determine what they will pay. Discount hotel buyers use online reviews to determine which properties to avoid. Luxury purchasers and buyers of resonance items like designer beers or new high-performance golf equipment use reviews to determine which products to consider.

Above all, corporate social network hosts must assume that the Net will provide nearly perfect transparency. The risks associated with consumers' detection of manipulation of their online communities are so costly in the marketplace that firms should act as if manipulation will always be detected and and as if it will never be safe. I believe that if you edit content, remove unflattering posts, employ sock-puppet positive reviewers, or pay some network participants for providing recommendations for you, your community will know and will quickly desert you. Understanding this intellectually is relatively easy; developing the willpower to avoid posting your own more flattering content, or to resist deleting negative posts that you find on your Web site, will be more difficult.

The Role of IT

The planned uses of social networking transcend advertising and extend to all areas of corporate communications. The IT group will inevitably be drawn in, as indeed it will want to be, even if initially only because it wants to ensure the successful operation of the company's Web site. But the IT group can also communicate; IT professionals have much to offer, based on their experience with users' reactions, interactions, and perceptions.

In Conclusion

Using social networks as an alternative to traditional forms of corporate communications has promise, but it entails real risks as well. Obtaining trust is difficult and time-consuming, and attempts to harness trust for corporate purposes will be difficult. Heavy-handed attempts at manipulation of content and obvious use of content to influence beliefs and behavior will eventually be detected and, when detected, will be unmasked across the user community. Trust is fragile and easily destroyed.

Direct attempts at monetizing trust will be even more dangerous. Blatant use of paid, push-based marketing messages will be detected and largely ignored; consumers have already found alternative trusted sources of product information and recommendations. Finally, the use of sock-puppet spokespersons and paid shills masquerading as online friends offering sincere recommendations will eventually be unmasked and will engender enormous ill will among the potential customers the firm was trying to influence. Rather than serving as viral marketing on steroids, clumsy attempts at monetizing trust are likely to become public relations disasters.

While we certainly are not prepared to embrace social networks as a replacement for traditional advertising, we are likewise not prepared to declare them to be irrelevant or without impact. They cannot be controlled, and they will not replace traditional media as a reliable and controllable means of delivering prepared messages. This does not mean that they will not be used, or that they will not have impact, both on social structures and behavior and on marketing strategy. Indeed, whether or not they can be harnessed, they will be used, and they will change the nature of telecoms, of social interaction, and of the scale and scope and structure of business, as thoroughly as the telephone did in the century after its introduction.

1See www.techcrunch.com/2006/11/15/news-corp-myspace-worth-6-billion/.

2Sock puppeting is the practice of using anonymous posts or posts under pseudonyms to promote yourself or your company online.

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COMMENTARY BY ROB AUSTIN

During the third week in February 2007, a friend sent me an e-mail with an embedded link to YouTube. The e-mail said, "Check this out; dawn of a new era?" I thought at first that this was a general remark about the significance of YouTube, but then I clicked on the link and was fascinated to watch David Neeleman, CEO of JetBlue, offering an unscripted, off-the-cuff, and sincere apology to the company's customers. 3

A week or so earlier (on February 14), JetBlue had experienced major problems with a winter storm and had much-publicized difficulties getting customers off airplanes in New York (some folks were stranded for more than nine hours). As I watched Neeleman say how sorry he was and describe steps the company would take to avoid a repeat, as he hemmed and hawed, I found myself becoming nervous for him. Some of it was the intentionally unpolished way he was coming across; but the bigger part of the reason my palms had begun to sweat while I watched was that I felt the company was walking a very, very fine line. It was experimenting with a new means of communicating with customers in its target demographic. An exciting experiment, but one that also, I felt, entailed risk.

The management of JetBlue had apparently made a decision that the informal YouTube ethos had potential to reach out to customers in a way that conventional apologies could not. A press release or a spokesperson (the traditional ways of communicating after such an event) would be regarded with so much cynicism in our modern era that it was worth trying something new. The risks arose from the fact that this community, this social network, had norms in place already; if the JetBlue apology on YouTube violated those norms, if people in the community perceived the video post as manipulative or packaged, the company's efforts (earnest from all indications) might backfire. To this day, I applaud JetBlue's courage in trying this experiment.

JetBlue has been on the forefront of this kind of experimentation and has encountered more than its share of difficulties in blazing a trail. More recently, the company has provoked a very different but no less interesting problem, via its apparent sponsorship (much overblown, not real sponsorship as it turns out) of a political convention organized from a blog. Fox News commentator Bill O'Reilly mined the comments (the miscellaneous messages anyone can leave behind in reaction to the blog's official posts) of the blog and produced prime examples of what he has labeled "hate speech." As anyone who has spent any time on the Internet knows, mining the comments of just about any political site will produce examples of some pretty hateful rhetoric. The blog in question, Daily Kos, happens to lean toward the left (you be the judge of whether the blog itself contains hate speech; in my brief perusal of it, I don't think it does); but right-wing blogs could be subjected to exactly the same kind of unflattering portrayal.

Politics aside, what is so interesting about the Fox News attack on this blog and on blogs in general? 4 A traditional media outlet seems to have declared all-out war on a new and potentially disruptive rival. To translate this into Eric's advertising contexts, it's as if a traditional advertising firm produced ad copy that said: "Get this great new product, just $19.99 -- and by the way, don't believe those blog-based advertisers, because somebody's probably paying them to say that just to get you to buy something."

The net of all this, in my mind, is to point out just how carefully companies must tread in this new space because of the already-established norms and because of the threat this new channel represents to established players. Without extreme sophistication, you can find yourself caught in the crossfire of a battle you would never have intentionally joined.

Lest you think you can skip the whole Web 2.0 thing with all its complexities, realize that sometimes this communication channel can insist on being addressed. Nintendo realized this in late 2006 when customers began to post YouTube videos of the wrist strap breaking on a component of Nintendo's Wii gaming platform. A surprisingly large number of videos appeared depicting Wii controllers flying across the room and smashing expensive plasma TVs (the controller simulates, for example, a tennis racket, so you are supposed to wave it around like a real racket -- now imagine, during a tennis serve, losing your grip on the racket handle). Before long, Nintendo had a real problem on its hands, which led to a worldwide recall and its own YouTube video posting.

This issue of trying to figure out how to tap established social networks for commercial purposes is one we've seen before and will see again. When Novell, IBM, and their partners decided to ally themselves with the Linux open source community, they were walking a pretty fine line too, undertaking an experiment similar to JetBlue's. The open source community was notorious for its idiosyncratic norms, for being not entirely accessible from outside the community, and for its suspicion of corporate influences. In the minds of many Linux community members, Linux had proven the viability of alternatives to commercial development models, so they were less than thrilled by the entry of commercial players into the open source experiment.

Smart IT managers will get out in front of the important new trend that Eric has identified. You may end up communicating with customers via these new channels in a deliberate way, or you might be dragged into it as Nintendo was. Regardless of how it happens, the IT department can prepare to lead when it happens. Those employees you might regard as the least social in real space might be best positioned to help you understand the norms of their Web-based social space. As I've shown, this is treacherous territory for companies, but you'll have to traverse it eventually.

NOTES

3See "Our promise to you" (www.youtube.com/watch?v=-r_PIg7EAUw).

4See "Fox attacks bloggers" (www.youtube.com/watch?v=mpht4sXDhx0).

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COMMENTARY BY STEVE BARNETT

As an anthropologist who has studied business organization styles, advertising, and younger employees, I believe it is timely to explore the implications of newer networking Web sites and user values for consumer trends, including limits on traditional advertising, misguided attempts to inject advertising into networking activities, and innovative communication strategies. Younger people have moved on from physical world networking to virtual networking and that changes their concepts of self, other, and what matters in general. Traditional advertising assumes a "real" self that is consistent and can be targeted for specific products. What's happening now is that virtual networking encourages multiple selves and self-experimentation so that appealing to this "real" self is often irrelevant. Similarly for the "other," who can also be a temporary construct that can be modified quickly in Web-based interactions. This flux creates an environment in which what is important at one moment becomes pointless at another.

My research (academic and business) suggests that advertising styles have evolved in a number of ways since WWII, despite most advertising agencies asserting the continuity of advertising methods and strategies. And that evolution will continue -- we need to understand what the next iteration of brand communication will be, rather than just assuming that the dead hand of competence is sufficient to create product differentiation.

Based on my research experience while teaching at various universities (MIT, Brown, Princeton) plus my business background (senior executive at Nissan North America, Citibank, and Ogilvy & Mather), I believe it is possible to understand these new forms of networking and their significance for advertising styles. That research needs to be innovative, evaluating how individuals actually use these networks and how that usage impacts their sense of self and their attraction for various products and consumption values.

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COMMENTARY BY LEE DEVIN

Eric's ideas feel mostly right to me, but I can't get past the sense that the Internet we're talking about is so primitive that our attempts to guess its future shape and effects on commerce are just that: guesses.

We're like those nervy pioneers who bought the first automobiles: we're seated atop our horseless carriage, tearing along, faster than human beings have ever moved before. Some sensible folks believe that such speeds are actually dangerous to human life. I think that if we recognize something similar about this www.thing, if we understand that we're hanging on by our fingernails, that we're in brand-new territory, we can get in position and react usefully to this rapidly evolving opportunity.

So how can we do that?

First of all, we can recognize that we don't even know what the box is that we want to think outside of. While that may be daunting at first, it's actually liberating. It means that unfettered imagination is the most reasonable tool we have. It places a premium on a kind of freedom we don't usually get to experience: the freedom to think up crazy ideas and chase them as far past current common sense as we have energy and brains to do. We'll be amazed how far that is.

We must (we get to!) retire our careful (and careworn) protections: "Naw, we can't do that," and "That'll never work," and "That's not very realistic," and "How can we pay for it?" We must (we get to!) replace all those with "Wouldn't it be great if we ..."

We'll need some help. Luckily, there's a whole class of smart people who do exactly this as a matter of professional routine. I mean artists, whose job it is to dream up things no one has ever seen before, to create brand-new realities, and imagine themselves into them. Artists have methods; we can learn those methods and apply them.

Let's do it!

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COMMENTARY BY JARON LANIER

I'm going to take an unpopular and contrarian position: the Internet industry is in danger of inflating an advertising bubble, and social networking could serve the role that subprime lending recently did in the housing market. This is not a popular thing to say around Silicon Valley.

Points in favor of the argument:

  1. Even the largest-scale Internet designs are still mercurial during the current era. It's entirely possible a MySpace, YouTube, or Facebook could become as tired in a few years as AOL is today. The reasons are:

    1. Strong life-phase identification coupled with generational identification. That means each new batch of kids latches on to pointedly new and different Internet sites and designs but doesn't seem to stick with them as they grow up. In the classic model of the entertainment business and marketing in general, kids retain an affiliation with their youthful culture throughout life. It's still early in the story of the evolution of the Internet, but that pattern doesn't appear to hold for Internet designs. AOL is one example, and there's a strong current of buzz that MySpace is becoming passé. The problem is that investments are still being made on the assumptions of old-media marketing, and that could spell a long series of expensive bad investments and unsustainable losses.

    2. Technological shifts can occur rapidly, which can undermine Internet designs. For instance, the open source Firefox browser is immensely popular, and there's an effective and free ad-blocking plug-in available for it. It's entirely conceivable that a plug-in like this could take off suddenly and choke off a large portion of the income of the largest Internet players. There's an interesting behind-the-scenes struggle by the big Internet players to prevent this from happening, but only time will tell.

  2. A disturbing proportion of online advertisers have not exactly been blue chip firms, and that can spell trouble in the long term. I don't have the proper data to prove it, but it appears to me that Google, for instance, makes a larger percentage of its advertising income from questionable advertisers than is the case for television, newspapers, or the other old-media competitors. (The top Google AdSense keywords for this month suggest that its top advertisers are hawking such things as discount cosmetic surgery, questionable mortgages, and come-ons to suckers willing to pay to learn how to get rich quick on the Internet.) These are the kinds of customers that can disappear suddenly. (On the other hand, there's an argument that in a more general sense they are the most reliable class of advertising customers of all.)

  3. The fundamental emotional transactions of social networking sites are disappointing to many users. People feel the weight of social obligations without the rewards of reliable or close contact -- or at least that's what I've been hearing from marketers doing focus groups and academics studying the phenomenon. That doesn't mean that social networking is going away; it only means that we haven't yet seen it in a form that will achieve persistence.

  4. Historically, advertising has always positioned itself within delivery platforms that enjoyed either a natural monopoly or something close to it. You couldn't really get off the bus you were on to go read a different ad on the wall of a different bus, for instance. But as technological gadgetry becomes ever more intimate, that situation changes. It's entirely conceivable that a large number of people will soon hear ads at the beginning of subsidized phone calls, for instance. And that might happen on a technology base along the lines of Skype, which isn't "sticky" at all. That means that consumers could switch to another similar service easily and with only a nominal penalty.

There's a zero-sum game inherent in competing for the attention of people, but that fact has been obscured in the past by the zero-sum nature of advertising placement opportunities. If there are only a limited number of billboard locations and TV channels, it's moot that there are also only two eyes and two ears and a certain number of waking hours for each person. Any given advertising strategy will soon be competing against not just similar strategies but a multitude of experimental ones that are about to appear.

This trend could be self-limiting with a nonlinear dynamic. Advertisers are gaining better data about the efficacy of ads, and while that is of benefit to companies like Google for the moment, it also means that if efficacy drops off suddenly, there will be no buffer: revenue will drop off just as quickly.

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COMMENTARY BY LOU MAZZUCCHELLI

Let's take Eric's assertion line by line.

Online social networks will become increasingly important and will increasingly function like and have the significance of our more traditional real-world ("meatspace") social interactions.

Online social networks are rarely social and barely networks. The herd mentality of investors, coupled with the early success of sites like Facebook, has led to a proliferation of "social networking" sites without much proof of economic efficacy. Clearly, there are questions firms need answered before they start assuming these sites are marketing's next silver bullet and begin investing heavily. We have seen this phenomenon before in the first Internet bubble. An attention-challenged and fickle audience makes one wonder if the end state for some types of social networks could just as likely be the bottom of the other half of the parabolic curve (would that make them dead virtual meat?). From a marketers' point of view, is it already too late to cash in on the novelty aspect of social networks? Perhaps now the message has to be meaningful as well as extant. It's not obvious how firms can best leverage these networks.

As advertising loses both its viewership and its impact, the desire to use corporate social networks to replace more traditional means of influencing potential consumers is increasing.

The once easy-to-find homogeneous prime-time television audience has been fragmented into myriad media and extended demographic segments that likely sum to an audience exceeding traditional television media consumers; some of these segments are more likely to frequent the Web than a television channel. Big ad agencies get it. The New York Times recently described Publicis Groupe's plan to "build a global digital ad network that uses offshore labor to create thousands of versions of ads. Then, using data about consumers and computer algorithms, the network will decide which advertising message to show at which moment to every person who turns on a computer, cell phone, or -- eventually -- a television." 5 Companies like Visible World are adding technology to the mix to automate the creation of variants in near-real time, so the resulting advertising can react to content -- approximating a shared experience between advertiser and viewer.

Social networking can serve as another key channel. But so far, experiments in virtual spaces like Second Life are decidedly mixed -- perhaps the best commentary on the real value of Second Life is the tremendous outcry from its denizens when Linden Lab recently announced its intention to outlaw gambling businesses. I invite you to go, right now, to the Toyota pavilion in Second Life and see if anyone is there beside yourself. The challenge is how to put these new channels to work for the products and services your firm is selling.

And yet even high-traffic online social networks will not directly translate into means of selling products or communicating with customers.

This is true if there is nothing other than presence in a social network or virtual world. The novelty has passed. Companies that figure out this piece of the puzzle will have a clear advantage.

Since the IT group will ultimately maintain corporate social networking sites, it will be necessary for it to have a deeper understanding of consumer behavior, consumers' desire for information, and the sources of consumers' trust.

It may be that IT will have to come to a better understanding of consumer behavior, but not because it is maintaining corporate social network sites. The architects and designers of such sites would be well served by an understanding of their intended users and the larger social context. That understanding will be equally vital in creating any system for consumer interaction, social networking systems, and the inevitable post-social networking ones that follow.

Knowledge of IT and consumer electronics trends will play a critical role in aiming ahead of the fast-moving social network target. But building and maintaining trust between companies and customers using new media will take more than gadget savvy. Interactive communications, and interactive communications across multiple media are just beginning to be understood. The world of marketing and advertising is definitely in flux. A much clearer understanding of the market forces at play is essential before you rush headlong into still-immature social networks.

NOTES

5Story, Louise. "It's an Ad, Ad, Ad, Ad, World." New York Times, 6 August 2007 (www.nytimes.com/2007/08/06/business/media/06digitas.html).

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COMMENTARY BY RICHARD NOLAN

I concur with Eric's notice of early alert of social networking to business and his call to find out more about it. As pointed out by others, early adopters are experimenting with social networking, and the initial results may indicate precursors to another important dimension in the way business interacts with its global customers and potential customers. And it can go further by engaging interest groups and others in ways that may influence the profitability and competitiveness of a business. Social networks now exist, and they cannot be ignored. Management needs to figure out how to harness them.

I am reminded of the bike lock company case. The company advertised its bike lock as "unpickable" and almost impossible to cut off. Suddenly, sales declined, and management was in the dark as to why. Later, it discovered a popular blog showing how to pick the unpickable lock. Here, management was ignoring a phenomenon that existed, and the head-in-the-sand reaction was quite costly.

If you post your own reviews, praise your product excessively, edit out the bad reviews, or trash your competitors, you will be outed. Social networks will certainly influence customers' behavior, but social networks cannot be hijacked or controlled as a substitute for advertising.

There are important new principles emerging in the Information Age. One is being proved in the open source community: "All of us are smarter than some of us." So to think that management is going to act as the kingpin for information about its company and products is just plain wrong and, worse, terribly naive.

Another principle is: "You can know everything about anything." Indeed, Eric's explanation for product and service proliferation is that we are now smart enough to find the offerings that are perfect for us, no matter how complex and cluttered the market may appear. Manufacturers don't need to advertise the way they used to; if companies make the right stuff, consumers will find the stuff that's great for them. It is user-generated content, pulled in by users who want it, not paid commercial messages, pushed out on the unwilling listeners, that makes us smart.

While these principles are still in their infancies, it behooves the IT leader to be alert for what Eric is talking about, to thoughtfully consider the importance to business, and to respond appropriately.


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