While many older parts of the US are not as well penetrated as younger ones, what we’re starting to see is the likes of Facebook gain the benefit of network effects and is likely the gateway to deeper use of such tools. The adoption of these tools will create a chance for business models to shift to the much written about referral based, pull demand from consumers instead of push marketing to the masses. In short, conversations, positive experiences and then sales instead of a shotgun and a falling bird.

I was talking to PhotoKeith this past week who is a [very good] professional photographer about different ways to grow his business and we both realized just how much value there is in combining a traditional micro-marketing database driven marketing approach combined with Facebook and MySpace.

Professional service businesses face opportunities and threats from the explosion of online networks and businesses.

* For businesses that haven’t shifted to an online model (e.g. most personal services that require being in person), then social networks allow for a changing of the guard. Specifically, with an increased use of a social network or referral site, the opportunity to be the leader is a new one. Existing leaders may or may not be able to adapt. For professional services, the person really is the brand.

* The online arena is empowering more information, more tools and more ways to share. While this means that the market for certain services like the occasional photo shoot goes down because people can shoot and edit a picture with a lot of tools, really this just means that professionals need to identify more clearly where the value exists for services. Most people aren’t going to watch a video to learn to cut someone’s hair, so professionals are certain to continue to have a place in the market, but certain kinds of jobs in each profession are going away.

Online social networks are getting much more user friendly and as the ease of use of the platforming moves from early adopter to the majority, we’re going to see far more networkers leverage a new kinds of business model to grow business. Specifically, a database driven marketing model where the customer’s data is retained and the service provider uses technology to stay on top of needs and can recommend services as needed and get referrals for being very good.

As backdrop, Christopher Locke saw this trend coming back in 2001 in Gonzo Marketing when he noted that Ford was being very progressive in 2000 by trying to get all employees to push forward their passions into online forums. As an example, if people who work for Ford also like to garden, then foster online communities amongst employees offer the possibility to open up to the outside world to interact about all sorts of things that could even include new ideas for Ford’s trucks, but also a lot of other good ideas and meaningful involvement.

This week, Gary V. nails it on his “120″ video covering how all these new social web tools are forcing folks to align all elements of their lives onto the same page. No more secret lives, fake or ambiguous ID’s since Facebook is playing the hand of people to fess up to the networks they belong to for access. Along with that forcing hand comes transparency.

Next up, Loic Le Meur offers solid thoughts on his frustrations of the decentralizations of the social map. Partly, web communications are just becoming more advanced to meet users’ needs, but also he’s noting a problem with the early stages of web’s social tools.

Facebook is a walled garden which offers people a safe and user-controlled environment. While Flickr and MySpace broke a lot of social norms about a person’s online persona, Facebook’s attraction as a safer version of digital media sharing allows for a transitional platform for those still afraid to fully go online. For these ‘early majority’, the idea that digital media may get online with little to no control personal control is still scary. An explosion in video and digital camera technology combined to most cell phones (plus much easier uploading functions) should all but end that fear in the coming years (for many in the early and late majority of tech adoption, not for laggards).

How does this thread together for branding? The two emerging concepts of transparency (=people being who they are at work and at home) plus disintermediation (=tools that foster connectivity without being a platform) create a person as marketer/representative/communicator. [note: yes, I'm pulling a term, disintermediation, that isn't really used for the web, but I think it fits]

Marketing strategy and communication is becoming more like silly putty. While these branding concepts are not novel in for web developers and marketers, it is very challenging for firms outside of the interconnected web that are used to highly structured interactions. Silly putty can even make a copy of the news/comics that can be stretched.

Many of us seek openness from companies and public facing people relying traditionally on some intermediary press/media function. Times are changing as transparency takes hold, and people have increasingly gotten ahead of media scrutiny… and people around them are ready to consume these options. Soon, we’ll all be intrigued in having direct access to anyone (we may not always take advantage of the option, but like a 3rd row of seats in a SUV, we’ll take it). Company CEO’s and high profile employees are pushing their messages externally via video and blogging. They don’t have to, increasingly they want to.

Backlash can be anticipated for those that want to be black holes within these new information transmission platforms. Identity anonymizer services can allow the opposite option: not being transparent.

What will this lead to? We’ve talked between us BSM guys that we’re our own brands, and maybe having our own domains, our own servers and our own media developer tools that allows us to deliver our own messages for our companies, for our families and with our colleagues.

Transparency has yet to go from early adopter to mass consumption in many of our lives, mostly because the steps to be open takes writing blogs in code and working to get movies and pictures onto platforms to deliver them seamlessly. As those tools move into our work and home lives, more and more people will be asking why you’re not easy to find, approach and see what you’re up to.

Whew, a position piece video (the player auto-loads, hence the jump)…

Is Facebook the Trojan horse this video implies? Maybe the answer of “what happens in Facebook, stays in Facebook” isn’t so much to ask for.

Zillow.com announced that they intend to build a social community network where neighborhoods can provide information, pictures and recent events to flush out what living is like in that community. I get social networks are everywhere. I like marketing that comes from education, user displays and social interaction.

I don’t get why Zillow would ever agree to this kind of mission creep. It reeks of attempting to find more social relevance while the real estate market has tailed off. Taking on the National Association of Realtors and streamlining the closing process seemed so much more compelling for Zillow.

Stats don’t lie, traffic to Zillow.com and Realtor.com are just plain down:

From the Back Seat, this one looks like a stretch.

Background
A meme recently occurred on the frustrations of web metrics tracking. I personally found it quite interesting in that these frustrations occurred before: retail POS tracking. Even more compelling in its parrallel is the fact that one of the leading players in the web tracking industry, Magid Abraham of comScore, was one of the leaders of the retail POS industry, IRI. This train of thought provides insight on how widgets should be monetized by social networks using a parallel to retailer best practices: Category Management.

During the 1980’s and 1990’s, retailers grew more competitive by expanding geographic reach and then squeezing costs out of supply chains. As a result, the winning retailers grew efficient and stayed profitable by using four key elements:
1. Standardization of store fixtures, field operational practices and store selection/offering.
2. Nationalization of branding and leveraging of operational components including purchasing and back-room elements.
3. Development of performance metrics where leading players could leverage their data and consumer knowledge into better and faster decisions (=powerful got more powerful, the small had to develop strong niche positions)
4. Mass customization became possible as large, national retailers could now leverage operational efficiencies and large pools of proprietary information to deliver better selection to subsets of stores under a national umbrella

Moving into Web Metrics
The new retail space is social and viral – Facebook, last.fm, MySpace, Technorati, Netvibes, leading blogs. Unlike retailers, the amount of available space is limitless, but the space “above the fold” at key leading networks is limited, and will benefit from assessing operational efficiency metrics in managing space.

For example:

Even a leading website, like TechCrunch, needs to balance ads v. content delivery. Based on an initial measure of ads v. content above the fold, TechCrunch current has roughly 55% of its page containing ads (see red blocks noting ad space). This isn’t a dig against TechCrunch specifically, clearly the demand for ads on the blog are high enough and users aren’t complaining about the lack of content or difficulty reaching it.

Isn’t there more to TechCrunch than a one-way push of blogger opinion and advertisements combined with a second push back of responses by readers? The addition of Forums slightly changes the TechCrunch experience, but beyond some community interaction, a large audience of invested people seem interested in more, but what? Previously, I covered thoughts on how social communities need to focus on industries they serve over ads they should run.

User Interface Realization
Jakob Nielsen’s Alertbox notes screen size for about 60% of all monitors is 1024×768. While this size will change over time, a web page “above the fold” will continue to have limitations.

Result
A web page has limited primary web space beyond the social elements. Fred Wilson astutely suggests that he would like to virally receive and give purchase suggestions of all kinds. Facebook has developed its API to begin to deliver on that promise. While Facebook has a strong social network, it will have to assess how its widget platform becomes an profitable venture, much in the way WalMart leveraged the “store of the community” concept by not reducing or restricting choice, but expanding it to the limits of profitable choice and efficiency.

Shelf space above the fold is limited and a standardized platform (of widgets) allows users to customize uniquely through use of host-approved API programs. While customization rules, space will still matter and players along the social network value chain will need to develop a new set of compensation and performance metrics. Jeremy Liew has taken a crack at assessing the four key metrics of performance for widgets (=feels a lot like the security or cell phone business). While valuing an individual widget is important, the means for a social network to assess its value is also important for players like Facebook as well.

Web Performance Metrics for Social Networks
Many retailer metrics used in category management can apply into the new economy, including:
* Brand enhancements – not directly for profit, but for image and user experience
* Revenues/profits per square pixel area
* Placement optimization (A, B, C)
* Variety within a category v. across categories
* Loyalty programs to grow user affinity

Ning recently took a full year to build its platform of social networking turnkey solutions which demonstrates that even a well funded team requires time to develop a strong set of tools. While web platforms are becoming more scalable and cost less, user effort is still required to customize the experience to a specific community niche (just like a retailer needs to focus product selection and store layout for its consumers). Social networks, like retailers before them, will have a similar opportunity to focus on valuable users and how to ensure key segments continue to be rewarded over time.

Concluding
Savvy brands and companies investing into 3rd party hosted communities and portals have the potential to create value for sizable and loyal audiences. These investments will require retailer-like emphasis on customer loyalty, content variety/depth and segment profitability. User engagement offers as an added intangible benefit of faster and more accurate feedback for those companies that can effectively and credibly manage this medium

Contextual marketing has no page in Wikipedia, funny isn’t it? Funny in the sense that contextual marketing is at the core of Google’s AdSense platform. Google has redefined, and will continue to drive, efficiency and metrics into the advertising arena moving its influence from search to radio and to TV. While efficient advertising continually focuses on “the” desired target audience, advertisers will begin to turn the question from efficiency and effectiveness metrics in ad delivery (=push) to determining deep ad-sponsored relevance.

Google’s Actions

In fact, Google itself has blazed a trail doing exactly that, just this week. Google’s long tail user base is entrenched in blogging, video, and online publishing. The Google acquisition of Feedburner has strategic and financial rationale from an ad delivery standpoint, but its decision to make Feedburner a free tool shows another intent: increased relevancy to its core user base. Feedburner is part of the Google brand, and is now part of the Google ad-network experience. User advertising relevance is going to take on a whole new world well beyond the mere “push” attitude that exists in the current market definition, inclusive of most contextual ads.

With so much to be said about the $ size of the advertising arena, a contrarian opinion is to seek out advertising relevance covering sponsored activities, and not ad supported ones. Sure, in a way this can include things like in-game advertising, but in actuality, it is far more than that.

Advertising relevance in a world full of sales and brand messages will need to shift from ‘telling the consumer information’ to ‘providing the consumer with the tools of discovery’. These tools of discovery lead to the following framework for brand relevant advertising experiences:
1. Educational and beginner advisory content;
2. Customizable and configurable experiential software or venues;
3. Social elements for publicity, critique, guidance and/or networking and perhaps
4. Means for the user and host to profit.

The above four elements are technology agnostic as they could easily be in a store as online.

Businesses spend a wide range up to 30% of their sales on marketing, awareness, brand recall and promotion. For many businesses, this budget is well into the millions, or hundreds of millions annually. During the past 3 years, the costs of developing online technologies has dropped dramatically. With FOSS, versions of Digg and eBay can be downloaded for free and customized for a few thousand dollars into a niche social network. As a result, ad spots on the ever growing impression blocks stay very cheap, and inventory will continue to be hard to sell. Content will continue to explode, and choices on where to place ads will continue to grow in complexity.

Google and Yahoo benefit from complexity in the online ad marketplace. First, capturing and retaining cached content is a growing barrier for Ask.com, AOL, Yahoo and Microsoft. Second, the growing number of long tail publishers, relevant ones, makes individual selection of online publishers less possible each month. While TV and radio may be “all or nothing” shot guns with a difficult set of metrics to verify payback, online advertising’s inefficiencies are click farmers and brand connections to extremely poor quality publishers.

An Escape

Thinking differently, businesses should consider doing as Google does, . Google’s purchase of FeedBurner and the free-ware decision will foster loyalty and increased usage. Seth Godin astutely noted the same with Google Analytics. Analytics is not for boosting egos by showing big viewing statics, it is for attaining measurable and profitable results.

What about contextual meaning? I started on this topic and now I’ll come back to it. With the arrival of low cost open source technology and communities of interested people looking to get engaged (=buzz word), creating a move into this experiential world to drive business should be considered as an alternative to traditional and interactive marketing. Caution, this should be done in a credible way by the right players in the value chain. For example, how will bloggers feel about free Pro Stats from Google? I know how I feel, happy (thanks, Google, seriously).

Facebook’s API isn’t All That

Honestly, Facebook is a great networking tool. Its move into the lives of lots of people is having an impact. Many people, college kids and professionals, now have a new home that is an open market with guard rails. Very cool. It will be a place where users can push messages, but will Facebook create a world where people can learn, create and share?

Facebook’s widgets are billboards that allow users to have 1-way push of messages (=music preferences, videos, etc.), push of products (=Amazon, Gap, etc.), push of blogs and other info. As a result, “profitable” Facebook users will be ones that view the platform as a means to push messages to monetize it (more on this in another post). Do you have friends that sell to you? I don’t mean refer you to things, but want to make money off of you. As a note, I’m no fan of a world of being a “referral friend”, where my friend makes money on that deal.

Looking to Education + Customization + Sharing

Gary V. at the Wine Library has gotten some buzz for a story worth digging into, deeply. Understand that case study, apply it to your industry, win.

Wrap Up

Contextual marketing should be defined as the fusion of education, customization and sharing. The buying or creating of website portals that do all three of those things to the right audiences will be where web 2.0 gets monetized, and it won’t be because those websites had great advertising revenues.