In most brand organizations, marketing investments rest on 20th century marketing principles whose results are diminishing every year. At the same time, an increasing portion of products and services are commoditizing, which puts more pressure on marketing to “create” differentiation and value. In many cases, there is no escape — except by changing the rules.

Here I’ll show how marketing can reinvent itself by using social business to tap a hidden gold mine. Here are the ways that CMOs can leverage digital world of mouth:

The threat: Dire straits in marketing

Marketing as a profession emerged in leading economies during the mid-20th century, when manufactured products were novelties in many categories. Marketers came to assume that they could “create an image” or “brand” using the mass communications to which few had access. Individual customers had no leverage because word of mouth was analog. Word of mouth has always been the most trusted source of product or service information, but it had no leverage until social peer-to-peer technologies emerged. Marketing’s credibility will never recover because customers now have a more trusted alternative: other customers. You can make this work for you.

The opportunity: Customer service as marketing

For customers, the most compelling information about companies, products or services is often conversations about how products or services can be used in specific situations. They have high credibility because they are initiated by customers and show what happens when exceptions arise. Simplistically speaking, marketing’s job is to increase demand for the company’s products and services. Customer service conversations will be more compelling than marketing messages in many situations, but they have to be treated completely differently.

• When you realize that superior customer service in digital social venues can be reused by thousands of customers and prospects, suddenly you can invest in it because it can drive more sales. And customers can use it for free to help themselves. Therefore, it is like marketing, except it is much more effective because it has high credibility since your company doesn’t control the conversation.
• Customer service is an opportunity to show how products or services create value, or how people can avoid or deal with exceptions. These exceptions are often fears that prevent other prospects from buying.
• Address the emotional channel of value. People are most attracted to other people who are sincerely interested in them. People who care. Really. This can’t be faked. But when your employees do really care and can show it, people can feel it and will want to do business with you. When this happens in a transparent many-to-many venue, it creates demand.
• One company that does this consistently is Apple in its Genius Bars. Over the years, I have had dozens of interactions with various stores, in person and over the phone. In virtually every case, people show genuine interest in what I present to them. I also observe employees and how they interact with a variety of other people. It goes beyond being “professional”; people really seem to care. It can be done. But Apple is practicing it at one-to-one retail, at a very high cost.
• Pattern matching software can automatically select, analyze and publish very specific public conversations elsewhere (mash-ups). Therefore, your company can display these conversations alongside products, so customers can find them easily.

How to leverage social business for marketing

• One of the most difficult things to overcome is the realization that marketers will never have the credibility and influence they had before digital word of mouth. However, this is critical because, until you realize and accept it, you will lack the sense of mission needed to transform marketing ahead of competitors. It requires profound culture change. Companies that do it will win because they will be aligned with customers. Those that don’t will increasingly have adversarial relationships with customers.

• Analyze social business conversations for your products or services. Look for certain products or services that show relatively high levels of customer involvement and group problem solving within defined scenarios (i.e. big screen TVs for having people over, or seatbelts when you have a pack of pre-schoolers in the minivan). Also analyze customer service capabilities and results and cultures around various products. You want to select situations for pilots in which customers are collaborating and customer service is relatively empowered to address problems. If the latter is in bad shape, don’t use your customer service people for the first pilots.
• In the pilots, have people serve customers in third-party sites, which will save money and increase credibility. Choose forums and sites that are public, so you can republish information later via mashups.
• Select a small group of contributors for pilots who love the products but who are really interested in customers and how they use products. Scale the program by rotating people in and out.
• Have a username convention for contributors that’s natural yet uncontrived. This will help you track mentions in Google.
• Create quantitative metrics to show results. Create a taxonomy to categorize customer service issues along with metrics. Some examples of metrics: expressions of gratitude, customer problems solved, uninvited mentions or referrals, Google rankings, social media monitoring rankings of conversations. Contributors’ rankings within forums or venues (i.e. “thumbs ups”).
• Create the mashups and republish relevant conversations between your people and customers on your web pages. Be careful when you do this, so it doesn’t come across as fake; you want a good portion of conversations in which your people admit they are wrong or made a mistake. Marketing is already known for “happy talk,” which is why it has little cred. Also create a microsite that explains the pilot.
• Create an unobtrusive tracking device (i.e. code) for people to use if they learned about you through the venues, so you can track incremental sales. But don’t do this using regular copywriters; otherwise it will sound like common coupons or promotions and discredit the effort.
• Experiment with various product/customer/service scenarios until you get some wins. The better your due diligence in the beginning, the more likely you’ll get on base. But many companies and careers depend on getting this right.

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Inside the huge banner opportunity created by Facebook

Facebook’s development schedule epitomizes the “white water, fast iteration” approach to serving company and customer. Although its mishaps are legendary, it succeeds in consistently fielding a mind-numbing array of features, so it is difficult to keep up and very easy to miss the significance of things.

To wit, very few people people have noticed that Facebook has quietly revolutionized banner ads through a feature that is maligned by users but gold for marketers. This feature has created two opportunities for e-commerce marketers: a new means of inexpensive market research and an easy way to improve relationships with their viewers.

Read on to do this to your competitors before they do it to you.

‘You have removed this ad’: A spark in a dry forest

I hope you have used the “remove this ad” feature that Facebook introduced, I believe, in Q4 2009 or Q1 2010. When you mouse over most Facebook ads, you will see an “x” in the far right (1 — see above). When you click the “x” to remove the ad, you get the dialog box beneath, which gives you the radio buttons (2) and the all-important “other.” When you hit “Okay,” you get the gold box. Seems innocuous, right? Wrong. It has begun to change the expectations of your prospects, who will increasingly expect to give feedback on all ads.

Removing ads: Customer viewpoint

I have been using “remove this ad” since it was released, and I have noticed several things about it:

• There’s very little talk about it online. Any dialog is dominated by users who hate “remove this ad” because they hate ads in general and they would like “removing” the ad to be permanent (i.e. bar chart brains would never reappear). Note that the gold box doesn’t promise banishing the ad. Users don’t care, though.
• I’ll hypothesize that only a small portion of Facebook users bother to give feedback, but I’ll wager that most of those who do want to do it everywhere.
• Yes, when you remove the ad, it isn’t banished from your land forever, but clicking the “x” and adding a peppery comment can be satisfying anyway.

Removing ads: A marketer’s viewpoint

Now, think about yourself as a buyer of millions of dollars of banner ads per year, which all CMOs do. What if, for appropriate (geeky) segments you would introduce this functionality in some of your banner ads (not necessarily on Facebook)? This would help you:

• Conduct low-cost market research by collecting responses; on Facebook itself this is particularly interesting because Facebook knows user demographics. However, off-Facebook, wouldn’t you like to know if readers of certain sites find your ads offensive or …? (you design the responses)

• Improve your relationship with prospects when you give them the option to respond; you suggest that you are interested in their viewpoints.
• You can take this into account when selecting your ad mix. You read it here, in 2011: The majority of “display” ads will be selected by customers within 10 years at the outside; certain demographics much earlier.
• I recommend pilots this year to get ahead of the market. Of course, many of your ads are syndicated, etc., but you can select specific situations to experiment and learn.

• This is another example of how disruption happens: Remember that inane idea by the inflated company in Cupertino? A “touch screen” phone? “That’ll never work!” Now everything has to be touch. Get ahead.

Under the hood: Social actions

Facebook’s DNA is encouraging social actions, which are digital transactions within a social context, because social actions give insights into the social graph. I’ll wager that Facebook regards “remove this ad” as a private social action, between users and Facebook and their clients. They have a business to run, and they are going to optimize impressions to make money. Over time, they will be able to show users more relevant ads, which is why I’ve committed to giving them feedback when I have time. I’m educating their algorithms.

Conclusions

• The very suggestion that users can “remove” ads is brilliant: Not only can you make that ad disappear, you can give the reason. Most banner ads will have that feature in the medium term, depending on user/reader demographics.
• If marketers truly care about the people with whom they are trying to communicate and influence, they will appreciate that feedback and use it to focus their efforts better. What if you could increase clickthrough 2x, 3x by using in-workstream customer feedback? Some firms will.
• You can outdo Facebook by giving readers more ways to indicate approval of ads. Facebook has several reasons for removing an ad but only one way to indicate approval (“like”). But that will change. You can lead.
• Bottom line: if your brand uses online ads, begin experimenting with this feature in 2011. Work with your viewers, not against them.

What do you think of Facebook’s “remove this ad” feature? Do you like it or use it? Tell us in the comments!

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