The Relationship Economy……

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A friend who is a social media strategist had no idea the firestorm he was about to ignite in my imagination when he handed me a copy of Barack 2.0: Social Media Lessons for Business. Authors Brent Leary and David Bullock have created a manual for effectively developing and implementing a social media campaign drawing insights from the historic election of President Barack Obama. Not only did it serve as a primer for understanding social media strategies that could be applied in my own life as a business executive and as an educator, it also provoked me to consider other possibilities. For instance, could social media provide resources leading to a better way for America’s citizenry to govern and be governed?

Leary and Bullock make a compelling case that the way we elect our governing officials has forever been changed because of how Barack Obama conducted his highly successful Presidential campaign. I would go even further and say that social media is going to play an even bigger role in the not-to-distant future. Whether Democrat or Republican, one thing is certain: Americans want change. Americans, at least the ones I am in contact with, are chiefly concerned with two things: They want a better education system for their children and an improved economic system for themselves. And they have placed their faith in a government that seems inadequate to satisfy on either issue.

Einstein once said the level of thinking responsible for creating your problems will never be able to solve them. Social media allows us to ascend to a level of thinking that is unprecedented in history. Social media allows us to share knowledge openly without boundaries. Social media allows the best and the brightest to collectively collaborate on solving the problems that pose the greatest threat to our freedom and to our welfare. We now possess resources that allow an amazing degree of knowledge exchange and collaboration. Social media has provided us a set of tools promoting a level of innovation the likes of which the world has never seen. A true renaissance of human potential is now possible above and beyond anything we’ve ever hoped or dreamed of.

Is it possible that social media could affect the single greatest shift in our national identity since the American Revolution of 1776? Our forefathers suffered under a yoke of oppression and sought to form an independent government that was based on a single principle: Liberty and justice for all. They did well. They created a system of government that was “of the people, by the people and for the people.” Social media provides the citizens of our great country the ability to participate in their government like never before. We have before us a great opportunity to produce conversational currency.

An economist might say that conversational currency is created by leveraging social capital into a value proposition that generates an exchange of goods or services. An educator might say that conversational currency is produced from the convergence of knowledge, collaboration and innovation. How ever you put it one thing is certain: Social media is the catalyst for the flow of conversational currency.

A recent President once challenged us to “ask not what your country can do for you; rather, ask what you can do for your country.” It was an appropriate challenge then; it is an even more fitting challenge today. Speak up, Americans. Your voice is louder and clearer than ever before.

What is going on these days with advertising???

I pay escalating rates for cable to watch an ever-escalating # of commecials. I can’t change the channel or hit fast forward fast enough (if fortunate enough to have taped show on my DVR). The national news plays the same handful of Pharma brand commercials every night. How many times can they push this repeated flurry of ads on us before we get mad? I for one am mad! The amount of money expended on these expensive commercials, poured on us every night by the same marketers, is passed directly onto a consumer base choking on the cost of these same drugs. I often wonder if they’re checking the pulse of viewers to see if maybe ‘we have a problem, Houston’. I propose a new Healthcare reform initiative: Stop advertising Rx…or restrict mass ad budgets.

Or take women’s magazines. I occassionally look at the most popular ones my wife subscribes to. On page 35, you’ll find the table of contents. And if you’re patient enough, you may actually be able to find articles within these ‘ad books’. Make it a game the whole family can enjoy: ‘Find the Content’.

What these traditional marketers seemingly don’t understand is simple. It’s no longer a numbers game. Mass media is dying a slow death. Cheaper isn’t cheaper if your mass audiences are not ‘listening’.'Push marketing’ (mass ads) is slowly but definitively being replaced by ‘Pull Marketing’(a reason to buy). But not ‘pull marketing’ in the traditional sense using coupons/rebates, sweepstakes, etc… No, the future of ‘Pull Marketing’ involves one-on-one engagement with your audience and those audiences you hope to build (or ‘pull’) into a meaningful conversation. And yes, conversation can and does convert into currency for the bottom-line.

Again, why don’t advertisers simply “give me the ad money” to buy their products?  Sounds far fetched.  I am working on the solution.

Ask me a question about this or tell me what you think…it’s all about peer-to-peer conversation now.

I recently attended a conference and the host had the “traditional marketing materials” set out for the taking by anyone who had interest.  My first thought was what a waste. My second thought was I wonder if participants are interested in the material.

Upon looking around I discovered that not one person who was passing by the “material” table was actually taking the material.  Being curious I decided to see if the material had any valuable content in it.

Sure there was some pretty graphics and slick pictures all printed on high gloss bound paper with a high stock cover.  By he way, the content was all about them. I decided to ask someone about these materials.  I found someone who looked official and engaged in a conversation. The questions and answers were as follows:

• How did these materials get here? Answer: We shipped them  (Cost)
• These are nice looking. How much did it cost to print them? Answer: We run lots of 25,000 so we keep the pricing price down to roughly $3 per piece (Cost of $75,000 per run)
• How often to your print material like this? Answer: Probably once a quarter so we can keep the content fresh. (Cost of $300,00o a year)
• Do your customers, suppliers and partners like this material? Answer: I really don’t know, people usually don’t comment whether they like it or not. (No feedback loop?)
• Can I get this information off your web site? Answer: Yes, it is in the section called Products and Services” and all you have to do is log into or site and you can download the material. (Now why would I want to do that?)
• How many people download this material? Answer: I have no idea. Someone else manages the web site. I am in charge of marketing and events. (So your web site has nothing to do with marketing and events?)
• Just curious but has the economy hurt your sales? Answer: Yes, business is terrible and our entire market segment is down 20% over last year. We’ve had to cut budgets and layoff people. We’ve even cut marketing and advertising.  I hope this economy turns around soon. So how is your business and what is it you do?
• My answer was, I am in social media. The response: Oh yeah, I am on Linkedin, Facebook and just started Twittering. Seems like a lot of wasted time to me.
  

Am I Living On A Different Planet?

Sometimes I wonder if I live on a different planet.  How could can company spend $300,000 a year on printed material that no one is interested in? How could someone in marketing and events not be concerned about the traffic on their web site? How could printing out hard copy material once a quarter be considered “fresh content”?  How could any company spend $300,000 a year in hard copy material that doesn’t add any value while having to layoff people?

How could they? They do because they don’t know the difference.  Simply put they lack the knowledge and understanding that the “market as changed” and they wonder why profits are down. Instead they waste time, money and effort.  Please kill the waste.

Does this sound familiar or am I the only one living on a different planet?

What say you?

Having been in ‘classical marketing’ (ie. brand management’) and every area of traditional marketing with the CPG world for 25 years, I found myself asking this very question several months ago. Is this just a fad? Can I really market products effectively this way? I knew these areas were hot, but wasn’t it just dominated by kids? Such questions are likely being asked by many ‘decision-makers’ in marketing departments everywhere.

The truth is, Marketers now have a critical choice that has seemingly come out of nowhere. Either ‘get in front of it’ (social media)…or get buried under it (the wave is escalating and coming right for you). Those that fear change may very well be those ‘decision-makers’ who fear their lack of knowledge may undermine their position of authority. These ‘politicians’ who raise pessimism about Social Media are only seeking to serve themselves. Fortunately, many will be quick to ‘embrace change’. Common sense tells me that the earliest adopters of change associated with Social Media are (or will be) those that adopted these new tech waves early, and in their personal lives.

My advise is this: If your marketing department is ‘led’ by ‘experienced veterans of marketing’ like myself, someone needs to bring these folks down to the level of ‘learning’ from ‘less classically experienced marketers’ who know a whole lot about this impending wave of influence…and fast! I knew little about social media and networks six months ago. I viewed static websites, interacted a little with the latest 2.0 websites, read a blog or two, and used LinkedIn for networking sake. In the last six months, I have become immersed in Social Media having the good fortune of being partnered with a nationally recognized Social Media expert who ranks 120 worldwide by Ad Age, has authored books on the subject, speaks to large corporate forums, and refers them to his blogs (100s of thousands of daily followers).

Social Media can be monetized…our model calls itself “Conversational Currency(TM)”. Social Media will ultimately change everything we marketers do. Mass marketing is dying a slow death. Consider TV, Radio, Print, and couponing…they’re all in a free fall and blame it on the economy. Guess what mass media, when the economy fully recovers…you won’t. This little thing called ‘Social Media’ has concurrently flourished and will fill the gap you expect to regain in the years ahead.

‘New Guys Help the Old Guys’ applied in the days when laptop training came to Corporate America. Even more applicable today with ‘Social Meda’.

Are you an ‘Old Guy’ or a ‘New Guy’?

Marketers have not shifted their thinking rather they have simply moved old models to a new space. Consider the poor results of old print methods and coupons which yieled a 3% – 5% return.  The same “model” is now being pushed out on the internet using Google Adsense, banner ads, “virtual coupons”, target marketing on Facebook etc etc. Billions spent doing the same thing they did in the past.

If insanity is doing the same thing over and over while expecting different results, advertisers are insane.

Joe Marchese writes in an article titled “Why Advertise At All? : It’s been eye-opening to have conversations with thought leaders in advertising and marketing regarding the future of the industry. The conversations always start on how one could advertise effectively in social media, but more often than not it turns into a discussion of the bigger question: What’s the purpose of advertising/marketing?

I would argue that for marketers, finding a way to interact with consumer and strengthen brand perception is as important as ever. In fact, as production of perfectly functional, and higher and higher quality substitutes continues, it is a brand’s perception by consumers that protects its economic value.

But it’s not enough in today’s media landscape to tell people what your brand values are merely by broadcasting them. Marketers must find a way to allow people to experience and share a brand’s values. Brands found a way, through advertising, to be a part of people’s cultural experience using broadcast media. The task is the same for social media, and it is an important one.

The form advertising takes to maintain relevance in media’s latest evolution, has yet to be totally unlocked. And it may be that advertising makes up a smaller share of the media mix or (shockingly) a larger share, given that advertising’s new role will be to create conversations, which can drive product insights, which can lead to maintaining a leadership position in product innovation.

It may be that the lines separating advertising, research and other marketing functions will simply blur, and elements of each be present in all brand communications. “Why” is always a good question to ask before starting any marketing or advertising initiative — but how honest are we with our answers?

You Can’t See Well Through A Dirty Window

Innovation is not applying old models to new methods. Innovation is turning old models upside down and inside out.  Innovation is being creative with new methods. Current advertising models and methods are not very “social” nor innovative.  (see How Social Is Your Media?” and a related Power Point here). 

Advertisers continue to waste their money and our time. Not a very productive social thing to do.  What advertisers don’t “see” is that brand awareness is increased best by word of mouth. Revenue is gained best by simply passing the cost of advertising through to the consumer. If you gave the consumer the money you spent on advertising do you think they would tell their friends? I would, would you?

Tom Nilsen has created a new model for advertisers. The model simply stops the advertising and gives back the money spent to the consumer. How does it work? Ask Tom, stop advertising and give me the money.  You’d be surprised how appreciative people will be.  Appreciation spreads fast by word of mouth. Trust the consumer and you’ll win. The reason you can’t see it is because you are looking through an old (mind) and dirty (models) window. Get it?

What say you?

Warren Buffet recently wanted to raise money for a non-profit Association for the Blind in California. He put an offer on EBay promising to have lunch with the highest bidder. The highest bid came in at $1.6 million!

Whomever made the bid felt that an hour lunch conversation with Warren Buffet was worth $1.6 million. Warren Buffet is a wise man and one of the most successful creators of capital. His net worth is $36 Billion.  Apparently whoever agreed to a $1.6 million conversation felt they would get at least that value in a luncheon conversation with Warren Buffet.

What Would You Discuss With Warren Buffet?

A wise man named Solomon once said “wisdom is worth all the gold in the land. With wisdom comes knowledge”.  Now imagine the conversation with Warren Buffet in which you paid $1.6 million. What would you ask? Would you ask for a stock tip?  Would you ask which start up will take off?  Or would you talk about the weather or the economy.

Today time and productivity is the value of conversational currency. Whether your a brand trying to push your offering or an individual seeking opportunity, your conversation can pull or push an audience away.  The value of your content and the affinity to your audience is the currency of pull.

The wisdom of crowds can give you keen insight, direction and knowledge that creates the wisdom you seek.  If you seek revenue you must create value first which pulls people to your conversation. Even creating pull doesn’t guarantee revenue. Revenue comes, over time, from giving and creating value to the market. The market of conversations is a market of knowledge about anything and everything.

An hour of Warren Buffet’s time and wisdom was worth $1.6 million to someone. You might think one of his wealthy friends paid for the EBay bid but the point is his conversations attract lots of capital.  People seek him for his wisdom and knowledge. To create conversational value you must provide the market with knowledge they can use. Creating chatter and pushing your message isn’t wise nor does it reflect knowledge that people can use.  Get it?

What say you?

Everywhere I go these days it seems as if everybody is talking about this new phenomenon called social media. Social media is profoundly altering the way companies market their products and services and having a significant impact on how they conduct business. At its most basic sense, social media is a shift in how people discover, read and share news, information and content. Even Larry King has added Twitter to his social media mix – or to put it another way, he “tweets.”

Traditionally, when we think of media we think of newspapers, magazines, radio and television. With the widespread use of the Internet we saw the advent of new media: Amateur journalists leading the way with blogs and podcasts. With the introduction of MySpace and the advent of Facebook media took another leap forward by becoming “social.” Thus, we are a society that is interconnected to one another as never before: Users engaged in conversations around the clock without ceasing. This non-stop, free flowing exchange of information is redefining how we relate to one other as humans and how we relate to the organizations we serve or that serve us. But not everyone enjoys the same quality of experience.

Millions of people make online sharing part of their everyday lives, whether engaging in conversations on Facebook, posting family photographs on Flickr or networking with other professionals on Linkedin. Thousands of new users are joining in the practice each day. Nevertheless, I am meeting people everyday that are still reluctant to actively participate in social media. It seems as if most of the resistance is a combination of ignorance and fear: Not understanding how resourceful social media can be and feeling apprehensive that it will somehow end up doing more harm than good. I’ve heard husbands gripe that their wives spend too much time “chatting” on Facebook and business owners complain that their employees are distracted by social networking on the job. On the other hand, I’ve had friends to share with me how their life was impacted by reconnecting with a long, lost relative. And small business owners have relayed to me how wonderfully resourceful social media tools have been in generating leads and boosting sales. I am fascinated by the impact social media is having on other peoples lives. From the novice to the hardcore social media junkie to the burned and burnt out former user, there are stories that I would like to hear, perspectives I would enjoy gaining.

How about you? What’s been your experience? Please tell us.

The word “real time” brings a connotation of instantly, NOW. The web is a “real time” environment.

Anything published 60 seconds ago is old. Any new conversation quickly become old.  Real time is at the click of a mouse and it does not wait for anyone nor does it wait for your business models to catch up.

The problem with business is most leaders are stuck in past “mindsets and models“.  Mindsets and models are changing moment by moment and the changes are fueled by the conversations, NOW.

How Do You Plan for “Real Time Business”?

Tim Leberecht writes: It used to be that there’s nothing more boring that yesterday’s newspaper. Now there’s nothing more boring than today’s. When you relaunch your business model, product, brand identity, web site – it’s already too late. Real-time beats planning to the punch.

Real-time businesses therefore must get rid of long-term strategy plans, product road maps, goals and objectives, and all the other superfluous documents that distract organizations from focusing on their true mission – the here and now.

Real-time business is inherently social – there is no real-time without social. The more businesses open up their organizations and invite external voices into their inner sanctum, the more real-time they will become. Getting social will help companies gather customer intelligence in real-time and use it to move faster. In the future, real-time businesses may deliver before their customers even articulate their needs. And they will provide immediate value without immediate return, in other words they will over-deliver – free for now but with a material or immaterial return later.

“The process is the product,” as Trendwatching writes in its latest report, in which it also claims that the real-time the web is breeding a new quest for longevity or “Foreverism”: “the new popularity of technology that allows consumers to find, follow, interact and collaborate forever with anyone & anything.” It’s not as paradoxical as it may sound. Living real-time means living in the ongoing – forever. If everything happens in real-time, nothing is ever final and always in permanent beta.

Conversely, if everything lasts forever on the Google web (your emails, networks, conversations) and your digital presence is only as good as your latest search results and Twitter updates, you better utter some digital impressions NOW.

How Fast Can You Get To Now?

My brother used to always tell me “The past is over and you have to learn to live in the now. Just remember the now you were just in is now over!“

The irony of doing business NOW is NOW is  for a moment. The rate of change is relative to the rate of interest.  The rate of interest changes with the conversations. Now do you understand why Twitter, at 140 characters, creates rapid changes in conversational  interest? That is why it’s called conversational currency, the rate of interest is in a constant state of “change” NOW.

How do you plan for NOW? It’s to late!  Get it?

What say you?

Past marketing tactics have created wasteful brand spending on inefficient and largely ineffective paper & clearinghouse-dependent marketing tactics (coupons, direct mail, etc..). Dollar expended in these areas (before counting the incentive itself) would help pay off the national debt, Ready?

$375 Billion++ a year! That’s Right,  THREE HUNDRED and SEVENTY FIVE BILLION DOLLARS WASTED ON COUPON PLACEMENTS!

Do These Campaigns Bring In New Customers and Sales?

Who really cuts coupons out of newspapers?  Do consumers even subscribe to newspapers anymore?  Do people open most direct mail, or is thrown into the trash? Can existing trees continue to support all this waste?

The rate of return brands realize on most coupon placements is 1% or less. Sunday paper coupons are the biggest spend by far, and redemptions typically range between 0.5-0.8% . Direct mailers (commonly referred to as ‘junk mail’) may yield a whopping 2 – 5% interest level. Moreover, the consumers most attracted to these coupon(s) are those who regularly purchase the brand…and would have made the purchase anyway…without the costly piece of paper! Brands typically ‘subsidize the purchase’ without changing consumer behavior as intended.

Why Would Brands Use The Same Non-Productive Marketing?

Since the consumer products industry (CPG) has relied repeatedly on the same non-productive marketing tactics the related activities have created repeated dismal results. There are a myriad of reasons why they continue down this path.They include the following:

1. fear of making any drastic shifts from ‘the norm’ (what we have always done, what our competitors do)
2. the upfront expense of placing mass coupons seems relatively cheap (true in many cases, like Sunday paper coupons)
3. common failure to evaluate the actual ‘cost-per-unit moved’ (ie. the true cost ‘per redeemed coupon’)
4. the actual quality of those coupons/rebates redeemed (are we actually attracting new users, expanding consumption by existing consumer base, etc..)

With these traditional failures by marketers, the result is rampant waste.

Who Pays For This Waste?

Essentially, the consumer. Well beyond the price of products themselves (production, delivery, established margins by manufacturer and retailer), the consumer must also bare that inefficient burden of $375 Billion spent on coupon placements. Not the value of the coupon incentive (we’ll take it!)…but just the massive push to implode us with these paper-dependent incentives!

Is There A Better Way?

Shouldn’t brands use more productive and cost effective means to reach and retain new customers?  Indeed. . . which is exactly why we’re seeing a rush to the internet and social media to finally deliver real Innovation.

I realize this may be a stretch but imagine the $375 Billion++ a year being used more efficiently. How? Why not simply give it back to the consumer for being a “loyal follower” on Twitter. Sound crazy? Not as crazy as wasting the $375 Billion++ a year on old non productive methods that don’t create relationships and conversational currency. Conversations stick much more than any old marketing tactics.

Comments?

Footnote: My name is Tom Nilsen and I have spent 20 years in the marketing and sales departments of major brands such as Nestle, Sara Lee, Coca-Cola, Coors and others.  I am now with AvidPath (EVP-Business Development & Marketing).  Jay Deragon invited me to share my experiences on his blog. He has also been teaching me the dynamics of social media. This is my first ever blog post and I must say this is a lot of fun.  You can expect to hear a lot more from me on this blog. Your feedback and comments would be greatlty appreciated.  I can be reached at tnilsen@avidpath.com

The term “social media” has many individuals and businesses confused. Whenever I do a presentation I ask the audience how would they define “social media”. The answers reveal a fundamental misunderstanding of both the term and its related implications to the audience and business.

When communicating to an audience, who is not familiar with your topic, it is always vitally important to put your topic into context so as to insure comprehension of your communications.

Always Start With The Basics

For those of us whom use social media regularly we sometimes forget that the majority of people’s familiarity with the term “social media” is in context with simply having a profile on Linkedin, Facebook or Twitter. While having these profiles in most cases the audience does not know how  to engage in social activities creating their own media.  Thus I always start by spending time defining the terms so the audience can understand what they can do besides simply having a profile.

The adjective “social” implies that the verb or noun to which it is applied is somehow more communicative, cooperative, and moderated by contact with human beings. In the absence of agreement about its meaning, the term “social” is used in many different senses, referring among other things to attitudes, orientations or behaviors which take the interests, intentions or needs of other people into account.

The word media may refer to tools used to store and deliver information or data.  Today’s social technologies enables people and businesses to create their own media as a means of getting their own audiences attention, attraction and affinity.

Every business needs an audience as do we as individuals. Our audience sustains us, whether it be your family or your customers, we all need an audience to support our development through the exchange of media, information (conversations) which precedes our progress to useful knowledge.  Knowledge is the foundation of improving value, whether it is between two or more individuals or business to business. We share knowledge with our children hoping they will use it to improve their lives. We share knowledge with our customers hoping it can be used to improve their lives or their business.  We share knowledge using multiple forms of media, a conversation.

Media, whether text, audio, images or video are merely elements of a “conversation”. The most valuable conversations take the interests, intentions or needs of other people into account.  The least valuable conversations are pushed by selfish interests, intentions or the initiators needs in the forefront. Do you see the difference?

Most people see the difference but lack the will power and knowledge to make the necessary changes. Common sense isn’t that common anymore if it were the change would be easy.  Social media is a shift aimed at the interest of others. The fact that most people and business don’t get it is because the mentality starts with the wrong premise: what’s in it for me?.  The answer is what do you have to say that is in the interest of others. If you focus your media on the interest of others and create value for them results will come naturally.

If your web site, your profile or your conversations are static then your not adding any conversational value. That is why it is called “social media”. Do you expect people and business to come to you? You have to create enough interest, activity, for them to want to come to you. It is called a conversation. Get it?  No, then go back and study the definition of “social” and “media” again.

Still don’t get it? Try having a self centered conversation with your spouse or your customer or try ignoring or not responding to their interest then maybe you’ll get it.

What say you?