I put myself down for thesis 18 which is the subject of the rest of this post:

“18. Companies that don’t realize their markets are now networked person-to-person, getting smarter as a result and deeply joined in conversation are missing their best opportunity.” … here goes

Business feels more comfortable seeing the customer as ‘king’ rather than as a peer. After all, it’s easier for the marketing dept. of a company to objectify and bestow importance upon its customer as a segment (identifiable, but not easily actionable), a target market, trend or latent need, rather than go through the day-to-day, humdrum activity of talking to the people who consume its products and services.

The trouble is we as customers are down-to-earth republicans at heart and prefer to solicit the views of other people before we make a purchasing decision and indeed afterwards.   Online communities are now an integral part of the early stages of the purchasing cycle and after-sales support process.  We consult them long before we go near the official web site of a business …  it’s been a very long time since I booked a hotel room without vetting it first through Tripadvisor.  And off-line we use our personal networks to find trusted suppliers for the jobs we need to get done.  Some recent research from BT found that the biggest driver of new business leads for small businesses was still offline Word of Mouth – 70% of the sample got the majority of their business this way, going up to 88% for sectors such as professional services.

Companies have everything to gain from tapping into the power of conversations both on and offline. The example of  Walkers Crisps is a good one.  They have run a campaign to get the public to suggest new flavours for crisps (1.2M entered!) and then vote on the finalists made into packets of crisps like the Cajun Squirrel pictured here.

You may think this is a cheesy viral … I see it as a fantastic way for Walkers to become part of a fun, creative and meaningful conversation with its customers that will reinvigorate its product line and sales. The crisp company has made itself the subject of the conversation between its customers.

A related but alternative strategy is for a business to become the place of conversation for its customers, in other words a platform.  This is the approach of a community like Get Satisfaction for example.

In contrast I see many of the large customer review sites that provide a platform for consumers to comment on a company, but limit the means of interaction/right of response of the business, as a flawed medium.  At the end of the day it doesn’t help consumers if the subject of the conversation can’t take part in it!  Yelp’s recent change of policy to allow businesses to comment on reviews indicates that having a one-sided conversation is not the best way forward either for individuals or businesses.

The Cluetrain Manifesto ten years ago made a compelling case for markets to be seen as conversations that remains as valid today.  Business practice has yet to catch up with consumer behaviour, but the signs are positive and change is accelerating.

What we all want to do with social media is dialogue and share. For large enterprises, the opportunity is to engage with their customers in a more transparent and effective way than ever before possible through ‘linear’ marketing campaigns. But it ain’t easy…

Here’s my take on the obstacles facing Big Corp:

1. Understanding – social media is typically approached as just another route to market and this leads to a campaign approach with businesses majoring on ‘viral’ marketing and tapping up the blogosphere as a PR channel. By thinking in campaign terms, ‘social marketing’ is driven by the tempo of the marketing plan and is at the mercy of the quarterly campaign focus. However, conversations involving your business can start at any time and judging when and how to engage simply can’t be planned. Inconvenient I know, but nothing you can do about that!

2. Skills and confidence – marketing in Mega Corp is coming down to a reporting, budget and program management function with the doers being the rostered agencies. As a rule, traditional marketers, including those with an online background, have neither the skills, nor confidence to enter into a conversation with their customers using blogs, podcasts, and video or through forums, or social networking sites.

3. Process: One reason that marketers are uncomfortable getting stuck into the social graph as their day job is that they are not empowered to do so and may even be explicitly barred from doing it. In effect turning your marketing team into ‘spokespeople’ for your business is not something companies do lightly. But changing or indeed writing for the first time policies that enable employees to take part in online conversations is essential if businesses are to benefit from social media as a customer engagement tool.

Also the team developing an engagement plan using social media needs the freedom to procure services they need from a variety of suppliers most of whom won’t be on the roster. I’m convinced that as social marketing becomes core to the ‘plan’, purchasing of marketing services needs to become more like software procurements (project based) and less driven by the dictates of who is on the roster.

An outcome of these obstacles is that forward-thinking marketing departments that do see the potential of social media often turn to their agencies to define the strategy and lead the campaign. This approach is simply doomed to fail. Effective social marketing demands as its foundation transparency and proximity to the customer and cannot be done by proxy. Social marketing even transcends the boundaries of the marketing department. The best people to engage with your customers are those closest to the topic of conversation with the customer and this could be someone from the product, customer service or sales team.

So my advice to any enterprise looking to put Web 2.0 into the marketing mix is don’t get worked up about digital influence or going viral, but simply look at what your customers are talking about, understand what matters to them, and let your people join the conversation.

Agencies, hosting companies, and domain registrars will all be rubbing their hands together at the opportunity to breathe new life into their business models. But I can’t quite help feeling that the whole shebang seems just a little passé …

On the Web the first time round, we all rushed onto the beach flinging our towels down and claiming our individual space. After a while we caught on that actually everyone was having fun at the bar, so we left our umbrellas where they were and joined the party. That’s Web 2.0.

Social networking is largely domainless (who cares or knows what my Facebook URL is!). What matters are the interactions on the platform and between platforms through data porting. So my Tweet is syndicated to my Friendfeed and then displayed on my Facebook profile. The ‘address’ of this information is actually irrelevant. The important bit is the community with which I am sharing my content and time.

The social Web is changing the landscape of ecommerce too. Some recent research from Quidco found that 62% of shoppers consult online communities before making a purchase. And that only 27% of consumers go directly to the retailer. And the top three reasons …

1. communities offer me unbiased facts about products and services (32%);

2. I trust the views of communities more than merchants (27%);

3. communities help me find the best deal available (27%).

Given the above, is spending a fortune to ‘protect the brand’ with a custom domain (and then spending even more to drive traffic to it) a worthwhile activity? Or should businesses take part in the communities where customers are already talking about their brand, engage them and turn them into advocates? In other words, will a hotel chain get more customer value out of a .hotel TLD, or a series of positive reviews on Tripadvisor? I strongly suspect the latter.

This is really a big business dilemma as SMEs won’t typically have the marketing budgets to worry about securing a new TLD. That could turn out to be an advantage, as whilst the big brands buy better picks and shovels to take part in the new gold rush, small business can be down at the saloon mixing it up with their customers and doing real business.

Why turn over Apple’s prime online real estate to a message that is principally not B2C, nor even B2B, but A2D – i.e. Apple to Developers? The language used on the page, e.g. ‘software roadmap’ is clearly oriented towards a tech industry audience and the eye tracks directly to the acronym ‘SDK’.  For a consumer brand that has built its success on making technology simple, easy to use and understandable this is puzzling at first glance.

On reflection, Apple’s home page take over is a bold statement by the company that reveals not only its appetite to take a real marketing risk, but also the seriousness and confidence in driving forward its strategy to turn the iPhone into the company’s next big platform play. Apple knows to do that it needs to market itself to developers. What better way to open that engagement than by demonstrating how serious it is by dedicating its hugely-trafficked home page to the task?

Many companies are rolling out their own APIs and SDKs for third party developers to build services upon – for example BT has a great SDK for communications services. However, to date Apple appears alone in realising that its core corporate marketing vehicles are tools to be used to engage third party developers to support key growth areas.

Apple has clearly ‘thought different’ about how to use online marketing to support business strategy.

The full report and presentation is worth a close read and a handful of key messages jumped out at me.

1. Big business understands that social media is only going to grow in importance with 56% of respondents (rising to 80% in the US) seeing it as very significant for their companies within the next 5 years.

2. But, today the marketing organisations of major corporates are not at ease with social media. They see it as a source of customer insight (68% said they read and analysed social media to understand customer perception), and as a new channel for marketing/advertising campaigns, esp. viral (62% of respondents agreed). In short, big business is passively consuming social media or trying to map a fairly traditional campaign model to the medium. What it’s not doing is actually taking part in the community on the same terms as its customers.

3. There is a strong feeling that marketing agencies don’t get it. A typical quote from a respondent (this one from Johnson & Johnson): “They are not doing a very good job at all. At the moment most agencies still view social media tools as just another vehicle for driving their messages.”

Whilst TNS sees this as a reflection of the immaturity of the market and the need for agencies to acquire the skills to assist their clients exploit social media, I see a more fundamental problem. If social media is about having an authentic and unmediated connection with the community with direct lines of communication between the company and its customers, then this ‘conversation’ simply cannot be outsourced to an external agency. Rather marketing, sales and service departments have got to undertake this role themselves.

So all in all, a pretty clear picture that the big brands have got a long way to go to make ‘social marketing’ part of their business as usual.

It feels inevitable that there is going to be a backlash against the advertising-based business model of social networking. But if we accept that social networking as a medium (rather than any particular instances of it) is not going away and will continue to grow, it then becomes incumbent on online marketers to find better ways to engage the social graph. A new tool set is needed as the current tools are lacking …

For example Facebook promises that by using its ads you can “reach the exact audience you want with relevant targeted ads”. I would be really interested to hear people’s stories about whether these ads have been successful or not for them. My hunch is that simply having a well-targeted ad based on granular demographic data will not help conversion if it is blind to the social context it is served in.

The way to get that context is through participation in the conversations that your ‘audience’ is having. In other words join the party. The party metaphor is a great one for a community and quite insightful for online marketers. In the off-line world sponsorship and product placement work well as promotional tools at social events. Social networks offer plenty of opportunities to create branded/sponsored spaces for online conversations. And companies such as Blendtec (intentionally) and Coca-Cola and the Perfetti Van Melle Corporation – the maker of Mentos mints (unintentionally) have demonstrated the uplift in brand visibility and sales that comes when your product is at the heart of the online conversation.

So the message for online marketers is clear … as far as making money from social networking goes, the party is far from over … in fact it is just about to begin. Cocktails anyone?

The article gives a good overview of how a blog can help a small business to market itself and build its brand and has some very nice supporting case studies. But the NYT does suggest that not all companies will be suited to using blogs as a marketing tool for a bunch of reasons, including that they may not have “enough to say”.

I don’t think the latter’s really the issue. Rather blogging (just like podcasting or using video) is a very new marketing tool for small businesses and the rule book hasn’t yet been written. As I’ve seen at BT Tradespace, SMEs are already using blogs in a variety of ways from a direct sales pitch, to source of advice, to general discussion. The level of experimentation is very high.

What is likely to happen is that in the hands of many thousands of small businesses, (the majority of whom will be coming to the medium for the first time), blogging itself is going to change. In fact many of the discussions about what is an appropriate use of blogging for marketing purposes may soon seem quite quaint as SMEs claim the medium for themselves.

As William Gibson said “the future is already here. It’s just not very evenly distributed”. My prediction for 2008 is that the use of blogging and other forms of social media as marketing tools will go well beyond the current niches and become mass market and that as a result we will see a new type and style of online marketing emerge with SMEs in the driving seat.

1. It’s an ad platform for SMEs – now there’s quite some debate about whether Myspace is the right context for small business, and for many it undoubtedly isn’t. But the fact that Myspace has invested in Selfserve suggests that it believes it has the base already to make it a success.

2. Selfserve is about making online advertising accessible to SMEs -That means cheap (apparently pricing starts at $10) and easy – the ad platform has been designed for small businesses to set up and run their own campaigns. If Myspace achieves the latter it will have made a breakthrough as, despite Google’s efforts to date, online advertising is too damn complex for SMEs to master. Myspace acknowledged this in its release when it says that of over 23 million SMEs in the US less than 1 million advertise online.

3. Selfserve is about driving traffic to a Myspace profile – usage stays within the community and is not taken off site. This is quite a revolutionary change from traditional net marketing that is all about driving traffic to a web site. In Myspace’s model, not only is the SME spending their ad money in the network, they also have to invest time keeping their profile engaging and up to date in order to convert leads. A Selfserve advertiser will therefore be a very active Myspacer.

I’m going to be following Selfserve with interest as it’s a clear sign that Net marketing is going to be increasingly about managing a constellation of online assets in relevant communities, than sucking traffic into a stand-alone web site. It’s also an indication that engagement and quality of participation in a community will be at least as important as ad spend in driving campaign success.

Small businesses are starting to adopt web 2.0 tools to market themselves online precisely because traditional net marketing built on the ‘big iron’ of integrated campaigns using paid search and display ads and supported by a comprehensive SEO strategy is beyond the skill sets and resources (time and money) of most SMEs.

SMEs are struggling with online marketing and sales today and this is shown in the numbers. >40% don’t have web sites, <20% sell online and the percentage that make any significant sales online is much less than this. Running a web site is a costly, complex business that often requires the support of third parties to build, maintain and market.

Now look at the tools of web 2.0 – blogging, podcasting, photo and video sharing – adopted by millions of consumers because they are simple and powerful communication tools. These characteristics make them ideal for small businesses to build their net marketing strategy on.

SMEs have a direct connection with their customers in a way that larger enterprises struggle to mimic. That same piece of research from BT Business also found that 52% of small businesses get up to half of their revenue is from referrals, with 31% obtaining 75% of their work from word of mouth.

Now, if we put the costs and complexity of traditional online marketing alongside the growing importance of the Internet as a research and purchasing medium for consumers, it is apparent that SMEs desperately need to find a better way to market themselves online. This is provided through the tools of social media that are very well suited to the personal and conversational marketing style of small businesses that already works to their benefit offline.

I really believe SMEs have the need and incentive to drive innovation in online marketing using web 2.0 – much more so than big companies. We are starting to see this happen already with businesses as diverse as florists and PR experimenting with new forms of conversational marketing. And there’s much more to come.

Galileo was right … our view of our place in the universe is no longer geocentric, in fact we understand that our planet is part of a solar system. Blindingly obvious today, revolutionary back in the 17th century.

We are starting to witness a Galilean revolution in online marketing. Our perspective on Internet marketing is still site-centric. We believe our web site should be the centre of our net marketing strategy. However, given the sheer number of sites and the very high costs of driving traffic to a single entity on the web, this strategy is not working for many businesses, especially SMEs, many of whom are not even trying.

I believe that we will soon see that marketing efforts (SEO, SEM, display …) that aim to make the Internet revolve around your web site are as absurd as thinking that the sun revolves around the earth. So what has changed?

The explosive growth in online communities has started to reveal on the net the social graph and relationships between people on a massive scale. To attract customers it is now necessary to participate in communities relevant to your business. By participation that means taking part in a conversation with prospects on terms understood and accepted by the community. We are very far from ‘traditional’ online marketing here.

Audiences are fragmented and this means customers are distributed and harder to reach. Online this means they are present in many different contexts, often behaving differently in each. So not only is it now necessary to be present in may different communities, we also have to adapt our behaviour and engagement accordingly to be relevant. This poses a stiff challenge to the concept of a strong unified brand.

So net marketing is going to move from being web site-centric to generating customer engagement through multiple, highly contextual ‘profiles’ – in other words a constellation of online assets. Online marketing will also shift from being ‘advertising’ driven to ‘participation’ based.

Some big brands have already seen the way the wind is blowing and are being successful. Most haven’t. And I also am convinced that smaller businesses are best placed to leverage this revolution in online marketing … but more on that later.