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The Impact of Social Media on Marketing
Milton Kotler

President, Kotler Marketing Group July 2011

My colleague Peter Hutchins, a foremost social media expert, and I decided it was time to put together a short history of social media and its impact on Marketing. Social media platforms are new tools for influencing the market. When websites exploded in 1997 consumers wanted to be involved in the brand [products. They wanted to suggest new features for these products, e.g. recipes for food products, hospitality ideas for hotels, concern about airlines, etc. This was only an interest in product quality and features of personal concern to them, not in brand equity. They communicated their ideas in websites and blogs.

Amazon was the first highly visible website that received these consumer inputs on products. This interaction was one-way and personal. In marketing research terms, these comments constituted an unstructured focus group, but without group interaction. That came later.

New websites emerged that became forums for personal product comments and evaluations. Thewell.com became the first forum that enabled people not only to comment, but to see and respond to other peoples’ comments. It was the birthplace on online “community”. Other websites emerged that enabled what we now would call “old school” threaded discussion. They were bulletin boards of consumer interaction with products.

Companies began to take notice of this tide of comment about their products. This was an entirely new platform of what we would call customer satisfaction surveys. But it was spontaneous and energetic; above, all beyond the design and control of the companies. The companies than began to use their websites, as well as interacting on the bulletin boards to ask questions to consumers; review new product concepts; and strive to find evangelists to identify “evangelists for their products. This was the first time that consumers and the public had the freedom to interact with companies about products. Many of these inputs were passionate. The old tenet of branding was to elicit emotional attachment to products. This was the first time that consumers could express their emotions about products, both constructively and critical, pro and con on a very specific basis, and at the consumer’s initiative. The cable TV news programs, notably Anderson Cooper, were among the first industries to invite digital input from viewers.

Some companies began to see the real needs and concerns of people about products within their business sphere. They began to engage the public, customers and non-customers about their expressed needs. Instead of just touting their products on a unilateral basis, they adopted a strategy of using their websites as a solution learning experience. Rubbermaid was outstanding in this respect. The company used its website to help people learn how to optimize their household space to effectively contain the things they bought. Rubbermaid is in the containment business, but it was not trying to directly push its containers; but rather to help people organize their possessions. The company, as well as the public, interacted about this problem of containment and came up with all sorts of new ways to solve this problem. Netizens (the Chinese term for Internet users) appreciated Rubbermaid’s help and this developed a positive public attitude towards the company and its products. Rubbermaid also got some new products ideas. The unstructured “focus group” became more interactive and communal than the threaded discussion of the bulletin boards. Rubbermaid, and other companies, enhanced this interaction with many different media formats, - text, video, photos, animation, and sound. Multimedia became a new tool for brand management and companies began to develop strategies for using this new tool.

Google and other search engines fed into this new mode of digital consumer interaction. People accessed website and page destinations for their many interests. Conversely, Google began tracking personal searches and built a vast storehouse of data about personal search and buy patterns. It sliced and diced this data to achieve a deep understanding of what consumers and users were interested in. It used this analyszed and structured information to attract advertisers to the key words that represented customer interests and targets. Advertising on Google became a very low cost way of reaching target markets and getting attention and responses. The specificity of Google key words enabled companies to reach niche segments that mass advertising could not reach. But Google was still a one-one communication system.

The next breakthrough with multimedia was social media. Facebook and its precursors started out as platforms to identify, organize and communicate with limited groups of friends; first on university and then in other settings. It was a new friendship communication technology. The universe of Facebook has vastly expanded to currently embrace 600 million people. They search friends, exchange thoughts and photos and organize events. The key advance of Facebook from a marketing perspective is that it brings people together in groups of direct and indirect friendship. Friends interact about social and personal matters, including their collective attitudes about products and brands. The Group, and we are talking about large groups of hundreds and thousands of friends, creates a vibrant and collegial word-of-mouth viewpoint about products and brands, among many other social, business, cultural and political matters. Word-of- mouth has always been the most trusted form of brand support. Research indicates that people have 78% more trust in word-of-mouth communication than in expert opinion or ads.

Before digital technology, word-of-mouth was communicated through personal meetings, letters, telephone, etc, was by its nature one-on-one. With Facebook, word-of- mouth is simultaneously exchanged among thousands of related people. Negatives views of products are fortified by group scale, and trusted group at that. Though skepticism is human, it is weaker among self-selected groups. Similarly, positive viewpoints can rapidly expand brand sales and create new brands suddenly out of new innovative niche products that some people take a passionate liking to and carry their influence for the product through their Facebook network. Facebook now links to Twitter, Google, LinkedIn, YouTube and other social media platforms.

Companies have to enter this space to engage with the network to defend their products and or optimize a positive stream of collective support. This is a creative challenge because companies are alien to friendship circles. They are not friends, but commercial vendors. Intrusion and unwanted presence can undermine company and product brands.

The capacity of Facebook to understand consumers far exceeds Google. While Google built personal data by tracking searches, Facebook reveals the personal and group identity at its most intimate level, with text, photos, audio and video content. People reveal their wants, needs, views, hopes, desires, evaluations of products and these views interact collectively in powerful group attitudes. From a marketing standpoint, these are self-forming niches, and even segment markets that companies have to engage. A self-forming niche is for more real and reliable than a marketing research analytically derived niche. Companies can see where their products stand in these self-forming markets. Facebook is the largest photo bank in the world with billions of photos. Google has now introduced its own social network called Google+.

New websites, like Radion6, have emerged that monitor what is said on social media platforms like Facebook about companies and products. These websites are essential to company analytics about their public status and the strategies of intervention to counter negatives and optimize positives.

New media like Twitter intensify the public control over brands by permitting instant short messages that are blasted universally, according to a key word. While Facebook profiles the user through their own entry and routes the profile to circumscribed groups of friends, Twitter blasts instant, concise critiques of products to the whole social media world with 140 characters or less. Every negative event that a person has with a product or positive delight is instantly known to everyone who keys in the brand or product name. Leaving out 40 characters enables every viewer to add a few words and re-twitter the message. Opinion builds upon opinion. It is a vast, amorphous consumer report that companies have to be instantly in touch with and responsive to. Today there is more product discussion on Facebook and Twitter than there is on many company websites.

Social media has more power over product influence than search engines. If you want to buy a car or a computer, ask your trusted friends on Facebook about their experiences and preferences. They have already done the searching. Why should you do it yourself? The same is true of job recruitment. With a vast circle of friends and friends of friends, you can ask your large group to recommend suitable people for recruitment. This is far more efficient than a bulletin board that invites resumes and leaves you with five hundred resumes to sift through. Friends know good people who are looking for jobs. Let them vet their acquaintances and filter the field for you. The efficiency of confident selection is enhanced by Facebook. You can access a category like cameras and get your community’s opinion about the best camera to buy. These categories groups of opinion are very descriptive and evaluative about the finest specific features of product inquiry and selection. If you add to product comments, personal life, social life, political opinion and social attitudes of millions of people, you can see why the Library of Congress is planning to archive Twitter data for future historians who want a real picture of what is going on in American society on a personal and group basis at a particular point in history.

In addition to Facebook, which is still fundamentally a social network, and by its very nature has a certain degree of clumsiness and social clutter surrounding product discussion, there are new websites, like Compare.com, Consumer Reports, Wired, and V&H that focus on product comparisons based on their own data analysisand linked data bases of consumer comments and experience.

Every company is challenged to respond to this new world of instant and continuous discussion of their products. Interactive company websites, Facebook. Twitte and Googles are creating new ways in respond to this vast comment stream. American Airlines has a Twitter address called AAairwaves that deals with this input. It is a creative challenge for companies to reorganize their marketing departments to deal with this phenomenon.

LinkedIn is a variety of social media that is really a professional community that started before Facebook. Professionals interact around their work and interest topics. It is now growing by leaps and bounds. Career people can interact in discussion groups around career topics. Job searches and service offerings.It has multimedia to enrich the professional community discourse. All of this activity is free. Knowledgeable use of LinkedIn can save users a lot of money otherwise spent on recruitment agencies, public seminars.books and costly internet article subscriptions. All of this is possible because every professional is trying to brand his own or her own expertise and company. The way to build reputation most effectively is to put interactive creative content on LinkedIn and be helpful to a vast collegial community.

Traditional media like magazines and newspapers are taking a big hit from social media and professional media platforms. Print magazines and newspapers are losing ad revenue to on-line and social media platforms. Companies are using their media dollars to engage with the large and more dynamic on-line and social media audience than the smaller static circulation of print media. Broadcast TV, while still the large depository of advertisement dollars, also has to protect its flank. Tivo and digital recording (DVR) are taking TV content offline and fast forwarding ads. Broadcasters have to keep viewers online are for ad revenue. They are doing this by introducing more interactive methods of engaging online viewers. American Idol uses voting as a way of keeping viewers online. Other creative incentives, like access to instant coupons, giveaways and sales are being developed to keep viewers online. Newspaper and magazines are also going digital, but their success is yet to be tested.

The final point for marketers is how to get their companies to strategically and tactically engage with social media. First, they need people who are young and attuned to the new world of multimedia and social media platforms. Older marketers did not grow upin this new world of communication. Second, they have to relate their strategy to the influence power of social media? Everything in the marketing planning and management handbook has to be adjusted – vision, goals, objectives, market research, competitive analysis, market profiling, segmentation, targeting, position, strategy, branding and the 4Ps of tactics. They need a 4G marketing organization.

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