Must be the money

by Peter Kim 06 Oct 2010 Blog Post

if you wanna go and take a ride wit me
we’re 3-wheelin in the 4 with the gold d’s
oh why do i live this way
(hey) (must be the money)

- Nelly

[If you want a soundtrack to read with this post, click here. If you're more classic rock-oriented, click here instead.]

Social media is finally coming to a critical inflection point and make no mistake – it’s all about the money.

When I started blogging five years ago – early, but by no means among the earliest – the prevailing inclination among bloggers was to share and connect on an individual basis. Bloggers shared their content and built each other up by linking to each other in posts, creating blogrolls containing links to friend lists, even commented on blogs of individuals who worked for industry competitors. Corporations had presence through individuals; Bob Lutz at GM and Randy Baseler at Boeing were like the Columbus and Magellan of corporate social media.

Between 2005 – 2008, consumer adoption of social media shot up at a rapid pace. According to Forrester Social Technographics data, US online adults active in social media increased rapidly from just under 50% to 75%. Naturally, brands began to follow consumers into the medium. Early adopters were not happy. Debates between “purists” and “corporatists” began to emerge. What they didn’t realize is what Mark Cuban had called out years earlier – the social internet is a long tail ghetto where no content creator wants to be stuck.

In 2008, I left Forrester to start Dachis Group, because early on Jeff, Kate, Ellen, and I saw the potential for companies to go far beyond what had been imagined possible using social media to date – the thinking eventually crystallized as social business design. We knew that there was money to be made in “social media marketing” and “Enterprise 2.0″ – and we weren’t alone.

I’ve been observing these trends emerge as social business evolves:

  • The nature of “social” has become much less social over the past three years. It’s now increasingly private and profit driven. The bloggers I followed in the early days write blog posts much less frequently today, if at all. However, they’re still writing and thinking about the industry – they’re just doing it behind the firewall and delivering value to paying customers. Smaller, private virtual salons have cropped up to host and monetize conversations – for example, Third Tribe Marketing, the Social Media Business Council, or the 2.0 Adoption Council. You think #Angelgate is only about Silicon Valley and startup money? Think again – similarly, there are private communities thriving today that keep thought leaders connected to one another and others, out. The exception to this trend are public community organizers like Mack Collier who coordinates #blogchat. Enjoy them while they last.
  • Companies are cashing out, performing their final tricks off of Cuban’s hypothetical vert ramp. From following the brand monitoring space, we’ve seen Cymfony, Umbria, Techrigy, and Scout Labs sell off. You’re probably more familiar with TechCrunch’s recent sale to AOL or Six Apart sold to VideoEgg. From what I hear on some of the tech deals, the companies may not be shaking the glitter off their clothes as much as pawning off whatever usable parts they’ve got left after crashing and burning.
  • Free social media sites are moving to monetize. Ning moved early and very direct. As any MBA could see, penetration pricing strategy, duh. Free doesn’t last forever, but its spectre does sell books. Dick Costolo is Twitter’s new CEO and he has one mission – to make money. You think Facebook Places is useless? Think again – the future of advertising is relevance and Facebook has it in spades: location-based services + social graph + user generated content.
  • Executives are migrating to small, socially-oriented businesses. This time around it’s not limited to traditional-to-dot-com; the similarity is from public to private. Talent is leaving Google, Yahoo, and Microsoft and heading to Twitter, Zynga, and Facebook. In a more old-school way, Erin Nelson is moving from CMO of Dell to CMO of Bazaarvoice. (BTW Dachis Group is hiring.) It’s not Shaheen from Andersen to Webvan or Dobbs from CNN to Space.com…yet.

Perhaps if the global economy didn’t crash in 2008, social media could’ve floated on in its cordial state indefinitely. But now we’ve seen more than enough proof of the concept that social media and technology drive tangible results for companies. That’s why Dachis Group calls it “social business” – we started using the phrase in January 2009 and have seen many others adopt it since.

Anyone in business knows you need to eventually capture the value you create. That time has come for social business.

  • http://www.mackcollier.com Mack Collier

    Hey Pete, thanks for the mention! And ironically, #Blogchat will have its first sponsor this weekend. This might be the first time an existing twitter chat has been sponsored, not sure if #journchat has beaten me to the punch there or not. Moving forward, there will be a maximum of one sponsored #Blogchat each month.

    For me, bringing on sponsors isn’t about ‘cashing out’ so much as finding a way to use the sponsorships to improve the #Blogchat experience. From the participants’ point of view, they shouldn’t really notice any difference between a sponsored and non-sponsored #Blogchat. The topics will be completely consistent. From the sponsor’s point of view, they get a chance to interact with #Blogchat participants, and that increases their level of exposure and access to potential customers.

    And for me, bringing in sponsors means I can spend more time on growing #Blogchat and bettering the chat for its community. Unfortunately, my own work with clients means that I can’t spend as much time as I’d like with the #Blogchat community throughout the week, and hopefully bringing in sponsors will help alleviate this problem for me.

    But the key question I asked from the start was ‘If I bring in sponsors, how can I do that PLUS improve the #Blogchat experience for its participants?’. I think as long as I can do that, it’s a win-win for everyone. I am sure there will be some pushback and there always is whenever monetization enters into the equation with social media. But so far, the #Blogchat community has been supportive of this, and I think they’ll see Sunday that this is something that will ultimately benefit them.

    Thanks again for the mention Pete, and tackling interesting topics!

    • http://www.beingpeterkim.com Peter Kim

      Hi Mack – I’m sure that you will maintain a good experience for participants as you introduce sponsors. We’ve discussed similar topics in the past and I know that your head and heart are starting in the right place. Thankfully we’re past the outdated “purist vs. corporatist” debate and we can all focus on creating and sharing value publicly while making a living. I can think of one or two trolls still hanging on to that old line of thinking…but even their satire has worn thin for most people now.

  • PK

    it’s also the drug dealer model: give it away for free; get customers hooked; then charge, charge, charge.

  • http://www.stagirainc.com Jason Stoddard

    Social motivation begets social behavior; social behavior begets social design. Such is the lesson of natural selection. But humans have an arrogance about them advances the notion that they can dismiss the natural order. Such is the case of the Soviet planners subscribing to American magazines and mail-order catalogs in order to attempt valuations and pricing of products and services. In other words, the Soviets process was backwards to the natural valuation order.

    All social behavior is a value exchange. Participation (action) assumes interest, assumes motivation.The only exceptions being varying forms of force and coercion: social and military conscription, death and taxes.This is nothing new. What’s new is the medium through which we participate and, of course, the currency exchanged between the participants.

    Perhaps I am reading too much between the lines, but this post resurrects the age old quantitative vs. qualitative dichotomy. More to the heart of it, in the new economy (or in the case of the Soviet planners) can one design velocity… can one buy market without adequately addressing/engaging the motivation of the participants exchanging within the acquired market? More precisely, in buying an audience is some if not all of the qualitative ethos lost?

    In Mack’s case, he has worked tirelessly to develop and manage a community of members motivated to participate because of their interest in developing the various layers of their proverbial onion. A critical mass has been achieved.

    A speculative case follows. A total fiction.

    To date, blogchat is unsponsored. From the sidelines, Brand X, a social media management product platform start-up, has recognized this “phenomenon” after a Winter intern commented that he/she found the weekly blogchat discussion useful when developing an affiliate blog devoted to golf-related product reviews, after hours. Brand X has little to no social credibility as the company brand has placed little to no investment in engagement in new media. Brand X identifies blogchat as an opportunity to garner access, an opportunity to purchase credibility. Due diligence is in order.The intern is then tasked with monitoring #blogchat as a potential partner. Brand X begins aggregating the #blogchat hash tag, begins monitoring links to identify what if any competition is participating, begins trying to identify which employees of Brand X’s defined sales targets are participating. Brand X is impressed with the numbers. Unapologetically focused on the numbers. The Brand X intern reports to his/her business manager that week over week, Mack’s blogchat community has grown by 23%. Of blogchat’s participants, 6% are employees of Brand X’s sales targets, in addition to calculating the total reach at 344,000 people. Brand X seizes the opportunity: the business manager calls Mack directly and proposes sponsorship. In parallel, Mack has been concerned that as the community grows and a critical mass is achieved, he is having difficulty reconciling the investment of time and energy to adequately manage blogchat while maintaining his roles and responsibilities to his company and his family. Brand X’s call is a welcome opportunity: Perhaps Mack can garner a return, substantiate the investment, and reinvest the revenues from sponsorship into the development of a participant managed blogchat micro-site/ forum. Brand X loves the idea and proposes to cover the expense of all development in exchange for anchor sponsor for one calendar year. With Brand X’s investment, mack can hire someone to moderate. Dilution.

    Of course, this is an over generalized fictional case. Mack is smarter than I’ve wrought. Nonetheless, this account is not unlike what happens everyday in the promoted/sponsored business space, social and otherwise. The epsilon–the unknown qualitative value–in this valaution is that no one associates Mack with Brand X/Brand X with Mack, and because most if not all of the community gravitated towards Mack and the value and insight Mack brings to any community, to any conversation, Brand X can not assume appreciation of the currency in the new exchange. In fact, I would forecast depreciation both in the short-term and long-term valuation because of the inclusion of a strictly commercial interest in the community. All in all, Brand X still has to earn it; it cannot be bought and sold.

    Before closing, Mack, while we do not know one another, I maintain the utmost respect and admiration for you, from afar. Please do not interpret this as a dig. It is nothing more than a hypothetical.

    Towards real value,
    Jason

    • http://www.beingpeterkim.com Peter Kim

      As I was writing the post, a couple of counterarguments came to mind in the form of Marx and Sir Thomas More. I conveniently ignored them.

      Your hypothetical situation sends me to a real parallel on a grand scale – television and its business ecosystem.

      • Jason Stoddard

        Peter,

        re: reference to Sir Marx More. Specifically “Utopia”? If so, really “Utopia” or More “Eutopia”? pun(s) intended :-)
        (No place or Good place? If the latter is Good defined as communal ownership/equity? Is Bad defined in the allusion as Proprietary?)

        If you really want to get academic, the difference bridge between Marx and More is Berkeley’s Idealism. God. Providence. Both ask and answer, who is the Ideal Proprietor?

        Marx’s historical polemic concluded State ownership. More’s Catholic polemic concluded communitarian ownership. The former is “public”; the latter is “private.” (And then came the proliferation of nation-corporations (proliferation being the operative word as civic-corporations date back to the founding fo the City of London by the Romans.) In the context of the American political tradition, the US nation-corporation was founded under Lincoln. But this deserves a conversation in and of itself and is really beside the point.) This difference plays out today in terms of economic conflict and tension, the best and most notable example being “US health care reform.” Both cases are extra-legal constructions in an attempt to distance human activity from barbarism, an attempt our of the state of nature. Never the less, they are only conceptual in so far as there is really no such thing, no “Utopia” (read: No Place) in State or Community.

  • Dan Shalkey

    I am a dentist in private practice who knows nothing about social media. First, how could I learn about it? and second, could it be used to market my practice better than a website?

    • http://www.beingpeterkim.com Peter Kim

      Best thing to do is some research: http://www.google.com/search?q=dentist+social+media

      Best practice is to use social media in conjunction with your other consumer touchpoints – website, direct mail, TV, print, and of course your physical location(s).

    • http://www.stagirainc.com Jason Stoddard

      Dr. Shalkey,

      You’re not giving yourself enough credit. If you knew nothing about social media you would not have landed on Peter’s blog post, only to reach out about an interest in creating demand for your private practice via social media. To answer your question directly, you need a “web site,” even it is nothing more than one landing page that aggregates (read: connects and streams all of your online activity and the information that others create about your practice) in one place.

      Marketing, generally, and social media, specifically, is all about who you are + what you do+ where you are+who you serve+who you interact with based on the previous four values. Of course, like everything, this rubric is debatable. For our purposes, it serves.

      In most cases, especially for professional service businesses, social media is focused on what you do and how you do it differently than the practitioner up the road. For this reason, new media marketing is more a narrative about operations. This narrative communicates expectation by opening the proverbial kimono and allowing the market to see what to expect, allows the market to see that modern dentistry has advanced to the point that a root canal is really not that bad… sets the expectation that mitigates fear and anxiety… increases the velocity of appointment booking because your market can better understand an experience in advance of the actual experience. Social media is an opportunity to broadcast your personality, too. Dentistry is intimate. Simply publishing what you look like, how you speak, the mannerisms you use to convey a point is often enough to alleviate the “stranger barrier.” If people can visualize, people are more likely to act.

      Based on a cursory web search, you’ve been in private practice long enough to understand the importance of professional reputation management, referrals, and word of mouth. The only difference between your current understanding and its application to social media is digital communications as opposed to real time, on the ground communications. While the difference is vast, there are more similarities than not.

      You, more than anyone, know: online reviews have more gravity than they used to–the last time you probably we’re in the market for a product or service (even if it was the driver you you purchased to increase shots off the tee by 15 yards while still keeping closer to your target line) you went to the internet curious about why the guy in your regular Saturday foursome was starting to out drive you, to garner other people’s (not unlike you and your playing ability) experience before ordering a driver online or heading into your local retailer to purchase. You know: what your best patients look like; what manner/methodologies resonate best with those patients; the cost/benefit of working with particular types of insurance companies and how this affects the dentist/patient dynamic (and more over, how this affects the profitability of your practice); the average appointment time; the difficulty in productizing within a service oriented business; etc. You know that the nature of the economy has decreased the number of new patient appointments and residual appointments that prefer paying cash. You know that recent federal legislation potentially changes your business model. You know that as a solo practitioner, you’re only billing when you’re working. You know you cannot create more hours in the day, but you can increase the number of billable hours to a maximum, at which point you would have the opportunity to hire an apprentice and/or exercise revenue management and increase the cost per billable service hour so that you’re working less but making more, and thus spending more time investing in your quality of life and/or reinvesting in your practice. You know that people are putting off dental care, hedging their dental health against time in thinking that in a couple of months or years the economy will get better… “then I’ll make that appointment.” You know that as a general practitioner because you are often the first point in a patient’s dental care, you are closest to the market… that is to say, within your professional circle, you’re often the dentist referring business to specialists, not the other way around. You know that you’re bombarded by vendor solicitations… potential opportunities to learn about and subsequently resell new dentistry technologies. Believe it or not, you’re in a good position and opportunity is everywhere. But just like a patient, you want a better understanding of the process to make the best investment decision with respect to time, money, and quality.

      Focus on the behavior not the tools. Right now, there are probably no less than 10 people within a 15 mile radius of your practice that need or want your service. Each of those 10 people know at least 5 people that will be in the market for a dentist in the next 6 months. Of those 60 potential new patient-clients, approximately 37 of them are on facebook; 11 of them are on twitter; and 58 of them have used google search at least once in the 4 weeks. The behavioral analysis enjoins that 97% of your potential market share is using an online tool to find what they need. When they find what they need, assuming the experience is a good one, people talk about it. Using the same tools, I searched “dentist york, pa” and “tooth ache york pennsylvania”. I cannot find you. Opportunity.

      Also consider that your last vendor appointment contained information that only few people know about. Opportunity. While you only resell the vendor’s product, should you publish content about the product’s usability, features, benefits, etc, not only is the content attributed to you, you create a companion marketing opportunity with your vendor…a formal partnership whereby the vendor subsidizes the investment to publish content about the use of their product at the user level. Should people search for content that is attributed to you published on your site or linked to your online social accounts, your site and network account traffic increases. This supports your organic page ranking in addition to increasing the frequency that your services intersect with your market’s demands/needs.

      Social media participation has been integrated into search. In plain English, should you begin creating content in the social media space and aggregating this content on a web property, there is a greater likelihood people that are looking for who you are + what you do+ where you are+who you interact with based on the previous three values.

      Shoot me an email and I’ll send you a few discovery documents that ask questions that only you can answer. With those answers, I’m happy to point you in the right direction so you can go about achieving your ends.

      Towards 2″ birdie putts via more root canals,
      Jason