• by David Baker , Vivek Palan , December 22, 2011

When you shop for a new product that you know little about, are you more likely to trust the recommendation of a friend or an ad? If you answered "your friend," then you're not alone.

Recent surveys by Nielsen indicate that a recommendation from a friend or even a review from a virtual stranger are generally far more likely to be trusted than ads. Moreover, people now spend three times more time on social media than on email. And this trend is not limited to youth, either.

The average age for a Twitter user is 31. As social media grows to the point where almost everyone on the planet has some form of a social identity, the next issue will be to better understand the consumers on these platforms and deepen engagement.

As the richness and complexity of social media increase with different types of content being shared, the types of data available about consumers will also increase. Twitter and Facebook have given powerful incentives for consumers to volunteer this information freely, either in the form of comments, creation of personal videos, or sharing and recommending existing content.

The challenge will be to sort through the complexity of these different types of data to generate the necessary consumer insights, although quite often, the data is in separate databases without a clear way to link them together.

Unlike the structured data typical of traditional databases (e.g., name and address fields, marital status flag), much of social data consists of free-form, or unstructured content: short tweets, longer blog comments, video uploads- basically anything that can be created by a user.  Organizing the data will be a prerequisite for meaningful analysis.

Then there is the privacy hurdle. Most people don't read the terms of use on a site. Regardless, the more important issue is not legality, but rather whether targeted marketing is expected or welcome. Some users are completely indifferent. But it may seem creepy to others when an ad shows up that coincidentally seems to know everything about their personal life (e.g., Just had a fight with your girlfriend? Buy flowers!) >

If not managed properly, this could damage the brand being advertised.

To address these issues, we recommend the following:

*Many companies are now starting to use social listening systems to monitor references about their brand on the Web. In addition, we recommend that marketers also consider a wider use of these social listening tools to segment and then analyze users discussing not only their brand but also related topics. Use this data to understand what aspirations, behavioral preferences and intent your consumers have. Finally, incorporate those insights into marketing decisions pertaining to product research, post-launch feedback, and real-time alerts around customer service trends.

*For most companies, social media currently sits as a silo within the enterprise, and as a result, many of the insights it holds are not actionable. It will be important to invest the time to build a data management platform that can do the following with the data collected: link different data types together to enable a multidimensional view, manage privacy constraints on sensitive personal data, and have an ability to integrate with other CRM systems to improve engagement.

*Rather than fighting against the current, marketers should look for ways to help users set their preferences, signal their buying intent, and opt out of receiving offers they don’t care for. A number of companies are now working on ways to facilitate this kind of explicit demand signaling. The privacy policy should be able to be easily understood by non-lawyers and have a simple opt out process. By lowering the risks and barriers to leave a marketing program, consumers will have less to fear about their information being mishandled.

As more data becomes available, there is a real danger of becoming overwhelmed. Data creation is accelerating and arriving in multiple unstructured forms, requiring more sophisticated ways to manage and analyze it. Moreover, the value of the real-time component is indicative of intent, which decays rapidly if not used quickly.

Despite these numerous roadblocks, marketers must rise to the challenge to better serve their customers.