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Kopp: The Fate of Marketing in the Age of Social Media

Facebook recently showed off some ingenious new features that promise to transform the entire Web into one vast social network.

The new social plug-ins (known as “Open Graph”) will seamlessly integrate Facebook into other websites and blogs, giving it unheralded insights to consumer interests and behaviors across the Internet.

Yet controversy rages on — is it a boon for customization or a bust for privacy?

The truth lies somewhere in between. The benefits of instant personalization and hyper-connectivity come as a tradeoff for letting Facebook and its marketing partners in on our lives -- who we are, where we surf, what we read, what we buy. And as goes Facebook, so go Twitter, Foursquare, Yelp and all the other social and location-based startups that are also feverishly racing to extend their reach.

The connectivity debate will undoubtedly continue for some time. But no matter how the discussion is ultimately resolved, the unintended consequence of the all-social Web will be the dramatic rise in influence of digital public relations, word-of-mouth and “buzz” marketing at the expense of more traditional forms of paid advertising. (Full disclosure: I’m a digital and social media strategist at a big PR firm.)

A new McKinsey report confirms what public relations pros have staked their claims on since Edward Bernays established the practice of PR – that a personal recommendation from a friend, relative or other trusted source is one of the most powerful influences over purchase decisions, especially as overwhelmed consumers “tune out the ever-growing barrage of traditional marketing.”

In fact, McKinsey found that peer recommendations are the top factor driving up to half of all buying decisions.

Nowhere is this trend truer than online – from blogs to social networks to e-commerce storefronts – where sales pitches are scrutinized for accuracy, then rated and commented upon by an army of self-appointed consumer watchdogs, critics and fans. People even feel compelled to express their feelings about a product or company by creating their own web sites, videos or social media campaigns to share their user experience with other would-be purchasers. Big brands, including Dell (“Dell Hell”) and Wal-mart (“Walmart Sucks”), have scars on their backs to show for it and are now actively working to engage consumers on their terms. While other brands with passionate followings, like Apple and Zappos, have benefited from fans’ positivity.

At either extreme, the social Web is empowering consumers.

Before, the high cost of mass media put advertising out of reach for all but corporations. But now, social networking hands us a modern-day megaphone to shout our opinions and extend our influence far and wide.

As people watch less TV, fast-forward through commercials and get more news and information online, marketers are abandoning old media in droves. Budgets at leading companies, like P&G and Unilever, are shifting to effective digital advertising, including search, behavioral and contextual ads as well as pre-roll and inline ads around Web videos.

But even as some forms of online advertising deliver undeniably strong returns, smart marketers are seeking more creative and subtle ways to insert their brands into conversations with individuals in order to earn their attention, rather than trying to buy it.

Why?

Because today’s connected consumers want personal communication that’s authentic, transparent, respectful and responsive. They want the ability to interact, share and contribute to the conversation. And they want to know that their personal information won’t be misused. In other words, the social Web is about relationships. Companies entering the social space should spend more of their time listening to, and engaging with consumers, not advertising at them. This is how brands earn trust.

In 2008, the Obama campaign demonstrated the power of driving opinions through online social connections as its grass-roots movement helped swing a U.S. presidential election for the first time in history. Since then, more and more marketers have sought to emulate Obama’s online campaign, but harness it for profit, not politics. They’ve woken up to the importance of engaging consumers and, in turn, generating awareness, favorability, loyalty and sales for their companies, products and services.

Facebook showed us the future at a conference they ironically dubbed "f8" and branded it with an image of a fortunetelling magic eight ball. Marketers must now embrace the all-social world. The stakes are too high to leave it to fate.

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Jonathan Kopp is a partner at Ketchum and the global director of Ketchum Digital. He was a member of the 2008 Obama National Media Team, focused on online and offline communications targeted at younger voters.