Web 2.0 | a thousand cuts

In late October, I got a first hand glimpse into how the web is taking on traditional newspapers. While in Dallas for Forrester’s Consumer Forum, I was grateful to be invited to drop in at the offices of the Dallas Morning News to talk about how retailers are using Facebook.

A Somber Scene

At first glance, the floor where most of the reporters sit is very much like the stereotypical movie sets. I expected Perry White (Jackie Cooper, in my head, anyways) to come screaming out of his office at any moment. The major differences: PCs everywhere instead of typewriters, and most of the desks were empty. I visited them on a Monday – the prior Friday they had been through a series of layoffs, and the mood was somber. As the paper takes on challenges brought on by Web 2.0 and the shift of advertising online, ironically a blog solely for former employeers of the paper cropped up and has some very passionate people engaged.

Challenges for Traditional Newspapers

Three major challenges for the paper are apparent. First, the cost of advertising. Simply put, ads cost a lot less and are far more measurable online. This directly competes with ad revenue for the paper, and was a deciding factor in the recent Chapter 11 filing at the holding company that owns the Chicago Tribune and LA Times.

The second challenge is the proliferation of other media sources. I heard the phrases “reading blogs” and “did you see the blog post” several times. The lines between traditional media and new media are blurring and anyone who can publish a story could conceivably trump a reporter at a paper. Clearly reporters are paying attention. The lines are blurring between official reporters and passionate folks who like to write.

A third challenge for newspapers is really understanding the digital channel. I’ve seen recent discussion on Twitter with Bryan Person and Aaron Strout around how newspapers don’t understand search engine optimization (SEO). Both have pointed out examples of articles in Boston papers where the authors failed to include links in the online version of the story to either personal blogs or corporate web sites. “Sharing the link love” is a key piece of making the digital channel successful and accessible through search.

Understanding a Slice of New Media

The main purpose of my visit was to discuss my agency’s recent study on retailers using Facebook. Several big name retailers, including J.C. Penney, are in the Dallas area, and the retail reporter for DMN was trying to get a better understanding of Facebook and other tools. I spent a couple of hours with her explaining how Facebook works and gave her a demo of Twitter (thanks to many connections there for helping out). It was clearly an eye opening experience for her, and we reviewed what several local-based retailers were doing with Facebook fan pages. The net result, including much of her hard work looking at viral marketing, interviewing a variety of sources and adding insight to what the companies are doing, is this well-written piece published Tuesday called, “Retailers find Facebook friends in hopes of finding sales.” No doubt the folks who are reporters are talented in their research and writing – she did an excellent job tying in the recent viral successes of J.C. Penney and Victoria Secret’s Pink brand to our discussion on retailers using Facebook pages.

Clearly the Dallas Morning News is getting the digital channel – the page where my article lives had (as of my last view) advertisements for Ford, Cars.com and Netflix. The article also had the ability to share via social bookmarking sites and allowed comments. Unfortunately the article had no link here or to our agency’s site, Rosetta.com. But 2 out of 3 ain’t bad right?

In the end this was a real world microcosm example of how the old media industry needs to adapt in order to thrive. Thanks again DMN for including me in the article and I hope we both continue to learn from the experience.

Photo via IMDB.com

Danger?

Folks shy away from the term “social commerce.” Why? I asked the question on Twitter, “What’s the first thing that pops in your mind when you hear the term ‘social commerce?'” and I received quite a number of cynical (and humorous) responses:

@k_seas: “Pyramid Scheme : – ) kidding”
@illig: “Social commerce: Prostitution, human trafficking and ice cream socials. In that order. But I’m not normal. : ) “
@heatherrast: ” (1)selling out your friends (like personal info?) (2) the cost of selling out your friends (3) revenue from adsense ads”
Taken out of context, my question also sparked a little debate about what social commerce is and caused friend Aaron Strout to weigh in with some great dialog happening in the comments.

Here’s the danger: People want conversation in social networks to be genuine and to avoid overt marketers hawking their wares. Social networks bring people to connect, not to shop. But as technology evolves and people look to leverage their networks as information sources, invariably those networks will turn to helping each other make purchases. I, for one, take a friend’s recommendation as an important information source before buying – and I have to admit consumer ratings and reviews are helpful and important to me.

Back to the Future

As far as I could dig up, one of the first posts defining social commerce was back on December 23, 2005. Steve Rubel wrote an intriguing post on 2006 Trends to Watch. Steve started to predict the trend of advertising and commerce shifting to blogs:

“Social commerce, however, is an area that I think holds a tremendous amount of promise as a way for bloggers to make money. It’s a win-win for the bloggers, product marketers and existing e-commerce sites.”

His post went on to show examples of how e-commerce sites had extended functionality to allow bloggers to take advantage of the Long Tail and bring the ability to conduct commerce on their blogs, beyond the innovation of Google ads. At the time, Yahoo!’s Shoposphere was the highlight, where users could collaborate on shopping lists. More posts went on about preparing for social commerce as the next big wave of innovation that would push the continuing trend of online shopping growth (combined with broadband adoption at home and at work along with the continual adoption of Web 2.0 technologies like Flash). But the term “social commerce” seemed vaguely defined to include innovation in customer experience on commerce sites, and overall the term remained nebulous.

The Year of Social Commerce?

Jay Deragon predicted 2008 would be the Year of Social Commerce. On January 1, 2008, he wrote:

While social networks continue to grow exponentially the next growth curve will be driven by the “holy grail of economics“, social commerce. Social commerce may actually become the dominant development in 2008 and subsequently turn business models upside down and inside out.

Jay is on to something here. While the last year brought the challenges of Facebook’s Beacon product, and there continues to be large debates about ways to monetize social networks, big ticket retailers are starting to get involved by adding functionality on their own e-commerce platforms. Already we have seen reviews, stories from other customers and ratings start to really permeate the online retail space – where retailers that don’t have them are becoming the exception. (Bazaarvoice is a business partner of my agency, Rosetta, and one of a few vendors who provide user ratings and reviews as a service to be integrated into a web commerce user experience.) In addition to sites adding this functionality – and receiving a bump in conversion % of visitors – here are some other examples of what vendors are doing:

Facebook Connect and platforms like Open I/D allow corporations to authenticate social graphs on their own sites.
IBM did a recent case study integrating the capabilities of Lotus Connections with Websphere Commerce.
Companies like LiveWorld have launched products to integrate social interactions directly on websites, like their recently launched LiveBar product.

Based on watching what vendors out there are doing, I’d argue that beyond the initial premise of bringing commerce to social media tools and networks, it appears the next wave is bringing the social networks back to commerce sites. Some companies like eBay and Amazon do this well, but I think more merchants will be trying to figure this out. Bringing customers together to help on purchase decisions can be a good thing if it’s handled properly and e-commerce companies engage their customers the right way, beyond just user ratings and reviews. What do you think?

Photo credit: racineur via flickr

a thousand cuts

adam cohen's blog :: interactive marketing, digital and social media

Tag / Web 2.0