Industry Note: Social Media and Marketing

Last night, I dropped into a nice discussion run by the Social Media Club. It was marketing focused - the context, obviously, is that there is a huge shift of value away from mass media, and to micromedia. But this is despite the fact that marketers haven't exactly figured out what marketing/branding 2.0 look, feel, smell, and taste like.

So it's an interesting situation.

Interestingly, the same questions came up that have been coming up for a very long time in these discussions. So let me try and highlight these questions, and give you what little insight I can.

1) Is Myspace (etc) a fad?

I think this is the wrong question.

I think Myspace is definitely not a fad, but is rather a hyperefficient solution to a hugely long standing and vexing economic problem - the music industry's neverending lameness.

Now, many disagree. Fine. We can argue about this forever (despite the fact that pure numbers tell us Myspace/etc most definitely isn't a fad).

The point is that the strategic question is different. If we want to think strategically about Myspace, we should look at what's happening in the real world.

There, consumer behaviour changes radically when consumers get hypersocial - which has powerful implications for market power, switching costs, demand, advantage, etc.

When we ask this question, we have a much more interesting discussion. We begin to see that consumers connect in very specific ways, and that demand gets amplified and attenuated in very specific ways as well - with enormous effects on market power. This is how Myspace is able to already begin redesigning the music value chain.

2) Do corporations always need to tell the truth?

Corporations, like governments, have always lied and hidden the truth. And they always will.

So this question has little meaning.

The strategic question is: does telling more of the truth make us better off? In other words, is the relationship between truth and advantage more powerful today than before?

I think the answer is unequivocal: yes. Take Yahoo vs Google. Yahoo keeps drinking it's own Kool-Aid (viz Semel's recent explanation of Yahoo's dismal performance - I predicted this last year, you guys should have listened to me :)

Google, on the other hand, tells more of the truth. Not totally, to be sure - Google is a very secretive player. But it's truthful enough to know when an experiment's working, and when it's failing (viz, YouTube vs Google Video).

So truth is a powerful component of Google's seemingly unassailable advantage.

Now, this points to a new, deeper, and more powerful rationale for marketers than as simple image-managers. Which is the next point I wanna make.

In all this detailed, tactical discussion, I think the bigger question got lost. And that's unfortunate, because these details aren't so important unless the deeper economics (value creation/capture/etc) works.

To me, that's a simple, if a bit abstract, question: what is the economic point of marketing in the post-network economy?

Is it "facilitating" of discussion? Is it as shapers of messages? Is it "engagement"? What economic meaning do these fuzzy concepts have (if any)? Etc...

The point here is that the economic rationale for marketing is undergoing tectonic shifts (and these shifts are only going to accelerate). These shifts point to the simple fact that the yesterday's economic rationale for marketing is, today, less and less valid.

In other words, there's a huge pie up for grabs - but marketers, imho, should think a little bigger if they want a taste of it (and I say that with special emphasis to the cosmic lamers at Edelman).

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