Social Leaves the Silo

rue la laAs marketers learn to focus more on roo (return on objective) than roi (return on investment), social marketing is infiltrating every platform

If you’re convinced that social media — and social marketing — is over, you might point to the stock market performance of three of the industry’s erstwhile highfliers: group buying service Groupon, social gaming company Zynga and, of course, Facebook.

After peaking at just above $26, about two weeks after its early November 2011 ipo, Groupon’s shares have been in a death spiral the last few months, trading at just under $5 as this story is being written in mid-August.

Zynga? The social gaming company, which is Facebook’s closest partner — and accounts for low double-digits of Facebook’s revenue — has seen a similar drop in valuation. Zynga peaked in early March, at over $14 share, less than three months after it went public. The company is still growing — and reported a 19 percent increase in revenue year-on-year for the second quarter. That result, however, was significantly below analysts’ expectations. As of mid-August, the stock was hovering at around $3.

And then there’s Facebook. Looking back to its May IPO, the snafus that surrounded its initial offering now look like they were a harbinger — even if NASDAQ, not Facebook, was responsible for the technical difficulties. After its first lockup expired in mid-August, shares were trading for about half of their opening price, and Peter Thiel, an early Facebook investor cashed out of some 20 million shares. Not exactly a vote of confidence in the platform’s future.

So you’d think that interviews for a story about trends in social marketing would contain a lot of hand wringing. After all, Facebook, Groupon and Zynga rely on marketing as a major, if not a main, source of revenue.

But you’d be wrong. People deeply immersed in social media — be they agency execs, marketers, or the myriad technologists who support them — don’t seem to be fretting over market caps. Instead, they see a world where the sky’s the limit and the heavens are filled with dreams of connecting with consumers (instead of the storm clouds of market valuation doom).

Social data, says David Berkowitz, V.P. director of emerging media at Dentsu’s 360i, is “a way to monetize everything that’s happening on the Web.”
Cockeyed or misplaced optimism? Perhaps. But this unabiding excitement may also reflect a deeper truth: social media and marketing are going beyond their initial obeisance to particular platforms, metrics, or silos within marketing-focused organizations. In this worldview, social media isn’t about the performance of a particular company, but about an increasingly important form of communication. “The big idea here is that Facebook is a big social graph, but the reality is there’s a much bigger social graph than Facebook will ever be,” observes Chase McMichael, ceo of InfiniGraph, a company that uses social data to help organizations create more engaging content. He envisions social as becoming “universal,” part of “a collaborative, connected world” that has little to do with one platform.

Successful social marketing today also has a bit to do with nail polish, but more on that later.

Statements like McMichael’s carry huge ramifications that seem to touch most parts of the social media ecosystem — and, in some cases, beyond. It shouldn’t come as a surprise that nearly every segment of the ecosystem has its own spin on this central idea.

Take marketers, for instance. “We’ve done some modeling and metrics over the years, and we’ve already proved to ourselves that social touches every aspect of the company,” explains Richard Binhammer, director of social media and community at Dell, an early adopter among social media marketers.

An agency viewpoint? Ian Schafer, CEO of Deep Focus, predicts that social’s increasing importance to marketing will spell the end of the siloed social media agency. “Social media agencies are over,” he says. “There will be fewer and fewer brands looking for social agencies.” In case you had harbored the illusion that Deep Focus is a social agency, harbor no more. The company’s home page now proclaims it “the Digital Agency for the Social Age” a statement, perhaps, about social being an integral component to nearly all digital communication. Schafer sees the pressure on social agencies coming from both sides. He’s been upfront in his belief that agencies that don’t specialize in social will need to incorporate the discipline into their existing services. After all, who doesn’t want their cool new campaign to go viral? Meanwhile, he says, marketers’ growing sophistication about social means they will increasingly take some social functions in-house.

But social media’s bust-out goes much further, touching, as if it weren’t completely obvious, the giant mishmash of 1’s and 0’s known as Big Data. Though Big Data is — as you might expect — hard to get your hands around, the increasing amounts of intel coming from social platforms — ranging from deeper data about shares and comments to who is sharing with whom — allow social to evade measurement based solely on ROI. “The reality is roi is strictly a financial metric,” explains jd Doughney, senior social media marketing manager at Coca-Cola. He advocates for ROO, return on objective, that takes into account that social marketing — as with some more traditional advertising forms — isn’t always about the bottom line.

In fact, you could argue that the recent rash of consolidations — Salesforce buying Buddy Media, Oracle buying Vitrue, and others — are about just that, building more comprehensive data sets that integrate social media more fully into the whole. Jeff Ragovin, co-founder and chief strategy officer of Buddy, explains, “This is kind of a new chapter in social. There’s a real opportunity here to understand what the roi is.” Though Doughney would probably counter that what Ragovin really meant was roo, the point is taken. Combining Salesforce’s CRM solutions with Buddy’s social management solutions and the social listening from Radian6 — which Salesforce bought in 2011 — makes for much more insightful marketing. As Marcel LeBrun, who helms Radian6, said in a blog post: “By tying it all together, we simplify the CMO’s world and become a single point of knowledge and insight for marketers and anyone else inside the organization who wants to see a holistic view of their customers, connect their social profiles to their customer profiles, gain insight about what they want and act on that insight with content and engagement — all while analyzing the bottom-line impact.” Yes, these people are thinking big.

The weird thing about Big Data, though, is that, properly analyzed, it can yield some incredibly granular insights (like that one about nail polish). On a recent Wednesday, the Facebook Timeline for the Boston e-retailer Rue La La featured a picture of a woman’s hand, which was sporting two colors on each finger. At last count, the status update had garnered over 1,700 likes and 59 comments, one of the most popular items on the Timeline. “For whatever reason, people love nail polish,” explains Mike DiLorenzo, vice president for audience development and syndication at Rue La La. His mantra is that marketers must learn “to respect the sanctity of the Facebook EdgeRank,” the algorithm that determines how status updates appear in the News Feed, taking into account a variety of factors, such as how often two Facebook Friends interact on the platform. “It’s not sufficient to walk into an editorial planning meeting about social and talk about what we think we know,” he explains.

However, Rue La La, like most advertisers, isn’t solely focused on one social platform. While not every bright, shiny object strikes DiLorenzo’s fancy, Rue La La has been an early adopter of the visually rich Pinterest, because the latter attracts a user base that overlaps with Rue La La’s audience of female online shoppers. “It’s impossible to ignore the curve,” he says.

Still, most of those interviewed for this story weren’t interested in discussing particular platforms. There’s no current trend that encapsulates this better than the rise of the API. In the past, if you wanted to see a mainstream marketer’s eyes glaze over, you would only need mention APIs (short for application programming interfaces). Why on earth would companies that market things like Cheez Whiz be in the business of writing code, let alone releasing it to developers who might iterate upon it? Precisely because marketing in digital, and in social, moved beyond the corporate Web site long ago. The open Web may not be a distinct location, but it’s where it’s at. “The smart brands have gotten past building a gas station in the desert,” says Doug Chavez, vice president of marketing at San Francisco-based RadiumOne, which incorporates social data into targeting. 

That helps explain why two major, non-tech brands — Kraft and Home Depot — were sponsors in June of a Big Brand Hack-a-thon in San Francisco. According to a Tumblr about the event, Kraft let developers access an api of recipes connected to its database of products. Developers were asked to adhere to three guidelines — that whatever they designed be “platform agnostic, easily scalable and built using HTML5.”

“Brands need to figure out what their api strategy is,” says Chavez.

Note that we’re not talking about apps here. In an open-source world, an app downloaded from the iTunes store, though available — and usually free — to millions, can seem suddenly isolated, a one-to-one experience between app publisher and individual that doesn’t necessarily scale. That’s why, once again, the “s” word comes into play. The challenge for brands is to figure out “how these apps can be socialized,” says Mike Germano, founder of Brooklyn’s Carrot Creative. “I believe that when a person is intersecting with a brand on a social network, that’s the highest point of interacting.”

So where does this leave social’s major platforms? As the prime generators of a huge river of social data, some from which they will profit — and some from which they won’t. To a marketer — or social media investor — one of the strangest parts of the business is that pinboards on Pinterest, corporate Twitter feeds, and Facebook’s Timeline for Brands are all free, as is much of the data that these platforms spew onto the open Web. Jason Cormier, cofounder of Boulder, Colo.-based Room 214, notes that as Facebook apps are shared, they give marketers a window into a much broader circle than the people who have friended your brand. “It’s leveraging Facebook profile data outside of Facebook,” he says. 

So money is changing hands in social marketing, just not always in directions that directly benefit its major platforms. “Social media by design creates efficiency, but it’s not free,” says Adam Kmiec of Campbell Soup Company.  
The challenge for Facebook — and its rivals — is to figure out how much of that monetization can hit their own bottom lines. “Integration into every part of the Web is what’s going to make [Facebook] massively valuable,” says Germano.

Thus, marketers and investors should keep an eye on two recent developments that illustrate how Facebook is transcending its platform confines (and expects its rivals to do the same). One is the Facebook Ad Exchange (FBX), which launched in June. In partnership with a handful of demand-side platforms (DSPs), Facebook is now allowing marketers to target users within the platform, based on their behavior elsewhere on the Web.
But the bigger, though still nascent, play for Facebook is an ad network that would let advertisers target outside of Facebook based on profile data. For now, Facebook Ads are only showing up on the Web site of Zynga, but observers expect that Facebook will develop the network at some point. You need only consider how many sites have implemented Facebook Connect to understand the possible reach of this initiative.

For marketers trying to come to grips with social marketing, development shouldn’t be looked at as something that will make or break the medium. Regardless of how social media companies perform on Wall Street, the social marketing genie is out of the bottle. And it doesn’t look like it’s going back in.

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