The Praized Blog

Was reading this morning a great analysis by Mathew Ingram about a New York Times article describing the way “young people” get/read their political news. It’s clearly more and more about word of mouth and your social graph.

As Mathew says: “It’s not that there is anything earth-shatteringly new in the piece, mind you. But I think it does a great job of describing how digital “word of mouth” — in other words, social networking of all kinds including Twitter, IM, Facebook and so on — has become a dominant means of news delivery for young people in a way that I’m not sure old geezers like myself quite grasp, no matter how often people describe it”

The Times sums it up: “In essence, they are replacing the professional filter — reading The Washington Post, clicking on CNN.com — with a social one. (…) In one sense, this social filter is simply a technological version of the oldest tool in politics: word of mouth.”

What it means: I remember when I joined Yellow Pages Group in 1999 (called Bell ActiMedia at the time), old-timers used to tell me that the biggest “competitor” to directory publishers wasn’t other directory publishers (or Google or other online directories), it was word of mouth. People have always asked their friends for recommendations and it has always represented a large volume of local search “queries”.

Admittedly, news and local search are not totally the same. Local search information is usually more of a pull (i.e. someone looking for a product/service) than a push (i.e. someone broadcasting information about a new merchant they found). It’s also more “evergreen” than news, i.e. unless you’re a total local merchant junkie, you don’t need to learn in a timely fashion about a new restaurant opening in your neighborhood. But there’s the seed out there of future consumer behavior which could create a great disruption effect on local search. Who knows? It might become valuable to broadcast information about your favorite local merchants. As I estimated in this blog post, there’s potentially 7 more times online local conversations than online directories searches currently. Anyone who successfully harness these conversations will create very valuable local search inventory.

To finish this week’s series on business models atomization, I’d like to address the situation where media has been completely atomized. I think that happens when individuals start becoming media themselves, broadcasting “news” through their blogs, Twitter tweets or their Facebook status updates. That concept, explored last summer in my famous “I am Media” blog post really resonated through the blogosphere. What I missed at the time was the corollary:

If I am Media, I am also Advertising.

I remember being very annoyed by the first Facebook Beacon implementations. I gave them a good scolding and wasn’t happy with the way I was depicted, becoming a “Blockbuster spokesperson”. My friend Perry challenged us to think further about these experiments. In my blog post comments, he said: “In order for them to win, urgently, they need to push the envelope on new ad product models. I think the model of stepping “meaningfully” over the line and then back gets them more forward motion.” He was right but I’m not sure the Facebook folks have learned anything yet…

Facebook Beacon is an amazing idea but it’s really badly executed. In a world where individuals can become media, Beacon could be the “AdSense for People” but it needs to be completely reversed.

Facebook should:

1. Give user control over which ad appears in their newsfeed (i.e. which brand/service you’re endorsing) and when it appears.
2. Share revenues with the user using a performance-based model.

There are obviously a couple of massive challenges with this model. The first one is Facebook does not yet have the inventory of word-of-mouth ads to make it really interesting for users. The second one is “spwom”, individuals “selling out” to brands they don’t believe in, which would be the equivalent of spam for word-of-mouth recommendations. But I believe there might come a time when recommenders get rewarded for talking about their favorite products or places…

Yesterday, I wrote about what I thought were the most important news in 2007 in the local and social media space. Today, I’d like to propose my 2008 predictions, an always interesting exercise.

1. The year of Identity. One of the big challenges of social media is having to sign-up and add your friends in a multitude of web sites. Expect 2008 to be the year where this problem becomes a major issue and gets potentially solved through identity interoperability initiatives like OpenID.
2. Social is now everywhere and open. The last few months of 2007 have set the stage for a very social 2008. Any new major initiatives will include social elements by default and will use existing standards like OpenSocial, DiSo or Facebook.
3. Fragmentation & personalization of media. Given the lower barrier to entry for new local/social projects, user and advertiser fragmentation will continue to accelerate in 2008. From a user point of view, this will lead to new personalization tools allowing consumers to create their own unique media view.
4. The year of ad networks. As a corollary of point #3 above, given that user fragmentation will accelerate, an increasingly large number of ad networks will pop-up to aggregate consumers into a critical advertising mass. It’s all about advertiser defragmentation. Directory publishers will want to become ad networks themselves to push their ads outside of their core destination sites in order to increase their total reach.
5. Content wants to be distributed. That’s the second corollary of point #3. Increasing user fragmentation requires content producers to atomize their content and push it in the fabric of the web. Think of your business in terms of content units or atoms (some inspiration came from Clay Shirky’s “fame vs. fortune” post from 2003).
6. Social graph-based search. I am now a firm believer that social graph-based search will be the future of search (including local search) and we will see this concept gain some tractions in 2008. I think humans will always trust recommendations and advice from people in their “social network” (friends, family, colleagues, known experts, etc.) more than a machine. Online word-of-mouth is the biggest local search opportunity out there.
7. More M&A activity in local. 2007 was quite active from a local M&A (Idearc buying Infospace’s directory business, Citysearch/InsiderPages, AT&T/Ingenio, Marchex/Voicestar, etc.) but I expect 2008 to be even more active given i) the need for directory publishers to execute on their strategies and ii) the need to aggregate traffic to increase advertiser ROI.
8. Mobile: the year before the big bang. 2008 will be the year where a solid mobile development base (open devices, networks, platforms) is established leading to an explosion in 2009. Watch for the Google spectrum bid in January.

While the blogosphere is slowly discovering what Facebook Beacon does, MoveOn.org, a US advocacy group, has launched a campaign against the new advertising system. They’re asking users to sign a petition and join a Facebook group to protest what they call a “huge invasion of privacy”.

With the help of this blog post from Charlene Li (Forrester Research), I’m starting to understand more what the Beacon ad product does. Charline explains that her husband bought a coffee table on OverStock.com and that when she next logged in to Facebook, she saw this mention at the top of her newsfeed.

She explains that “Facebook Beacon is merely a small piece of script that allows the partner site to put a cookie on your browser. So when I bought the table, an Overstock cookie was created, which then transferred the information to Facebook. Facebook then checks to see that the same browser is logged into Facebook, and shows the information.”

Many in the blogosphere are concerned by this new ad product. In response, Chris Kelly, chief privacy officer of Facebook, said in Wednesday’s Wall Street Journal that “Facebook is transparent in communicating to users what it is tracking. When a user visits an outside site and completes an action like buying a movie ticket, a box shows up in the corner of his Internet browser telling that person the outside Web site is sending that information to Facebook. The user can opt out by clicking on text that reads “No, thanks.” If the user doesn’t, the next time they visit Facebook, the user will see a message from Facebook asking for permission to show the information to their friends. If the user declines, the information won’t be sent.”

Phil Windley from ZDNet has a great conclusion to the whole fracas: “Facebook realizes that simply relying on the targeted ads of the past won’t garner much attention and that they have a tremendous asset in the social graph within their system. Facebook Beacon is an attempt to capitalize on that by using the social graph to make advertising more useful for the customer and more profitable for Facebook. Unfortunately, they got it wrong. Instead of advertising, they should have focused on recommendations. No one is going to say “please show me more ads based on what my friends like.” But plenty of people will ask a friend to recommend digital cameras or books to them.”

Update: Peter Kafka (at Silicon Alley Insider) offers Facebook two solutions to resolve the situation. “The short-term solution: Turn off Beacon until you can make it fully opt-in. The long-term solution: Let users sign up for Beacon via Facebook, and give them a reason to do so.”

According to Keller Fay Group (via the Center for Media Research), there are 3.5 billion brand-related conversations per day in the U.S. 8% (280MM) of those are happening online. Let’s speculate for an instant. If 25% of those online conversations are local in nature, that means an impressive 70 million local conversations are happening online every day in the US in e-mails, instant messenging, blogs, forums, social networks and other online communities.

Let’s equate these conversations to local searches and compare them with ComScore “IYP” searches. According to this article from SearchEngineLand, these totaled 808MM in the US in Q1 2007. In a three-month period, 6.3 billion local conversations are potentially happening online. That’s 7 times the total “IYP” searches universe! And a whopping 35 times the total of the current leader, Yahoo!

What it means: for anyone who doubted that local search was very fragmented online, I think these numbers speak for themselves. In addition, the ability to deploy a social media strategy for anyone operating in that space is key.

While browsing through this morning’s interesting web links, I found a praized-worthy combo of articles. The first one talks about lawyers advertising in business directories:

“The Yellow Pages AssociationT (YPAT) recently announced that, according to a new Attorney Advertising Perceptions Study from Wiese Research Associates, consumers have rated Yellow Pages as the most acceptable form of attorney advertising. Almost half of respondents said they would use the Yellow Pages to select an attorney if they were not familiar with or referred to a particular attorney. So, it’s no surprise the “Attorneys-Lawyers” Yellow Pages heading ranks sixth out of more than 4,000 headings and generates nearly 290 million references annually.” (via the West Virginia Record)

The second is a letter from a reader of the Sarasota Herald-Tribune talking about their new Superpages directory:

“My new Verizon phone book arrived, and in leafing through it, I discovered that lawyering appears to be the biggest business in town. Before I even cracked the covers of the new directory, I was exposed to five attorney advertisements on the cover’s front and back and on the binding and bottom. Inside, many residential pages had ads for attorneys. And the Yellow Pages? There were 87 pages for attorneys but only 45 for restaurants and 42 for physicians.” (source: HeraldTribune.com)

What it means: this is what I call a great vertical for directory publishers: high usage and advertising revenues. But a comment from one of the lawyers interviewed in the Record makes me think this heading might come under assault by social media soon. “Most of my clients are referrals and former clients” says Charleston attorney Rusty Webb. If the web is truly becoming a big word-of-mouth machine, usage might migrate to social media in the future and this might impact revenues if publishers do not have a social media plan in place.

(Flickr picture by brookenovak)

Sock Puppeting: assuming a false identity online to promote a product or company online.

(in word-of-mouth lingo, as seen on MediaPost.com. Flickr photo by greefus groinks )

“The online culture is a recommendation culture.”

Greg Clayman, Executive Vice President of Digital Distribution and Business Development, MTV Networks speaking at the Mobile Internet World conference (seen on Mark Dixon’s blog and in Montreal’s Le Devoir).

Facebook just announced their new ad product. Highlights from the press release:

(…)Today, Facebook Ads launched with three parts: a way for businesses to build pages on Facebook to connect with their audiences; an ad system that facilitates the spread of brand messages virally through Facebook Social Ads™; and an interface to gather insights into people’s activity on Facebook that marketers care about.(…) Just like a Facebook user, businesses can start with a blank canvas and add all the information and content they want, including photos, videos, music and Facebook Platform applications. (…)

Advertising messages will gain distribution through what Facebook has termed the “social graph,” the network of real connections through which people communicate and share information. When people engage with a business’ Facebook Page, that action will spread information about that business through the social graph. Users can become a fan of a business and can share information about that business with their friends and act as a trusted referral. Facebook users can interact directly with the business through its Facebook Page by adding reviews, writing on that business’ Wall, uploading photos and in any other ways that a business may want to enable. These actions could appear in users’ Mini-Feed and News Feed (…).

(…) Facebook gives marketers valuable metrics about their presence and promotion on Facebook. Facebook Insights gives access to data on activity, fan demographics, ad performance and trends that better equip marketers to improve custom content on Facebook and adjust ad targeting. Facebook Insights is a free service for all Facebook Pages and Social Ads. (…)

More details will eventually be found here.

What it means: First thoughts: with this announcement, we’re seeing the rise of what Jeremiah Owyang is calling the Fan-sumer. Consumers who “vote” for their favorite advertisers by becoming “friends” with them, interact with their brands/products and “broadcast” their “love” through the Facebook newsfeed. Quite a fascinating way of channeling word-of-mouth. My big questions: when does an advertiser pay? Is it when they build their profile page? Is it when consumers interact with their page? More details soon…

Following this blog post yesterday about my speculation that Google is building a mobile development platform, the whole blogosphere announced this morning that Google is leading an initiative called OpenSocial that will see the launch an open social web API. This new API will allow social networks and application developers to work together using a set of standardized instructions. Partners currently include Google’s Orkut, LinkedIn, Hi5, Friendster, Salesforce.com, Oracle, iLike, Flixster, RockYou, and Slide.

Flickr photo by magerleagues.

As Marc Andreessen said this morning on his blog,

This is the exact same concept as the Facebook platform, with two huge differences:

• With the Facebook platform, only Facebook itself can be a “container” — “apps” can only run within Facebook itself. In contrast, with Open Social, any social network can be an Open Social container and allow Open Social apps to run within it.
• With the Facebook platform, app developers build to Facebook-proprietary languages and APIs such as FBML (Facebook Markup Language) and FQL (Facebook Query Language) — those languages and APIs don’t work anywhere other than Facebook — and then the apps can only run within Facebook. In contrast, with Open Social, app developers can build to standard HTML and Javascript, and their apps can then run in any Open Social container.

TechCrunch explains in more details:

OpenSocial is a set of three common APIs, defined by Google with input from partners, that allow developers to access core functions and information at social networks:

• Profile Information (user data)
• Friends Information (social graph)
• Activities (things that happen, News Feed type stuff)

Hosts agree to accept the API calls and return appropriate data. Google won’t try to provide universal API coverage for special use cases, instead focusing on the most common uses. Specialized functions/data can be accessed from the hosts directly via their own APIs.

What it means: this is a major announcement, maybe the biggest announcement of the year. Standardizing the social web will go a long way towards the explosion of social as a key element of the Web operating system and one more step towards the web becoming a gigantic word of mouth machine. You’ll want to embrace these standards.

Update: According to AlleyInsider, MySpace will announce today that they join the OpenSocial “alliance”

Update2: Techcrunch reports that blog software publisher SixApart is also joining. Bebo also.