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January 31, 2006

The Insurgent Consumer

The consumer today is in open rebellion.

He doesn't listen to advertising anymore. He no longer trusts corporate spokespeople or their messages. In fact, according to the 7th Annual Edelman Trust survey released just last week, people now say their most credible source of information about a company and its products is “a person like me” -- a trust level in peers that has skyrocketed from only 20 percent three years ago to 68 percent today (versus a trust level for corporate CEOs that has now plummeted to only 28 percent).

This lack of trust, of course, has major bottom-line consequences. More than 80 percent of people surveyed say they would refuse to buy goods or services from a company they do not trust. And new research also shows that negative consumer comments on blogs have a direct impact on corporate brands, earnings and share prices.

The fact is that consumers are no longer willing to put up with shoddy products, indifferent service, and lack of accountability and transparency. What's more, they are demanding a decision-making voice in shaping the products, services and media they consume. TiVo is one example of this new take-charge attitude on the part of consumers. Another is the fact that, according to a Pew Internet & American Life Project survey released earlier this month, half of all teens in this country -- and 57% of those who use the internet -- have created a blog or web page, posted original artwork, photography, stories or videos online, or re-mixed content into their own creations.

Indeed, the consumer now demands more of business -- and thanks to blogs and other new consumer-empowering technology and media, he can now get it. Companies who meet these new expectations are rewarded. Those that don't see their businesses punished as never before.

How should business leaders respond to this new insurgent marketplace? How can they use blogs and other new "voice of the customer" media to develop a new and more democratic relationship with customers -- one that leverages customer insight and initiative to create more effective marketing, branding, product development and public relations strategies that materially enhance firm success?

Richard Edelman, CEO of the world's largest public relations agency, took the lead in answering this question when he posted what amounts to a new mission statement for his firm last Friday: As he noted, the traditional approach to corporate communications has always been a controlled process of scripted messages delivered by the firm to investors and consumers. But this top-down corporate communications model is now being supplanted by a peer-to-peer, horizontal discussion. And as a result:

"The consumer has become a co-creator, demanding transparency on decisions from sourcing to new-product positioning."

How to do business when the customer increasingly calls the shots is fast becoming a strategic issue for the executive suite.

January 25, 2006

Marketing is Dead ... Long Live Marketing!

Responding to my post on "What's Holding Back Corporate Blogging?", Stowe Boyd offers some valuable insight into the myopia of most business executives who see blogging solely as a new marketing vehicle:

"Corporate types steadfastedly refuse to believe that the post-marketing world is better ... blogging is considered an adjunct to marketing, 'just another channel' to carry messages, slightly recast perhaps, to one 'segment' of the 'market.'"

This tendency to define blogging as merely a new-fangled marketing vehicle -- and the business media are just as guilty of this -- has always bugged me, too. Indeed, 3-5 years from now, blogging's value in marketing may be seen as the least of its many benefits to business. Product development, enterprise management, the creation of new businesses -- these functions may turn out to be be the chief beneficiaries of corporate blogging initiatives.

What then, is the role of the marketer in the blog-fueled new commercial epoch in which customers increasingly call the shots in business?

I have some ideas ... chiefly revolving around marketers becoming facilitators of the customer insight and initiative that will increasingly become the fountainhead of enterprise success.

But does Boyd have other ideas? Does anyone?

Or are we truly moving into uncharted territory here?

January 23, 2006

What's Holding Back Corporate Blogging?

Why did the much-predicted 2005 stampede by corporate America into the blogosphere fail to materialize?

The number of Fortune 500 companies with strategic public blogging initiatives, after all, is still quite small -- somewhere between 3-4%, depending on how you figure it. Many of those firms are what you might call "the usual suspects" -- i.e., technology firms such as IBM, Sun and Microsoft that are enmeshed in network culture. And basically none of them are the sort of brand-name consumer powerhouses that could really push blogging and related customer-contact media into the mainstream of everyday business.

By itself, this delay is not surprising, especially when you look at the history of early corporate involvement with the Web a decade ago. When the World Wide Web first emerged in 1994, some pundits predicted the "imminent demise of the shopping mall" as name-brand consumer product firms rushed to set up online stores. In point of fact, it took four years for the dollar volume of online shopping to even hit the $1 billion mark -- in other words, to even reach half the size of the real-world market in blow dryers.

Change, it turns out, usually takes longer than the pundits predict. Especially change in the business world.

But it does beg the question: What are the factors or conditions that will drive mainstream American firms to truly embrace external public blogging -- whether for marketing, product development or other purposes?

I asked two authors of business blogging books -- Jeremy Wright and Debbie Weil -- for their thoughts on this question:

Jeremy Wright, a corporate blogging consultant and the author of Blog Marketing, named three factors holding back a stronger corporate embrace of blogging:

"First, these things take time. It never happens as fast as we imagine. Second, the software tools are in many cases still too immature for enterprise use. And third, a clear ROI (return on investment) from blogging remains to be demonstrated."

As for Debbie Weil, also a blog consultant and the author of the forthcoming The Corporate Blogging Book, she stressed the psychological roadblocks to corporate blogging:

"Fear is the single most important thing holding corporate America back from embracing blogging. Fear of being open, fear of a two-way conversation, fear of not being able to control the message, fear of the time commitment."

Wright and Weil make good points, to which I would add one more:

Blogging really is not for the faint of heart or the control freak -- two personality types usually thought to be well-represented in the ranks of management.

That's because, first of all, there really are dangers involved in tearing down the traditional barriers to direct customer interaction with the firm. There are a lot of angry consumers out there -- their anger fed by decades of having to deal with shoddy products, indifferent service, and the lack of corporate transparency and accountability -- and now, thanks to blogging, for the first time in history they can finally hit back. Just ask Dell, Sony, Kryptonite, Circuit City, and others whose brands, if not also their revenues, have taken a beating from the blog-fueled revolts of angry customers.

But just as important, blogging will ultimately force companies to abandon many of the traditional ways they have always managed not only their public affairs but their marketing and product development functions as well -- not least by giving customers a far more powerful and direct voice in enterprise decision-making than has ever been the case before.

In short, blogging requires firms to turn many of their operations inside out -- or, more accurately, to reverse the polarity of corporate thinking and practice from inside out to outside in.

Think about it: With notable exceptions, most large companies have always operated on a push-driven model, creating everything from their products to their marketing messages in-house and delivering them to what has always been (until now) a passive consumer marketplace. Now, thanks to blogging and other new developments, the transmission belt to the consumer is reversing direction, and marketing and new product insights will increasingly flow from the customer to the company.

That's a huge, epic change -- the sort of change that will require a lot of "tough love" for executives to embrace.

As Weil noted:

"If you put blogging in the basket of corporate communications it runs absolutely antithetical to so-called current best practices."

Ain't that the truth.

January 05, 2006

A More Critical Look at GM's Blog

John Cass offers a good critique -- I prefer to call it a helpful complement -- to my recent "First Year Report Card on GM's Blog." He noted that while I quoted from some readers' comments on the GM blog, I didn't actually interview some of those readers to get their assesssment of how well the Fastlane blog was serving their needs.

That's a good point. As Cass notes:

Many people had commented on the GM blog, but many did not receive a response from GM, even through customers perceived that they would receive a response.

Cass has suggestions for how GM could handle the issue in the future.

Anyway, thanks to John Cass for his good work on this issue.

January 04, 2006

What's Behind the Fortune 500 Business Blog Index?

I was the writer that Chris Anderson and Wired originally hired to produce an article suggesting that Fortune 500 companies usually only start blogging when they're in trouble. The article was prompted by highly-inconclusive (as it turned out) data assembled by Chris and Wired researchers showing that firms with blogs had lower share price performance over the past year than companies that don't blog.

The article was eventually killed because the evidence I found did not prove the original proposition that there's a firm, direct or causal correlation between share price performance and the decision by a firm to blog.

Recently, Chris Anderson and Ross Mayfield announced a research project called the Fortune 500 Business Blog Index to continue the research into this issue. A number of commentators are interested in what develops, including Henry Lambert and Doc Searls and Debbie Weil.

I'd like to point out some problems with Chris Anderson's original supposition:

While it's true, as Chris notes, that F500 companies that blog have lower one-year share performance than those that don't, statistically this is no more relevant, as Sun's Jonathan Schwartz pointed out to me, than "the share price performance of firms whose CEO's answer their own email vs. those that don't."

The problem is that the percentage of F500 companies that blog is too small, the time period looked at in share performance too short, and the factors and timing behind any one company's decision to start blogging too varied to lend any real support (as yet) to Chris's original supposition.

Plus, when you factor in the five year data on share performance -- and especially the 5-year share performance against industry averages -- this makes even less of a case that share price is any real indicator of whether or not a company decides to blog.

True, there are a number of firms that started blogging clearly because they were suffering image problems that their traditional PR methods failed to redress -- Microsoft, GM and Boeing are cases in point. Interestingly, though, while Microsoft's share price is down nearly 9% the past year, Boeing's is up 29%. Go figure.

Which is exactly my point.

Meanwhile, other companies such as IBM and Sun are clearly blogging because they're enmeshed in network culture and wanted to get closer to their customers and developers. That's just a fact.

One other hardly-minor problem with Chris's supposition:

If you're trying to show that it's corporate malaise that induces companies to blog, then you've got to look at their share price performance PRIOR to starting to blog, which is different for every company.

To say that GM's share price performance over the last year that it's blog has been in existence is down 29% tells us NOTHING about what induced it to decide to start blogging 15 months ago when the decision was first made.

If you want to make any correlation between the last year's share price performance and GM's blogging efforts -- and it would be foolish to do so -- you could only conclude that blogging had hurt the company.

But in fact, as I note in my "First Year Report for GM's Blog" , there's no evidence that it has hurt the company and more than a little evidence that it has helped GM -- at least in the image and PR arenas.

The fact is there's no way to make the firm correlation Chris wants to make between corporate share price doldrums and the decision to start blogging.