Money quote:

“I’m going to quote a competitor to Mediapost, Advertising Age, but its packaged-goods reporter, Jack Neff, said it best: “BlogHer helps solve the mystery of how marketers will manage to spend money on social media despite showing relatively little interest in ads on Facebook or MySpace and the numerous free opportunities available everywhere.”

Neff than goes on to quote Jill Beraud, the Global Chief Marketing Officer of PepsiCo, who explains that wooing the mommy bloggers is a long-term ROI effort. As for the entire roster of advertisers at BlogHer, it reads like a who’s-who of the blue chip: Wal-Mart, Procter & Gamble, General Motors, Gymboree, Unilever, Kodak.”

There is a seismic change going on in the way companies communicate with their customers and prospects. In the traditional model there are three company departments that communicate with their market, typically in a silo-ed manner:

• Product Development. Through research, including panels and focus groups, savvy product developers try out concepts with users, receiving feedback on usability, features, appearance, etc. Unfortunately this feedback is not truly unbiased because there is a selection process associated with these situations.
• Marketing. Marketing traditionally pushes out complimentary brand and product messaging, in part based on research and demographics and in part based on ‘creativity’. We market at people, not for people. Today we’re marketing with people.
• Customer Service. Customer service is viewed as problem-solving, the primary problem often being viewed as the customers themselves. The product may be imperfect but the customer caller is someone to be avoided through phone trees, referrals to automated help systems, etc.

Social media unites research, communication and service

With the advent of social media, all of these functions need to be reevaluated to the point where I’d argue that all should be eliminated in favor of a Customer Interface Department. The Customer Interface Department would be the central point in the company dedicated to understanding what customers want, what they feel about the company and the products, and how the company responds to those needs. A department that champions the customer.

Social media means businesses have ceded control to the market

There is little separation among these functions when you have access to monumental global conversations about your products and services, conversations that are unguided and honest. Being able to understand these conversations changes market research, communications and problem-solving. The social media eco-system provides all of these functions as people review, question, complain, compliment, tear apart, suggest and spread the word about products they are interested in. The company that understands this understands that they must fundamentally change the way they interact with this system.

Your choice is to respond and change now or later; but you will be changing

This is not a voluntary change in the way businesses are structured. It is the way things will work going forward. Start with this premise: Your products and service must be the best on the market or have a considerable price advantage that outweighs their defects. Given that nearly any product eventually becomes commoditized in a global digital marketplace, the former is your only competitive option.

Only best in class products and service, combined with honest engagement will make it

You cannot pay lip service to being the best, you must actually be the best. Why? Because anyone considering a purchase, whether it’s a high-end server or an electric toothbrush is going to go online and ask others what they think. The detailed responses they find will determine their buying position. And the entire decision process including their experiences interacting with your company and your people will be public and globally accessible via search.

How does social media affect us? Where do I start?

Are you wondering ow this affects your business?

How your culture is going to adjust to drastically changing internal and external relationships?

The first step is o take a look at where you are vs. where you will be.

If you’d like to have a conversation about how social media will impact your business in the near future, give me a shout at MartinEdic.com

Local news coverage is important

This is a real problem. Local papers do one thing really well: They cover local issues in more detail than any local TV or Radio outlet is likely to do. We need that depth of coverage and that requires reporters with contacts and skills that help them ferret out the underlying issues, the real stories.

Shifting to online news coverage is not easy

What about online? Here in Rochester this is a problem because the D&C web site is dreadful- and it was recently redesigned (I wonder who made this mess?). Instead of following the simple nav conventions of great newspaper sites like the NYTimes or the Washington Post, they chose a convoluted and complex navigation scheme that frustrates me to the point where I often give up looking. And I am an online professional. I can’t imagine what my elderly mother would make of it. She would probably lose access to local news.

Cutting newsroom staff doesn’t make sense because the news and the need for it haven’t lessened

Cutting editorial and reporters also complicates things in the transition to digital. Just because the distribution platform changed, it does not mean that the news changed. You still need enough savvy people to find and report the stories, editors to edit them and designers to get them on the web. Firing newsroom staff creates a problem. The union press workers and truckdrivers won’t lose their jobs on a wholesale basis until the print operation is shut down, however that loss is also inevitable.

Even as digital, the non-major markets’ news business may shrink to the point where it’s not a viable business

Online papers bring in a lot less revenue than print. That is somewhat offset by savings in paper, printing, trucks and other distribution and labor. The obvious and inescapable fact is that the print news business will shrink permanently even if they shift to digital. The companies that own these properties may look at this shrinkage and decide that the local news business is not big enough to be worth having and shut them down completely, digital and all.

‘Local’ is serious business for social media

What does this have to do with social media? A lot. There are significant opportunities for social media entrepreneurs in local, non-major markets. Building out a network of neighborhood sites based on social media platforms like WordPress or Wetpaint is not costly or difficult. Reporting and editorial content creators are out there seeking work. You can leverage their skills and help them build a new career for themselves. Incorporating local blogging is another source of content.

There is money in this. Local businesses need to advertise locally. Social media’s revenue potential in local markets is huge. If I’m doing business in Rochester, NY and I can focus my message on local users in Twitter, Facebook and these local media sites and via local Google Adwords, I’m all over it- or I should be.

When a gap opens because of a major change, there is opportunity. The loss of print local newspapers creates such an opportunity, especially because the newspaper business has squandered the opportunity by waiting so long to deal with it that they now can no longer afford to refocus their resources on something new. Some of us are already working to fill that gap and recreate our local news model in a new way.

Google and Facebook don’t advertise. My friend’s nightclub doesn’t advertise. They have a Facebook Group with hundreds of members, members that want info on what’s going on at the club. If I’m asked about advertising I tell people to try Adwords, Google’s PPC ads, and to do it themselves. Better yet, figure out social media and spread the word to people who are looking for the solution you offer.

The advertising business is poised to disappear, and like the newspaper business, they don’t seem to know it. Consumers are exposed to thousands of ads daily and the result is that we no longer see them. They are meaningless and they no longer affect our buying decisions. I recently bought a computer monitor. Did I buy a magazine and look through ads for monitors? Did I go to a store and talk to a sales rep? No. I went online and read user reviews.

Ad agency people, read that last line and ask yourself if your business is still viable. Tell me one compelling reason why using clever, attractive, intrusive or subtle brand advertising makes any real difference to your clients.

An agency I once worked for did an award-winning (The awards are chosen by other ad agencies, an anomaly that I always thought was pretty self-serving) campaign for a beer brand. Sales increased. But did they increase because of a clever slogan or because beer drinkers liked the product and told their friends? The fact is they don’t know.

I spent the last year marketing a software product that is critical to understanding how brands are perceived in social media. Our intial target markets were PR and ad agencies. We talked to and demo-ed hundreds of agency people. I gave in-person presentations to many agencies. Not one advertising agency bought the service while nearly every PR agency was either buying from us or reviewing competitive products- they understood why they needed this. The typical ad agency response was to interrupt the conversation and glibly announce that they did not understand why they needed this service. After all, if social media is the new marketing medium what are all the creative and media buying people going to do?

Good question. Maybe start engaging customers and adding value to the conversation? Listening and responding to specific requests for improvements?

Unfortunately these activities are difficult to bill for at agency rates. That’s the response I heard every time. It doesn’t fit our business model. Right.

Change the business model. Or get fired when your clients learn that their competitors embraced social media and have a big headstart while they were spending millions on ad campaigns that they cannot put an ROI number on.

The world of marketing has changed completely with the widespread adoption of social media. If I ran an ad agency I’d be working 24/7 to figure out what this means to my business and what I have to change to take advantage of it. I’d have every employee reassessing their skillset and job description to learn how they can apply those skills to an entirely new medium.

Advertising has always viewed itself as the ‘coolest’ profession on the planet. Creativity is king in their minds. Yet many are crippled by this perspective. What if you are wrong? What if the world changed while you were shooting multi-million dollar broadcast ads? What if you run those ads and the response is public ridicule? Or even worse, no response because the people are going to their peers for better information?

BTW, if you’re an agency and you want to build a profitable social media practice we should talk. Contact me via my site, martinedic.com . I’ve been working with agencies on their social business model for the last two years.

At this point? Yes, because there is certainly some overlap going on. I could blog on LinkedIn and I could use Facebook to microblog instead of Twitter. Eventually one of these platforms is going to absorb the full capability of one or more of the others. However, right now there are very good reasons for keeping them separate. Here’s how I use each for different things:

Twitter for business

Twitter is a business tool. My followers follow me because I have a shared interest in marketing and social media. I don’t follow people that don’t share that interest (especially those incredibly annoying multi-level marketing people!). I am strict about this because I need to stay on a focused message in my Tweets to keep my reputation strong. I don’t have thousands of followers because of this focus. If you share these business interests please follow me and I’ll follow you.

Facebook for friends

Facebook is just what is says it is: a social network. FB for me is a place to unwind, joke around and learn what my social friends are doing. Sometimes I hear about a death or illness, a relationship change or find a friend I haven’t heard from in years so it’s not all fun and games. I don’t do any business here at all- in fact I’m guessing a lot of my friends don’t even know what I do for a living. Facebook’s revenue model is going to be dictated by this aspect and I think they should treat groups of friends from a geo-localized perspective, serving up local entertainment or restaurant ads for instance. Otherwise advertising on FB will not work.

LinkedIn for experience, references and referrals

LinkedIn is an entirely different thing. It is a resume/reference source, i.e. Who is this guy and what do other people think of him? Who is he connected to and is he willing to make an introduction? Business networking, in other words. I’m all for relevant conections on LinkedIn because bigger networks increase its value as a tool. Connect with me and mention this blog post.

WordPress for publishing

WordPress is a content management platform. It enable a non-programmer like myself to publish my ideas. User-generated content is the heart and soul of social media, in fact it defines social media. I’m a writer by background so having a powerful tool like WordPress is amazing. To be able to instantly publish to a global audience is any writer’s dream.

Do we need another social media platform?

My platforms help me communicate in different ways. At this point I don’t need another platform. I could see myself adding YouTube at some point and I have used Slideshare in the past, however I can easily embed those items in my blog, on my LinkIn Profile, in Facebook and point to their URLs on Twitter. I see them as plug-ins rather than standalone platforms. What I don’t need is another platform that duplicates the functionality of those I currently use. Plaxo, for example, duplicates too many things that FB and LinkedIn do well. No Plaxo for me, no offense Plaxo people.

There are lots of attempts to link all these platforms together with one centralized dashboard. I haven’t seen that works they way I’d want it to yet but I’m certainly open to the concept. If you’ve found one that works well let me know in the comments (which in themselves constitute another platform if you’re using Disqus, Backtype or Intense Debate- another post for that one!).