1. The Dawn of the Age of Influence 2.0

Takeaway
 
The first 10 years of the Internet brought great change in many ways, but on reflection it changed the media and marketing world less than it appeared. The second Internet decade opens with the emergence of Web 2.0, which promises more fundamental change in the relationship among consumers, media, and brands. Marketing and PR will have to do more than expand their toolkit of ad formats and augment their media lists, they’ll have to learn to let go of control and allow their audiences to participate in the entire process of message creation and distribution.

Storyline

The Internet Didn’t Change As Much As We Thought

The distribution channel and the device changed, resulting in changes to form and processes. But the fundamental relationship among consumers, media companies, and brands is still driven by content experts delivering their creations to consumers, and brands interrupting with their messages wherever possible.

Web 2.0 Creates a Social, Collaborative User Experience

The principles and technologies of Web 2.0 evolve the user experience from hunting and gathering to creation and social connections. This will be explored further in Chapter 2.

Web 2.0 Begets Influence 2.0

With readers and viewers actively commenting on the news and information they access, traditional media no longer has the final say. As companies like the New York Times and Time.com incorporate blogs more tightly into their offering, their audience has access to the entire array of perspectives offered in the blogosphere. Result: a positive story in one of these prestigious publications may take on a negative tone in light of the entire body of opinions that link to it.

Companies Need a New Mindset for Influence 2.0

Yes, companies made many changes to accommodate the rise of the Internet. Influence 1.0 thinking will create viable methods to tap into emerging content forms. But these will underutilize the potential that mastering Influence 2.0 offers brands. Chapter 3 will present examples of companies who are adopting a new mindset and thriving, while Chapter 4 will propose a framework for how companies can begin to adopt Influence 2.0.

The Internet Didn’t Change As Much As We Thought

Living through the first ten years of the Internet felt like a whirlwind of change and it is easy to point to a host of changes. It made a PC a must-have device in almost 80 million US homes, according to Forrester Research. It virtually eliminated the hand-written letter. Nielsen//NetRatings tracks over 470 million Internet users worldwide; they have all learned new skills of search, navigation, and clicking. The actively selected the content they wanted, rather than waiting for the paper to land on their doorstep or for the 6:00 pm nighlty newscast.

But it didn’t fundamentally change the mutually dependent relationship that binds consumers, media, and brands. Internet media fit neatly into the Influence 1.0 world, where brands must work through media companies to get their messages to consumers (see Figure 1).

The table above summarizes some of the changes the first digital decade brought to media. No doubt these changes caused many companies pain, but ultimately they were able to adjust because the foundations of the business remained.

The most successful content companies may not have been offline powerhouses, but Yahoo!, MSN, and AOL redistributed a lot of offline content. They also modeled themselves on media companies of old and aimed to displace them.

When viewers changed from being passive recipients of whatever was delivered to them to active seekers of what they were interested in at the moment, this was a dramatic change. But at the root, the model of a small group of powerful authorities creating all the content persisted.

Advertising began experimenting with innovative sponsorships and “rich media” technologies, but has become more and more similar to offline advertising. Search remains the most unique online ad format, but: in the last two years  inserting ads – usually a variant of a TV ad – into streaming video has generated by far the most excitement.

PR perhaps changed the least: the list of media outlets, editors, and journalists grew a bit longer, but the practices of pitching stories changed little.

Figure 2  - Attributes of Web 2.0 (Source: Adaptive Path, LLC)

Foundation Attributes User-Contributed Value - Users make substantive contributions to enhance the overall value of a service. The Long Tail - Beating the sales of one or two best-seller products by using the Internet to sell a cumulatively greater amount of the products that have low demand or low sales. Network effect - For users, the value of a network substantially increases with the addition of each new user.

Experience Attributes Decentralization — Users experience services on their terms, not those of a centralized authority, such as a corporation. Co-creation — Users participate in the creation and delivery of the primary value of a service. Remixability — Experiences are created and tailored to user needs by integrating the capabilities of multiple services and organizations. Emergent systems — Cumulative actions at the lowest levels of the system drive the form and value of the overall system. Users derive value not only from the service itself, but also the overall shape that a service inherits from user behaviors.

Web 2.0 Creates a Social, Collaborative User Experience

As consumers became more adept at navigating the Web and finding the content they want, the Web itself evolved to become an even more open, flexible, and interconnected platform. As we’ll see in Chapter 2, this empowered consumers to become creators of content, and increasingly Web users’ surfing brings them to content not created by the big media companies (new or old) but to content created by other people.

The term “Web 2.0” was coined in 2004 by Tim O’Reilly and John Batelle to encompass both the range of technical changes as well as a set of principles describing successful business practices that had emerged in the post-Internet-bust. Mr. O’Reilly lays this out in detail.  User experience design firm Adaptive Path nicely summarizes the key principles of Web 2.0 (see Figure 2).

The success of blogs over personal web pages illustrates how the nuances of these principles make the difference between a Web 1.0 and Web 2.0 solution. At first glance, blogs and personal web pages offer an individual a space in which to proclaim ideas, spout opinions or display life events to the world. But personal web pages are a Web 1.0 version, requiring HTML skills which are more than the average web user possesses. Blogs emerged in the Web 2.0 era as services from companies like Blogger and Typepad which enabled anyone who could type to create a blog. As a result, Technorati reports the number of blogs has consistently doubled every 5.5 months for the past three years.

Here are a couple of examples of how Web 2.0 principles drive success:

1. Network Effect. Blogs’ linking and trackback functionality leverage the network effect while personal Web pages didn’t. Getting traffic to a personal Web page is hard and there is no mechanism to connect to the site visitors. Links and trackbacks enhance participation between blogs, and give an author positive feedback, encouraging him or her to continue posting. This linking structure taps into one of Google’s main ranking algorithms, raising blog visibility and drawing more traffic.
2. User Contributed Value. In the Web 1.0 era, companies and institutions used HTML to create pages of information for people to come and read. Web 2.0 encourages visitors to contribute their knowledge for all to read. eBay’s member ratings and Amazon’s customer reviews facilitate exchange of information and views among customers, supplementing the product information these retailers provide. The power of this information helps these retailers beat bigger offline rivals like Wal-Mart and Barnes & Noble in the online arena.
3. Decentralization. Sites like Flickr and del.icio.us don’t provide a rigid, expert-defined framework for how users must organize their photos and links. Instead users can create a “tag” to classify their information in a more unstructured way. Uploading your photos to Flickr, you classify them as “vacation”, “Arizona”, “Grand Canyon”, “Donkey ride”. Now any other user planning a trip can see what that experience is like without buying a Frommer’s guide.

MySpace represents the next evolution of participation, changing the information and content seeking experience into a friendship-making and social one. As a result, their usage has boomed, reaching 38.4 million unique users in March 2006, a one-year growth rate of 367% according to Nielsen//NetRatings.
 

Web 2.0 Begets Influence 2.0

Web 2.0 gives people the ability to quickly and easily post their opinions. The link structure ranks blogs highly on search results and traditional media are incorporating blogs into their information delivery: the New York Times has a prominent list of the “most blogged” stories, while top Time.com stories include a “Relevant Blogs” link which takes the reader to results on blog search engine Sphere. But even the blogger isn’t the last word: his or her readers’ comments often raise other facts or perspectives that change the tone.    

Traditional media’s view is no longer the last word. The increased participation empowers the audience to turn every news item or announcement into participatory theater. Receiving positive coverage in prestigious traditional media outlets no longer guarantees a positive image for a company. Even befriending bloggers isn’t enough, when readers’ comments raise opposing views.

The result: an environment where corporate, brand, and public relations messages no longer take a straight path to their intended audience, the message can be amended, appended, extended, and upended along the way (see Figure 2).

 In the Influence 2.0 world, traditional media and social media are increasingly intertwined. Chapter 2 will explore this in more detail and it will show that journalists are increasing sourcing story ideas from blogs, as well as presenting bloggers’ perspectives alongside other experts they interview. At the same time, bloggers instantly comment of the stories journalists write. By the time the audience tunes in, they can tap all of this content, and the wide range of perspectives it represents.

Wal-Mart’s recent announcement to sell organic food, illustrates how the Influence 2.0 dynamic impacts the coverage of a story...

1.  The New York Times ran a balanced but generally positive story on May 12, 2006 which began with the sentence, “Starting this summer, there will be a lot more organic food on supermarket shelves, and it should cost a lot less.” The reporter duly presented two sides of the story, the proponents who considered the move a boon to the organic industry, as well as opponents who worry that the giant retailer will somehow weaken current definitions of “organic”.
2. The blogosphere was frequently more negative. Oligopoly.com’s post titled “Pass the Organic Twinkies, Ma” focused on the fact that Wal-Mart would feature organic versions of brands like Kellogg’s Rice Krispies and Kraft Macaroni and Cheese, benefiting the large food processing companies. They summed up their view by saying, “Wal-Mart’s entrance is going to industrialize the organic segment ever more….But industrialization would seem to be the opposite of organic as originally conceived.”
3. The Treehugger.com blog, on the other hand, was more positive, even adding that Wal-Mart is already the largest seller of organic milk. But while the post itself is positive, readers’ comments present an opposing and decidedly negative view:

“Organic is great, but let’s not forget about the other terrible business practices that Wal-Mart partakes. I’m still not shopping there.”

“It’s hard to celebrate Walmart [sic] going ‘ organic’ when the term ‘organic’ will loose [sic] its meaning (if they get their way).”

While Wal-Mart PR staffers likely cheered the positive Times story, they can’t assume that its positive coverage sets the tone for the entire market. A reader who does a simple Technorati search finds a far wider range of opinions and additional facts that paint this announcement in a far more negative light.

Companies Need a New Mindset for Influence 2.0

Ads are beginning to appear in blogs and RSS feeds. Services are popping up to allow brands to seed product samples with “influentials” and “mavens” to set off viral marketing campaigns. But these are Influence 1.0 approaches that don’t fully leverage the principles of Influence 2.0. Will they work? Probably. Will they leave money on the table? Definitely.

Influence 2.0 means breaking the Influence 1.0 habits to adapt to the new realities of:

• Participation, not control. Much has been written about technology empowering consumers to take control of advertising and gathering information to support purchase decisions. But consumers don’t exclude companies’ messages entirely, but now they are just one of the many inputs the consumer evaluates. Companies like Lego which feed enthusiasts with exclusive product information rather than superficial marketing fluff are welcomed as valuable community members.
• Market conversations, not message placement. Ad buying and media placement will continue to exist in Influence 2.0 world but buying ads on blogs or in RSS feeds and even conducting viral marketing campaigns is an Influence 1.0 approach. In the Influence 2.0 world, ads, press releases, and media coverage are the beginning of the conversation. Chapter 4 will explore how Chevy used the GM Fastlane blog to become part of the market conversation when anti-SUV activists swarmed to their consumer-created ad initiative for Tahoe.
• News permanence, not news cycles. The Web is a giant searchable archive, so yesterday’s news is no longer today’s fish wrap, it is tomorrow’s top search result. Nearly two years after a consumer-created video demonstrated how to pick a Kyrptonite bike lock with a Bic pen, links to articles on this incident still occupy six of the first ten results of a Google search for the company’s products.
• Transparency, not spin. With armies of “citizen journalists” scrutinizing every statement and claim for hyperbole, half-truths, and glossed-over flaws, inconvenient truths will be aired and debated. But transparency cuts both ways: because your opponents’ arguments are posted online, you will have the chance to understand, them prepare a response, and enter the conversation.

As we’ll see in Chapter 3, companies like Intuit and General Motors are conducting successful experiments that demonstrate the business results that flow from applying these principles correctly. Chapter 4 will present a framework for how companies should begin to think about adopting Influence 2.0 into business activities that support their core strategies and goals.