A shadowy social network group.

Facebook is getting an assist from Visa Inc.’s marketing machine in its struggle to lure more advertisers. To date, Facebook has not had as much success as was expected in garnering revenues from advertising. The plan with Visa appears to be aimed at small businesses who are using Facebook to look for new customers.

Michael Liedtke reports:
Visa’s service is designed to provide small-business owners with tools and tips on attracting new customers, trimming costs and other ways to make more money. Businesses that belong to the Visa network on Facebook also will be able to communicate with each other to share ideas or even negotiate deals. Internet search leader Google Inc. is providing some of the features on Visa’s business network, including maps, calendars, word processing and a new template for creating expense sheets and business cards. And The Wall Street Journal and Entrepreneur magazine will contribute articles addressing questions posed by businesses that belong to Visa’s Facebook network.

Facebook’s struggle to produce revenue from its site sounds similar to the problems that MySpace has been having. Facebook has 80 million users who play games, share photos, rate music and track their friends’ activities - the idea that they can be bothered to click through on an advertisement that is not relevant to them, and one that just randomly appears on their home page or profile, is a marketing stretch.

As Michael Liedtke writes:
…while the array of applications have helped make Facebook even more popular, few programs are producing revenue for the site, and Facebook still hasn’t proven that its social playground is an effective advertising forum. Finding the right advertising approach also has been a challenge for other social hangouts like News Corp.’s MySpace. Even Google, which runs the Internet’s most lucrative ad system, has had trouble marketing on social networks.

Advertisers and marketers are labouring under the assumption that the information that Facebook has gathered about its users makes it easy to target different groups of them. This is a dubious notion at best. They are a moving target.

As Liedtke points out: …..some advertisers fret that Facebook’s audience will resent commercials amid all the site’s frivolity. Others are leery about their brands showing up on Web pages featuring racy or unsavory content.

Stay tuned.

As celebrities are constantly followed in the media with their every move recorded and scrutinized for a slew of gossip shows and blogs, a side effect has emerged in the form of the ‘human billboard.’ Now more than ever, celebrities themselves have morphed into lucrative brand names, hawking everything imaginable from credit cards and cars to perfume and yogurt.

The line between celebrities and the products they’re pitching has become increasingly fuzzy as the two merge to create mutual benefits. Brands are now relying on hot stars to not just stamp their name on products, but to co-design their own lines that capture the attention of their rabid fan bases. 

The Power of Celebrity Endorsement

While the endorsement of products and services by celebrities is nothing new, there has been steady growth in this area over the last ten years with an estimated 14% of all U.S. advertisements including stars last year (via marketing research agency Millward Brown). 

Why is this phenomenon so powerful? Why do stars sometimes earn more from advertising revenues than they do from their actual day jobs?

The truth is that companies would not be paying celebrities exorbitant fees to stand in as spokespersons for  their brands if they didn’t see a positive effect on sales. People want to be a part of something bigger than themselves and if they truly believe that their idols actually use the products they are paid to pose with, sales and (website traffic) can go through the roof.

Consumers are constantly shown glimpses of a celebrity’s lifestyle and even though they may not be able to afford the cars, mansions, and private parties, they can at least buy the fragrance, t-shirt and sunglasses their idols (appear to) prefer. It’s easier to live vicariously through products and services than to look inward to the real issues. 

Controversy: The Downside of Endorsements

When a company chooses a celebrity to endorse their brand, it’s all about image. To make a partnership successful, they have to decide whether a person’s image is in line with their values and further enhances their reputation. When Magic Johnson announced his HIV-positive status in the early 90s, he was swiftly dropped from endorsements, though the companies claimed it was the affair factor that sealed the deal. 

Sometimes controversy can help a celebrity land even more endorsement deals after the dust has settled. Supermodel Kate Moss weathered a scandal in 2005 when she was caught snorting cocaine. Her lucrative contracts with Chanel, Burberry and H&M were dropped, yet Yves Saint Laurent and Gucci held on. Since her release from rehab, she has landed even more endorsement deals from the likes of Calvin Klein, Longchamp, Bulgari, Stella McCartney and Virgin Mobile. Amazingly, Hollywood.com claims that these deals have reportedly brought Moss’ earnings from $10.3 million before the bust to $17 million after!

Celebrity Power and Ranking

The numbers for celebrity endorsements in advertising are down this year after hitting an all-time high of 19% in 2004. In the over-saturated world of advertising, this may be the beginning of a trend. Many companies are now realizing that their roster of brands are being overshadowed by the bold-faced celebrity names they once courted. While the celebrities promoting the products are gaining increased notoriety, the company image can be lost in the shuffle. In the last few years, Pepsi has dropped Beyoncé and Britney Spears for this reason.

Companies are now looking to the two year old Davie Brown Index to see how hot a celebrity is. Ranking a total of 1,800 celebrities, the D.B.I. determines a celebrity’s ability to influence a relationship with the brand and to also encourage consumer purchases.

The Future of Advertising

The future of advertising may be in ‘friend endorsements.’ Allen Stern of Center Networks makes the case that most of us would rather have our best friend recommend a product to us over a paid celebrity. This is becoming increasingly easy since many of us are connected into tight webs of friends, family members and acquaintances with similar interests via social networking sites like Myspace and Facebook.

The reason why we value the opinions of friends over celebrities comes down to one thing: TRUST. Celebrities are instantly recognizable and even likable, but that doesn’t mean that a consumer fully trusts their endorsements when making purchases. For this reason, social networking truly is the wave of the future for advertisers.

Obama’s viral timepiece.

These days the advertising and marketing world is all abuzz with phrases such as - Social Media, Social Advertising, Facebook Ads, Mass Media Networking Advertising…..etc, etc.. In the last two weeks I have been a panelist at the L I S A seminar in Portland and the Hawaii MusicTech Conference in Honolulu. L.I.S.A., which is an acronym for Lessons In Social Advertising, was aimed at marketers and advertisers who [for some reason] don’t understand social networks or haven’t yet worked out how to advertise effectively to them. It focused on topics such as ‘What is social advertising?’ and ‘How do you get young people to recommend your brand?’ The Hawaii MusicTech panel discussed how musicians could effectively use social networks such as Facebook and MySpace to reach an audience and communicate with them.

Two sides of the table as it were. One group wants to advertise, or push, their messages to a mass audience, while the other wants to create a network of like-minded people who hopefully will pull content such as free MP3s and then “evangelize” on behalf of the musicians by spreading messages by electronic word of mouth. With no hint of schizophrenia I happily migrate between both camps.

To understand and embrace social networking is to place the idea that says “technology makes this possible” to one side and embrace the idea of the basic human need to stay in touch with other like-minded people at all times. As Clay Shirky says “The desire to be part of a group that shares, cooperates, or acts in concert is a basic human instinct.” Think about rock concerts for a minute…..

Most people that take a position on social networking and advertising come at it from a technological point of view, as in “technology has created the means for everyone to be connected and to stay in touch.” I disagree with that statement because it removes nature from the game. It is entirely natural for humans to want to interact as often as possible as we are all social animals. Cities are no more artificial (technological) than the hives of bees. Therefore the Internet is as natural as a spider’s web. People who believe that technology is driving our interactions are missing the point - we ourselves are technological devices, invented by ancient bacterial communities as a means of genetic survival. Bottom line - social media is as natural as apple pie as we all want to be as connected as possible - we can’t help it. [A really good book from which I have borrowed some thoughts is 'Straw Dogs' by John Gray, professor of European thought at LSE, published in the UK by Granta.]

Online networks might be seen as antidotes to boredom at work, school or college. These new social networks do more than transmit information about their members, they change behaviour by propagating moods. These days we can all share “news” really fast, even about ourselves - for example, my Facebook or Twitter status might say “I’m heading to the beach in Waikiki…” and the mood that simple statement makes might become very contagious.

The Internet confirms what we have all known for a long time - the world is ruled by the power of suggestion but in the case of social networking it is “influencers” that lead the suggesting. Then suggestions might become “group think.” John Gray writes - “in evolutionary prehistory, consciousness emerged as a side effect of language. Today it is a by product of media.”

So, the question currently being asked by companies and advertisers is “how do we market and advertise to social networks?” Having to ask that question suggests the rocky ground that online advertisers are standing on. For instance, Jack Myers sees nothing but doom and gloom in online marketing: He says “Advertising is simply not a sufficient revenue model to sustain content companies into the long-term future.” And goes on -

“I have preached evangelically for nearly three decades about the bifurcation of the media and advertising marketplace into 1) a transactional commodity business model and 2) a relationship-based brand-focused premium marketplace. Most media companies and agencies are investing appropriately in the technology resources required for their transactional businesses. [But] Brand building, relationship-based business models and premium-priced enterprises require completely new and innovative models, and can take years before they generate returns that justify the investments. Industry realities place enormous pressure on executives to adhere to traditional business models, and companies that foster and advance innovation are often drained of resources before they can deliver the return-on-investment demanded by the stock market, equity rights holders and VC investors. Typically, implementation of new business models must be forcefully imposed by the CEO, need the blessing of investors, and they cannot be managed by executives trained exclusively in the ways of traditional media and advertising.”

Neil Perkin in a slideshow entitled ‘What’s Next in Media’ that can be found here says that today - Social Media is counter-intuitive to communications media. Here’s one of his slides that shows just how counter-intuitive things have become for marketing online:

Meanwhile, the old way of marketing is through push messaging and therein lies the mistake of many of today’s marketing managers. Take a look at this slide to see how things don’t stack up nicely into a marketing message or ‘drop’ that has been long planned waiting its turn on the calendar.

The Linear model above reminds me of traditional TV and Print advertising. Some people in advertising and marketing today still view the Internet as a “channel” rather like TV.

Let’s consider another buzz phrase - viral marketing online. The success of YouTube in extending an advertising campaigns length and reach is now common currency. We’ve all seen the videos, perhaps even this one - My girlfriend and the Wii Fit. 2.2 million views and going strong.
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In an age saturated with advertising everywhere you turn, you’d like to think that you’re one of the ’smart ones.’ You’re an individual that is impenetrable to the multimillion dollar marketing blitzes being doled out in an increasingly rapid succession.

Though 77% of Americans claim to be very perceptive to marketing pitches, many still end up being defined by their ’stuff,’ whether they realize it or not.

When making purchases, we sometimes rationalize our decisions by claiming that our choices are based on quality, price, comfort and convenience. We convince ourselves and those around us that these decisions have nothing to do with marketing. Apple products are preferred because of their superior quality (the sleek stylings are secondary). Coke is deemed to have the best taste (the billion dollar marketing budget doesn’t have any relevance). Manolos are the most comfortable, well-made stilettos (it doesn’t make any difference that Sex And The City’s Sarah Jessica Parker wears them as she struts through the streets of Manhattan).

The modern consumer is typecast by marketers as having become completely resistant to all advertising, but the truth is much deeper. Instead, they have fully embraced specific brands on their own, many of which lack mainstream ad campaigns. Marketers are quickly adapting to this new phenomenon and becoming more stealth in their techniques. Often, these tactics are so seamless that they have become imperceptible to the consumer. While they may feel that the lack of a defined campaign relates an aura of street cred and lacks the obnoxious connotations closely related to corporate powerhouses of the past, this is exactly what marketers are striving for.

Products are now regularly launched without an explanation as to what they are, what they do, or who should use them. The benefit of this approach is that consumers are invited to define it for themselves in a way that’s perceived as being a unique, individually focused experience. They have every reason to believe the product is a reflection of their values and needs because they’ve never been told any differently.

It’s natural to use possessions to aid in self-expression but there’s a fine line between doing this and in leveraging items to make ourselves into someone else. No matter what your views are, it’s important to remember that stuff is nothing more than…stuff.