Monday, September 14, 2009

An Adless Recovery? The Rise of Social Media as a Major Marketing Investment

With many forecasts beginning to predict a bottom of sorts in the ad-supported content market, can an ad recovery be too far behind? It's a question that is probably harder to answer than ever, given the rise of social media tools as an increasingly important platform for marketing influence and insight. Yes, we're bound to see increases in ad spending as the economy improves, but while the ads were away, companies have been learning how to listen to their clients more effectively through public social media channels and their own online forums and customer support platforms to influence markets cost-effectively. One of the leaders in helping organizations to listen and to respond to their markets effectively is Lithium Technologies, which provides both community forum tools and social media monitoring tools that integrate with popular CRM platforms such as Salesforce.com. To some, tools such as Lithium may seem like stuff down in the bowels of product management efforts rather than marketing efforts. But in fact, it turns out that investments in social media gathering and monitoring are having measurable effects on marketing efforts.

As noted in a recent Lithium white paper, a Harvard business review study recorded a 56 percent increase in sales for an online auction site for people participating in the site's online community features. Similar results were seen at one Lithium customer, which reported $41 million dollars in increased sales from their online community members along with $8 million in reduced support costs. In other words, companies are learning that customers generating millions of page views on their own Web sites and social media portals learning from other customers and their own staffs are becoming powerful channels for revenue generation and brand management, as well as reducing support overhead. Of equal importance, though, is the ability of tools such as Lithium's "Social CRM" suite to monitor feedback and discussions in forums and social media outlets that can be channels to support staff and sales and marketing teams in ways that enable them to respond to market opportunties and threats expressed in social media even as they are emerging online.

With capabilities such as these, advertising becomes less of a critical tool to formulate messages that can be spread widely and effectively to the most important and influential market participants. Instead of focusing on "spinning" markets through ad campaigns, engaging markets through social media tools and empowering clients to have influence over their peer purchasers can enable companies to empower peers and product specialists whose influence can be more direct and immediate on sales processes than ads placed in online content of general interest. Why bother paying a prominent media figure like a sports hero, for example, to get people charged up about a new product or service via ads when influential peers whose opinions are trusted by others can do it for you for free?

So while advertising will play an important role in marketing for some time, the nature of how influence is spread through markets has changed fundamentally via social media, helping people to gravitate towards content generated by the markets themselves and by companies and organizations able to communicate effectively with markets on a peer level. To put it another way, when your clients and prospects generate more content and more engaging content than traditional publishers, you're going to put your marketing monies down on the content that produces most cost-effectively. I believe that we're just at the very early days of publishers beginning to understand the likely impact of social media on their own organizations - even as their clients are already well down the path of exploiting it directly for their own purposes. So much for intellectual property rights when you can have intellectual influence rights.
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