Editor’s note: This guest post is written by Seth Goldstein (@seth), the Co-Founder of socialmedia.com, which is building the first ad server based on people not pages. Its platform provides authoring, serving and reporting across different types of social media. All of its ads are real messages from real people. Seth is also the Co-Chairman of the IAB’s Social Media Committee.
Social Media and Identity
We are witnessing a profound change in the media and advertising industries due to the emergence of social media. Companies that did not exist ten years ago, like Facebook and Twitter, have captured significant share of the attention economy from traditional publishers. Underscoring this trend is the fact that at the same time that Businessweek was selling for less than $5 million (plus assumption of debts) to Bloomberg, Foursquare’s pretty cousin Gowalla drove up Sand Hill road and collected $8.4 million for a minority stake.
Amidst this disruption, media companies are chasing after “their” audience in order to continue to broker the attention of that audience to marketers. But just at the moment that media has mastered the art of blogging, search engine optimization and CPM yield management, they are now faced with a new set of consumer behaviors that elude their programming faculties: mobile devices, location-based services and the social graph.
Driving this change in consumer behavior is the emergence of social media as a means of content production. Social media started more than ten years ago with online personal communications tools such as Evite, Shutterfly and Blue Mountain Arts. Since that time, systems have been built to support broader and more subtle social interactions. This has been achieved primarily by the introduction of new creative formats that make it easy for individuals to express information about themselves (such as status updates, tweets and check-ins) and new distribution models that enable this personal information to be shared easily among friends and followers.
Social media’s ascent has led to an Internet experience based less on pages and more on people. As a corollary to this (and counter to Marshall McLuhan’s thesis), the medium is no longer just the message. The permanence of words and images and their meaning in context has long been promoted as a foundation of media theory. In an increasingly real-time environment, however, content gives way to identity, and traditional contextual analysis gives way to dynamic social interactions.
The medium is the message . . . is the member. This is why there can be no discussion of social media without a simultaneous discussion of identity, and why the growth of social networks such as Facebook and Twitter are one and the same with the growth of identity systems online. There are a number of technology and business trends that are converging around this thesis.
Here are some that seem to be of particular importance as we head into 2010:
- The only check and balance for Facebook is Twitter. Twitter is significantly smaller than Facebook in terms of users, and its social graph is asymmetrical and therefore looser. But what it lacks in terms of the size of its contributors, it makes up by offering a broadcast media model. Celebrities find it easier to reach large audiences directly by using Twitter. Even though Twitter follows far more of a media model than Facebook, it too is being pulled into the identity space by Google who is unlikely to integrate Facebook Connect under any condition. Google is bringing the Twitter API to the fight (while Yahoo and MySpace drop their identity ambitions and happily incorporate Facebook Connect). The interesting question here is Microsoft. Although it is impossible to imagine Microsoft siding with Google on anything these days, integrating Facebook Connect may end up doing to Windows what Microsoft itself did to IBM many years ago.
- Agencies are tired of being treated like commodity procurement organizations. They want to increase their margins through the application of data to media and become demand side platforms (DSPs). This is the strategy of IPG’s Cadreon unit and Vivaki’s “audience on demand network” which both look to add proprietary data from sources such as cookie exchanges and re-targeting databases. In addition to leveraging new data to better target existing creative assets, agencies wish to also transcend the one-off “give me a big campaign idea” business. Consumers will increasingly ignore the high-bandwidth, homepage-takeover distraction tactics of traditional online marketing. The average social media users have trained themselves to focus on real messages from real people. Agencies will need to learn how to produce low bandwidth advertising content that can be shared and distributed in lots of different ways by lots of different social groups, all the while preserving some underlying essential brand equity.
- Publishers don’t want their quality audiences sold cheaply outside of their sites. Their expensive sales organizations have no chance of maintaining high CPM rates from an agency that can offer the same audience to its client at a fraction of the price by sprinkling some cookie data on top of a remnant ad network buy. This will embolden premium (top 100) publishers to align themselves with consumer advocacy groups looking to erase cookies and anonymize users. ESPN and the WSJ would love it if all of their readers were rendered anonymous as soon as they clicked away. This echoes Murdoch’s supposed interest in removing his content from Google’s search engine index. The value of “free” distribution is materially impacted when the distributor is able to separate a user’s identity from the context of his consumption.
- Advertisers will recognize that they have a fiduciary responsibility to maintain their own social graph. Until now social media has been an ROI-free playground for brands looking to experiment with new formats. Marketers have built Facebook and iPhone apps, only to learn that distribution is not free. Now they are managing Twitter accounts and Facebook brand pages that deliver more scale, but still with limited insights that they can own and apply to the rest of their marketing initiatives. Consumers, meanwhile, are constantly talking about brands within their communities and are expressing their affinities for commercial products and services. Advertisers can no longer afford to cede knowledge about these interactions to the social networks within which they are occurring. Inevitably, companies will require their own social graph data that includes all mentions of their brands and information about the identity of users (and their friends) discussing them.
So what are media companies and advertisers to do as the former audience use their social identity as a fulcrum for content creation? To prepare for this change in the media economy, companies need to establish an identity framework that integrates Facebook Connect and/or the Twitter API. And in order to profit economically, startups might want to address one of the agency, publisher or advertiser challenges listed above.