Chapter 1 - Word of Mouth Goes World of Mouth

Marketers have long acknowledged the power of word-of-mouth promotion - it's not a new concept at all, but for many years it has been a fringe interest. However, it has received very little attention because it happened informally and privately and there few firms had the power to leverage it.

Social media has turned word-of-mouth loose on the world. People ask questions and express opinions in a channel that reaches the masses, is disseminated immediately, is stored permanently, and is accessible and easy for others to find. The kinds of comments that were heard by few and quickly forgotten now get broader and lasting attention - all the limitations that made word-of-mouth invisible and inaccessible have been removed.

It's also noted that recording things in digital format preserves their integrity: others can see what the originator said in his exact words, and it is not distorted or permuted by being passed from one person to the next. Social media also overcomes anonymous rumors - everything is associated to the person who said it, and anything that cannot be ascribed to a person is likely viewed with suspicion and doubt.

Is Social Media Just a Fad?

Social media is massive. In less than three years, it became the first activity in Internet history to surpass pornography in its popularity - nothing else has ever done that. The notion that it appeals to a niche market is clearly disproven.

The author theorizes that a primary reason for its growth is information filtering. The Internet has become so large and gangly that it is now difficult to find the things we need and are interested in, and aggressive advertising often distracts us from our intended aims. Participants in social media share and filter information for one another - and call attention to things that are likely to be of interest.

Social media also fulfills some basic human needs, particularly the need to express one's individuality but at the same time to feel a sense of connectedness and belonging to a greater society. Information sharing is a way of connecting to one another by identifying common attitudes and interests. Having others approve of the information you share is validation of your value and a strengthening of your bond to others.

There's a brief mention of privacy and the desire to control the information that others have about yourself - but the use of social media demonstrates that many people feel that their privacy is less valuable than their ability to connect with others and be accepted as they are. In terms of advertising, people seem happy to give up a bit of privacy if it means their experience is of greater interest and relevance.

Social media is also useful in defining cultural norms, and has taken power away from commercial interests and returned it to society. For many years, the editors of Billboard magazine reported on popular music, and people had to rely on their lists to determine what was most popular and worth consuming - now, they get this information directly from other users, without a commercial or political agenda.

Who Cares?

People who don't participate in social media often have a "who cares" attitude. Why should I care where someone else is having lunch, and why should they care where I am? So much of what happens in social media seem to be petty narcissism.

(EN: Narcissism, perhaps, but a valid human need nonetheless. People like to think other people care about them - often in ways in which they don't care about other people. I want everyone to know what I ate for lunch, but I don't want to know what everyone else ate for lunch. Truth is, most people simply ignore one another in social media - but there's still the hope that there's someone out there who is genuinely interested.)

However, even the most frivolous-seeming details form a database of information that can be relevant at a future time. You may not care where your friend is dining today, but a few months later when you are thinking about going to a restaurant, you might be interested in whether any of your friends has even been there and whether it was any good.

Social media also helps you to stay informed about the (few) people you genuinely want to stay connected with via casual observation. People seldom have the time to invest in writing letters and waiting on responses - but checking and updating social media is a task that can be done in a few spare minutes now and then.

The author uses the hackneyed example of a person who is waiting in line at a grocery store: in the five minutes she stands in line, she can check up on her friends, fire off a response if anything is of interest, and post her own activity. There are some rather interesting observations along the way:

Foreign Friends Are Not Forgotten

There's a personal account about the way in which social media makes it easier to keep in touch with acquaintances over distance and time: it's simply easier to keep in touch by social media than by letters and telephone calls.

The account also mentions that it enables highly mobile people to reconnect: a person who travels a lot feels isolated, and if he is acquainted with other frequent travelers, there are often instances where they end up in the same town, even the same hotel. Before social media, there was no effective way to be aware of this and meet up.

Search Engines and Social Media

The Internet's greatest strength - a massive amount of information - is also its greatest weakness in that it is increasingly difficult to find anything useful among the clutter. Even when you have a very clear idea of what you are looking for, it can be difficult to find.

Worse yet, users don't often know what they are looking for in the first place. If you search for a "good gift for an avid golfer," the results are seldom very helpful - it's a sea of confusion, cluttered with advertising for things that aren't really a good match. It may take paging through multiple results and trying many different queries to find an idea. In social media, you can find gift ideas from the comments posted by other friends who are avid golfers, or reach out and ask a question.

The author concedes that search engines are constantly attempting to improve their results, but it's the very nature of the task that have prevented them from achieving much success, in spite of years and billions of dollars spent in research. You're still far better off asking a question of someone you know than you will find by using a search engine.

The author mentions that social media sites are becoming the strongest competition for search engines, because many users are searching social media first, rather than choosing which search engine to try (much in the way a student doing research starts at Wikipedia rather than Google because he knows the kind of information he wants to find).

Google, specifically, has made a number of attempts to better leverage social. It has launched its own social networking and bookmarking site (Google Plus), its own microblogging tool (Google Buzz), and its own collaborative communication tool (Google Wave). All have been spectacular failures - and have largely prevented the firm from entering into more productive partnerships with firms who already "owned" the crowd.

The News Finds Us

In the social media, we do not search for the news - rather, the news finds us. A given article or video clip will get far more attention if it is presented to others in social media than promoted on the home page of a news-oriented Web site.

(EN: This is entirely true, but in order for something to be listed in social media, the originator has to find it. A better characterization of the social news service is a group of friends who each read different magazines and share articles with one another - social does not make the news, it merely promotes it.)

The author provides a case-study of viral video: a video clip of a Saturday Night Live skit was viewed by over 50 million people online; a survey suggested more people saw the video online than on television; and the show's television audience surged by 50% over the previous year.

(EN: This is also a pretty good example of the reason that mass-media producers should take a less hostile view of social media - it can help build audience. The more typical reaction is for networks to petition/threaten site operators to remove unauthorized clips.)

For the users, the filtration of social media is a great time-saver. Considering the same example, the viewing audience of SNL has fallen greatly since its heyday, and the common complain is that there really isn't much content in the 90-minute program that's interesting or amusing. With the help of social media tools, people can count on others to extract and present content that's worth viewing.

For advertisers, the social media provide the ability of a consumer to take immediate action. A person who hears about a cool new product around the water cooler at work must remember that information at a later time. A person who hears about it in social media can visit a merchant's site immediately.

Finally, there is "news" in the sense of information about events in the lives of the people we know. The experience a friend is having on their trip to Paris is news they want to hear - and with social media, their friend can post information whenever there's a break in the action. You don't need to wait for them to get back and then arrange time to "catch up" and hear about their trip.

Newspapers and Magazines Diminish in Power

The author asserts that there has been a shift in information control. In previous times, information was created by a few and individual stories were distributed to the masses - but in the age of social information is created by many people and each story delivered to a few.

The ability of social media to deliver news that is a threat to local newspapers - or it can be said it might have been a threat, if local newspapers hadn't been pronounced dead in 2009. While some local newspapers still exist in larger cities, their readership and revenues have plummeted significantly.

Classified advertising was the last bastion of revenue for many newspapers - and even this was swept away: Craigslist and Ebay enable people to buy and sell their items, Monster and LinkedIn have taken over the job listings, and Edmunds and Auto Trader have taken over vehicle listings.

(EN: The demise of newspapers is rather more complex than that. The Internet played a part, but it was also attributed to the changing lifestyles and interests of people. The "silent generation" was very much interested in local news and made time to read their daily paper as a ritual. Beginning with Generation X, there was less interest in the local scene and less time to spend reading newspapers. Papers switched from hiring local writers to mostly republishing newswire stories - but this failed to capture younger reads and disappointed their established, but aging, subscribers.)

Magazines have fared little better, as many readers turn to online sources for information and mailing costs increased, the magazine industry has also suffered setbacks, and many have shifted to online-only formats (as did PC Magazine in November 2008). The author predicts that it won't be long before they follow newspapers down the tubes.

Another perspective is that the clutter of competition is being cut down: now that there are fewer magazines to choose from, the ones that remain each get a larger audience. In a similar way, there has been an uptick in direct-mail marketing results, simply because there is less junk mail overall.

The author pauses to appreciate the irony of writing a printed book - and acknowledges that by the time it is released in print, the statistics he presents will already be outdated. He senses that there is still sufficient "evergreen" content that will have a long-term appeal, and this is also true of some of the magazines that have survived the rout: "news" magazines are no longer viable, but those that provide hobby and special interest content that doesn't expire as quickly still offer value.

(EN: Another valid counterargument I have seen is that reading on the computer screen, and especially on the tiny mobile screen, is an unsatisfactory experience. The printed format has a number of advantages, and will likely remain in spite of digital channels, because people simply prefer to read lengthy articles on paper.)

A common tactic among print-media publishers is to simply transition to an online model, but this has not been very successful. There are a plethora of online sources of information for which readers don't have to pay, and trapping content behind a login gateway prevents it from being findable in search engines. A publication that can generate enough advertising revenue can survive, but Internet (and especially mobile) users have little tolerance for commercial intrusion.

Bloggers Are Better than Reporters

This section is a bit of a dog's breakfast, with the author beginning by telling a narrative about the way in which an independent blogger can provide more relevant content to her readers than can a national news magazine (EN: which I believe to be an entirely made-up example). Along the way, a few observations are tossed in:

Pressing onward with the hypothetical scenario, the author suggests that bloggers are generally well-intentioned and over time develop expertise in a niche subject. They are concerned with their reputation and, while they will sometimes post dodgy information they are quick to update and retract it.

Flip to then audience's experience. Consider that the consumer of information will generally conduct a Google search to get information - they click through to articles, but are quickly blocked by a "subscription required" statement. They do not get the information they want, are not motivated to subscribe, and leave the site quickly.

By contrast, when a reader comes across a blog post, they get the story they want right away, don't have to pay a fee to see it. They pass the story along to hundreds of people by posting it to Facebook and/or Twitter. Dozens of his friends also read the story, rate it, and re-share the link with their social media friends.

Given that the average Facebook user has 130 friends, this builds a huge audience quickly - and if ten friends comment on or repost the story, add 1300 to that audience. As viral sensations have demonstrated, an audience of millions can be amassed within hours.

Many users also leverage aggregation services - so rather than perusing a newspaper or magazine in hopes of finding something of interest, they can set up a "feed" that combs the Internet and brings items of interest to their immediate attention. These feeds provide information quickly, as they update at an interval the user sets (which may be by the minute) rather than having to wait for a story to be picked up by a search engine.

The author again chides the traditional media for clinging the outdated model of paid subscriptions, and even cites instances in which publishers have acted to prevent search engines from linking to their articles. They are under the mistaken impression that they are still in control and that information is still a rare commodity that can be locked up and sold - and are acting in ways that expedite their own demise.

He's further flabbergasted by the hubris of publishers to charge exorbitant subscription fees for online service. A magazine that used to sell for $18 per year now demands $12 per month ($144/year) - and in a medium where they are saving all the expenses of print production (ink, paper, press time, physical distribution).

(EN: I'm generally in agreement, but I sense a lot depends on the value of the information and the importance of timeliness. For example, the Wall Street Journal has had great success online - its users value the quality of the information, which bloggers cannot rival, and the convenience and timeliness of digital deliver. But it is generally quite rare for a publication to have that degree of esteem and a devoted subscriber base with high disposable income.)

Free and Faster Information

Social media often "scoops" the major press, posting announcements before television or news websites (examples of two celerity deaths are cited). While newspapers would argue that they take time to verify their information, and are therefore more credible, there are few instances in which social media has reported an event that turned out to be untrue.

Social is also better at serving the interests of minor and niche markets: the mass-media are often geared toward a national audience and are poised to cover major events that have a mass audience, and can ignore stories that they feel are not "big" enough to appeal to their audience. Local news outlets used to fill this gap, but do not have sufficient resources to do so in a timely manner, or at all.

The notion that social media is inaccurate is also not well founded. While one person may spread misinformation, through their own ignorance or through malice, the collective voice of all participants is generally accurate.

One study (Giles 2005) is cited in which a mix of articles form Wikipedia and Encyclopedia Britannica were reviewed by subject-matter experts in a blind manner. In 42 articles total, the experts found eight "serious errors" ... four of them from each of the two sources. In effect, Wikipedia was found to be just as accurate as a traditional encyclopedia, and it covers a much broader array of subjects. Because information in social media is considered to be public, more people can contribute, and members of the online community are often willing to challenge and confirm the facts that are published.

(EN: What the author doesn't mention is that in many instances, participants in social media are qualified experts. The individual who posts or a Wikipedia article could well be a professional or academic with significant credentials and experience - and it may be reviewed and amended by dozens of people who have significant credentials.)

Case Study: Bacon Salt

The author mentions a business that was born of social media: a pair of entrepreneurs noticed a social media thread in which people were jokingly suggesting that they would be interested in a seasoning that made everything taste like bacon. They created a fake social media profile for exactly such a product, and were amazed at the level of interest that was expressed and the serious inquiries that came in. They rushed to develop and package a product, and sold 600,000 bottles in 18 months.

(EN: I looked into it, and the firm is still in business, selling bacon salt and a variety of other bacon-flavored products. It's likely not going to become a fortune-500 company, and will likely collapse when the internet meme about bacon has run its course, but a rather interesting story nonetheless.)

The author suggests that a number of other firms have found good business ideas simply by listening to what people were saying in social media, whether for new products and services or merely fine-tuning the ones that they already provide.

It's further mentioned that the Internet and social media level the playing field among brands. Because space is unlimited and cheap, small companies can have just as good a web presence as large ones. It also helps that many social media sites do not cater to commercial interests, which often means large companies cannot throw their weight (or their budget) around to silence competition. Because pages are based on templates, a company that's run out of someone's garage is on level footing with the industry leader insofar as the content of their social media profile page are concerned.

Case Study: Dancing Matt

The author's mention "Dancing Matt" Harding, a young man who got the notion to video himself dancing the same peculiar way at various locations as he travelled around the world. The videos went viral and Cadbury approached him about sponsoring his trips if his videos could be associated to their gum - Matt gained celebrity status and the commercials were deemed a wild success.

Of particular importance is that Cadbury did not attempt to take control: they did not insist that he wear their logo, hand out samples, or do anything at all to promote the product except identify them as a sponsor of his videos. They recognized that being heavy-handed with the marketing would likely squelch the popularity of Matt's videos.