Tag Archives: measurement

RE: Marketing, Innovation and the Creation of Customers

This post is a response to a fascinating post by the remarkably thoughtful Venkatesh Rao at RibbonFarm. Trying to summarize his post would take an entire post in itself, so I’m simply going to respond and see where the conversation goes.

My only quibble with Venkat’s post is the description of marketing as inherently a numbers game, “by definition”. My argument is that we have distilled marketing into a numbers game because that’s a convenient way to reduce perceived uncertainty and market risk. The reason marketing and engineering look so much alike is that businesses have ~made~ marketing more like engineering, because engineering customers with the efficiency of a machine is far more attractive to the numbers-oriented inmates running the corporate asylum. The average marketing executive answers far more to the CFO these days than they do to customers.

The problem with the marketing funnel as the defining metaphor for marketing is that it’s a machine of efficiency, not effectiveness. It’s like a speedometer–knowing how fast you’re going is great, but it doesn’t tell you if you’re driving off a cliff. You can be incredibly efficient in marketing going entirely in the wrong direction. Which is why partnerships between marketing and engineering, as Venkat points out, are critical. But a more perfect partnership for the purpose of simply creating a better machine to manufacture customers is still missing, I think, the point that the social media revolution signifies.

Let me say clearly, first, that I don’t think social media itself is the point–or the really even the revolution that matters. It’s an indicator of something far deeper at play, which I’ll summarize now, but which requires a more lengthy post to give it the kind of justice Venkat has given to the topic in his post.

Underneath humanistic rhetoric about authenticity, the creation of a customer is an act of control…This explains why customers need to be created, and what innovations really are. Innovation isn’t about creating novel products or services. An innovation is a stimulus that causes a novel and stable pattern of human behavior to emerge.

I think that’s a perfect description of the elevation of what I call “The Magnificent Machine”–the distillation and abstraction of business as a self-substantiating institution, connected to society only through the lens of predatory economics. But business has *always* been a social construct as well. The marketplace is social. Business ecosystems are social. Deals are made and brands are built on trust, which is a social contract. And over the past 100 years, business has arisen in many ways to become the defining construct of human and social identity: More people know themselves by what they do for work, what they buy, what they wear and drive, than by the more traditional frameworks of religion, geography and clan.

But business as a social construct is not convenient for businesses. It’s far more convenient, far less risky, to manufacture customers than to participate meaningfully in a customer community–to the degree that most businesses even accept the importance of the social environment, it’s used as a tool to exert leverage in the customer manufacturing process. As a fungible commodity, customers produce greater short-term margins if you can jettison all that messy social contract stuff labeled as corporate responsibility, green business, not to mention all the costly legislation that protects consumers. The problem is, customers are not isolated patterns of human behavior–they interact. They share impressions, compare product notes, and through the growing accessibility to social networking technology, exert a greater influence over brand reputation and purchasing decisions than the marketers trying to influence them in an “act of control”.

My argument is that what’s driving this change is not social media technology–that’s the enabler. What’s driving it is a fundamental response to generations of being preyed upon by business as a fungible commodity–of being targeted by relentless campaigns that reduce the meaning of the social/business interaction to a process of efficiency that’s convenient to businesses, but not to their customers. Why else have we created do-not-call lists, spam legislation, and government programs for consumer protection? In the simple terms, “consumers” are tired of being minimized in the social contract with businesses. Most would not be able to articulate an intention to change the equation, much less identify any chain of causality between their behavior as consumers and the outcomes shaking so many stalwart markets. They just know that listening to commercials sucks–so they buy a Tivo, or watch more content online. They just know that the fun of buying a product is often killed by finding out the product is junk–so they go online to find out what other people have experienced with the product before they open their wallet. They just know that the realm of social relationships defined by school, work or home are now only slice of what’s available–so they connect with distant friends and new colleagues they meet online to expand their base of knowledge and engagement, much in the same way I’m interacting with Venkat now.

This is a ~real~ phenomenon, and again, the technology is a great enabler, but the drive is more fundamental, more human, more social, than just media. If the relentless drive among humans for understanding, for finding meaning in our lives, can give rise to religion, philosophy and science, why would it not also generate a response to a social and economic equation that has minimized the essence of being human to a stream of consumption behaviors manipulated for the benefit of business?

In sum, businesses are motivated to create the most efficient machine for manufacturing willing customers at the greatest profit. Unfortunately, that motivation is predatory by definition to the people framed as the target consumers. Technology enabled businesses to sway the equation in their favor, by using it to improve the cost of production, to enlarge markets with the technology of transportation, and to flood those markets with carefully choreographed messages to influence purchase decisions. As long as all that technology was expensive, it was an equation defined by business control. But as technology has been increasingly commodotized, consumers have found the means and the opportunity to stem the overwhelming influence of business–a reaction I’m arguing has a fundamentally social root. It’s messy and chaotic, but trends are emerging that show how new lines of power might emerge.

I don’t think any of this minimizes the importance of numbers-driven marketing–businesses are still in a game of survival with aggressive competitors, and they need efficient processes to succeed. But I think that’s only half the story businesses need to understand in today’s changing environment. Customers are not isolated and mass-replicated patterns of human behavior. They are communities of real people who function increasingly as self-organizing systems of market influence, and engaging them profitably and sustainably means a lot more social participation in the process of marketing and innovation than asymmetrical and efficient acts of control.

Brilliant post, Venkat. I agree with so many of the details you describe–and wish I did them better justice with a more refined and less rambling response–it’s only the abstracted picture of where those details drive most businesses that I offer a counterpoint.

Update: In one of the funniest emails I’ve gotten in a long time, a company just notified me that my discussion of the concept “manufacturing customers” violates their trademark, so in the future, they’d like me to know I’m required to capitalize it in acknowledgment of their ownership. I would post the name of the sender, but a) it was a private email, and b) I don’t want to advertise the company. However, if they’d like to post their email as a comment, and make good on their offer to “join the conversation” maybe we can start with a discussion of the fair use doctrine.

Measuring Social Media

I want to go a step further in breaking down the dialog over social media metrics, in the wake of the Factiva roundtable. The questions I asked yesterday were what should be measured, why should it be measured, and what will the impact of those measurements be. Let’s start by looking at who wants to measure social media in the first place.

When a social media channel first takes off, the measurements that are important first are those that are relevant to the Content Provider. Take Marketonomy. I want to know what kind of people are reading my blog. I want to know what they find interesting. I want to know how to better target my content to build a better relationship with readers. Currently, those metrics are not very robust. I know how many people subscribe to my RSS feed, but I know next to nothing about them. I know which of my posts get read the most, but with the small ratio of comments to readership, I’m not always certain what drives those posts to the top. The metrics I wish I could get today are demographic. I don’t need to know *who* my readers are personally, but I would like to know have a general profile of their professional background and areas of interest.

Once a social media channel has some traffic, new measurements come into play. If you want to bring on advertisers or sponsors, you need to demonstrate the value of your channel over others. In print, you point to subscription demographics and circulation numbers to justify ad pricing. On the Web, you’ve got traffic. Of course, these metrics are open to gaming. Publications find creative new ways to inflate their circ numbers, just like Web sites find creative ways to inflate traffic. Content providers package pretty numbers to push up ad prices, and ad buyers poke holes in those numbers to push the price down, and the same game will certainly develop with social media.

Just like the current dialog in Social Media circles, traditional media has mounted periodic campaigns to introduce new metrics that justify more ad spending. I once worked for a magazine that tried to measure pass-along rates, and I’ve put the same concept into play with email campaigns using source codes. But these metrics are usually a sign that the provider doesn’t have leverage with buyers, which means they probably don’t have high demand. Just as traffic/circulation has been the bottom-line metric for traditional channels, I would argue that it’s going to remain the primary metric for most social media channels too–the more traffic you have, the more demand there will be to reach your audience, the less granular your metrics will need to be, simply because you’ve got waiting buyers.

But the complicating factor in all this is how a channel grows and maintains a robust audience, because once it reaches critical mass, it has a hungry mouth to feed. You’ve got to find worthwhile topics to cover, people to interview, or at least engaging people that will drive dialog and audience participation–and if they’re really that interesting, other people will want them too. That’s where other players in the value chain for delivering content often come into play, and other metrics matter to them. Whether you’re dealing with an interview prospect’s secretary, or an executive’s PR rep, or even if you’re relying on users creating content, the question is: Why should anyone bother driving content into your channel? The answer is that there must be some value they can derive from it, and one of two metrics will demonstrate that value.

For anyone actually engaging in social media, the important metric is likely Participation. The more people are engaged, the more people I have to talk with, or at least listen to. For anyone interested in getting content in front of your audience, like a company or PR group, the important metric beyond raw traffic is likely Influence–which is the power to impact the opinions, attitudes and behaviors of a target audience. In Social Media, traffic, participation and influence are certainly related, although the relationship doesn’t seem all that clear yet. You can have high traffic and low participation, and still have signficant influence–just as the Wall Street Journal has for generations. You can generate influence with low traffic and high participation–just as my former job at the CMO Council did with programs engaging a small group of leading marketing executives.

I’ll dig into the dynamics of influence more next time. For now, I’ll just repeat the argument that if you have significant traffic, you’re going to have high demand to reach your audience. More granular metrics will help you raise the value of reaching your audience, or compensate for a lower traffic numbers than competitors.