["In the absence of clearly-defined goals, we become strangely loyal to performing daily trivia until ultimately we become enslaved by it." - Robert Heinlein (1907 - 1988)
Shel Israel, FORBES Contributor
Commenting on Facebook's recent loss of GM as an advertiser, the Washington Post has posted an opinion piece saying that Facebook's biggest problem is that it's a media company, basing its profits on ad revenue.
Well of course it's a media company. So is every other company and organization these days, and for that matter, so are you and I. That doesn't stop Facebook from also being a social network, as the Post implies. In fact, all social networks are media companies and there users provide the content from which they derive revenue. The fact that hundreds of millions of people provide it to various social networks shows the promise of social networks, not a weakness.
Journalist Tom Formeski who quit his job reporting for the Financial Times, a traditional media company to start a new media company, Silicon Valley Watcher is perhaps best known for declaring that every company is now a media company. He's absolutely right. Every company can-and does- post its own content online and to gain customers, prospects, investors and talent.
In my view Foremski is obviously right. Companies likeDell, Intel and GM have their own digital properties. They use them to publish interesting and useful content that could be called news. Instead of inserting ads in other media company properties, they increasingly use other own sites in ways that people find more credible and engaging then traditional ads that often feel like unwanted intrusions.
When you think about it, Formeski did not go far enough. In this new Conversational Age, every person who posts content online is actually a media company. Not everyone who posts online is ad supported-thank the Internet gods for that-but nearly everyone who posts online is giving something they know, think or feel for some sort of personal benefit to their work or life. It may be revenue or recognition, but there is some sort of expectation that there is a return on the investment of their time and sharing.
Is Facebook a media company? Of course it is. Should potential investors consider the repercussions of GM cutting it's ads? Of course they should. But the problem, as Robert Hof pointed out on Forbes yesterday may be more for GM than Facebook, and from my point of view it may be a problem for traditional advertisers more than for Facebook
The issue that GM, the Washington Post, Forbes and all media companies using the traditional advertising model need to face is not whether Facebook is a media company so much as whether or not advertising techniques have fallen behind these digital times.
Just about every institution has changed in the new Conversational Age, including media. What really hasn't adapted is advertising. Extremely few interactive ads have ever been served up and those that have seem less than remarkable.
Facebook's problem-if it has one-is not that it is a media company. It is that it is a social media company whose advertisers have not yet figured out how to adapt and profit in modern times.
A Local-Social Strategy to Make Big-Box Stores More Relevant to Their Communities
By: Clara Shih
Long before the digital age, all business was local and social. Customer engagement was paramount. Shopkeepers, barbers and Avon ladies alike intuitively knew that their ability to connect with customers would often determine whether a purchase would be made. They understood that building long-standing relationships with customers would result in repeat visits and loyalty. For many successful proprietors, this meant knowing customers by name, remembering their likes and dislikes and being on hand to answer product questions. Years before founding Walmart, at the age of 26, Sam Walton put these principles to work as a variety store manager in Newport, Ark.
On stage at fMC (Facebook's marketing conference) earlier this year, Walmart CMO Stephen Quinn evoked the earlier era: " . . . a retailer would be a pillar in the community. [Retailers] would know not only everybody, but their likes, what they thought was interesting, what new products they might be interested in.”
What happened to the shopkeeper who cared about customers? The answer is simple: technology. Technology has enabled two enormous changes to sweep across retail: national mega-chains and more recently, e-commerce. Both have played key roles in driving down prices by introducing greater transparency, efficiency and economies of scale. But this has come at a cost: the customer experience now feels mass-produced.
A central theme of fMC was how social media provides a way to put a human touch back into business. Facebook executives, including David Fischer, Mike Hoefflinger and Chris Cox, took the stage to explain how Facebook’s Timeline redesign provides an opportunity to “reintermediate” a human touch into online interactions with customers. Less advertising, more engagement. Less cookie-cutter, more authentic. Less corporate, more local.
The biggest retail organizations around the world are slowly awakening to this sea change. Quinn and his team at Walmart have recommitted to a “social-local strategy” that would have made Sam Walton proud.
Walmart has launched thousands of Facebook pages, one for each of its brick-and-mortar stores. Designated store employees who have received special training on social media are responsible for maintaining the pages. They will respond to customer questions and issues, share targeted local promotions, and discuss town news or events, such as the local football game. Quinn says social media is enabling Walmart to “go back to the future” by providing an authentic local customer experience, but at scale.
A growing number of brick-and-mortar retailers from Lululemon and Home Depot to 24 Hour Fitness and Quiznos are embracing social-local. According to a report published last month from Mainstay Salire, local Facebook pages already outperform corporate pages by a factor of 40.
Disintermediation is fine for highly commoditized brands and products, but if you want to build brand differentiation and customer loyalty, there are no shortcuts to authentic engagement. Certainly, social-local requires greater coordination than having brand pages alone, but like anything, what you get out of social media is proportional to what you put in.
Retail e-commerce sales topped $61.8B in Q4 of 2011, but this still amounts to less than 6% of total retail sales. Embracing a social-local strategy allows retailers to capitalize on the shift in consumer behavior toward digital, social, and mobile technologies at the store level, where most of the transactions are still taking place, even while investing in growing e-commerce channels over time.
The old shopkeepers, barber, and Sam Walton had it right all along. Customers want to be treated like real people, not an audience segment. Having 20 million fans secures bragging rights for a brand, but from the perspective of the fan, it’s far more engaging and rewarding to be part of a smaller, more intimate community.
Today, social-local is a really good idea. As more of your customers get smartphones, check in to your store locations, and begin demanding authenticity with a human touch, it will soon become mandatory.
ABOUT THE AUTHOR
Clara Shih Clara Shih is CEO of Hearsay Social.
Facebook’s Value Isn’t Clicks, It’s Using Online Behavior to Influence Offline Actions
By: Dave Williams
Henry Ford is often credited with saying that if he had asked consumers what they wanted, they would have asked for a faster horse. Whether he actually said that or not, it’s a great reminder that successful businesses look to the future. It’s ironic that GM, one of Ford Motor Company’s biggest competitors, demonstrated its eye on the past by pulling approximately $10 million worth of Facebook ad spend. The timing of this move is suspect, given its proximity to Facebook’s IPO and GM’s history of working over its publishers.
This move has brought GM more attention than it’s had in a while, but rather than raising doubts as to the value of Facebook, the move really brings into focus GM’s inability to amplify brand and consumer advocacy of its products on the world’s largest social networking platform.
With this move, one of the world’s largest advertisers is trying to say that Facebook advertising doesn’t work. The truth is that Facebook isn’t broken; GM is. And the automaker’s movement of ad dollars to other media channels offers a short-term solution to a long-term business problem.
Putting its $10 million into more traditional online advertising channels such as search and display ads will probably pay short-term dividends for GM, which will only obscure the automaker’s failure to recognize the best way to utilize Facebook. Rather than focus on selling cars on Facebook, the brand should have looked at how to connect with its best advocates to influence purchase behavior across the social graph. Facebook’s true value lies in the power to build loyal fans and then message them as well as their friends to build consumer relationships, with the ultimate goal of rebuilding the brand as well as selling cars. GM’s strategy clearly missed that step.
GM will reportedly continue to invest nearly $30 million to maintain a Facebook presence and develop applications, which may turn some of the brand’s 3.9 million fans into brand advocates. That’s an expensive investment, though, for such a small and disengaged fan base. GM’s chief competitor, Ford, has 10.2 million fans. If Ford consistently messages and engages with these fans and their friends through paid advertising that demonstrates the benefit of a Ford, it will continue to build brand advocates, of a kind that no amount of GM advertising can sway. When it comes time for a new car, rather than research new brands, those brand loyalists will go straight to their Ford dealership; GM won’t even be in their consideration set.
If GM were to take a more progressive approach, it would move social to the very beginning of its sales and product planning strategy, investing in using the platform for consumer research, using paid ads to engage and acquire more fans, and then engaging with those fans and their friends to turn them into genuine advocates. While the automaker complained of its inability to attribute success, we’ve seen consistent data showing that Facebook is best at using online behavior to drive offline behavior, and that Facebook fans influence others and minimize comparison price shoppers, as seen commonly through search and other comparison shopping sites. According to Forrester Research’s “The Facebook Factor” report, fans are also very likely to recommend a brand to friends. By leveraging Facebook advertising, brands can actually connect with fans over time to build loyalty and long-term sales — not only with the single buyer, but also with families of consumers and their friends.
GM’s consumer loyalty problems certainly didn’t begin with Facebook. GM ranked 12th out of 13 automotive brands in Consumer Reports’ latest automotive scorecard, and recalled 50,000 vehicles as recently as April. If the brand was losing ground to competitors on social, it was probably wise to look for a new battleground. It may be smart to abandon Facebook altogether for now, and reinvest its money in making a car that actually appeals to consumers.
Rather than ask what Facebook has done to help GM, GM should have looked at what it was doing to engage its fans. Diverting money into other online channels may sell cars in the short term, but will fail in the longer term, as consumers spend more and more of their time on social platforms like Facebook. Don’t forget that brands used to raise their eyebrows at the idea of search advertising, too. Brands that are investing heavily in Facebook now — such as Starbucks, Coke, Kraft, Zynga and Groupon — will reap long-term rewards.
Facebook’s value comes from its ability to help brands build long-term loyalty, and $10 million is a tiny fraction of GM’s $3 billion annual ad budget. If GM isn’t investing in building brand loyalists, then the automaker and its dealers will miss the value of Facebook, and will ultimately lose resonance with consumers.
ABOUT THE AUTHOR
Dave Williams is the CEO of Blinq Media.