This week’s Sunday Times has a whole page article entitled “Can Facebook Be Worth $10bn?”
If it’s true that Microsoft has offered $500m (£247m) for a 5% stake, then it must be worth $10bn (£5bn) because someone is prepared to pay it. But isn’t it ironic that Rupert Murdoch was sneered at when he paid $580m (£287m) for the much bigger MySpace in 2003? His investment appears to have increased over 20-fold inside of two years.
In the case of Facebook, the two aggressive, monster players in this market – Microsoft and Google – regard $500m (£247m) as loose change. After all, their market capitalisations are both worth well in excess of $100bn (£50bn).
Regardless of market hype, these are serious, big businesses that ought to be highly sustainable, but they have to be ready to move their armies into position whenever they see a threat. So they are watching the social networking phenomenon like hawks – and they are watching each other extremely closely too.
If today’s new-media owners regard social networks as a potential threat, then clearly they should be of concern to traditional-media owners, such as television and print, too. But what does it mean for marketers?
Everything happens faster now, so identifying the winners and losers is much more difficult. Since last December, when Piczo was being hailed as the new success story in the UK, it has fallen by 40% (according to Nielsen/Netratings), while Bebo has risen by 60%.
Confusing? Well, it doesn’t have to be. Marketers should no more beat themselves up about their inability to keep up with the latest in social networking than their inability to keep up with teenage music tastes.
They need smart, trustworthy people advising them, who know the market, and are living this stuff every day – who, therefore, have a good chance of spotting the winners and losers. Never has it been harder to separate a trend from a fad. This does not mean avoiding risks – it means being very flexible, experimental and taking controlled risks all the time. If you don’t have an environment where mistakes are forgiven, now is the time to change it. Companies with a blame culture, a fear of failure or which are strong on schadenfreude aren’t going to cut it.
The marketing director has to be concerned with the big picture – but what is the big picture? Social networking and blogging are all forms of word of mouth, which has always been the most powerful form of marketing.
Historically, it has not been scaleable – but now it is and marketers ignore this at their peril. Many suppliers in marketing services will see this as a threat. After all, word of mouth should be very inexpensive, and that’s not good for business. The approach needs to be subtle, sensitive and concerned with empowering, rather than controlling consumers. This is especially tough for those who have grown up in a different “command-and control” era.
This does not mean that ignoring the conventional media – big, “appointment-to-view” programmes will remain very important to large, established advertisers. However, the role of traditional media is being diminished, and it is important to understand their more restricted role in this brave new world.
Not all our language or thinking needs to change. “Engagement” is a word that has been in use in media and marketing circles for at least eight years – long before the phenomenon of online social networking arrived. This was because, even then, it was becoming easier to avoid ads with the explosion of media choice.
The marketer needs the skills to engage with those at the heart of the social networks. Out of the 60 million unique MySpace users in August, only a small proportion will be driving it – most will be onlookers. The ones to have on-side are the connectors with very broad social networks who love to talk. They are inquisitive and desperate to keep up with what’s new and interesting. Procter & Gamble, in their Tremor division, identified this group some time ago and described them as “trend-spreaders” not “trend-setters”.
Perhaps an even more important word than “engagement” is “inclusive”. Most people under the age of 35 want to feel included – in fact, they expect to be included – and that expectation can be successfully harnessed. With so many communications tools at their disposal, this is the era of people’s media, as well as commercial media. But there are as many threats as there are opportunities.
When the marketing director has brought in and harnessed the young talent to engage with the people’s media, he or she, personally, should be concentrating on something else – the customer experience.
There is no hiding place now – every bad experience can be communicated immediately and endlessly debated online. There is no point in getting really close to consumers with your marketing unless you are prepared to respond to them – and that’s more a matter of attitude than structure within most organisations.
Who is better placed to align the organisation with the customer than the modern, career-minded marketing director
Chris Ingram is founding partner of Ingram