The Coming Decade (Part 2): Social Media – What Every Business Needs To Know
Tuesday, February 2nd, 2010
The last decade was defined by search. The next decade will be defined by social media. Social media is penetrating the mainstream worldwide. It is delivering on the promise of the web, to make accessible and to connect everything and everyone.
For far too long businesses have operated like the “Television” model – they decided what you watched, the time you watched it,they told us that it was good and we had to accept it. That is how the advertising industry works to this day, same for newspapers,movies, music, banks and many other businesses in all industries.
The VCR first attempted to change this – users could time shift their viewing by recording a show and watching it when they wanted to and as many times as they wanted to. However, the VCR did not have a mechanism to connect users so the impact on the television model was minimal if any. Today things are different everyone is becoming connected. Consider this, India is poised to go to 11-digit mobile phone numbers sometime this year (2010). India’s combined operators have issued over 800 million phone numbers to date. It won’t be long before they hit a billion phone numbers. One billion connected who understand that the information flow is not one way. Hence the foundations of the social web are already in place. So what are the implications for business?
Social media is putting the power back in the hands of the user. Users understand they have choices, they are aware of more things, they have a better grasp on global issues and hence they are making smarter choices. Users cannot be sold to like before so businesses have to figure our new ways of selling, marketing and branding on the social web. The “television” model will not work anymore. You can already see it happening in music, movies, newspaper and it is moving like a force into every vertical.
Even the television industry is being disrupted – remember the Jay Leno/Conan O’Brien fiasco – an ad agency advised them that if they moved the Jay Leno show to 10 pm they would get an extra hour and so they could all make more money selling advertising. It backfired. Users will not be sold to anymore.
The US market is completely saturated in practically every industry hence businesses will have to look to new markets for growth. Given the new market dynamics businesses have to rethink even the basics such as their product design, messaging, delivery and pricing. It cannot be easily done by hiring an ad/design agency in a foreign country – the rate at which users are adopting social media the agencies are completely out of touch when it comes to helping you – because their business model is based on the “television” model – your company needs to start walking and talking what you customer are walking and talking. That is why your company needs to own the social media process and why social media should be a key component of your marketing strategy.
PepsiCo CEO Indra Nooyi understands the new market dynamics very clearly. She knows that the company’s new customers are not in the US. The average American drinks 800 soft drinks per year compared that with 35 per person in China. She also knows that you cannot reach the global audience through one medium. That is why she decided not to spend $20 million on SuperBowl ads, which has a very small audience and decided to spend it on social media marketing. Also, SuperBowl is a one time event whereas social media is on going. She totally caught her competitor Coca Cola off guard – they were listening to their agency that probably said “We could get that SuperBowl spot for less now that Pepsi has backed out and probably win the award for best ad agency for SuperBowl”.
Social media is also changing the process of getting your product to market. It is becoming incorporated into the product innovation lifecycle. These tools help business to listen to their customers and incorporate input and feedback from employees, suppliers and partners.
Social media is not a backroom “black magic” tactic anymore. It is real. It has moved into the boardroom, like at Pepsi. As more users connect via social applications like Facebook, where the conversations are happening, increasingly it will be where the purchase decisions will be influenced. Unlike the “television” model, with social media you can get engaged with your customers and it is better to engage sooner than later.
