By Jeremiah Owyang, insight from Charlene Li and Shar VanBoskirk.  This is also being cross-posted on the Jeremiah's Web Strategist Blog and the  Forrester Marketing Blog. 

Executive Summary
Both Facebook and MySpace have launched profile and network targeted advertising and marketing products. As they both use member interests and the communities which they are part of, trust continues to become key in adoption as information is passed along the network. The sheer size of MySpace’s member base, as well as the thriving local business membership will lead to success. Facebook, which brings a unique solution evolves advertisements to endorsements and encourages members to subscribe to a brand in what we are calling “Fan-Sumers” (an evolution of the consumer). As consumers share their affinities, brands can advertise using trusted social relationships.

Data: Highest trust comes from friends or acquaintances

(Left Graph: Consumers trust their friends and acquaintances far more than any other sources –Report: Leveraging User-Generated Content, 2007)

Trust is and will continue to be one of the most important attributes in the decision making process. 

Communities form online, trust develops
How we get information continues to evolve as communities form online organized by individuals with similar interests. Just like in real life, we identify our interests, and are often influenced by opinions and experiences of trusted peers in our communities. For many, social networking sites embody these relationships and influence how trusted decisions are made.

MySpace: Brands have a home and can hyper-target ads
The already active MySpace platform is leveraging their already active member profile pages, encouraging the many small and medium businesses to setup a online storefront and providing tools to make it easy to self-serve advertisements to their customers. It’s easy to make the case that demand and inventory are present.

Webmaster not needed: MySpace profile for businesses
Small businesses can continue to build their online profile on MySpace (many of them already have), but now, because of their familiarity with self-marketing (restaurant, nightclub, and other local businesses and their customers) on Myspace.

Self-service ads remove middle man
When friction is removed, efficiency is created. With MySpace’s “Self-Service” ad network small businesese can target ads across a variety of affinities (over 300) and deploy ads on users’ profile pages. These ads, which should (by theory) be relevant and contextual to a user who has self-populated their profile page will have these ads displayed.

Advertising balance required in already busy MySpace
With marketers already with a strong presence in MySpace this could continue to erode away at early adopter “cool kids” from embracing MySpace. But as cycles have shown, where communities form, marketers follow.

User experience continues to be free-form
These ads, which will conform to IAB advertising standards (sizes) will give advertisers the freedom to create the ads in the style accustomed to the network. Yes, expect more blinking text.

To watch: OpenSocial
As OpenSocial starts to be deployed across MySpace and other partners, expect profile ads to be tied to widgets and vice versa; a fabric of links. I’ve already outlined How to explain OpenSocial to your executives.

Inaccurate user profiles could result in mis-targeting of ads
We know that many members do not make their profiles accurate which could yield inconsistencies in how and where ads are displayed. While MySpace has assured they’re accounting for rogue outliers, expect some inefficiencies in advertisements.

Our Call: Sheer mass will yield success
We think this to be a win for MySpace, given their great reach, there are millions of users with active profiles, and there’s also plenty of inventory as many small and local businesses that are present will be comfortable deploying ads where their community already exists.

Facebook: Rise of the Fan-Sumer
Going beyond just profile matching of advertisements, Facebook allows consumers to self-identify with brands and becoming fans. In turn, brands can use these “Fan-Sumers” as endorsers to their own trusted networks, resulting in trusted word-of-mouth. Brands can also self-manage their own campaigns, and there’s some unique opportunities for eCommerce widgets or applications to be part of this formula.

There are three major components to today’s announcement, they include the following:

1) Facebook Pages: Brands get their own profile
For the first time, businesses will legitimately be able to setup profile pages, much like MySpace’s business profiles feature. Next, Facebook members will add these brands as ‘fans’ (much like friends) and this will produce a connection between the parties. Members will self-identify with brands in what we are calling “Fan-Sumers”. Furthermore, this service, called “Beacon” gives third parties the ability to share information on the newsfeed and provides lots of unique opportunities. Sponsored groups will start to evolve into this new form brand profile as this system gets adopted.

2) SocialAds: Endorsements at the friend level lead to eCommerce
Once a member has indicated they are a fan of a brand, that brand can choose to purchase SocialAds (from Facebook Sales or via a self-service platform). A unique endorsement of a product or brand will now appear on that individuals news feed or banner or skyscraper ads. Advertisers can purchase social ads target by profile demographics and profiles, as well as by activities done in Facebook. Payment is an auction-based system available to marketers via both CPM and CPC pricing.

3) Use “Insight” for control and flexibility
This self-service dashboard called Insight gives the marketer detailed knowledge how their advertising campaign is working on Facebook. It’s expected that advertisers will have flexibility, control over the type of ads they deploy, in what quantity, and the demographics they want to target.

A likely scenario:
Shauna, who enjoys Revlon products, indicates she’s a fan of the brand and becomes a Fan-Sumer. Marketers at Revlon can then purchase SocialAds, which will then display on Shauna’s newsfeed or on ads on her profile. If Shauna purchases Revlon makeup from Amazon, her newsfeed could indicate an eCommerce links recommending it to her 100 trusted friends, resulting in further sales.

Implications for Facebook:

Members have more control over ads
Facebook users can opt to turn off social ads, and friends of that user can ‘dial down’ endorsements they see using preferences. We believe that Facebook is attempting to respect the rights of users by giving control to members to ‘opt-in’ to become a Fan-Sumer.

Quest for Fans will cause brands to beg
Since social ads only work if a member has indicated they are a fan, brands will be working to earn and buy fans to accept them as members. Expect a lot of noise to be generated from this activity as brands run campaigns to encourage members to add them as fans through discussion boards, banner ads, and special offers.

Hard to qualify a “business”
Facebook is limiting these features to ‘real’ businesses and organizations. Expect an entire team to be crawling and dealing with this qualifying the issue. As recent member accounts have been disabled from Facebook, expect businesses and organizations to encounter same issues.

Limited ad supply to raise prices
Because Facebook members will see only two social ads per day, we expect the supply of ads to be in scarce supply and thus raising prices and not matching the value. This could shift ad buying to large brands who have experience buying and managing search and direct response ads.

Our Call: Brand affinity leads to community endorsements and more trusted marketing.
We see this as a win for Facebook, this highly targeted system isn’t just about web advertising but about brand affinity and hooks into what’s really important, trusted endorsements from people in a network. This truly is the next generation of advertising. Facebook tells us that the worst case it will be 2 times click through rate over the performance of (existing is 4-26%)

Next Steps For Brands

Experiment: Because of the control and flexibility, we recommend to brands that are currently on either of these social networks to experiment and test.

Learn how to efficiently manage your campaigns. There’s clearly a trend towards self-service, which provides efficiencies for both businesses and the platforms.

To know: Marketing has changed, advertising is no longer a sole-solution. Marketers must also learn how to be part of communities, engage with them, and be part of the conversation.

To know: Marketing is now distributed, brands must embrace communities where they currently exist, rather than solely driving them to their corporate website.

This digest not only explains what is happening, but why it matters to you. If this was helpful, please pass it on. Love to hear your thoughts, please leave a comment, even if you don’t agree.

by Charlene Li

You may have noticed that the tag line for this blog has changed – a key goal is to help people do their jobs better, to “win” so to speak with social technologies.

To that end, I thought you’d like to know about a few upcoming boot camps Forrester is running. These events are different from large scale conferences – they are typically 1-2 Forrester analysts with a small group of participants, usually around 20 people. We spend an entire day discussing the strategy and tactics needed to win with new technologies. And I personally love the format because it’s a great way for me to immerse myself in the day to day issues that people are facing.

So here are a few highlights of upcoming boot camps – there is also a complete list of all boot camps being offered. I hope you can join us, and please contact me if you have any questions.

Emerging Interactive Marketing Channels Boot Camp
Wednesday, March 21, 2007 in Cambridge, MA 
Analysts: Brian Haven & Christine Overby

This Boot Camp will introduce new marketing channels and provide techniques for successfully exploring and leveraging the marketing opportunities that each offers. Marketers will learn how to determine if each channel is right for their brand and develop a plan for how to get started.

This Boot Camp will include:
•    Interactive sessions covering how consumers have adopted each channel, how marketers use each channel today, and how to best leverage each to target consumers.
•    Sessions covering rich media (video, podcasting, gaming), user-generated content, social media (social networks, wikis, widgets, tagging, etc.), word-of-mouth marketing, mobile marketing, and others.
•    Examples of how marketers, agencies, and public      relations firms have used these emerging marketing channels.

Social Computing Boot Camp: Tapping Into The Power Of Connect Consumers
Tuesday, April 10, 2007 in Miami, Florida
Analysts: Charlene Li & Brian Haven

New technologies like blogs, social networking, and RSS are changing the media and marketing landscape. This Boot Camp will not only introduce these new tools, it will also move you quickly into being an active participant in social media and marketing. You'll go home with a better understanding of how to use social marketing — and more importantly, a workable plan for what to do today. Marketers will learn when it is appropriate to use these tools, how to overcome internal resistance to deployment, and how to measure the results.

This Boot Camp will include:
•    Interactive sessions on consumer adoption and behaviors toward blogs, RSS, social networking,      word-of-mouth marketing, and podcasting.
•    Examples of how marketers, agencies, and public relations firms have used social marketing — and how to avoid the pitfalls.
•    Hands-on training on how to create blogs and RSS feeds, as well as podcasts. In addition to a      technical overview, the training will include best practices on how to manage the internal process of setting up these social marketing tools.
•    A best practices panel of marketers, agencies, and technology providers.

Blogging Fundamentals: Building A Business Strategy
Friday, April 13, 2007 in Miami, Florida
Analysts: Charlene Li & Brian Haven

Blogs are evolving quickly as a communication medium and influencing the development of communications and marketing strategy. With more than 27 million blogs being written today, it is impossible not to find a niche community that can influence customer perceptions of a brand.

As customers increasingly tune out traditional advertising and turn to new communication channels to fill the void, companies must learn how to join in the conversation. Moreover, besides connecting companies and their customers, blogs are also becoming an invaluable collaboration tool within companies to facilitate knowledge management and cross-functional communications.

This Boot Camp will focus on the fundamentals of blogging from a corporate perspective, helping companies develop a blog strategy and implementation plan, including discussion of policy, technology, and process. It will have a heavy focus on hands-on exercises that will complement in-depth presentations on these issues.

Back in October, I posted our initial research on the ROI of blogging. Many of you contributed your ideas, thoughts, and criticisms – thanks so much as it was extremely helpful.

We’ve (finally) published the report – and actually, there are two of them. The first is “The ROI Of Blogging: The “Why” And “How” Of External Blog Accountability”. It’s available at URL for Forrester clients and also for purchase. I’ve included the excerpt below:

Many large companies stand on the brink of blogging, yet they are unwilling to take the plunge. Others, having dove in early, now face the challenge of managing existing blogs without the ability to show that they effectively support business goals. While blogging’s value can’t be measured precisely, marketers will find that calculating the ROI is easier than it looks. Following a three-step process, marketers can create a concrete picture of the key benefits, costs, and risks that blogging presents and understand how they are likely to impact business goals. This, in turn, enables marketers to answer the key questions, such as whether to blog or not to blog, or to make smart choices about an existing blog.

We also published another piece of research, “Calculating The ROI Of Blogging: A Case Study, A Look At The ROI of General Motor’s FastLane Blog” which applies the framework we describe above. Again, here's the excerpt:

Forrester used the process outlined in the first document in this series to calculate the ROI of General Motors’ FastLane blog; but, this is not merely an exercise to generate a number. Using scenarios, General Motors can understand the risk and impact of increases and decreases of a key metric — the number of press mentions — on the value of the blog. With this knowledge in hand, General Motors can make critical businesses decisions, such as whether to invest heavily in innovations that will rekindle press attention.

We developed a framework that allows companies to track and measure the benefits of external blogs. From the companies and individuals we spoke with, the most common benefits are; increased brand visibility, savings from customer insights, reduced impact from negative user-generated content, and increased sales efficiency. The hard part is coming up with metrics that reflect these benefits, and more importantly, how to value those metrics.  Here's the graphic from the report:

Let’s take for example the FastLane blog. One of the key goals of that blog was “to share information about its products and to start a dialogue between GM leaders and customers”. So a key metric would be to see how many times customers wrote a comment. FastLane has about 100 people commenting on the blog each month, which is equivalent to gaining customer insight on products and brands from a traditional focus group. We estimated that the value of this was equivalent to running a focus group every month at the cost of $15,000 a month, or $180,000 a year. Voila – there’s the value of the blogging benefit laid out in black and white. The case study contains a full-blown Excel model (Update: this is available only to clients) showing how we calculated the FastLane blog ROI in excruciating detail.

But the key metric that we think drives the value of the FastLane blog was the number of press mentions it received, which we valued on the basis of "advertising equivalence" -- how much would it have cost GM to buy an ad in the same news outlet? This is a long standing metric used by the public relations industry to measure its value. We found that this metric drove a significant amount part of the FastLane blog's value -- and that press mentions were decreasing significantly over the last two years. With this knowledge, GM can decide whether to take steps to increase press activity -- or to de-emphasize this metric in favor of other ones in the calculation of the blog's ROI.

As you can see, this process and framework is not cut and dry, black and white. Rather, it’s highly subjective, requires tremendous judgment, and is open to interpretation. But it is a starting point for an otherwise nebulous activity.

We invite you to provide your ideas and feedback as this is an ongoing exercise -- we believe we're just starting to scratch the surface when it comes to blog measurement. As the number of companies with blogs grows, we'll be able to add to and refine the framework.

Finally, here are some frequently asked questions that I’m getting about the ROI of blogging, which I thought would be helpful.

Q: Is there a standard ROI for blogs? A: Nope – sorry, it isn’t that easy! Just as there isn’t a standard ROI for a Web site, there’s no standard for a blog. It depends on what the goal of the blog is and also how much investment the company (and the blogger) puts into it.

Q: What’s the best way to measure the effectiveness of a blog? A: Again, it starts with the goal of the blog. I strongly suggest that companies start with the goal, develop metrics that measure the attainment of that goal, and find ways to assign value to those metrics.

Q: But aren't blogs risky? How do you take that into account? A: We definitely take risk into account by generating scenarios that show the impact of low-likelihood but high impact events -- such as a lawsuit.

Q: Our CMO/CEO/CFO won't let us have a blog until we can show him/her the definitive ROI of a blog. Help!! A: It's not an unreasonable request -- they don't really understand the value of a blog and see just the potential cost and risk. By going through the exercise of defining and quantifying the benefits, costs, and risks of a blog, you'll be educating your C-level executives while also demonstrating the discipline that they expect.

Q: But this is heresy - you can't put the benefits of a blog on a spreadsheet! You've just got to believe that blogs are a good thing because they develop conversations with customers. A: At the core of my bleeding heart pumps the soul of a pragmatist. Sure, I buy into all of the positive, feel good reasons to have a blog. But when your manager asks why the company has a blog versus spending more time and resources on XYZ initiatives, it sure would be helpful to be able to show a spreadsheet of those blogging benefits in dollars and cents.

We just published a new report, "Social Computing: How Networks Erode Institutional Power, And What To Do About It" (available to clients only, but it's getting some good distribution as I'm getting pinged about it left and right). Here's the Executive Summary:

"Easy connections brought about by cheap devices, modular content, and shared computing resources are having a profound impact on our global economy and social structure. Individuals increasingly take cues from one another rather than from institutional sources like corporations, media outlets, religions, and political bodies. To thrive in an era of Social Computing, companies must abandon top-down management and communication tactics, weave communities into their products and services, use employees and partners as marketers, and become part of a living fabric of brand loyalists."

Forrester defines social computing as "A social structure in which technology puts power in communities, not institutions." We also believe that three tenets define social computing:

1) innovation will shift from top-down to bottom-up;
2) value will shift from ownership to experience; and
3) power will shift from institutions to communities?

Now, this sounds all simplistic and theoretical, but I think there's a great deal of power in the idea of social computing. With full respect to the definition of Web 2.0, I believe that the concept of social computing is the underpinning of much of the pain that companies are feeling around new technologies like blogging and RSS. But as I often stress, it's not about the technologies but about the new relationships that users will form. Technologies will come and go, but the power built on the relationships created by social computing will endure.

To fully appreciate the value of social computing, companies have to let go of control. That means letting customers control the brand if you're a marketer, and it means enabling new enterprise tools that IT can't easily control to attract and support employees with high social computing needs. In many ways, this is the source of the great distress that I routinely hear from corporate managers.

The goal of the report is to be the foundation piece for a key area of research for Forrester. So if you've had a chance to read the report, I'd love to hear what you think of it.

I just got pinged about this new stealth viral campaign, www.entertainmentanytime.com. I hadn't seen it before and it's not clear who's behind it. It says that there will be more options on November 14th. One hint is that it appeared to originate on an Organic blog and mentions that it's from the "home team". Anyone with more information, please ping me!

Just be sure to do more than use the arrow keys -- letters, space (for brakes), and zig-zag back and forth. You'll be rewarded with even more content. Very Subservient Chicken-esque.