You Gotta Have Friends. Memos on Hot Social Media mention twitter; MySpace; Facebook; Linked In; auction site Buyer/Seller Ratings; User Reviews; Blogs; Votes on Digg It, Delicio.us, Reddit, Stumble Upon, Bookmarked and many others sites that organize groups of like-minded friends, who share opinions and ratings, tips and recommendations. All among trusted networks.

According to Nielsen Online business media trackers, traffic to social networking sites increased 83% from April 2008 to April 2009. Unique visitors to twitter soared from 475,000 in February 2008 to 7 million in February 2009. Nielsen also found that twitter is most popular among working adults.

How Wholesalers and Manufacturers Use Social Networks

Here’s a look at how some of the biggest global services, original equipment manufacturers, wholesalers and chain resellers use social networks…

1. Tap a Network of Friends. Major advertisers – Puma athletic shoes, General Mills food products, Sprint telecommunications – now look at connected webs of friends as a pointer to others who might want their products or services … rather than looking for traditional demographic targets (age, gender, geographic location, economic status) to decide where to advertise.

Believe it or not, this friend-of-a-friend approach is pre-twitter and BF (Before Facebook)!! It’s based on research into social groups that showed people who had contact with existing customers of a telecom company were more likely to respond to the company’s offers.

2. Mapping Friend Nets Not SPAM. Behavioral targeting doesn’t harvest friend lists visible at social network sites like MySpace or Facebook (which would violate terms of use). But it does build a web of actions among friends, such as when a user visits the page or blog of a friend … sends a web page or video to another … sends an instant message or re-tweets (RT@friend-name) a friend’s message.

Businesses who use this approach to cull out potential customers, and decide where to best spend marketing money, insist they only approach friends of their existing customers. Companies map out these Friend Networks – who connects to whom; who frequently talks to 30 other users; and, in turn, who those 30 interact with – to build large friend-of-friend lists. Two such vendors, 33Across and Media6Degrees, insist they only harvest actions and do it anonymously, by installing a “cookie” on the browser of a web site visitor. These vendors, who know your friends, then order ad exchanges to ONLY show ads to computer browsers who have the cookie.

3. See Online Ad Knows Where Your Friends Shop by Stephanie Clifford in The New York Times.

4. Social Network Recommendations Carry More Weight. Yes, this seems like a No-Brainer. People believe the reviews, opinions, buyer tips and recommendations from people, communities and sites they trust … over any claims from a stranger they see on a mass media advertising channel like TV and outdoor boards or on blinking web site banners.

But the obvious advice to “consider the source” when weighing a referral has been hotly debated, mostly over whether recommendations have more influence if they come from the famous, hip and trendy. Or not. See more below in Viral “Schmiral” :: Trendsetters Not a Small Elite.

5. Amazon Tribe Recommends. An example of using social network recommendations is Amazon.com. Any purchase – a World Beat music CD, Secrets of Thai Cookbook, Geneva Conventions Impeachment Brief, How to Build an Urban Food Garden – come with recommendations, customer reviews and ratings, plus a list: People Who Read This Also Liked _______________. Amazon doesn’t stop there. It sends regular emails to inform a purchaser of new works on the same topics, or by the same author/musician, plus incentives such as discount coupons and Return Customer free shipping.

6. Recommendations Tool. The vendor company Choice Stream offers personalized micro-targeted product recommendations. This is a way to give your customers the products and offerings that are most relevant to them … while cutting through information clutter and personalizing product recommendations specifically to each prospect.

Choice Stream sets up an applications interface on your company web site to capture data from your shopping cart or online purchase pages. Choice Stream also collects info on which pages of your product catalog or on-site search box grabbed the most visitor eyeballs … holding them for the longest time. This tool then automatically serves quotes, comments, reviews, ratings and testimonials from others who purchased the same item, brand or category of merchandise.

7. Guidance from Wholesale Review Sites. A search on “__Your Product Category__ + Wholesale + Review” should deliver a number of industry and expert evaluation sites. For example, one I’ve come across is Wholesale Dropship Reviews, that evaluated a shoes and accessories wholesaler. This review site offered:

WHOLESALER PROFILE — Location, registration fee, minimum order, payment/shipping options, returns policy, validity (whether or not the wholesaler being reviewed is listed with Verisign, eTrust, Better Business Bureau, etc.);

PRODUCTS — Order quantities, range of unit pricing, package sizes;

RATINGS — This industry reviewer’s numeric rating (n out of 10) on the wholesaler’s product prices, quality, quantity, reliability of service, impression of web site and overall impression.

REVIEW — Overview of the featured wholesaler’s strengths/weaknesses, highlights and cautions for its product category. For example, one review for a shoe wholesaler indicated …

Highlight is the low pricing on certain wholesale lots. But, be warned, the lowest-priced lots are often the ones that have either been there the longest (without selling) or contain the greatest amount of items per order (that you’ll have to resell to recover a profit). Be sure to choose wisely when scanning the products, and pay attention to how many items are in each item case. Regardless of how low the prices are on each lot, though, the minimum order requirement is $250. All these factors seem to be off-putting, but it’s still possible to catch a good deal on an attractive lot, so maybe it would be a good idea to check back every once in a while.

Note: If you encounter a supposedly objective, expert review that seems like blatant advertising or is overly promotional, then it may be neither objective nor from an expert. It may be a paid-for industry review, also called: pay-for-play, PR flackery, paid shilling, advertising posing as news, a social media “puppet show,” or just plain fraud. See more below under Be Advised.

8. Viral “Schmiral” :: Trendsetters Are NOT a Small Elite. Wholesalers and Manufacturers prosper by how well they predict buyer trends and customer demands … often more than 2 or 3 seasons in advance. However, in the age of trusted social networking, tracking only celebrity-driven consumer trends can muddy up the wholesale crystal ball.

That’s the reason a network theory scientist named Duncan Watts, author of 6 Degrees, had music industry executives and traditional Madison Avenue “ad men” calling him nasty names.

Watts built experiments:
(a) to test email social hubs,
(b) to spread rumors,
(c) to propagate ads virally by boosting pass-around power,
(d) to trigger the Latest Hot Trend through Sims-like populations of up to 10,000 people, who could be used as social networking guinea pigs thousands of times.

Watts proved that the old model of a few top “Influentials” — who are gatekeepers of viral trends and who decide what will be a commercial success — was (in his words) black magic and rubbish.

“Any attempt to engineer success through Influentials is almost certainly doomed to failure. It just doesn’t work. A rare bunch of cool people just don’t have that power.” (Duncan Watts)

Adios, Malcolm Gladwell’s “Law of the Few” and “The Tipping Point.” Bye-bye Katz and Lazarfeld’s “Personal Influence.”

This is great news for marketers who can’t pay superstars to be their testimonial spokespersons or advertising voiceovers. Fact is, you don’t need them, according to networking guru Duncan Watts and Jonah Peretti, veteran of viral marketing wars. They developed what they call “Big Seed Marketing.” In its simplest terms:

· You never know who will spark a trend; but, statistically, it’s far more likely to be an “average Joe or Jane” than a high-profile celebrity. (Surprise!)

· All hot trends require word-of-mouth buzz. So you need to build social networking tools into any ad campaign.

· The Watts-Peretti ad test placed banner ads on prominent blogs and news sites that included a “Share This With Your Friends” button. That button is usually ignored … but this one became a Facebook-like forwarding game when they added ForwardTrack to their share button. ForwardTrack shows the route the ad travels when a user forwards it.

RESULT: People passed it on only to contacts who were most likely to keep the message moving. And move it did — the Watts-Peretti test ad more than tripled its reach. For free.

You can read about Watts’ “barn-burning” social networking experiments, which cause brawls at advertising conferences, in Fast Company’s Is the Tipping Point Toast? .

Bottom Line: Track your company’s most involved reviewers, commenters, social networkers, twitter followers, and customers who refer your product pages to others. Spend your marketing budget and efforts on social networks/communities at industry and business sites; directory listings in your product category; specialized vertical search sites, blogs and reviewer sites. Hold the big-name celebrity contract; it’s not cost-efficient.

Check out WOMMA — Word of Mouth Marketing Association, for more tips from “The Leading Voice for Ethical and Effective Word of Mouth and Social Media Marketing.”

9. Be Advised. The power of social media, online networking and recommendations from trusted communities works for business users both small – home office dropshippers, auction resellers, niche marketers – and large, including Intel, Cisco, Nokia, Apple iPhone, Blackberry, Dell, Comcast tech companies; JetBlue and Southwest airlines; Priceline, Hotels.com and Travelocity travel sites; and even auto manufacturer Ford Motor Company.

Smart companies use social media tools not only for marketing and advertising, but also for instant customer response, to track their brand image and new product demands, and to resolve crises (from product recalls and public health/safety bans to malicious rumors and “bad press”).

Of course, with every new high-buzz opportunity come challenges. Here are highlights of issues in using social media now showing up in trade and industry publications.

· Loose Tweets Can Sink Ships. Posts to the instant messaging social media channel twitter are all very public and searchable forever by keyword tags. (Called hash tags – # – in twitter, as in “new job at #cisco. I will hate the work” … an actual tweet from a new hire at Cisco technology that went public and almost-viral, along with the twitterer who called her out.)

As noted in Business World Not Immune to Twitter Craze ,

Businesspeople are flocking to Twitter without much thought about its true benefits and risks — jumping on the bandwagon. There is a temptation to use confusing acronyms and the potential for Twitter-monitoring to suck up a lot of time. Another danger with Twitter is the way loose tweets can torpedo firms.

Or, as Jim Rapoza, Web 2.0 technology reviewer for eWeek Europe, noted in his evaluation of secure business-friendly alternatives to Facebook and twitter:

The first time business users look at Twitter, it’s inevitable that they will be intrigued. It’s a great way to determine the status of employees; where they’re traveling, what they’re working on, and even what they are reading or discussing. … But few companies would want to do this on a public network such as Twitter. The last thing you want is for your competitors to know where your top salespeople are traveling or what ideas your research teams are throwing around.

Recall our advice, above, to check out WOMMA – Word of Mouth Marketing Association. Below is a tale from WOMMA’s blog. Moral of the Story: Do Not Tweet Mad. Nothing Gets Deleted from the Internet. Nothing.

Author Tweets Her Way into Backlash
Pat McCarthy July 2, 2009
Tags: Microblogging

Twitter provides a platform to publish instant reaction to events in the world and in our own lives. But sometimes that opportunity can be a little too instant, as author Alice Hoffman learned on Sunday when she tweeted an enraged response to Boston Globe writer Roberta Silman’s negative review of her novel “The Story Sisters.” Deriding Silman as a “moron,” Hoffman posted Silman’s phone number and e-mail address and encouraged fans to “Tell her what u think of snarky critics.” Hoffman deleted her Twitter account a day later and issued a terse apology for her “heat of the moment reaction” via her publicist. But on the Internet, where nothing ever really gets deleted, is it enough? And why didn’t she tweet her apology?

Full story in the New York Times, Author Apologizes for twitter Outburst.
Summary written by WOMMA Intern Amy Ellison-Cherny

· Beware the “Twam” (twitter spam). In what may be either an honest alert or an attempt to rain on twitter’s parade, one TV news reporter warned: Flood of Twitter Spam Has Only Just Begun. Highlights include:

Twitter has been infiltrated by an influx of unsolicited advertising, most promising bigger body parts. The number of spam tweets is rising, from 1-to-2 unwanted tweets a day to now almost 10 percent of all twitter messages.

Twitter’s attempts to control spam (or twam, as it’s called), including suspending twam accounts, is “ineffective.” In addition, San Francisco-based twitter requires users to take an extra step to report twitter spam to an “@spam” site, in contrast to a 3rd-party twitter client, Twhirl, that includes an easy Spam Report button on its own interface.

Third-party twitter clients are trying to develop solutions – filtering, blocking – to the twam problem. But one such firm, Twittfilter, believes the second stage of Twitter spam has begun and that it’s much more difficult to identify and block. Twam version 2.0 apparently uses keywords and usernames to dump tweet spam into the most recent twitter posts (called timelines) for both the target and everyone he or she is following.

The Twittfilter interface uses a scoring system personalized to a user’s circle of friends, which does block spammers and unwanted marketing tweets. However, the founder noted, a twitter “power user” who follows hundreds of tweets a day won’t be protected by this narrow filter.

· Prospect of Government Regulation. For all the positive benefits of business use of social media tools and channels, there are also consumer protection concerns focused on online privacy and truth in advertising.

As noted in 2. Mapping Friend Networks, the two cited behavioral targeting companies (33Across and Media6Degrees) insist that they only track friendly connections in an anonymous way, through browser cookies. Their assurances may not satisfy online privacy advocates. The U.S. Congress has held hearings on online advertising, questioning executives of social media sites about their data collection and privacy protection activities.

Note also that one company questioned by Congress on data privacy, Yahoo!, was formally reprimanded in Fall 2008 by a Congressional committee that discovered Yahoo! turned over personal identity data on one of its account users in China who was posting messages on free speech and democracy. Yahoo’s collaboration in releasing private data helped the government of China identify and imprison the account user, who was sentenced to over 10 years. (For shame, said one Yahoo-scolding senator.)

Last, as noted in 7. Guidance from Wholesale Review Sites, social media channels such as blogs and review or ratings sites may actually be paid-for advertising that only poses as objective, expert editorial content or as genuine reader opinion.

The Federal Trade Commission, with authority over fairness in advertising, proposes to start regulating viral marketing techniques and blogs IF they attempt to deceive or confuse viewers. The FTC is only interested in product or company reviews, endorsements or testimonials that have been paid for (fees, payments, free products, any items or services of value), if the writer does not disclose his/her paid relationship with the company brand.

Proposed FTC monitoring does not affect, for example, reviews and comments voluntarily submitted to Amazon by other purchasers (as noted previously), or any product ratings based on “review copy” samples, providing the free items or paid endorsement is disclosed.

FTC reasoning is: Consumers are influenced by recommendations of trusted others or apparent experts. But they can only weigh the believability of positive comments, reviews and ratings if the paid relationship (if any) is clearly disclosed.