As Valeria Maltoni (@ConversationAge) put it so well in a recent post describing the increasing adoption of social media "marketers are finally putting their money where our conversation has been -- integrating social with their activities".

Even so, as a marketing consultant to smaller companies, I am approached by client firms that are still resistant to the "sea change" in the air. Frankly, some are still operating with 2007 market data (and schemas) in their heads. So it is I find myself called into executive strategy briefings and staff meetings and given a short time slot to plead the case for adopting social media.

Perhaps you know the drill?  Fifteen "make it or break it" minutes to stand and present, survive a firing line of questions and, hopefully, actually survive long enough to open the door to discussing the company's own social media strategy. Catch: There's not enough time to show the Social Media Revolution video.

What I've found works very well in such situations is to have an opening set of market research slides, "schema-busting" slides I call them, which set a big picture marketing context, highlighting that our former Google-centric view of the online universe of the past decade is changing.

Yes- I refer to the ROI of Dell's social media use, Zappos, the brilliant customer service case studies of Comcast, the product innovation crowdsourcing by Starbucks, the even more brilliant crowdsourcing experiment by NetFlix  and many others. However, too often, there can be a NIMI (Not-in-My-Industry) attitude that raises objections. So I launch usually with a more macro view of recent significant data. The sole purpose of these schema busters is to establish that significant changes are underfoot which require an alteration of the current marketing strategy, a realization of that "Ignore at your own peril" moment.

After all, why else would I be advocating a marketing strategy change?

Lately, I've had good results using the following slides.

Slide 1.

Social Media Sites are now among some off the top web properties. Dramatic changes have taken place since 2007.

Compete data | Erik Qualman's Socialnomics slideshare

There's no sense in being taken down on the first serve. As they say, begin on an unassailable point. Starting off with  Compete, Quantcast or Nielsen data -  authoritative market and web researchers - does just that. So I start by borrowing this slide from Erik Qualman's Socialnomics slideshare which shows Compete data to show that social media has changed significantly the top visited places on the net - places where people are sharing photos, product recommendations and links to articles with friends and colleagues. (Perhaps not the best time to point out that  'adultfriendfinder' will soon be replaced by Chatroullete though.)

This simple slide forces the conclusion " Dang, major tectonic shifts  have happened since 2007." More importantly, it forces the question," Maybe we should revisit our strategy?"

Slide 2.

People online now spend 7 hours per month "friendcasting".

This is more time than spent on search engines Google & Yahoo, as well as MSN and YouTube combined.

In a sense there's nothing really shattering about the data actually as it reinforces what we've always known, Word of Mouth is the most powerful recommendation driver.

You can make a similar point by referencing Compete's latest data in terms of "attentional time" market share, shown  in a more visual format.

Slide 3.

Facebook: More "attentional time" market share than Google or YahooSource: MarketingCharts, Feb 2010

What's cool about these last two slides is that they now set the stage for you to raise the question: Would you like your company to be part of this 7 hour per month conversation, one which is rising in attentional market share? Be part of the shared photos? The shared articles? The product reviews and recommendations?

Slide 4

Facebook is Besting Google in Driving Traffic to the main portal sites.

Based on data from Compete, Feb 2010

Compete Inc. and their director of online media and search Jessica Ong ignited a powder keg in revealing this data during a late February interview with the San Francisco Chronicle,

I say "powder keg" as this data ignited considerable reaction from within the SEO community. So be advised, Search and SEO aficionados within your audience may also take issue, especially as that group commands the lion's share of the digital marketing spend today. (It may help with any tumult here to say, to those who dispute that Google competes with Facebook and Twitter that more recently Google lists both as competitors in their latest 10-K report. )

Slide 5.

Social Networking is Passing Search in Driving Referral Traffic

Source: Compete January 2010

I first saw this slide just days ago during an enlightening presentation by Gigya CEO, David Yovanno at Gigya's "Social is The Next Search" webinar. While I've not actually used this slide yet, I will as it really delivers the coup de grace. In fact, if you only have one slide to show - this is it.

That social sharing is outdistancing search in referral traffic was pointed out earlier in a prescient blog post by ReadWriteWeb's Marshall Kirkpatrick. He wrote

What would it mean if social networking over-took search in terms of sheer visits online? It would mark a sea-change on the internet. No longer would our dominant use of the web be seeking out web-pages built by HTML web-masters! Now we would all be publishing tiny little updates that perhaps only our friends and family care about. We'd be subscribing, more than we ever did by RSS, to syndicated updates from organizations of interest, large and small.

There's no doubt: there's an increasing intersection between search and social sharing. But perhaps it isn't that people are changing the way they search,  so much as their friends are changing the way they find things. One of the more important questions you can open up at this point: Is the digital marketing spend allocation for social media vs search adjusted to these new market realities?

So there you have it: Five slides that can all be understood in five minutes. (Isn't it odd that we have to unroll the past conceptions, bust the old 2007 mental schemas, in order to see the best way to meet the future?)

What slides do you find work best to open the door to deeper social media discussions?

Postscript: My title notwithstanding, I am not advocating a wholesale revision of the search vs social media budgets planned. Just saying: The relative sizes may not be in line with the most recent 4-6 month marketing data.

In brief, Dan's research showed that while articles that use the word “Facebook” in their title get shared more often than the average story on both Facebook and Twitter, stories that mention “Twitter” actually get shared less on Facebook. In contrast, Twitter stories shared on Twitter led to a 300% increase in retweets,

Tribal Vanities

In a sense, it's no surprise: These are two very different cultures: The age range skews toward a younger population on Facebook which likes the all-inclusive web services environment.  Technorati's 2009 State of the Blogosphere report shows a very high percentage of bloggers (73%) tend to use Twitter, relative to the total internet population as a whole (14%). 

If we look at Trendistic data of "Twitter" vs "Facebook" mentions on Twitter, the base level of Twitter talk is considerably higher than that surrounding Facebooky subjects.

Conversely, looking at Facebook's data, we see a similar self-obsession with Facebook-related terms.

Facebook Statistics: "Twitter" vs."Facebook" data from their "Top 15 Status Terms of 2009"

Source: Facebook Data Teams Notes

Interestingly, during the Twitter hey days of March-May 2009, Facebookers themselves chatted up Twitter.

Seeking Agnostics: Key Social Bookmarking & Social News Sites

To look at the interest in "Facebook" vs "Twitter" in a more agnostic setting, I reviewd the trends in Twitter and Facebook as keywords and tags on two of the larger social bookmarking and social news sharing sites, Digg and Delicious. 

Recognised as among the most popular social sharing platforms, by latest counts, the number of inbound links for Digg is 383,598,000 and that for Delicious is 427,665, together totally more than inbound links for Twitter (760,750,806).

A set of social bookmarks contains in essence a web users's shared library of interests and topics they deem worthy and exciting  enough to share with others.  Social bookmarks can be used as indicators of what topics people think are important to understand and have some present or future value, perhaps for an upcoming research project sorting out this fast paced new social media landscape, and sharing with others. For bloggers and webmasters, social bookmarks and their curators play a special role in increasing SEO, driving traffic to their blog posts and web sites. In a broader (but perhaps less agreed on) sense, as social media watchers, the frequency of Twitter vs Facebook social bookmarking can also be viewed as a rough indicator of our personal bets on the "next  great social networking platform".

The figure below compares two Digg searches on Facebook vs Twitter performed in late February 2010, excluding the competing term in order to pull out posts that focused primarily on one service vs. general social media articles. Digg's count  for "Facebook" totals some 74,624 articles vs "Twitter" related articles at 72,412.  These are actually quite comparable, given plus or minue 2000 posts, well within a single month's worth of data. That said, a salient feature of the graphs is that the mentions for Facebook appear to still be on the rise, while those for Twitter are levelling.

What's of interest considering Zarella's data is the difference in Diggs, an indicator of the story's popularity.  For the 4 year time period sampled, Facebook-related posts which resulted in more than 5000+ Diggs outnumbers those for Twitter by a factor of five, roughly corresponding to the relative size in Facebook and Twitter active memberships. (According to Compete, Facebook attracted approximately 134 million unique visitors in January. Twitter had 23.5 million unique visitors for the month.) For Diggs exceeding 500+ and 1000+, Facebook bests Twitter by nearly twice as many.

Well, you say, perhaps not so surprising. Digg is not truly agnostic with its alliance since mid-2009 with Facebook Connect.

So let's take a look at the data from Delicious users. Used for private as well as social sharing by researchers and others, with a strong historical bent toward technology topics, this gives us a more "geeks-eye" view on the interest in these two social networking sites.

The figure below shows the trends in social bookmarks for articles posted and tagged "Twitter" or "Facebook", where articles tagged both are eliminated in the search as well as login and home domains, where the bookmarks would be biased toward the user population difference size of these two social networks. The exact searches made can be seen on these pages: Delicious Facebook search and Delicious Twitter search 

Comparing "Twitter" to "Facebook" tagged postings, we find over 581,072 results for Twitter and 388,472 for Facebook. "Twitter" tagged postings best "Facebook" postings by over 49% and still today exceed considerably in posted bookmarks per day. However,  much as in the Digg data, we see the interest in Twitter is flattening to falling, while Facebook interest still seems on the rise.

Other Social Bookmarking sites.  The table below shows search data for several other well-known social bookmarking sites.  These are ordered according to inbound links, the highest sites appearing first. (Caution in comparing these: While attempts were made to get the running total, usually the default, the time horizons of each site can be markedly different. For instance, Yahoo Buzz seems to be offering a much narrower time window. Also- except for Reddit, noted with *, all counts were unfiltered so there is overlap in the tagged stories. Technorati is obviously only counting the most influential blogs.)

These are but a small sampling of the over 250+ social bookmarking sites, but it's clear that the more technology-oriented sites show a marked interest in Twitter.

What Does it All Mean?

Perhaps the most surprising aspect of this data is that interest as gauged by social bookmarking and sociallnews sites reflects so even an interest in the two social networking platforms, and this despite Facebookers outnumbering Twitterers by over five times.

During the period of much of these graphs (2009) we 've seen Facebook take-on many of Twitter's best-appreciated features: the ability to tag friends or companies they mention in status updates, commenting and real-time updates. Ironically- many of those Delicios and digg postings were about Facebook taking on Twitter features.

The preliminary data indicating a rise in Facebook and levelling off of Twitter interest is consistent with the maturing of both social media and Facebook in particular. A great deal of the ongoing conversation on social networks concerns social media's use for business. As Facebook positions itself as a bonafide business promotions channel, the fact that Facebook's advertising business model seems to be working certainly increases business confidence that its a viable  platform for conducting business.   The bigger its tribe grows, the more stories (written by more people) it has to share with more people. And interest in how to build great Facebook landing pages,pay-to-learn webinars and podcasts, building great Facebook landing pages and advertising opportunities all swell as the social media consultants see a rising tide of new social media customers.

It will be interesting to see the next shoe to drop, as there are  rumors of Facebook including more support of external sites and page bookmarks on the Dashboard in Q2 2010. That may have profound implications for the future of many of these social bookmarking sites, particularly as it addresses one of the key shortcomings of Facebook to many - its closed garden wall architecture.

Twitter's linchpin? That garden wall is anathema to many of the free-spirited freelancers and some of the blogsphere's most prolific, content creators, many of whom built their wide audience through social bookmarking sites and Twitter. And this is, in the end, the content we love to share. Perhaps some hint is afforded by looking at the Technorati data, showing over 1000 more influential blog sites tagged "Twitter" as opposed to "Facebook".  While Facebook is still hidden behind its wall, it seems these influential blog sites - along with WordPress, Tumblr and Posterous - may be the best friends Twitter has.

Postscript: This blog author is a fairly frequent user of Twitter and Delicious.

Forum for the Future's "Paint the Town Green" Report

Since the start of the sustainability movement in the 80s, we've seen that products resulting from that 99% perspiration  "have a story" to tell. Legendary are brand stories like the waste reduction program at carpet-maker Interface, Aveda's stories of skin care products sourced from indigenous people and Jeffrey Hollander's book, What Matters Most, describing Seventh Generation's trek toward creating toxin-free household cleaning products.

So I was pretty excited to find The Forum for the Future's recently published report, Paint the Town Green. For here was a new product announcement  accompanied with its full story.

The culmination of a 3 year U.K.-based research project between ICI Paints AkzoNobel, a paint manufacturer and supplier, Carillion, a paint specifier, and Forum for the Future, an organization of sustainability experts, this is one of the most understandable, colorful and enjoyable reports on sustainable product innovation I've encountered. 

For decision-makers in R&D, sustainability innovators and their marketers alike,  the report details  the vision, processes, cradle-to-grave product lifecycle analysis and business benefits of the team's trek  --  all in a compact 27 pages.

Yes, it's about paint

the pigment-emulsified  liquid, some billion gallons of which  U.S. commercial and residential owners brush, roll, pour and spray over all forms of surfaces annually. (so now you see why it's  a "colorful"report ;-))

Like most man-made materials, the environmental issues associated with conventional paint are many, ranging from VOC emissions affecting human health and climate, ingredients requiring high fossil fuel use, energy-intensive manufacturing processes, voluminous water use for cleanup to package and product disposal issues for landfills.  (If you are a manufacturer in another industry, do not let this dissuade you - for this is a story of not only how sustainable products can be designed but also marketed.)

Partners of this project set out to create a more sustainable paint - ideally one which was emission-free.  By setting the bar high, the  project partners achieved numerous product and process innovations along the way. To name but a few of these:

• A new almost "VOC-free" paint line with carbon and water-use footprints reduced each by 50 percent.

• For construction customers, development of an environmental wash system for cleaning paint equipment on site, avoiding contamination into drain systems.

• For all end-use customers,  launch of a Take-Back Service allows for paint cans avoiding land-fill use (and in the U.K., associated land-fill charges)

• A new recycling process which allows cans from the Take-Back service to be redeployed  by the manufacturer for use in new paint cans.

• A new closed-loop water process in manufacturing allowing water reclamation of equipment cleaning water for use in new paint

While the paint manufacturer benefited in bottom-line cost savings and competitive position, my reading recommendation relates to the marketing value of this report.

What Marketing Lessons Can Sustainable Product Innovators Learn from it?

The Forum for the Future's report holds five key lessons for sustainability innovators:

1. Market your  Multidisciplinary Team. The involvment of partners and suppliers from all phases of the product lifecycle clearly enriched the wide set of innovative solutions  delivered.  In doing this, both commercial and residential  customers are more readily assured that the manufacturer has a keen knowledge of the product's A-to-Z environnmental context.
2. Provide Graphical Authenticity of the Team's Involvement and Milestones.  Replete with graphical illustrations, from project artifacts, hand-hewn concept drawings, colorful marketing flowcharts to finished marketing materials, the report brings to life the early thinking and explorations of the design team. (Too often I read sustainability reports where the R&D process seems distant and abstracted from the final product. Not here.)
3. Discuss Forward-Looking Projects. Much as vendors disclose to key clients their product futures to increase confidence, the report discusses midstream and future projects - again increasing confidence that this is no "one-off" venture, but that  the vendor and partners have incorporated sustainable practices into their planning and operations.
4. Redeploy R&D documents as part of the Product's Marketing Story. The report provides a detailed "behind the scenes" look at the product's innovation.
5. Time the Release of  the "Story" upon Product Announcement.

Sure, sustainable product launches need  eco-conscious product names and easy-to-read tables allowing today's educated customers to see and compare specifications. But smart companies and their marketers are also learning that disclosing the efforts behind a brand's environmental design, revealing the R&D process itself - the story, is one of the best uses of marketing.

Reading the report - I couldn't help but think: What if all product packaging had a simple written statement?

Read the full sustainability story behind this product at www.XXXX.com. 

As potential customers scanned that into their iPhones and BlackBerries, would your product have a sustainability story to tell?  How would that story compare to your competitor's?

Manhead (c) BioRaven

A few days ago Steve Knox , CEO of P&G's inside agency Tremor, wrote  a most illuminating Ad Age post "Why Effective Word of Mouth Disrupts Schemas", describing the cognitive science behind getting consumers to talk about a product.  I highly recommend your reading it as his examples and explanation deconstruct perfectly for online marketers how they too can successfully engineer Word-of-Mouth using disruptive messaging.

His starting point is this: Ordinarily the brain remains in a static state, relying on cognitive schemas or mental models of how the world works.    Steve uses a simple example to illustrate a schema: Getting into your car, you're ready to drive on the right-hand side of the road - without even explicitly thinking about it. Driving on the right is part of your mental schema.  So it is  - when first driving in the UK-   it is quite disruptive to see someone driving on the "wrong" side of the road. It's very disconcerting to your American driving schema -- and you tend to talk about it.

He then goes onto to describe a successful P&G Secret deodorant  campaign leveraging these cognitive principles.

Here is an example of schema disruption and resultant word-of-mouth message from the Secret brand.  The purpose of the Secret Clincal Strength brand is brought to life in our advertising through "Live Life. Don't Sweat It."

We uncovered the core schema in the category is the more active you are, the more you sweat and the worse you smell. We created a disruptive message of "The More You Move, the Better you Smell."  It disrupts the schema first and then is supported by the brand technology (unique mositure-activated deodorants).

The 51,000 people who subsequently posted on P&G's Secret website were exploring the "disruptive schema" that, counter to popular belief, working out can intensify a deodorant's effectiveness, i.e when working out and wearing Secret, you smell better. 

To me, a  great  litmus test of the schema-busting power of a tagline is to gauge whether it directly or indirectly raises the question "Can your product do this?"  Connecting into cognitive science,  the "this" in "Can your product do this?" must bust outside the current schema for the product category, namely, the current expectations of how a product works.

With litmus test in hand, I tried to find other examples. Taglines which speak to the fundamental definition of what is and what is not in a product category are of particular interest to me.

Disruptive Taglines - New School

Let's look at the Apple iPhone, whose brand popularity and overwhelming presence in online and offline discussions dominates  channels today.  Apple's tag line of course is  "There's an app for that".

The somewhat techie word, "app" (for software "application") is the salient feature in the tagline.  It may be a cell phone, but its software-enabled with an OS and, most importantly, tons of apps. (as of Nov 09, over 100,000) .  In effect, this tagline raises the consumer's expectations of what a cell phone  is and  what it shoud do for you.


Nikon Coolpix S1000pj adHere's another example of a product whose tagline disrupts the schema. The Nikon Coolpix S1000pj introduced in August 2009, has yet to hit full stride, but given BlogPulse mentions is capturing a good share of Word-of-Mouth within the online digital camera community.  It is in fact the world's first compact digital camera that includes a  a small projector, allowing users to project a photo on a nearby wall.  So friends and family no longer need to crowd around your small camera screen or wait to upload to a computer to view a photo.

The camera's tagline, "Your personal theater on the go" puts the new category-rivetting feature in the foreground. Encountering the Coolpix S1000pj, the product-researching consumer must re-look, learn and evaluate  -  and today, this usually generates a good deal of online discussion all along the way.

A tagline which successfully disrupts a product schema is like an upward  knee thrust to the corner of the product category's gameboard, throwing competing products that lack the disruptive feature, outside of the consumer discussion.  Is it a camera or is it your  personal theater on the go?  Is it a cell phone or everything-your-personal-computer-can-do plus more?

Now some of this isn't exactly new. Looking back, the power of schema-busting was exercised in some of advertising's most memorable taglines.

Disruptive Taglines - Old School

Source: TaglineGuru.com

The key difference today is that  consumers can check and verify claimed schema busters. While the truthiness of that tagline will be tested in the online conversation sphere. we also see that it's also the marketers starter opportunity to guide that conversation.

For Steve Knox is right: Consumers generate much talk as they wrestle with their disrupted schemas, trying to reconcile something that initially defies their belief system, trying to verify a claim, determine if a  new feature truly works or is useful and so on.  Schema-busting products coupled with masterfully designed messaging can trigger these  online conversations.  But there's a catch. Creating the initial moment of confusion, the shake-your-head "This doesn't make sense" moment is  precious and critical.  It may be predictable from cognitve science, but its final potency is often determined by art and design.

Have a schema-buster to share?

Image source: Wired

With a newly inked deal with Triton Media Group, the crowdsourced content will soon air on over 4,500 FM radio stations in the U.S.

Per CNET, what's so crazy exciting about this democratizing concept is:

•  The service revolves entirely around a playlist of songs that's managed by users in real time.

• Users can vote songs up or down before they ever hit the air, as well as when they're playing.

Adopting from video games, virtual armaments are supplied to listener/participants such as:

• Rockets  Each user is given a limited number of rockets allowing you to jump your song to the head of the queue.

• Bombs, given out in limited supply,  allow you to zero out the score of any queued track, keeping it from making it on air if other users dont vote it back up.

As described by Triton Digital Media VP/Strategy Jim Kerr to All Access,

JELLI combines the engagement, challenge and teamwork of a video game; the personalization and sharing of music we see in social networks; and a traditional broadcast that brings the experience to the masses.

 The platform promises to open up some truly exciting music play, allowing niche music lsiteners to find their worldwide counterparts.  At different times of day, as different parts of the world awake - expect the crowd-vote to change. (Myself? I'll probably be tuning into to what Montreal wants...)

Rise of the Software-enabled DJ?

We've already started to see the rise of citzen DJs around the Internet, with services such as blip.fm and the U.K.-based Last.fm.  And as with those services, DJs will be ranked by their music taste and ability to stay on "Top of Ethos" with the music culture sensitivities of loyal fans.

But Jelli's game-like characteristics suggest  a new set of criteria for future A-lister DJs: Software and gaming skills.

What will take to get wide play?  To stay on top for more than your "15 Minutes of Fame"?

This is admittedly some playful thinking going on here.  But in a new world of fast-paced listener-voted DJing, I think some technologies and skills that may help will include:

1.Sentiment Analyzers. Top Jelli DJs will not just observe the online chat window that's part of the Jelli web interface, but will employ listener sentiment analyzers to track votes on how well his/her song choices are received. We're not talking just lightweight tools like Twendz and Twittratr.  A  tool like MoodViews might be adapted to pick up emotional states of excitement or sadness on Jelli music server chat rooms. Or, useful for a DJ expanding his/her listener base, a tool like Sysomos MAP (Media Analysis Platform) which might indicate music preferences by geography.

2. Use of a MusicMeme, working much like TechMeme works, trolling the internet music servers and playlists, looking for cross-linking behavior. (If a scraper/bot/algorithm doesn't work today to do this based on Jelli's playlist - expect it to be created soon.) This MusicMeme will allow rapid identification of hot songtracks and, conversely, allowing an A-lister Jelli DJ to stay on top.

3. Fast Mash-up and Remix capability.With the crowd now able to vote-up and vote-down the current play a la Digg, expect the cycle of popularity to be going to be a lot faster.  To stay on top, an A-lister Jelli DJ is going to need the ability to incorporate  fast rising trends (or conversely, detect the onset of a "We're bored" wave and discard) into and out of their mix. So a hot DJ might have built than popularity base out of a repertoire of House and Trance, but if a fast-rising curve basaed on a new Acid artist is detected (through their sentiment analyzers of course), the A-lister who wants to stay an A-lister is going to incorporate a bit more of Acid. (This is just one of many scenarios obviously.)

4. Band of Brothers Technique. While all the Jelli game rules are yet to be defined (and surely the crowd will have something to say about that), it's clear that any one DJ only has one set of rockets and bombs at their disposal to take down an encumbent  and rise to the top. So just as in many video games today, expect to say back-room "group plays" meaning DJs cooperating with their support groups to use a group arsenal to rule the play.

A number of intriguing questions arise:

• What kind of authority system will be created for popular DJs?

• How will the authority of a long-term track record DJ be ranked against a fast-riser DJ?

• What form of flexible ad network will evolve to associate with a fast-changing tide of high popularity but short tenure DJs?

• Will a whole new market for music trend listening tools open up?

Jelli is going to be challenged to create an open playing field that allows the crowds wishes to prevail, but doesn't let savvy single sources out-game (hack) the system to dominate. But as many in the gaming world can attest, even the hacks can be part of the entertainment.

This much we're certain of: The cheering and excitement over this announcement indicate crowdsourcing is a very serious game for other radio industry players to understand -- and quickly.

A recent Reuters release, Small business, social media not mixing caught my eye. The release highlighted a survey of small businesses conducted by Citibank Small Business with the somewhat surprising finding:

Three-quarters of small businesses say they have not found sites such Facebook, Twitter and LinkedIn helpful for generating business leads or expanding business in the past year.”

On the face of it, this seems to fly in the face of several studies showing the tremendous impact of social media. Three studies, using online marketing tools used often by small business, come to mind:

1. Paid search

A recent study published by GroupM Search and comScore. showed that consumer’s exposed to a brand’s social media when combined with  paid search programs are 2.8 times more likely to search for the brand’s products when compared to users who only saw paid seach.

2. Blogs

 A HubSpot study of 795 small–to-medium sized businesses that blog found that the average “blogging” small company  gets 55%  more visitors.  Although not addressed in that study, considering that Twitter is micro-blogging,  one would expect it to raise a small business’ web traffic as well.  And certainly  some reports  (eg. O'Reilly's  “Twitter Drives Traffic, Sales”  indicate that it does.

3. Email Marketing

A study by Silverpop, found that combining social networking with email as well can be very powerful. Looking at email marketing reach of emails which included links to Facebook, MySpace and Twitter,  the study found

....shared emails evaluated for the study delivered an average increase in reach of 24.3 percent (based on original emails delivered), and this figure is expected to increase exponentially once sharing becomes mainstream.

Small Biz SocialMedia Wunderkin are Outliers?

You don’t have to go very deep into the social bookmarking sites, to find many fine super-list collections of small business case studies describing spectacular results from social media. Some of the better known include:

52Teas, an online tea e-tail site

CPA for Small Business

Coffee Grounds, a Houston coffee shop

 Kogi Taco Truck

Or check out Jason’s Fall’s recent roundup of small business case studies . 

Are these well-known small business case studies startling exceptions?  Are they the cherry-picked, well-trained poster children of the Marketing Elite, selling their Social Media Kool-Aid?

Well - as all technology bubbles are prone to encompass a greater sphere of influence than reality can measure, so too with small businesses and social media.

Why Would a Small Business Not be Benefiting from Social Media?

Why would small businesses report  finding little business advantage to using social media, given the remarkably positive results of the above studies?

Certainly, my own experience  with small companies is that they often do not have the resources to blog, Twitter or set up multiple presences on social networks. This in itself is no profound or new insight. The  HubSpot study mentioned that  a considerable number of the small businesses they sampled do NOT blog (nearly half of their total sample, or 736 companies, did not ).  But cultivating a blog is a well-known social media tactic for fully using Twitter and other social networks as a distribution mechanism. (Okay- now we are starting to get somewhere in understanding this...)

Many Small Businesses are Actually Living in Web 1.5

Following this line of thought, there are two simple explanations for the disparity:  First, in line with the fact that only 50% are blogging, many small businesses have unfortunately, not caught up with even the first generation of Web 2.0 tools to leverage the newer social networks and social media tools. 

Many Small Businesses do not understand Social Media integrates with All the Assets within their Current Online Marketing Strategy.

Second, and I believe more important, it may be that many small businesses are not  properly integrating their social media use into their other online marketing activities.

If there is anything we are learning about social media tools and social networks, it’s that they are  not stand-alone devices.  Rather, they are best used when combined in concert with other online marketing  tools and , certainly, when integrated into an overall online marketing strategy.  As the paid search and Silverpop email studies demonstrated well, the effectiveness of these well-known online tools is magnified by their co-use with social media.

Perhaps, stepping quietly and timidly into these tools, many small businesses are not aware of the synergies inherent to social media use:  Social bookmarking, blogging, participation and co-linking across multiple social networks are well-known to exert a compounding effect on a company's brand.

Are small businesses failing at the strategy level, i.e. not setting a social marketing plan in place?  Or are they failing at the tactical execution level, i.e. not integrating their online marketing tools properly?

They Can't Listen when They Aren't There

The answer may lie in the other intriguing statistic uncovered by the CitiBank study, namely,

86% [ of small businesses surveyed] said they have not used social networking sites for information or business advice.

 Wow! There's part of our answer.

If  the small company executives can’t find their way to the experts, surely, they cannot find good guidance to proper use of the technology, including the large cultural shift we are learning is part of the social media experience.

 A very self-fulfilling prophesy indeed!

Your thoughts?  (I'd  especially love to hear from you small businesses that have ventured into social media.)

After researching Health 2.0 and social media for a client, this marketer (and sometimes e-patient ) now realises we've come along way from the initial heady days of WebMD. Perhaps you relate to my response to the  promotional video here: I was all "pumped up", ready to get online and make an appointment with my doctor. But unless you're in 5% of the population, that probably isn't possible.

The video, like much like the Media, tends to focus on the exciting pioneers and outliers - the purple cows that make  good story-telling.  The story inside this post on SocioSphere3 captures my own patient reality alongside a market analysis of whose connecting the Health 2.0 dots.  Read more...

Why did the NetFlix Prize attract so much attention?

Here's one reason.

At a time when many companies are still afraid of social media   –  here’s NetFlix crowdsourcing their engineering knowledge, offering up customer data, knowledge often safeguarded inside a company’s IP sanctum sanctorem.

It’s bold.  As many other  news sources and this blog reviewed last week, it’s probably the best use of crowdsourcing to date.  And, to many,  it’s scary.

What specific lessons does the NetFlix Prize teach  that can deployed inside and, more importantly, outside, your own company?  I see six lessons for companies. (BTW - what's scary about any of this depends on which, if any, of these lessons appears alien to your company culture.)

1.  Share with your industry’s research community.

In order to improve their recommendation engine’s accuracy in predicting the movie likes of their subscribers, the starting point for the NetFlix contest was their offer of a precious data set:  100 million ratings from over 480 thousand randomly-chosen, anonymous customers on nearly 18 thousand movie titles.

To win and take home a prize, the NetFlix contest rules also specified

….. you must share your method with (and non-exclusively license it to) Netflix, and you must describe to the world how you did it and why it works.

 If you look at Wikipedia’s definition for the open source process, we see from the first few paragraphs that NetFlix pretty much followed it. (You only need  substitute the word “database” for “source code”) In the full open source tradition,  NetFlix didn’t  just sequester the submitted solutions for their own company use – they fed it back into the community knowledge base.

2.  Maximize the number of prizes you give away.

In many ways, NetFlix really offered many prizes to many different shades of stakeholders. (BTW- here's a key concept in crowdsourcing. Broaden your definition of who is a company stakeholder.)

 Note several of these "prizes" are free, posing no additional cost of goods for a company. (This doesn't mean some of these prizes, such as the customer data set, aren't tricky to manage, as NetFlix' current vexations with consumer privacy advocates now show.)

3. Keep them motivated for the long haul.

Tough challanges like solving a design problem, optimizing a movie database recommendation system for subscribers, can take months or years to make progress. In fact, the more valuable the problem being solved is to your company, the longer it will take.

The answer: Milestone or Progress Prizes. Per the NetFlix contest rules ...

Serious money demands a serious bar. We suspect the 10% improvement is pretty tough, but we also think there is a good chance it can be achieved. It may take months; it might take years. So to keep things interesting, in addition to the Grand Prize, we’re also offering a $50,000 Progress Prize each year the contest runs. It goes to the team whose system we judge shows the most improvement over the previous year’s best accuracy bar on the same qualifying test set.

 Complementing the Progress Prizes, NetFlix offered a leaderboard  for the contestants and media to watch.

 Why is this  gaming approach a key strategic element? Not only did this give contest entrants a sense of momentum, more significantly, it allowed NetFlix to incorporate incremental improvements into their product along the way.

4.  Use competitive energy.  Build in a “Last Call”.

After each prize submission, NetFlix  made  a public announcement that allowed all other teams to submit a better alrogithm within a 30-day window.

(For an idea of the sporting drama this lent to the final days and even minutes of the competition between BellKor’s Pragmatic Chaos and The Ensemble teams, check out Wired’s piece.)

Marketing-wise, this “Last Call” phase resulted in heightened PR and media attention to the contest, with the top tier media and techno blogosphere all tracking the contest’s progress with bated breath.

5.  Keep the attention of the virtual talent --- even when it’s all over.

To maintain the momentum (and perhaps preempt advances of companies seeking use of the newly identified talent) NetFlix launched a new contest on the very same day of the award announcement.

6. Warning: This new marketing territory may be No Country for Old Men

 Okay - this one's definitely scary.

It’s a new day when open systems, crowdsourcing and bold marketing combine.

Are the rules changing?

NetFlix along with the many others bravely deploying crowdsourcing indicate they are changing.

Too often marketing and engineering are separate silos within a company.   What NetFlix did here breaks across several  silos, brilliantly interweaving a marketing initiative in and out of the R&D process, while also outreaching to the wider research community – giving them a virtual engineering department of  51,000.

For those  afraid of open source process as putting their IP at risk – perhaps its time to think of the risks of not doing it, namely, much longer product cycles than your competitors.  

As in the movie No Country for Old Men, it really pays to know in advance what you're looking at: Is it an oxygen tank or an air compressor used as a weapon?  So too could be crowdsourcing in the hands of your competitors.  PH...SSSST!

Useful new articles from others

ComputerWorld: Crowdsourcing takes Center Stage at DEMOfall 09

EbizQ   Crowdsourcing: Five Reasons it’s Not Just for Startups Anymore

Source: Zoom-in of AT&T Researcher Yifan Hu's interactive map of the Netflix movie database

As scores of the world press corps and blog world reported on Monday, NetFlix, the video rental service, announced the winner of their $1 Mn contest to improve their movie recommendation engine – all aimed at looking for a 10% improvement. Simply put, the underlying basis of the contest was to seek out  an algorithm to address one of the core challenges for a video recommendation system, namely,  " Will you like this movie you haven’t seen before?"

This blog post is not going to retrench the news reported so well by The NY Times, The Washington Post and 400+ others .  Rather  I'm going to look at this contest from the perspective of a marketer and psychologist who sees it as a phenomenal marketing experiment .   Don't let the somewhat whimsicial titles of news articles fool you (eg. “Flash! Movie Tips form your Robot Overlords" or  CNN’s "Box  office boffo for brainiacs" ): NetFlix' three-year long contest seems to have provided one of the most compelling reasons for e-commerce merchants to take the technique known as “crowdsourcing” seriously -- very seriously.

The Core Problem: Find Me Stuff I Like

To answer why NetFlix paid $1 Mn for a seemingly small 10% improvement in their CineMatch taste and preferences engine, it’s helpful to look at the typical NetFlix customer experience.  My own experience with NetFlix resonates well with  NPR’s interview of Clive Thompson, writer for Wired and the NY Times and someone’s who has been researching the NetFlix experiment since its beginnings. Thompson describes:

….when I joined Netflix I had like 20 movies I wanted to see, so I saw those. And once I'm done, I can't really think of any other movies I want to see.

 [Editorial note: So here the user sits in the classical psychological state known as the “overchoice paradox” – when faced with too many choices, nothing happens. Not good.]

So if they want to keep on charging me 17 bucks a month, they have to be active in helping me find new stuff or I'll go four or five months without renting any movies and I'll be, like, why am I spending 17 bucks a month, right? Their business model is incumbent upon keeping you renting movies.

 

He's is spot on with this last one-sentence business analysis. A recommendation engine can be key to what  users do next, leveraging another  well-known psychological principle operating here: The Principle of Least Effort, or more simply, people  will naturally choose the path of least resistance or "effort".  In the NetFlix context,  it's easier for video subscribers to leave unrequited than take on the onerous chore of exploring a 100,000+ movie title system.  But a reccomendation or taste engine changes that.

For NetFlix, the problem was that their internal engineering team was stumped on how to get a 10% improvement in their recommendation engine, CineMatch. (After all this is a  very immense and complex data set). In a marvelous act of both insight and bravery – the company decided to run an open contest, offering the best mathematical minds on the planet a chance to interact hands-on and test their immense database of  100 million + movie-rating data points - all for the chance to win a $1 Mn prize. (The privacy of actual user identities in the data set was of course protected.) Interestingly, per The Washington Post,  when the contest launched in 2006, the first entrants took just three weeks to improve on what Netflix's internal team had been able to do on its own.

The Contest: A Dramatic ScreenPlay Itself

While I promised not to retread yesterday’s news tires, it bears saying that the manner in which NetFlix promoted the contest and the response  to it is the stuff of an exciting screenplay itself.  Here’s a summary  of some  of the more exciting stats:

• 51,000 contestants entered
• Those contestants ultimately merged into some 40,000 teams
• Participants included researchers from over 186 countries
• Only in the final nail-biting 24 minutes did the team BellKor’s Pragmatic Chaos edged out the team The Ensemble with the winning submission. (Both teams did complete the 10% solution.)

BellKor’s Pragmatic Chaos, the first and winning team, consisted of a group of statisticians, machine-learning experts and computer engineers hailing from the US, Austria, Canada and Israel. The Ensemble's 30 members come  from Australia, Canada, China, Greece, Hungary, Israel, Poland, The Netherlands, and the United States.

What's the Significance?

1. Recommendation engines are a high stakes game across many e-markets. Beyond NetFlix’ use of user ratings,  recommendation engines  are well known to users of  Amazon (as well as many other e-tailers)  for product sales, Pandora for music suggestions,  dating sites and social networking sites, such as Digg and Glue. We 've all seen  their traces online from the  tell-tale phrases such as  "People you may like..." "People who bought this also liked X, Y, Z".    Indeed, these engines are regarded by Forrester Research as critical mainstays  of next-gen ecommerce sites, translating the "overchoice paradox" into a cross-sell opportunity. According to  Thompson, two-thirds of all movies rented are picked because people had them recommended by the computer. 

2. Engine Improvements Address Recurring Revenue. NetFlix and others with subscriber models are keenly aware that the more accurate their engine is, the more likely they will have better customer retention and, most importantly, more recurring revenue.

3. Crowdsourcing is Now A Viable Marketing Solution and Perhaps A New Imperative. On a marketing plane, NetFlix's contest  legitimizes crowdsourcing, establishing it as a viable means of propelling (relatively) fast engineering progress. This point is well made in the NY Times published statements of Chris Volinsky, one of the leaders of the Pragmatic Chaos team and a scientist at AT&T Research. describing the mix of different statistical and machine-learning techniques used in their solution,

[It} only works well if you combine models that approach the problem differently.  That’s why collaboration has been so effective, because different people approach problems differently.

His statement captures the essence of why crowdsourcing works: Diverse approaches coming from diverse cultures, not a corporate monoculture, throw new light on a problem.

3. Machine Learning May be as Cool as Cloud Computing. On a more technical plane, NetFlix’ high profile contest, long-watched by the online technical community, has shown the spotlight on too little discussed techniques.  Per Gavin Potter, one of the few social scientists competing in the competition,

[The contest] has widened the awareness of machine learning techniques and recommender systems within the broader business community. I have had many,many requests from businesses asking how to implement recommender systems as a result of the competition and I guess other competitors have too. The wider non machine learning community is definitely looking for new applications (see my previous posts for some examples) and this can only be good for the field as a whole.

Take-Aways (Your Prizes)

Just as NetFlix provided data to consumer behavior researchers, their contest also provides  powerful information to all companies which use recommendation engines to encourage online product sales.

1. It combined two powerful techniques: prize economics and crowdsourcing.  By openly sharing their research database with data-thirsty researchers, the company virtually expanded their engineering department by 51,000 engineers and scientists.  You don’t have to look at engineering salaries or consulting fees to know that a $1 Mn marketing prize spend was a great deal for their R&D budget. Could your company too use such an outlandish technique?

2. With this highly promoted contest, NetFlix effectively chased out the identities of thousands of talented engineers and scientists who have further benefited by participating in the contest. Your company now has  the talent identified for your own company’s potential benefit. (Judging from Gavin Potter’s blog, smart companies have already started their outreach efforts to these experts some months ago.)

3. Here’s one of the more valuable lessons of the experiment:  The winning solution was based  on more than math skills. Whether you read the highly illuminating backtrace comment history on the Pragmatic Chaos blog or the recent press release from The Ensemble, it’s absolutely clear that teamwork was a key part in the journey to getting to the 10% improvement solution.  The members of the top teams in particular hold highly strategic technical knowledge, project management and timing skills.  These promise to  position their future clients in a highly advantageous position in producing world-class recommendation engines.

4. Finally, ff you are  wondering if these movie database research results really apply to your company’s particular market category, I invite you to read through some of the enlightening market-oriented questions raised  by Media Unbound, a software firm known for their recommendation services and one which tracked the contest in its final 30 days.   After reading these, it's more obvious that the whole field of recommendation engines has benefited from the NetFlix event.

Okay, a 10% Improvement– But Will It Blend?

Among their questions, Media Unbound raises a truly critical one in terms of the full marketing impact of the NetFlix experiment: Will the 10% improvement through the algorithm  result in a noticeable improvement in the Netflix subscriber  experience?   Comments from NetFlix CEO Reed Hastings seem to suggest so - “It will allow us to double the accuracy of suggestions to customers”.

But is this really a given?  Even while the mathematicians and engineers are leaving the playing field, it seems the pychophysicists and marketing scientists need to come onto it. Will the 10% be visibly felt and experienced as a substantial improvement by the typical NetFlix customer?  

Consider this. In the branch of psychology called psychophysics, they speak of a Just-Noticeable-Difference in perception or a JND. Here’s an example that may bring that concept into familiar light.  If you are sitting in a very  dark room, a 10% light increment will be very detectable and highly noticeable.  However, if you are sitting on a sunny beach, the 10% increment won’t be noticed. By dark, the light change is greater than one JND, while in a bright environ, the light change is less one JND.  Translated for NetFlix, the question is whether a NetFlix video subscriber, selecting among hundreds of thousands of movie titles using the new algorithm, is going to readily detect the difference to affect their satisfaction and retention.

 So bring on the next set of scientists! Let the games continue! (And they do. With the prize award, NetFlix also announced a new $1 M prize contest, focusing now on the tougher problem of subscribers with more sparse rmovie ratings.)

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I’d love to know your marketing thoughts on the crowdsourcing implications of the NetFlix experiment.  Is this, along with crowdsourcing use by StarBucks and others,  the sign of a new way to run engineering departments? Do you see this  as the path for faster product innovation?

In my next post – I’ll talk a bit about the best-practice marketing tactics NetFlix used to promote their crowdsourced contest.

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