Tag: Communities

What’s in a Name?

Buying domain names of real live people can be manna to the unscrupulous.

Anne Fognano is not a newbie in the online marketing world. She has run a successful affiliate business since 1997. She’s the force behind CleverMoms.com and has registered a raft of variations on the "clever moms" domain name to safeguard her valuable brand. But she never bought the domain for her own name – AnneFognano.com. When someone else did, all hell broke loose.

While domain squatting is as old as the Internet itself, the practice of buying a dot-com name and waiting for someone with a bag of cash to offer to buy it from you has lost some of its cachet – especially since pretty much all the good common names and brand names are taken these days.

However, this hasn’t stopped some folks from getting creative. Many call it "domain extortion," where someone buys your name, sets up a rudimentary Web page of you with dummy copy and then contacts you to sell you services such as Web design, hosting and other services for bloggers. This is what exactly what happened to Fognano.

"Not much I can do about it," she says, "because I don’t have my name trademarked." Since she is not a "public figure" like George Clooney or Paris Hilton, it makes it harder to make a case that her image has been co-opted for monetary gain. The FBI and her local District Attorney’s office in Virginia told her that unless she could prove that someone was looking to profit from her name, they could do little. Besides, they told her, the payout would be so little that it wasn’t worth the authorities’ time.

Domain parking in general is fairly big business, thanks in part to the popularity of PPC programs. Anyone can buy a domain that is either a name someone may type into the address bar or is a misspelling of a brand name (called typosquatting) and put nothing but Yahoo or Google PPC ads on the sites. The ads on these types of sites actually generated $400 million in sales in 2006, according to Susquehanna Financial Group, and looks to hit the $1 billion mark by the end of 2007.

Updated Version of Cybersquatting

In the domain extortion variation, someone grabs a name of a living person who has a blog or is an affiliate marketer for as low as $6 or $8 per name through an inexpensive domain registry such as GoDaddy.com. If the person that bought the domain offers to sell services to the namesake on top of giving them back their name, there’s nothing illegal that’s been done, according to authorities. In addition, the person who registered your name generally gets more than his $8 if you decide to at least take your name back.

In Fognano’s case, she decided to fight back. Going to the popular online forum for affiliates, ABestWeb.com, she posted her dilemma and let the members know that a "blog consultant, John Kitovitsu" of PurchaseMyBlog.com emailed her to show her what using his services would look like and that she could buy the domain from him. ABestWeb members, a large, vocal and tight knit community of savvy online marketers, suggested sending him a "cease and desist" letter to remove the content, which include her image and an article taken from Revenue magazine. They also suggested bringing him up before the Internet Corporation for Assigned Names and Numbers (ICANN) and even paying him a personal visit. ABestWebbers also helped her document all the text and images on the fake site and tracked down the IP address for the hosting company serving up the site. They also determined there was no business active on the Web using the PurchaseMyBlog name.

Not a Crime?

Fognano called the local police, the FBI, her local District Attorney and even the dubious website’s hosting company (in Germany). Since "Kitovitsu" had also set up a WordPress blog page for her without her permission, she got WordPress to pull down the page for violation of their terms of service. Fognano said the FBI pulled the site for her and said it would put an "FBI investigation tag" on the website. "I actually didn’t care that much," she said. "How many people are going to type my name [directly into the address bar]? But only when they use my name and image is it a big deal."

Thus far, the authorities she contacted are not calling this a crime. New York State recently signed a law providing a $1,000 fine per day for violation of people registering domain names of known people purely to sell them their own names for profit. The law goes into effect in early 2008. While it is not known if other states will follow suit, the terms may be just vague enough not to quash the practice entirely.

"It’s almost like they are taking your identity," Fognano says. "It seemed strange that it isn’t a crime."

Domain name registrars say they can only do so much. In 1999, the Ninth Circuit Court of Appeals ruled that registrars, such as Network Solutions, could not be held liable for registering a domain of a "known trademark." Network Solutions – which used to be the exclusive registrars of domain names in the U.S., says it used to purge "domain speculators" from its registry, especially those who registered thousands of domain names at a time. But it adds that most domain names can only be reclaimed if those who registered the names do not pay on time.

After inquiries were made, Fognano heard again from "Kitovitsu." "It’s not our intention to pose as you or use your blog for material gain," the email said. "If you decide to join our network we can have a professionally designed template made to enhance the look and feel of your blog."

"Oh, I see. It was a sales pitch," said a poster on her thread at ABestWeb. Another poster wrote that it sounded like "a scam with a bit of extortion thrown in."

Registrars and Revenue

Now that lower-cost domain name registering companies such as GoDaddy.com have entered the field, the competition for registration fees is much greater. There are hundreds of accredited registrar companies internationally that deal in the more popular .com, .net, .biz, .org, .edu and .mobi top-level domains. A new domain is registered at GoDaddy.com every 1.3 seconds, the company says. That figure comes to 12.8 million domain names every five months, according to Netcraft, up from 7.5 million in a five-month time frame last year.

Selling parked domains is also still big business. Business.com famously sold in 1999 for $7.5 million. Sex.com changed hands last year for a reported $14 million, although some reports said it was more like $11 million. Domain name sales generated $29 million in 2005, according to Zetetic. Some are just in it for the names. NameMedia, for example, apparently has more than 750,000 domain names in its marketplace. Sedo.com also acts as a kind of eBay for the domain space, selling $3 million worth of domain names per month.

"A domain name isn’t something you own, it’s just something you have a right to use," says Elizabeth Beal, director of the Communications Law Centre at Victoria University in Canada. "So it’s not like [a cybersquatter] has been using somebody else’s property."

In this age of security, some companies are enhancing their products and discovering revenue streams in the process. Retail domain name registrar Dotser offers "domain name security" with its NameSafe and TransferLock products. NameSafe restricts actions such as account updates, name server updates, contact name changes, domain account changes and registrar transfers without prior authorization through email. They charge a small annual fee for the service. Its TransferLock prevents domain name transfers without being logged in to your account. This service is free. Dotser itself, however, was named in a typosquatting lawsuit by retailers Neiman Marcus and Bergdorf Goodman a few years ago, saying that Dotster put up ad-filled pages in misspelled domains of the retailer’s name and then only paid to keep the misspelled URLs that were generating any revenue. This is called domain kiting.

Some critics also charge that the extra fee-based services don’t prevent someone from snapping up your domain if the registrar goes bankrupt or registers a taken name by accident or if the registrar deletes your domain through a process error. That’s what happened to Gary Kremen when Network Solutions was conned into giving up his Sex.com domain – a destination that was reportedly earning him $8 million per year. It took him three years to get the name back, but he was pretty much bankrupt by then.

Because of the competition between retail registrars, it isn’t surprising that companies are trying to entice you to add services or register more versions of a domain than you may need. One variation on the hard sell is getting a fax from a "domain name monitoring" organization stating that someone was registering the dot-net version of a dot-com domain name you owned. Saying they were checking on possible trademark conflicts on domains they have registered, the company offers to register the dot-net domain for you instead. Sometimes the materials are marked "final notice" with that day’s date as the deadline.

Lapses and Losses

Members of ABestWeb also suggested Fognano file a complaint with ICANN. You can make a case and request the domain be transferred to you. In most cases, when you register a domain, you are also agreeing to mandatory arbitration. Arbitrations through ICANN can also be far less expensive than litigation, and the judgments through arbitration can be quicker – about 60 days. While ICANN recognizes the need to keep the processes for transferring domain names tight, it is well aware of the chorus of complaints from those hijacked or extorted. "The registrant may lose an established identity and be exposed to extortion by name speculators," ICANN has stated. "Domain hijacking can disrupt or severely impact the business and operations of a registrant."

Generally there is a process by which a domain name can fall back into the unregistered pool to be snatched up by any attentive domain buyer. You register YourName.com on a given date: 1/11/06. The domain expires on 1/11/07. There happens to be a 30-day grace period to allow for renewal of the domain for the standard renewal price (until about 2/11/07). If that date passes, the domain is tagged as in a "redemption grace period," during which time the domain is put in "registrar hold" and then "pending delete" – about 30 to 45 days, depending on the registrar.

ICANN allows the registrar to charge its own fee for renewal from then on, which could go as high as $160. GoDaddy charges $80 and Network Solutions charges $160. If those fees aren’t paid, the domain name is released into the pool to be bought by anyone.
Rich Miller, blogger at DomainWorks.com, says to treat your domain as a brand. Network Solutions agrees – that domains left to expire run the risk of being co-opted by anyone, it says. Miller says that you should register your domain for more than one year. This way it’s actually cheaper to register and you won’t have to remember to do it every year. There are some who say that domains that have been registered and active for a while get better Google page rankings.

Miller also suggests that you should look for the best registrar, not just the cheapest. Look up the reputation of the registrar. You may not see a difference in the features of a registrar who charges $30 versus $9, but you will see a big difference between the $9 and the $5 registrar. He always recommends registering "alternates" of your name in other top-level domains. If you own the .net but not the .com, the .com owner can trademark their name and potentially force you to give yours up. Also, he says, don’t forget to brand your name within the social networks – set up pages in MySpace and other destinations before someone else does.

And whatever brand name you are operating under, always remember to try to buy your own name as a domain. Recently, Fognano decided she would offer "Kitovitsu" $10 to buy her domain from him. She has yet to hear back from him.

Blurring the Lines

Recently, I posed my question to a diverse audience: “At your company, who is in charge of social media marketing? Raise your hand if it’s the marketing group.” A few hands went up. “The public relations team?” A few hands again. “Market research?” Once again, only a smattering of hands was raised. “So I guess most of you aren’t using social media at all?” I suggested. “Must be your lawyers are in charge.” That struck a chord. Laughter all round.

So, who’s in charge of social media marketing at your company? At many companies, no one’s in charge because the legal team is still assessing the risk. The first thing to do is to fi nd an appropriate executive to accept the risk. That tells the legal team that you’ve heard their advice but that you believe the business value of social media outweighs the downside. But who is that appropriate executive?

It’s Marketing

It seems obvious. If it’s social media marketing, shouldn’t you put the marketing folks in charge?

Perhaps, but whether that’s a smart decision depends on what kind of marketing people you have. Traditional brand marketers steeped in television advertising might struggle a bit with social media marketing. Word-of-mouth marketing has migrated online to be christened viral marketing, but most marketers have never lifted a finger to get customers to talk to other customers. Marketers accustomed to paying for advertised messages might be shocked at how much harder it is to foment word of mouth.

Social media marketing depends on your customers wanting to tell other customers something good about your product or service. What you’ve been paying media outlets to say about you won’t cut it. You need a message that is interesting, entertaining, appealing, and just plain hard to keep quiet about.

It’s rare that trained marketers pull this off. As discussed in my last column, Blendtec launched a terrific viral marketing video series, obliterating iPods and other unlikely objects in its blenders. But it was not a marketing plan that started the series – grinding up weird stuff was part of their product testing.

Marketers who’ve grown up screaming, “Act now and get, free, an ice crusher!” doubtless have little chance of getting their messages listened to, much less passed on.

It’s Public Relations

So, if not marketers, then should it be public relations? Or Corporate Communications, as they so often like to be known nowadays? Good reasons exist for such a decision.

PR folks have long faced the problem of enticing others to pass along their messages. PR people have spent their careers talking editors, producers, and reporters into covering their “news” and getting customers to pass along a story seems like a similar challenge.

Moreover, social media requires listening, not just talking, which any good publicist knows how to do. Tracking what’s being said about your company in cyberspace is just as important as in mainstream media. Someone who knows how to respond to a media crisis has valuable skills that can be employed when the blogosphere and message boards light up over some issue.

But PR people have limitations, too. For one thing, they tend to respond to a problematic press story based on how much influence the source possesses. They burn the midnight oil when the New York Times prints something, but don’t break a sweat when it’s the Picayune Press. That approach works fi ne for mainstream media, but it’s harder to judge the effect of a customer’s opinion in the social media space.

A public relations professional might not be the best person to assess its influence.

It’s Market Research

So, who could gauge the importance of a customer’s opinion? Perhaps market researchers, because they have spent their lives understanding customer feedback – divining the importance of opinions based on prevalence.

Market researchers use focus groups, surveys, and other techniques to tease statistical signifi cance from the noise of customer feedback. They collate the information and analyze it so that your company can take action. Surely that’s the right kind of experience, yes?

Well, maybe not. After all, market researchers are great at listening but not terribly experienced with sending messages. They don’t know how to convince an audience, preferring to find out what the audience thinks without contaminating their opinions. Marketing depends on getting customers to buy what you are selling, which requires some persuasive powers.

It Requires Cooperation

So, we’re back to where we started. Social media marketing requires the persuasiveness of a marketer, the media savvy of a PR pro, and the listening ability of a market researcher, all rolled into one. Now, maybe you’ve got someone like that lying around at your company, but I’d call that a long shot. What can you do instead?

Break down the walls. It’s not easy, but social media marketing, like many types of Internet marketing, require that you abandon the traditional barriers that cordon off each profession from one another.

Perhaps you need your market research people to learn to use reputation monitoring technology to listen to the Internet conversation about your company. They can use their well-honed analytics expertise to assess the meaning and importance of what your customers are saying.

Then you need your communications people to step in. Some of that Internet chatter might be coming from blogs – your PR folks can help you treat them like press. But they can also use their experience to concoct the kinds of messages that customers will pass along.

Your marketing team can work with the market researchers to understand what kinds of stories might persuade your target markets, and your PR folks can help design them. In fact, IBM has just reorganized all three teams under the same executive – more companies might take that same approach.

Now, will having your teams work together solve all your social media challenges? Of course not. Even the best teamwork will leave you with normal challenges of crafting appealing social media campaigns. But at least you’ll have every possible person working together to do so.

Social Networking Bailout

Our politicians, along with Wall Street, a few bankers and some mortgage firms may be able to take our money, but they can’t take away our friends. In fact, our friends may be all we have left someday. There’s no doubt that the crisis we face today financially and otherwise will test our mettle as small business owners and brands.

So in tough times what can we do? Well, if you’re like me you turn to quoting Lennon/McCartney and say, “We’ll get by with a little help from our friends.” Once again, the Beatles solve all the world’s problems.Of course, you see where I’m going here,right? Social media will save us, if we use it wisely. Think about it. Social media at its core is simply friends and associates, using media tools to connect with each other in different ways – online.

It’s nothing new. Well, the “Web” part is. But in all actuality, social media always existed, even before the Web. Think about neighborhood watch meetings where everyone in your community came together at someone’s house to discuss crime in your neighborhood. It’s still happening, but today, that kind of thing can be done on Facebook, Myspace, or Ning, virtually as well. What about getting together with your friends at a local coffee shop to chat with each other about your lives, or to recommend an auto mechanic or dentist? That’s still happening, but now it’s also happening on Twitter and Pownce.

Social media extends our interactions and widens the net so we can have even more friends and even more discussions. And that’s a good thing. Especially if you’re wise enough to build a diverse and strong network of people who you can count on in times of trouble.

Here’s how I think social media, and the power of friends can get us through tough times.

Career Advancement

At the time of writing this article, 4,000 jobs were just lost, here, in Cleveland, Ohio due to a bank that is closing down. That puts 4,000people scrambling to find a replacement job,with many looking in the same industry. But there are only a few available jobs in the area and now there are 4,000 more unemployed workers vying for those positions.

In such a competitive job market, I believe those that leverage social media will emerge with a job. For example: let’s says that Joe the Banker and Sarah the Banker are both seeking employment. Joe never bought into the whole social media scene. He never thought it was important to have “friends”online so he ignored building connections.Sarah, however, realized long ago the power of social media. She’s amassed hundreds of Twitter followers, and has just as many Facebook friends and LinkedIn connections.Not to mention her blog where she has a complete resume of her skills and full contact information.

The first day after Joe loses his job; he heads out to grab the morning newspaper and begins to scan the want ads. Maybe he also calls a few friends who might know of something, and he might even call a professional recruiter. His job search has begun.

Sarah, on the other hand, started the job search minutes after she was laid off. She immediately told all of her followers about it on Twitter. Minutes after that, she updated her profile on LinkedIn and notified every contact there that she was available and looking. Then she updated her Facebook status and wrote a blog entry about her experience and what kind of work she was looking for.

So who got the job quicker? Of course, it was Sarah. The power of social media enabled her to sneeze her message out to more people,faster than Joe could. Her associations with”friends” also enabled her to be recommended personally by someone who might have a connection inside a company she is hoping to work for. Joe, on the other hand, is still checking the classified ads.

Sales, Leads & Publicity, Oh My!

Small businesses are feeling the crunch too. Now, more than ever, it’s a challenge to keep your business going strong. Today, the stakes are higher with challenges such as making payroll and providing health benefits for your employees. Oh yeah, and while the same time finding a marketing budget to advertise your business.

The good news is, social media can help with that ad budget and do things for your small business that a billboard can’t. Online footwear retailer Zappos as an example of this. Tony Hsieh, CEO of Zappos, actively uses Twitter to communicate with thousands of customers about his brand. Visit www.twitter.com/zappos to follow him. He also encourages his employees to use Twitter.There are more than 400 Zappos employees on Twitter.

At the time of this writing, Zappos on Twitter has just over 15,000 followers. That means that at any given moment, Zappos can instantly send out an update about their company to 15,000 people who are interested in their business – and it costs nothing. Let’s see, if you wanted to reach 15,000 targeted potential customers on radio or television,what do you think that would cost, and could you even measure it?

About 100 west of Boston there’s an Argentina Steakhouse called Caminito. http://www.caminitosteakhouse.com/ Justin Levy runs the restaurant and realizes the power of social media. “Since we are a small restaurant in Northampton, Mass. we don’t have the ability to spend a lot on traditional print marketing. We allocate some funds to newspaper ads, travel books/guides, etc. but I tend to focus my energy on Internet-based advertising, social media, etc.”

That includes having a blog and actively using Twitter. Plus having a MySpace and Facebook page where they can post events,photos, menu items, specials and videos to let customers feel part of the experience.The results for Justin and his steakhouse(in addition to a lower ad spend) is a 20to 30 percent increase in customers since implementing the social media strategy.

There’s Still Time

I rejected social media when it first exploded onto the scene a few years ago. I was like Joe the Baker in my example above.I already had friends in the real world. I didn’t need more online. I rejected Twitter at first, and refused to setup a Facebook profile. I saw them as distractions.

It wasn’t until six months later I realized the enormous error in my judgment. Being social online using social networking tools is more than just having new friends to chat with. It’s about finding effective ways to build your brand and grow your business or your career through the immense power of friends.

You still have time. Don’t be Joe the banker. You can, in minutes, create many social media profiles and begin to help yourself through tough economic times.

Owning Up

Social media technologies can be a powerful tool, but it’s important to know who within your organization should be taking the lead for your social media marketing strategy, which includes responsibility for everything from budgeting to staffing.

It’s commonplace for executives and managers to ask about social media leadership and inquiries stem from the growing desire to get involved with communities of customers, partners, and employees.

However, this question of who within an organization “owns” a specific community isn’t easily answered because it’s really three complex questions that need to be answered first: who interacts with the community; who pays for it; and who champions it?

Who Interacts with the Community?

Organizations have many questions when they get started with social media. They want to know who will write the blog, who will run the forum, who will manage the Wiki. These are all good questions about who you entrust with the responsibility of being your spokesperson to a specific community.

Some companies, such as General Motors, have high visibility bloggers (like GM’s Vice Chairman Bob Lutz). Other companies have a general manager overseeing its community efforts (like Intuit’s Scott Wilder). And other businesses field an team (like Southwest Airline’s Nuts About Southwest blog, which includes contributions from a diverse group of employees including Gordon Guillory, a Structures Mechanic in the Heavy Maintenance Department).

These different approaches show that any employee can interact with communities that they never deal with face-to-face with in their regular work. Community contacts shouldn’t be determined by title or department, but rather, by the mindset and judgment of the person in the job. It must be someone deeply passionate about developing that specific relationship – even if it means challenging long-held corporate culture and standards.

Natural places to look for these individuals are in marketing, public relations, and corporate communications. But don’t overlook customer support, market research, and product management as well.

Who Pays for Community?

The easy answer is that it depends on the goal of the community and who benefits most from the community. For example, a company may form a community for the express purpose of gathering insights into its customers. In this case, market research could work with vendors (such as Networked Insights, Passenger, or Communispace) to create a private community that can be polled and asked questions. These interactions can be used to supplement other sources like surveys and focus groups. In this example, it’s clear that market research should fund the community. However, companies can also allocate back the expense to other departments that also tap into that community for insights.

Communities can also be formed to provide better support. For example, through the use of discussion boards where customers, as well as company representatives, can answer support questions, the customer service department can eventually see decreased costs. In that case, customer service should pay for the community, as well as provide focus and direction.

One circumstance demands additional detail — when the IT organization should pay for (and control) community. IT usually gets involved when there’s a need to have a company-wide adoption of social and collaboration technologies. Historically, this has meant enterprise deployment of collaboration platforms like Sharepoint. In contrast, most social technologies are point solutions, designed for easy adoption by business users and requiring minimal IT involvement. IT typically becomes involved in social technologies when integration is needed into existing corporate systems and databases, where the role IT plays is one of ensuring security and systems maintenance. At some point, there will be enough point solutions where IT may also need to get involved to ensure corporate consistency in identity, data structures, and security, as well as in vendor and platform selection.

In the end, who pays for and thus controls the community should be fairly easy to determine because the formation of the community should be based on concrete goals that benefit the organization. If the goals are unclear, then the question of who pays for the community is the least of your worries.

Who Champions Community?

Deploying social media and creating communities is hard work that often challenges long-held company beliefs and cultures. But social media and community managers typically are younger, and earlier in their career, and thus they don’t always have the skills or the clout to be a change agent within an organization.

What’s needed is the third area of community ownership – executive sponsorship. Take for example Ben and Jerry’s. CEO Walt Freese is deeply involved in social media at the ice cream maker and not because he thinks it’s cool, but rather because he believes social technologies are crucial to deepening relationships with core customers – the lynchpin to increasing customer lifetime value.

Freese’s office title is Chief Euphoria Officer and he is the bearer of the social media torch inside the company, encouraging the integration of social media into all aspects of customer relationships, from marketing to customer service.

And at H&R Block, Paula Drumm, vice president of Interactive Media, has been the executive champion. She’s been educating executives while steering her team to engage with customers in multiple social media channels. Like many companies, H&R Block executives are conservative and come from a generation that’s generally skeptical about social technologies. Drumm’s change management skills have helped the company become a model of how to develop customer relationships with social media.

A key skill of this champion is the ability to understand far and how fast to push. In Naked Conversations by Robert Scoble and Shel Israel, the authors write about the importance of understanding the “corporate membrane” – how to stretch it to accommodate social media but not to the point of breaking.

The hard part of about this particular question is that it’s hard to appoint someone into position — usually, this person volunteers because they see the need and have the passion and energy to lead change within the organization.

Everyone owns Community

It’s a mistake to treat community as a separate, distinct asset because you’re talking about relationships that are core to the form and function of a business. In the end, everything that a company does flows through some sort of process that touches a relationship be it with a customer, partner, or employee. Thus, there’s opportunity for everyone in the company to own a piece of community, if only they are given the chance to do so.

I believe that a company that can spread the wealth of community involvement and ownership widely throughout a company will always be better positioned to win than one that doesn’t. After all, all companies want to be closer to their customers.

So, think hard not only about who will own community today in your organization, but also who is best positioned to open and share that ownership throughout the entire organization. The future health of your company may well depend on it.

Show me the Money

Currently, looking for the money in social media marketing is like asking directions in a foreign land when you don’t speak the language and don’t know how the locals connect and communicate.

Social media is commonly defined as comprising “primarily Internet-based tools for sharing and discussing information among human beings.”

As an online marketer you want to hear about ad copy and conversions. Everyone – your audience, customers, and your employees – wants you to listen, connect, and collaborate. You want to control the conversation so people click. They want you to understand there is so much more – including profits.

Here are three models that are working and speak to business in terms it can understand – cost savings, marketing, advertising, customer service, and lead generation – as well as terms it may not yet understand like passion, heart, transparency, sharing, not controlling, and being there for your customers. These are business models that go beyond mere advertising.

Business Model 1 – Social Product Development

Why hire employees to develop new products when you can have the audience do it with you, and both of you get paid? Even better, what if you could involve all of your audience to share, participate, and spread the word, and get them paid as well?

This is the new world of virtual currency or creating value out of traditional points systems. T-shirt maker Threadless.com allows people to judge, promote, and even get their picture taken wearing a t-shirt, and rewards them with points each step of the way. Points can be redeemed for cash.

While MetaCafe and others have tried to incentivize content creators by paying them a fee based on ads, Threadless.com takes it to a new level where the creators and fans of their T-shirts can help spread the word and generate sales.

How They Do It

Designs are submitted to the community and printed by Threadless, who shares some of the revenue with the creator. Each action is tied to some form of currency; some of it is monetary, yet in social networks much of the social currency is how people view your reviews, your creativity, and support it.

By incentivizing certain actions and maintaining an active community, they unleash the genius of their audience and profi t.

  • Incentivize the product creators: they invite people to submit T-shirt designs. If it is selected, the person can win up to $2500, or maybe even $10,000 if it is selected one of the Best.
  • Pay the slogan creators: submit a slogan and win up to $200, so you don’t have to be able to draw to win.
  • Incentivize consumers to spread the word: Members of this social community can recommend t-shirts via email, or traditional affiliate links, and earn two credits (about $3) per sale. If they get their picture taken with their favorite T-shirt and submit it, they get one credit ($1.50). If the picture is used in the main site for promotion, they get 10 credits ($15.00). Considering t-shirts run $9-$30, that is a significant bounty for a small action.
  • Reward people for taking action: The key to Threadless is the fun community. Just paying people to promote and create is one thing; rewarding them for good behavior and excellence is the new way of product development.

Business Model 2 – Direct Response Media: Ads and Performance Marketing

This is the most common model in use, with businesses basically trying to fit the traditional marketing world onto social media with mixed results. When matched to the right audience, this can be very effective. Still, targeting will almost always decrease the overall size of the audience you are reaching, so numbers are not off the charts.

Direct media is the evolution of traditional direct response media (direct mail, DRTV, etc.) and Internet direct response like pay per click and affiliate programs into the social media space. The goal is to get a sale, and these folks have been posting ads, manipulating search engines, and building links.

How They Do It

  • Use personality to create buzz: Create buzz about product by using audio and video-driven business personalities, driving people from social media portals like Facebook and MySpace to their own sites, and even social networks, to create ongoing business.

Gary Vaynerchuk, WineLibrary.TV: Gary combines a video show about tasting wine with ongoing presence in many social networks. He drives people from these networks to his own Wine social network, Corkd.com (he bought it after being successful) and drives retail sales through WineLibrary.com, among other sites.

Gary’s personality plays against traditional wine snobbery and drives sales. Personality is essential, because in social media, how they remember you is the most important thing”and if they remember you. For retailers,this means driving repeat visits, which the video, social networking and marketing continually generate.

  • Develop new direct response ads: Allow people to interact, watch, and make selections within the advertising itself. Instead of an ad inciting people to click and leave the space they are at, these ads invite people to stay where they are, browse, and buy.

MyWeddingFavors.com has an affiliate program that uses video and a special video widget from Qoof.com. Affiliates place these ads in social media spaces, where videos can be played right on the page.

People can choose, watch, and explore while they are in the middle of their own social media experience. Basically the performance based marketing invites them to engage and interact with the ad, and pulls them away from what they are doing BEFORE sending them to the eventual site to buy the product.

Other tactics include:

Buying low cost advertising ($0.50 – $20 CPM) space on a variety of social media through ad networks. Ad buys are mostly based on straight ROI. Clickthroughs are very low. Branding ads are rarely successful.

Posting consistently to blogs, social bookmarking sites, video sites, and tag these posts with keywords in the title, tags, and description to drive search traffic.

Do performance marketing deals and pay others to promote and pay a bounty for a lead or sale. If the ad does not perform, no one gets paid. Lead generation is dominant here, especially to targeted audiences where it works best; because people are often more open to inquiring than to buying.

Business Model 3 – Customer Relationship Management and Employ Retention Management as Social Support Media

Many smart companies are using social media to better engage with their customers, and some to better engage with their employees. But social media canal so be used to manage customer relationships as well.The social media business model is very simple. Your content is your marketing tool. Sois your contact with people, either directly or watching over the discussions, questions, and interactions around your product, your brand or inside your company.

How They Do It

Zappos empowers its employees through an innovative training program which allows them to go out, via Twitter, and be available to answer questions from people and customers. A whole book could be written about Zappos customer service, and in fact it has, by the employees of Zappos (you can find it on their website). Giving employees technology will not solve your problems; inviting them to be passionate about your business does!

The key issue is trust; good employees find good customers if you teach them. Zappos sees employees as assets and ambassadors, not as a cost of doing business, and it shows. They are not afraid of how powerful their employees can become, and in fact, encourage it.

Many smart companies are improving communication and efficiency within their own company with social media, as a way to improve communication internally. Social media technologies like microblogging enable employees to follow each other for specific projects, and gives management an excellent tool to keep an eye on the growth of the business.

Best Buy claims it has drastically improved employee retention with social media. Technical firms like Cisco and Intel swear by their internal social media initiatives that foster ideas and feedback, while saving money and time. Financial firms like Wells Fargo are seeing better production by employing some social media within the company.

As you can see, there is money in terms of sales, yet also in terms of savings in social media. It is not just an advertising game, and it is one that can change business.

Be Unique

If you want to find the money you have to create your own business model. One that deals with your goals while building a relationship with your audience (and employees) that can reduce expenses and build sales year after year if you manage it right…or better yet, moderate it instead of manage it.

Social media demands a blend of heart and business savvy. You cannot have one without the other; if there’s no business, we should all ignore social media right now (like most of you, right?). If there’s no heart, if no one shows up as customers and employees get bored being employees,nothing really happens. Put the two together and you may find the magic, and profits, you are looking for… because it is the new game and it is happening right now.

Leagues of Their Own

Since the days of the gladiators, sports fans have had an irrational bond with their favorite athletes and teams. Feats of athleticism evoke eruptions of euphoria or a tidal wave of tears as a game’s final play unfolds.These strong emotions create an indelible brand loyalty that remains long after the season ends.

Marketers are learning to exploit these relationships in new ways by expanding the scintillating sights and sounds of sports beyond television highlights to broad online distribution. By enabling fans to personalize their interactions with multimedia content and by bringing the game to their favorite arena – be it a social website or a personalized Web page – sports leagues are creating new online marketing opportunities that are increasing revenue. Typically, online merchandising of memorabilia and apparel is not handled by sports leagues’ online properties and is therefore not addressed in this article.

Sports leagues and their broadcast partners have historically been conservative in granting permission to use video and audio from games online. This idea was based on the belief that making highlights or live broadcasts available dilutes the value of live games and would reduce advertising revenue and attendance. For example, in the late 1990s, local radio affiliates streamed broadcasts of baseball games online for free. But within two years, Major League Baseball ended the process, allowing audio webcasts to be streamed only through the MLB.com website through paid subscription services.

Baseball continues its policy of charging to listen togames online today. Dinn Mann executive vice president of content for major league baseball, says the league listened to fans and for the 2008 season reduced the price of a season audio subscription by $5 to the former price of $14.95. “We tipped our cap to fans who complained,” he says.

Requiring customers to pay for live audio provides an alternative revenue stream, according to Mann. “Having a subscriber base and not relying entirely on advertising is of strategic importance,” says Mann. Subscriptions,which require submitting an email and physical address, provide an avenue for MLB to pursue online and offline direct marketing.

Major League Baseball also charges for video streaming of live games and restricts viewing to any games that are “out of market” from where the customer lives. This protects the lucrative contracts with cable companies and local TV stations that are the bread and butter of their revenue. Baseball game viewing- despite the lengthy 162 game schedule – remains largely a pay-per-view world, Mann says, because “some things are still worth paying for.”

This year is the first time that baseball fans can watch archived broadcasts of full games for free, something that MLB is”experimenting with,” according to Mann. The archived games do not feature advertising, but MLB is “exploring the right relationship,”Mann says.

Growing the Audience

Sports leagues are now taking a page from online marketers’ playbooks by encouraging consumers to personalize their experience in interacting with content. Instead of going the affiliate marketing route, the digital sports media companies are focused on partnering with social networking sites and other media companies that have established audiences of fans. The strategy is to encourage consumers to link to and save content on the sites where they visit on a daily basis, enabling fans to mash-up multimedia content to create something new from existing content. Marketers who join the roster of their online partners will gain a share of the spoils in growing their audience and reaching a new generation of fans.

At the start of the 2008 season, MLB.com announced a partnership allowing Yahoo.com to stream games and highlights.Yahoo will also sell ads against both pay and free content, although thus far the video has been distributed largely without ads. Through this agreement, MLB.com gets access to Yahoo’s large audience and the two companies share revenue from any transactions facilitated through Yahoo.

Professional and collegiate sports leagues have learned that embracing younger audiences on their home turf is the quickest path to rapidly growing an audience. The NCAA, in partnership with CBSSports.com, opened the video streams of its college basketball championship tournament to a wide variety of publishing partners with great success. This enables fans to see the content where they want it delivered.

Just a few years ago, video streams of March Madness games were protected from the majority of the population as if they were enriched uranium. The subscription service generated just $250,000 in revenue annually. But over time online distribution was proven not to be hazardous to the health of television advertising revenue. Subscription fees were replaced with free streams, and then the NCAA/CBSsports.com embraced social networking (See sidebar).

Free live game webcasts have paid huge returns, according to Jason Kint, senior vice president and general manager of CBSSports.com, which manages the online video distribution of the NCAA tourney. CBS Sports created an embeddable media player that contained multiple advertising locations, in-stream ads, and fixed positions sold to sponsors.

Online “consumption is additive and not cannibalistic”of the TV audience of live college basketball, Kint says.The streams were primarily delivered to people who didn’t have access to TV, including office workers. The media player’s “Boss Button,” which instantly hides daytime viewing at the office, was clicked more than 2.5 million times, according to Kint.

People will continue to watch games on TV if they can,he says, as the final championship game was the most watched game on TV and had the smallest proportional share of online viewers. Industry watchers speculate this type of arrangement may lead to new relationships between those who promote other events, such as concerts or entertainment awards shows and affiliates who can deliver a targeted audience.

Content owners looking to maximize their audience for ad-supported content should also spread it far and wide, Kint says. “Don’t expect users to come to a URL – bring the content to them.”

Like its collegiate counterpart, pro basketball also recognizes that working with existing online communities enhances rather than endangers its own digital efforts. For the past two years the NBA has “embraced the idea of distributing content beyond NBA.com” and is partnering with video sharing and social networking sites, according to NBA’s Vice President of Interactive Services, SteveGrimes.

Grimes says working with video sites such as YouTube, Joost and Hulu and social networking sites such as Facebook, Beebo and MySpace has increased fan engagement. The NBA makes highlight videos available to publishers such as Hulu and Joost to strengthen its brand awareness among younger audiences who are consuming a greater majority of their video online.

The NBA is encouraging fans to create their own highlight reels by mashing up content available only on NBA.com and embedding it on their social networking sites. “Fans that love the NBA will come to NBA.com, but those who like it will visit other sites,” Grimes says.Widgets that enable sharing of content are delivering interactivity to sports media. NBA’s widget page (www.nba.com/widgets/) contains embeddable code for showing highlights, up-to-date-scores and photos. The NBA has sponsorship deals with companies including Lenovo and TMobile for some of its widgets to gain revenue from content that sits on other sites, Grimes says. The league has also launched a fan application on Beebo to reach its audience.

“(Sports) sites are starting to realize the power of how content can be aggregated across the Web (using widgets),” says Tad Greenleaf, the media team lead, for Omniture Consulting. Greenleaf, whose company has measured fan engagement for the websites of all of the professional leagues, says that while some leagues have hesitated on widgets and distributing content to other sites, they will do so as long as they can maintain some control.

By contrast, MLB has not released any widgets as yet because “we haven’t reached the point that the content needs to reside on their (fans) pages,” says MLB.com’s Mann. “… We have taken a long term view and not just rushing to the tool of the day.”

Measuring Success

Most of the sports leagues are more concerned about building traffic and fan engagement than selling tickets or jerseys through their partnerships with publishers, according to Ominture’s Greenleaf. His company built a social networking website for the Indianapolis Colts (www.mycolts.net) that greatly increased traffic to the NFL’s Colts site by enabling fans to comment, share content and create their own blogs. The leagues want to measure views of videos to see how they can be used to retain consumers, Greenleaf says. “How much can a piece of content drive people into the site, or are they hitting and leaving?” He says sites want to see if the relationships have “velocity” and are encouraging users to “dive deep” into the sites.

Greenleaf says another strategic play is for leagues to buy keywords about teams, players or about timely topics in the news because the leagues “don’t want them going to other places on the Web.”

“The key thing is that you need to control [the environment] if you are the owner of the content,” says Robert Tuchman, the President of TSE Sports and Entertainment, which develops corporate marketing programs around sports. Tuchman says those who market sports leagues have yet to capitalize on the legion of diehard fans that follow their sport. “They have to get behind their existing market or other organizations will control their inventory.”

Tuchman says while social networking around video highlights is the hot topic today, it should be part of a larger strategy that integrates all media. “Social networking is just one aspect. You need to sell combined media packages” that include TV, print and outdoor, according to Tuchman.

Scoring With Mobile

The days of learning how your team fared by reading the morning paper are long gone. Now fans want to know about scores, injuries and trades immediately, and the league sites are marketing to this perceived need. Through mobile-device enabled websites (WAP) and SMS and text-messaging services, sports leagues including the NHL, NBA and MLB are generating revenue from on-the-go consumers.

For the 2008 season, MLB.com added video alerts to its text alerts subscription service. The alerts highlight great catches or home runs from a fan’s favorite team that will be sent to handsets within three minutes after a play happens. The NBA’s “mobile to go” service offers team and player text alerts as well as a service customized for fantasy league fans.

Quattro Wireless launched the mobile version of the NFL Draft site for the annual draft, which took place in April. The site, which included photo galleries,articles, draft prospect pages, player analysis, and the full draft order, was updated in real-time as the college players were selected by NFL teams.

“The NFL is trying to continue to give their fans more coverage wherever their fans may be,” Lars Albright, vice president of business development for Quattrosays. “The NFL found that the draft is turning into something of an event … It’s becoming a marketable event.”

Sports leagues and news services originally charged subscriptions for notifications to mobile phones and handhelds, but they are starting to shift to ad-supported services, says Eric Eller, senior vice president of products and marketing for Millennial Media. Eller, whose company operates two mobile advertising networks (CPM and CPC) that aggregates demand, says one of the big trends is in-game mobile marketing.

For example, during a game, fans in attendance can be shown messages on their mobile phones that are linked to messages being shown on the big screens that sit high atop the stadiums, Eller says. Mobile phones “will play an important part of sports marketing around events,” he says.

Sports leagues have learned that by making highlights more widely available and engaging on their favorite online destinations, they can grow both their television audience and put more fans in the seats.

Marketing in Action: Q & A with Seth Godin

If you’re in any way involved in marketing – online or off-line – chances are that you’ve read at least one of marketing guru Seth Godin’s best-selling books. He is the author of 10 books, including “Meatball Sundae,” “All Marketers Are Liars,” “Purple Cow,” “Permission Marketing” and “small is the new big.” Armed with a degree in philosophy and computer science from Tufts University, he began his career as brand manager for Spinnaker Software in Cambridge, Mass. Godin is also founder and CEO of Yoyodyne, an interactive direct marketing company, which was acquired by Yahoo in 1998. More recently, he founded Squidoo, a recommendation website, in 2005. Revenue’s Editor-in-Chief, Lisa Picarille, talked with the author, blogger and in-demand speaker about his unique views on marketing.

Lisa Picarille: How would you characterize the current state of online marketing?

Seth Godin: It works! It’s always worked, but now it really does. And, at the same time, off-line marketing is not working. We regularly see the results marketers are getting with big campaigns fail to meet expectations. At the same time, the power of social media continues to expand.

LP: What are the most important components of successful online marketing?

SG: Making something people want (choose) to talk about. They have power, not you. Also, delivering anticipated, personal and relevant messages to those that want to get them. And finally, treating people with respect.

LP: Can you give some examples of companies (and/or people) that are getting it right, and why?

SG: Talk about the importance of social media in online marketing – it’s becoming increasingly clear that messages that spread from person to person are far more powerful than those that come straight from a company. So, social media is powerful, but not if it’s manipulated. Then it fails.

LP: Are there aspects of social media that work for online marketers more effectively than others (Facebook, Twitter, blogs, vlogs, etc.)?

SG: Social media doesn’t work for marketers. Social media exists for the users. Sometimes there’s a positive side effect for a marketer who makes something worth talking about.

LP: You often post multiple blog entries each day; where does all your inspiration/topic matter come from?

SG: I look for things that are broken and then talk about them!

LP: If you were to give advice to someone that is just starting out in online marketing, what would you tell them to do as a first step?

SG: Start a blog. It’ll make you humble. And a better writer.

LP: Your book “small is the new big” is a huge success. But do the “Big Guys” really get it? It must be a whole new concept for many companies to grasp that success doesn’t directly correlate to size. That goes against everything they were taught.

SG: Yes it does. That’s where the meatball sundae comes in. This is a new time, a new era and a new industrial revolution. Not everyone will play by those rules, but that’s okay, because those that do will thrive.

LP: I’m curious what role you think customer service plays in marketing, and are online marketers leveraging that facet to their advantage?

SG: Customer service is part of the product now. So, amazing service (e.g., Amazon) is a valid replacement for advertising.

LP: What role do you think mobile marketing will play in the future of online marketing?

SG: Mobile marketing demands permission. You can’t do it as a spammer.

LP: What are the three trends that online marketers should have on their radar for 2008?

SG: Make great stuff. Get rid of the factory. Measure.

LP: What are the top challenges and hurdles that marketers are facing right now?

SG: This whole thing about “prove it,” and show “ROI” is totally bogus. There’s no ROI on TV or other traditional media. Why do I have to prove that the measured thing is better than the unmeasured?

LP: I keep wondering if marketers will become the new “celebrity chefs.” Do you see a time when marketers will be garnering more PR, praise and adulation than CEOs?

SG: I see a time (now) when the great marketers are the CEOs. Like Steve Jobs of Apple and Howard Schultz [chairman and CEO of Starbucks] and Sir Richard Branson of Virgin Corp.

LP: Is there an industry, vertical or niche that is poised to benefit more than others from the evolution of online marketing?

SG: The only people who won’t want to play in this space are those that make commodities, because it makes it more brutal. The neat opportunity is that almost anything can stop being a commodity (bottled water, micro steel mills, etc.)

LP: What is your vision of online marketing five years from now?

SG: When online is everywhere, all the time, it’s all online marketing.

Video + Twitter = Seesmic

I recently had to stop Twittering. It was awful. The doctors said I would go blind.

Seriously folks, even for as big of an Internet geek as I am, I was completely overwhelmed by the massive flood of 140-character messages from friends and colleagues that bombarded me 24 hours a day. So at the time of this writing, I’m off the Twitter-pipe, for now.

But just when I thought I was out, my friendly editor/publisher of this very magazine suggests that I do my next Innovations piece on another new, hot social tool, called Seesmic. So much for cutting down on my information load.

Talk about brand new – Seesmic only recently opened its doors around the end of November 2007 and proceeded to only invite about 300 users. Luckily, I know people (plus I know how to beg), so I was able to get my hands on an exclusive “pre-alpha” invitation code.

You’re probably wondering what Seesmic even is at this point, and why you should care.

Allen Stern of CenterNetworks. com sums it up nicely: “Seesmic is a video -sharing service just like YouTube, Vimeo, Viddler, etc. The difference is that Seesmic has stripped away much of the ‘extras’ that come with the other services.”

That’s a good start, but I think the best way to describe it is “Twitter plus video.” So instead of writing short text posts about anything you want and sharing it with your friends and followers, you instantly and easily record short videos, which are then shared with the community.

Imagine picking up the phone (you remember those days?) and calling one of your friends with a short thought about something on your mind. Seesmic lets you do that (sans phone), using your webcam, and gives you the option to share that short video message around the globe with your friends and colleagues, in an instant, all at once.

Getting started is easy. If you have an invitation code, you can register and immediately begin recording and sharing videos. You will have to have a webcam attached to your computer, of course. Once your video is recorded, you add a title and description and publish it to the community.

Now your video post is shown to the public, or you can choose to have it just sent to friends. Once published, other users can watch your video and they can reply to your video with their own, and so on “

Browsing the Seesmic site as it stands during pre-alpha is not so great. The Ajax-style community scroller area which shows each user’s video entries is slow and cumbersome at best. However, as mentioned earlier, they are in pre-alpha, so by the time this piece is published it will hopefully be more usable.

Your first video post is up; now what? That’s where the social aspect comes into place. Just like Facebook or MySpace or Twitter, you can choose to “follow” or “friend” other users. By doing so, you’ll be able to “watch” their Seesmic streams specifically.

To explain to you why this is innovative, I asked the exclusive base of testers for Seesmic what they thought. In my first- ever video on Seesmic, I asked the question, “What do you like about Seesmic?”

I recorded the short video (no script) asking for video responses and sat back and waited. A few minutes later, the answers started to pour in. Here are some of them. (Note: These are transcribed from videos in Seesmic.)

“I like Seesmic because it’s an unedited stream of consciousness for people. You get to know the real person.”

“Seesmic is the first application I’ve found that makes video blogging easy. I never really got into video blogging until Seesmic came around; I’m a podcaster.”

“Seesmic is like getting a book from a library with notes from other readers in it. It’s collaborative learning.”

“The reason I like Seesmic is because I don’t have to send you an email. I can send a video reply.”

“I am finding that I am getting to know people better and more quickly. It’s not just me jabbering into the camera. It’s me interacting and listening to others in video form.”

“I’m not sure I love Seesmic. I definitely fancy it. I would definitely sleep with it.”

Although I love to try out new social media technologies and I’m not married to any one, I certainly do enjoy the dating phase. And right now I’m anxious to see where my relationship with Seesmic goes.

Jim Kukral is an online marketing veteran whose most recent project, Scratchback.com, brings the fun back into making money online. Read Jim’s blog at www.jimkukral.com.

Fracas over Facebook and Trepidation with Twitter

Since Facebook was featured on the cover of Newsweek magazine less than a year ago, it’s been called everything from the social platform that would revolutionize marketing forever, to an overblown and overhyped experiment.

Industry watchers say the truth lies somewhere in the middle. Although Facebook certainly offers marketers global reach, desirable demographics and powerful “endorsed by your social graph” capabilities, its recent attempts to transform online advertising have either fallen flat or failed completely.

Facebook’s increasingly worldwide audience is one of its most valuable assets. Its rapid international growth is especially remarkable because the majority of countries – including Turkey and Israel – experiencing speedy expansion do not speak English as their primary language.

More than half of Facebook users are not enrolled in college. The fastest-growing demographic is the over- 25-years-old group. In fact, comScore Media Metrix found that more than 41 percent of all Facebook visitors are 35 years or older.

Facebook has long been considered the social network of choice over MySpace.com for those with higher educations, but recently it overtook MySpace in terms of daily page views and reach, according to Alexa. The boost has been enough to make Facebook the sixth-most-viewed website in the world. Hitwise finds that U.S. traffic to Facebook increased 80 percent from November 2006 to November 2007. However, traffic to MySpace was almost five times greater than to Facebook in November.

Speculating on the valuation of Facebook was an industry pastime this summer until Microsoft bought a 1.6 percent stake in it for $240 million in October, giving Facebook an estimated value of $15 billion.

Critics wonder if Facebook is worth what Microsoft paid for it. Many say there is no way to justify the value unless Facebook can grow into something much more than its current iteration.

But with estimates that spending by advertisers on social networking could almost triple to more than $3.5 billion globally by 2011, it’s not surprising that companies like Microsoft don’t want to miss out on the marketing opportunities.

Many Marketing Methods

Advertisers and marketers have plenty of options when it comes to Facebook. One is “Insight,” which is collected marketing data of social demographics and psychographics that Facebook provides to advertisers in an aggregated, anonymous way.

Another feature is “Pages,” which is the capability of businesses to host pages on Facebook for various brands, products and services. Brands have long attempted to build their own profile pages, with little success of getting past Facebook’s identity moderators.

Advertisers can buy “Ads” that can be targeted based on member profile data such as location, interests and activity. They simply write an ad, decide where they want to drive traffic, choose a target audience and purchase them on a CPC or CPM basis.

“Social Ads” are another option; they pair targeted ads with related actions from a user’s friends – allowing Facebook members to sign up as “fans” of an advertiser and then have their names and profile photos displayed alongside the marketer’s ads on their friends’ Facebook pages.

Online marketing consultant Sam Harrelson says he ran two Social Ad campaigns and spent approximately $500 in all. The return was about $15. He’s disappointed and doesn’t think what Facebook has rolled out so far will ever work or sustain any sort of revenue for advertisers or marketers.

Scott Aikin, president of shopping site Mallicious.com, says that Social Ads are very similar to “Flyers,” Facebook’s original form of ads, which was discontinued in December. The biggest change is that ads now show up in the news feed when attached to a relevant social story, as opposed to only in the left-hand ad space. The news feed, which lets people know what their friends are doing on Facebook and in the real world, is the first page Facebook users see when they log on to the site – making it a key place for ads.

Affiliate Scott Jangro used Flyers to target college-aged women for his Virtual Costume Party app, and says that although the application got tons of page views, they were not highly converting. He thinks it’s possible that Facebook did some analysis on Flyers and slowed down the ones that didn’t have a high CTR, but that’s “just a theory based on that one data point.”

But Aikin says he managed a substantial amount of traffic to his Social Shopping Mall application through Flyers and by advertising on third-party apps. He says that the prices are a little high for the value, but thinks this may change as Facebook brings in more adults.

Accurate Audience

Some think that Facebook’s advertising opportunities are revolutionary. Adware, malware expert and longtime affiliate marketing pundit Wayne Porter wrote a blog on Revenews.com saying that for the first time, advertisers are able to see the interests listed on 50 million Facebook user profiles. “This is groundbreaking if you are a beer marketer, because there are not many places besides Facebook where the average young man writes ‘I like to drink beer’ next to his name.”

Affiliate marketer Carsten Cumbrowski says he believes ad campaigns could be effective for smaller-budget items like ringtones and cell phones because the Facebook crowd skews younger. In general, Cumbrowski thinks Facebook, like most other social networks, “is very limited in terms of the type of ads that work well.”

Others doubt that Facebook is the next advertising gold mine because users don’t have their wallets out on social networks. They are there to socialize. And some think advertisers would have better luck targeting users when they are searching on news or search sites – because it shows intention.

Beaten-Down Beacon

Causing much of a hullabaloo in the news is “Beacon.” It enables the tracking of user activity across a network of external participating sites and then reports that back to Facebook. Activities could appear in the form of “endorsements” (e.g., Harry just bought a book on Amazon), that appear in a Facebook RSS feed area. Facebook said the model was intended to turn millions of Facebook users into a “word-of-mouth promotion” service.

However, in late November, Facebook decided to alter its Beacon feature after attacks from privacy groups and MoveOn.org demanded Facebook stop broadcasting users’ purchases without their consent. The Beacon feature is no longer active for any transaction unless the user clicks “OK” – making it an opt-in, not an opt-out, system.

Consultant Harrelson says Beacon was a horrible idea. “It reminds me of the toolbar apps from 2002.” He believes there were too many concerns over privacy, data ownership and Facebook’s long-term sustainability as a platform “to cause much skirt hiking.”

Another Facebook feature, “Groups,” allows users to organize around a cause or common interest. Groups have several levels of controls associated with them and can be public, private or invite-only, and they can also be hidden from the group directory. Owners can email notifications and communications to all group members.

Jamie Birch, director of affiliate relations for Converseon, a digital Web 2.0 communications agency, says they are looking into having their own group because it would provide an additional venue to communicate with affiliates and educate them on Converseon’s programs.

Facebook Applications

Out of all of Facebook’s offerings, it is the ability to develop applications that is most enticing to affiliates. Launched in May, Facebook Platform allows developers to build third-party applications within Facebook’s user interface. It took off like wildfire because it gives marketers a cheap and effective means of promoting their website to the growing Facebook audience.

As of mid-December 2007, there are more than 10,000 applications, and the most popular apps include Top- Friends, FunWall and iLike when ranked by most engaging as opposed to number of users.

iLike, a music-sharing social network, allows users to list favorite songs and bands on their profiles. It makes money by facilitating purchases of music through iTunes and Amazon. During its first nine months on the Web, iLike attracted 3.5 million users, but on Facebook it added 5 million in just 60 days – proving to advertisers that people are interested in what their friends like.

But the viral success of iLike is not the norm. The dynamic of Facebook’s application marketing has changed because the marketplace has become saturated. Users frequently uninstall applications, and the release of each new application means more applications must fight for attention.

Michael Allen, president of ShoppingBargains. com, a source of coupon codes, released his application for Facebook at the end of September 2007. He says he wishes he had launched it a month earlier during the zenith of user installation and when developers could market their app to an unlimited amount of people. In late August, Facebook changed policies and limited marketing to only 20 people per day.

Allen is hoping to expose Shopping Bargains to new users through Facebook. He wanted to make its deals customizable and easily shareable among friends within trusted social circles instead of forcing people to leave that warm environment.

Mallicious’ Aikin developed the Social Shopping Mall app, which allows users to save coupons they find on Facebook to his site. He explains that if a visitor uses a $5 coupon for ShoeMall through his app on Facebook, Aikin gets 100 percent of that affiliate commission.

Aikin claims he’s glad to have developed an app because it was an interesting learning experience and gave him a better understanding of how to monetize social networks.

Users can find Aikin’s app on Facebook in a variety of ways: through ads, via the application directory, in a Facebook search, on profile boxes, using news feed stories, and on ads on apps that are available through third-party advertising networks. But Aikin warns that even with all the marketing tools available, “the success of your app comes down to the value you provide.”

Jangro, the affiliate who developed the Virtual Costume Party app, had a less favorable experience. He launched his app in October and would “not deem it as successful,” suspecting that current users of Facebook are “not in the buying mind-set.” Jangro thinks that if shopping is not fun or useful enough to gain traction on Facebook, “it doesn’t seem advisable for affiliates.”

Still, Jangro says there is an opportunity on Facebook to build brand, and recommends those who are thinking about developing an app should first focus on one that is entertaining and engaging and then worry about how to monetize it. He thinks if an application name is interesting enough, it could garner adds from curious friends who learn about it on the news feed page.

President of SubmitAWebsite.com Joe Griffin points out there are a plethora of opportunities for advertisers. If a marketer of iPhone accessories wants to reach people on Facebook, he could leverage iPhone Groups, check out the fans of the iPhone Page or advertise based on users’ demographic information or listed interests such as “gadgets, technology, Mac users.”

But many advertisers shy away from social networks because there are reports that they can’t trust what users say in their profiles – they fear people lie about their age or interests.

Consultant Harrelson says he likes Facebook as a social network but doesn’t think it’s a good fit for marketing in its current stage of evolution: “” at this point, we’re still too closely linked to off-line models and metrics that break down when you try to translate them to the social networking world.”

Twitter

Another much-buzzed-about application is Twitter, a free social networking and microblogging service that allows users to send text-based posts of up to 140 characters to the Twitter website via short message service, instant messaging, email or an application such as Twitterfic.

Converseon’s Birch says people feel three ways about Twitter: “You like it, you don’t understand it or you can’t stand it.” Regardless, Twitter has been one of the fastest-growing apps in the history of the Internet since it launched in the spring of 2007.

Marketers such as Birch like Twitter because it offers a new way to share information. It is an additional medium for communicating with his affiliates in the way that they want to be reached.

Affiliates vary in how they get their information: Some like phone calls, some want email once a year, some prefer RSS and some want information as frequently as it comes out. Twitter messages can be received a variety of ways: on Internet- capable devices, the Web IM, and phone – which makes it a flexible solution.

Affiliate managers want to offer affiliates the most up-to-date information in the way that is most convenient for them. The more affiliates know about what is going on with a program, the more they can tailor their marketing, and the more they are able to convert their traffic into sales, according to Birch.

So if an affiliate manager receives a new coupon or hot product from a merchant, they can send a tweet to those who are following the account. For example, Birch could Twitter about a promotion for a specific product – with the message that the first person to sell it gets a 12 percent commission. Birch says that he has incentivized people to use Twitter by offering deals available only through it.

Early Adopters

Another advantage of Twitter is that it is useful for reaching early adopters. Birch says they sent out the Twitter invitation to approximately 100 top affiliates in their 11 affiliate programs and about 40 to 50 affiliates are following it.

Some think Twitter is an excellent tool for reaching affluent, well-educated early adopters and influencers, but not the general public. Brands, such as Carnival Cruises and The Wall Street Journal, are experimenting with it but they only have followers in the double digits – more successful experiments have attracted numbers in the thousands, but nothing significant.

Twitter is appealing to marketers because it and other “presence platforms” are an immediate way for people to communicate their thoughts and ideas. Marketers can leverage it by selling to the user directly or by seeing major trends in the millions of daily public posts.

Harrelson says that as a marketing device, Twitter is great for building brand. “It can be a direct-response-type tool (TwitterLit.com comes to mind), but as a platform it’s much better for getting your name/identity/view/message out there.” Harrelson has been using Twitter since November 2006 and says it has been the source for more network connections than any other activity he’s been involved in, including conferences, email or Facebook. Jangro says Twitter is a good promotional tool for individuals but thinks there needs to be a good amount of people reading the updates. “If you can’t get the users, the marketing value is nothing.” For this reason alone, Twitter may not be on the top of the list when it comes to ways that brands can communicate.

Regardless of which social networking platform online marketers opt to leverage, most industry watchers agree that we are just starting to see the marketing possibilities.

Natural Born Storyteller: Q & A with Steve Rosenbaum

Steve Rosenbaum made his name on MTV and doing documentaries. So it’s natural that he’s into Web video. Rosenbaum is the founder and CEO of Magnify.net, which powers user-generated video (UGV) channels for Web publishers, media companies and video bloggers. The Magnify. net platform searches and sorts virtually all video available on the Internet based on a site’s interest (such as hobbies, politics, music) and engages users to discover, share and rate them for relevancy and entertainment value.

Magnify.net came out of closed beta in January 2007 at the DEMO conference and had 20,000 to 30,000 page views a day. It is now averaging 350,000 and was on target to pass 10 million page views in October. Currently there are more than 15,000 channels for users to discover.

Revenue magazine Senior Writer Alexandra Wharton asked Rosenbaum how he got interested in collaborative media production, how users can provide tools to build vibrant video communities and about the impact video will have on marketers and performance marketers

ALEXANDRA WHARTON: Although user-generated content has been all the rage for the past few years, you have been involved in it for much longer. How did you get interested?

STEVE ROSENBAUM: I’ve always loved hearing the authentic sound of a storyteller’s voice. So before video, that meant autobiographies, diary entries or journals – I found the raw and intimate nature of first-person storytelling very compelling.

I have been a filmmaker, and more of a visual storyteller, but there really wasn’t much of a place for first-person media in film or TV. The gear was just too big and expensive.

Then, in 1991 I got an 800 number and had viewers to my TV show call in and record their story ideas. I put their voices on the air. It was amazing. In 1993, Sharp released the first LCD ViewCam and made it possible to shoot yourself on video.

The result was a show I created for MTV called “UNfiltered.” It was a program that literally put the power of TV in the hands of the audience and let them shoot their own stories. People were hungry to express themselves and become part of the conversation. That’s only become truer today. You can see some of the clips here (www.unfiltered.Magnify.net).

AW: Can you explain how a user could use Magnify.net to create a community?

SR: Magnify.net takes the idea that communities want to communicate and gives them the tools and resources to activate video sharing and engagement within their site. Really any site can do it. If you’ve got a site that is up and running, but you don’t have video yet, Magnify.net will let you choose your URL, and pick topics and keywords that you want video around. Then Magnify.net discovers the video and your community can act as the peer-review rating system.

AW: Do users need to be technically savvy?

SR: Magnify.net is built for site creators who are passionate about their content and community – technical skills are not necessary. All the tools are drag-and-drop simple; there are a few bits of code and you’re done. We have great tech support: FAQs, discussion boards and quick responses to our support ticket system. Other community members are supportive as well. It’s easy, fun and is ready to grow as your skills and abilities increase.

AW: You have been credited with creating a new paradigm for community- created video – did you always see the potential to monetize it?

SR: This may sound simplistic but I see the future opportunities for revenue clearly. Currently there is an advertising system that is optimized to reach a mass audience. TV media is designed to be mass media. But if you look at Google, for example, the real future is in aggregating the niches and providing contextual advertising into those verticals. Just look at the readers of this magazine. Many of them have sites that serve extraordinarily narrow audiences. But they have large defined audiences.

So yes – I think there will be an inevitable shift as more systems can target focused audiences. Content creators and community curators who do a good job creating high-quality audiences will be well-positioned to garner revenue as the spend against community-curated UGV increases.

AW: How does Magnify.net help serve those who want to build a community around a very niche site?

SR: There are two models: those who want to start from scratch and build a site, and individuals who have already built a site and want to add video. Two examples of this are PrettyToughTV.com and Radio Controlled Universe, respectively.

Pretty Tough TV [www.prettytough.com/video.php] is a network of Magnify. net sites created on Magnify.net that serve serious female high school athletes. It’s the work of a mom and her two daughters in Los Angeles who have a passion for sports. Magnify.net allowed them to build 14 channels into a sports network that they run out of their den.

On the other hand, there is the site Radio Controlled Universe (www. rcuvideos.com), which had a successful website with 300,000 registered users. When they built their Magnify.net channel, hits on the videos were through the roof. Now they’ve got thousands of video makers and watchers and it is growing every day.

AW: Can you explain Magnify.net’s sites’ different types of advertising, including Google AdSense ads and integrated ads?

SR: We’ve built a solution that has three user configurations: advanced, moderate and hobbiest. The “advanced” users are going to claim their own inventory. That means banners, in-page display, CPC, CPA, text, and click-to-play video space on our pages. They’re going to bring their own ad relationships with CJ, LinkShare, Performics, Google AdSense and Amazon – whoever they want. They’re getting paid directly so there’s no waiting for us to reconcile and no crossed wires over payments. This is ideal for advanced affiliate marketers.

For the “moderate” users who want revenue but don’t want to be spending time on optimization and multiple ad network management, we offer a one-click integration with AdSense – just put in the AdSense ID and Magnify. net will do the rest.

And for the “hobbiest” that is using Magnify.net for the occasional video, you don’t need to claim any ad space at all. Odds are that for the casual user sites, they are not going to be participating in the ad network. Of course if traffic grows, they can claim their 50 percent of the traffic with AdSense.

AW: Can you talk about the AdShare Network that launched in August, which aims to allow site creators the ability to broker more lucrative deals with advertisers?

SR: For Revenue readers, our AdShare network is really the most interesting alternative. It costs nothing to build a video page and gives 50 percent revenue share.

We think that empowering our users to make their own decisions about content curation is smart for all. YouSurfTubes is the world’s largest collection of surfing videos [www.yousurftubes.Magnify.net/]. Its site editor, DC Smitty, knows more about surfing than we could ever hope to. He also knows more about surf products and surf advertising. We think that over time, the more our partners fine-tune their pages to increase revenue, the more we will learn from them and improve the targeting and contextual relevance of our ads on those pages as well. Relevant ads serve everyone – sites look better when all the ads are appropriate and useful.

AW: Can you explain how to create a branded TV channel that pushes content through Facebook?

SR: We think that in some ways, Facebook is the future of network television. It’s the most direct way to plug in to the zeitgeist of what your friends think is cool, valuable and entertaining. We think that Facebook groups could be a launchpad for all kinds of things. Right now we’re learning a lot with our current Facebook application. It allows users to take their Facebook profile and use our technology to discover videos that meet their interests and share them with others on their profile page.

AW: How important is video to the performance marketing model?

SR: First, we believe that video will be ubiquitous on the Web within 24 months. That’s a sea change in the way people will be presented with information. Second, we think that the integration of UGV into content-oriented sites is inevitable and important. It means that publishers that have been marketing themselves as “speakers” will have to rebrand and rethink their offering and transform themselves into conveners of conversation really fast or miss out.

So performance marketing is logical as a partner to UGV because not all UGV is useful or valuable. And not all marketing messages have value. Now, customers get to vote – literally – and support marketing that supports sites they like simply by engaging in commerce within a context they want to support. This could be a powerful shift.

AW: If businesses are not currently using video, how do you suggest they dip their toes in the water?

SR: With both feet. There’s little to lose right now since it’s early. Customers aren’t yet critical and therefore won’t punish you for a misstep or a test. That doesn’t mean you can afford to have inappropriate content on your site, so curation is critical and essential. But it doesn’t need to cost a fortune. It can be as simple as adding video to an editorial product, getting some footage at a trade show or inviting your customers to videotape themselves using your product. But it needs to be interactive and enjoyable.

AW: What does video bring to online marketing that others can’t?

SR: Video is emotional – it can touch you in ways that text and photos cannot. It’s immersive – it can draw you in and take you on a journey. Video is convincing – you can convert people with a compelling pitch. But all of these things mean that you need to strive for authenticity and honesty – and really make an effort to go beyond marketing and into genuine storytelling. The Web is going to bring new tools to the experience as well – you’re going to see branch-and-tree video tools that allow viewers to respond to a story and have the video be responsive to that input.

For example, a company that’s touring a potential buyer through new construction of a high-rise could emphasize the playroom for families, and the neighborhood’s nightlife for 20-somethings. Old, one-size-fits-all video just won’t be enough, and that is what’s going to fuel innovation.

AW: Where do you see online heading in the next two years?

SR: I think the Web is the launchpad, not the destination. I think you’re going to see Web-programmed video on your flat screen [IPTV], and the iPod and iPod devices are going to be huge, and the iPhone will spawn a huge number of imitators.

The Web will be the engagement platform – it will be the place where you interact and “program” your video. I think that you’ll see RSS streams of your favorite Magnify.net channel on your TV within 12 months. That’s huge for marketers and users alike.

From a quality perspective, H.264 [a video compression standard] will mean a major jump up in quality. Not HD yet, but video on your TV that is looking good from the Web. For those of us that suffered through streaming video the last time, this is a major shift that’s been a long time coming.

In terms of revenue, you’re going to see two major changes. First, there are a ton of unhappy TV advertisers just dying to get their ads on the Web. It’s been a chicken/egg scenario – what comes first, the ads or the content to place them around? Now we know: Content is happening, and ads are next.

The second major change is the nature of who uses video for ads. We think of video ads as the realm of the big boys: national advertisers with big budgets. But that was back when making video and editing were expensive. Now with a digital video camera and a Mac with Final Cut Pro, you can whip up a great video ad for a couple hundred bucks or less. So as marketers figure this out, they’re going to jump to video in droves. Will it work for everybody? Certainly not. But for some categories it’s going to be huge fast – it’s a very exciting time to be in this space.

AW: What would you say to CMOs of big brands to convince them that video must be part of their marketing efforts?

SR: Most big-brand CMOs already know video works – they’ve been buying TV for years. The thing they’ve been facing is that there’s been a huge defection of the hard-to-reach consumer from TV to TiVO, DVD, the Web and other mediums that don’t do well using interruption advertising, so CMOs need to rethink how they talk to these customers. We don’t want to have our time wasted; we want to be educated and informed.

Community content is a powerful new tool that is just evolving – and it’s much nuanced, meaning that the line between education and evangelism is hard to walk. I think you’re going to see much more of what Seth Godin years ago called permission marketing – using video to deliver serialized messages to people who opt in. Today what a smart CMO should be doing is experimenting, taking moderate risks in a number of different platforms. The good news about all this is that it’s all measurable, so in the end, the new video-based solutions that will rise to the top will be the ones that work both for users and marketers.