You can feel a change of the seasons in the air and with each new season comes the change in fashions. This season I suspect we’ll see the old So.Me (Social Media) being replaced by the new So.Biz (Social Business). There was hints of it in the occasional displays of f-Commerce in last season’s passing parade. And over the past month or so, if you listened in the quieter moments, you could almost hear the faintly distant echos of So.Me guru’s practicing for this season’s rousing chorus. A veritable revival of that old broadway classic “There’s no business like Show Business” rephrased to expound the benefits of selling into the social networks.

“There's no business like So.Biz… it’s like no business I know… Everything about is so appealing…”

Last month we have already seen David Armano’s piece for the Harvard Business Review on Why Social Media will evolve into Social Business. Today its the ubiquitous infographic illustration why it’s time to Get down to Social Business.

So to paraphrase “Bones” McCoy is this new wave of social shopping “e-commerce Jim, but not as we know it”? Should we really be talking about How Facebook could change the world economy in much the same way that we talked about how the web was going to change the world economy back in the 1990′s? or is it time to say been there done that. Let’s move on?

I think there are 3 key questions that the So.Biz Guru needs to address before we can move forward.

The first question is if the number one reason people shop online is to save time how is being social going to radically change or at least improve the existing paradigm?

The second question stems from this acute observation by Valeria Maltoni : “That database you spent social ad money to attract? It’s not YOUR database. It’s Facebook’s, too.”: If the objective of e-commerce was to channel all your activity into pushing traffic to your site and then converting that traffic into a sales why are you now in the business of pushing all that traffic to a third party’s site? Doesn’t that a. create an additional step in the process and b. adds rather than removes time from the equation?

The third question is simply why would anybody in their right mind contemplate a future of 74Me34U when today you enjoy having it All4Me?

Don’t get me wrong So.Biz does work and it can be a very effective way to drive online sales. But building a sustainable and profitable So.Biz strategy is a million miles away from the world of calculating the value of Facebook Fans or Likes or Tweets and Followers on Twitter. It’s all about using social media to drive customers to your site. Not driving your customers to follow you on the popular social networks.

Here let me show you the difference. Let’s say you want to create a new online Insurance business brokering Car Insurance. Conventional So.Me wisdom would suggest that the best strategy is to build an online community through Blogging, Twitter and Facebook and then convert all that social activity into sales. Unconventional So.Biz wisdom would suggest that the best thing to do is to build your own social media platform that is linked symbiotically with your website.

Your fans and customers can then use this social space to exchange photos, videos and blog posts about the interest they share in common with your business. Namely their car. The same principle would apply if you are in the pet insurance business or in the business of selling books. Put very simply if you’re in the business of becoming the next Amazon then you don’t need to just build a better online bookstore you also need to build and nurture a better online community of interest. You need to be the best book club on the net. That’s the mistake Borders made.

You’re thinking this sounds like hard work. Why not just let them do all this socializing on Facebook or just continue to run blip campaigns on Twitter (e.g. The Google Last Minute Conference TweetTixfest)? Three reasons why this approach is better for you.

Firstly it’s your network and your database.

Secondly all this fan activity will significantly improve your organic PageRank on Google without you having to pay for it.

Finally all this social activity forms a prospective sales pipeline that will organically attract new business to your e-commerce pipeline.

To prove this let’s do a quick “lunch napkin” calculation.

Let’s say you build a small social network of 10,000 Motoring enthusiastic who enjoy telling the world about their love for all things wheels. Now assuming that each of those 10,000 enthusiastic social media content creators attracts just 1 organic search page hit per day from Google to their digital nest (i.e. Blog or Fan Page) then you have attracted an additional 3.6 Million uniques per year to your sales pipeline. Now apply a CTP of 0.01% to that traffic and you’ll discover that those 3.6 Million organic searches translates into 360 new customers each year. Times that by the value of the average value of the policy (let’s say $500) and we discover that this So.Biz strategy delivers an addition $180,000 in revenue to the bottom line each year. In addition to that we have the increase in organic search engine traffic to the e-commerce site generated by all that social content pointing back to the company’s website. So you are saving on Search Advertising and increasing the traffic to your website.

That figure translates into a very healthy $18 per “Fan”.

Now compare that to the estimated value of gathering a following on the popular Social Networks or even the ARPU Facebook is achieving from putting your ads on it’s network.

Earlier this year Jeff Bullas suggested a Facebook Like was worth $1.34 to the Eventbrite ticketing agency. A Tweet was just $0.80. Would these figures translate into car insurance sales? Probably not. After all concerts are more social than insurance and Jeff’s data suggest that value of sharing Financial Service activity socially translates into about 10% of the value of sharing the news that you are attending a concert. But having said that the value of the insurance product is probably much higher (maybe 10x higher) than a concert ticket. So maybe a case could be made for a “swings and roundabouts” comparison which in turn would suggest the “DIY” Social Media strategy significantly outperforms the more popular build a fan club on Facebook approach.

Of course there is nothing to stop you employing both strategies. The key though is to figure out what the primary objective is and work back from there and not to pursuit a strategy of being the most liked Brand on Facebook and then figuring out what’s next.

In the end though I still think the So.Biz strategy is yesterday’s approach to doing business. The DIY Social Network = A new business pipeline was a great idea 5 years ago when Facebook was first getting started. Today it looks and feels like just another ME2 in the highly crowded Social media space. For your fans it becomes just another time sink. Which means it will take more effort from you to get them excited about changing platforms.

The key to the e-commerce equation was the simple idea that people shop online to save time. At the moment that idea is more attune to the future of Mobile Shopping (Mob.Shop). So looking past this year’s So.Biz fashion parade it will be interesting to see what happens when the So.Biz converges with the Mob.Shop. When the Feedback Loop meets the Time Wallet. You don’t have to look very hard to discover the signs that this is already happening. (e.g. How So.Me and mobile is helping advertising to evolve).

Part 2:

Following on from that last post another quote that caught my attention last week was 10 words that summed up the economics of Free: “If you’re not paying, then you’re the product being sold“.

This of course is the economics of free media. The economics of free social media takes this idea a step further: “If you are not paying then your relationships are the product being sold”. This of course is the business of mapping and commoditizing the Social Graph and it forms much of the informed debate that is now being conducted over the relative merits of sorting and categorizing your world by Circles, Lists and Groups.

The next level of discussion above this is of course the idea that this rich personal data can then be traded in real-time ,just like shares on the stock market, to potential advertisers eager to reach the an audience of one matching the right customer profile.

Once this happens we achieve a kind of direct marketing nirvana and the biggest social network (be it Facebook, Google +, Twitter or some other next-gen entrant) wins the future of advertising.

Nice in theory but what happens if the growth in social networking isn’t a crowdsourced mapping the complexity social graph but merely gathering yet more data on how the web influences behaviour through the creation of massive feedback loops on a global scale? What if, as Neil Strauss has suggested, rather than sharing what makes us different we are busy sharing what makes us exactly the same? What if rather than creating a unique digital mirror of ourselves we are merely creating a digital mirror of our social selves (i.e. our commonwealth of interest).

What if the social graphs that are being mined are fundamentally worthless simply because in reality the only reason I am here sharing this with you this simply because everybody else is here doing this? More importantly the reason I have 20,000 friends is because the game being played across these networks is about accumulating influence and social presence (or at least being able to demonstrate the illusion of influence and social presence) and therefore the friends I have gathered are little more than an expression of my ability to create a personal feedback loop?

You see if all we doing is playing a global game of creating personal feedback loops then all of the social network theory goes out the window. Deep and meaningful So.Me ideas and though leadership like “To spread your brand on Facebook. Don’t target your fans– Target their friends“, “Seven Indicators of Twitter Influence“, “The state of influencer theory on the social web“, ”Topical storms brewing around influence“ and ”how to activate your brand’s super influencers ” may have a place within the context of network theory but are they still relevent within the context of discussing the nature and economics of igniting, fueling and managing the ubiquitous perpetual motion machines that are these global social feedback engines?

And what does it say about the future of the current crop of So.Me meta data start-ups like Klout and PeopleBrowsr? At the moment the focus is on monitoring and measuring. (e.g. You can’t keep your secrets from twitter) What happens when the focus is on manipulating and influencing? Today on Wall St “In high-frequency trading (HFT), programmers eke out every last incremental tick in performance to build algorithms that battle other algorithms for computational supremacy and millions in profits — and earn a lot in the process.” What happens when the same effort is put into creating algorithms that battle for social influence?

As I have said before within the context of a network the idea of monitoring, measuring, managing and manipulating relationships looks complex and time-consuming. However within the context of a feedback loop managing this “problem” appears to be as easy as turning the “knob” on the feedback controller… so long as you have access to the social feedback amplifier.

This then I suspect is the real So.Me challenge (much the same as it was with the original online media challenge). It isn’t about building the next global social network. The real challenge is to build an intelligent network (e.g. A network of human representative Bots of say 20,000 nodes that perform a function similar to that of Max Headroom) that allows you to monitor, measure, manage and manipulate the social feedback loop across all the established networks in real-time. Once you have achieved this you can just lease time on the “network” to advertisers and marketers seeking to reshape their “influence”.

That’s why I suspect the future of social media advertising will be about sitting in studios monitoring and mixing social influence by manipulating the global social feedback loop in much the same way we mixed in sound and visual effects when doing the post production for a TVCs. Understand this and you will see how easy it will be for very clever people to turn today’s So.Me pennies into tomorrow’s Feed.Me Dollars without having to put ads on the menu.

Postscript:

Not surprisingly it didn’t take long to find a Google quote that mirrored the idea of “If you’re not paying, then you’re the product being sold”.

“We are not Google’s customers: we are its product. We—our fancies, fetishes, predilections, and preferences—are what Google sells to advertisers.” – Siva Vaidhyanathan quoted by James Gelick in the New York Review of Books.

In the end Google didn’t so much invent the Web 1.0 Feedback Loop but certainly became the first to monetize it by tapping directly into the original source that fueled the growth of the web (i.e. PageRank = A hyperlink count = The basic metric of the creation+curation (i.e. the linkback)=creation feedback loop). Google was the first harvest the “wisdom of the crowd” embedded in the commons. Since then the rest of the market has been left with the challenge of manufacturing their own proprietary Feedback Loops (Think: Twitter with its Followers and Tweets and Facebook with its Fans and Likes). That’s why the Google Economy (i.e SEO, AdWords, AdSense etc) is easily the single biggest Feedback Loop on the web today.

Note: Feedback loops are synonymous with mathematical concepts like Fibonacci Numbers (i.e. Add the last two numbers to get the next number) and so I thought it may be worth looking at the growth in the social networks to see if there is a year on year pattern. Over the past 3 years Facebook, LinkedIn have both grown faster than the year on year Fibonacci projection by an additional year. We see a similar result if we take a look at the growth in internet subscribers for the period 1995-2010. The Fibonacci projection based on the 1995 estimates suggests the estimates for the 2010 level of subscribers would have been achieved in 2012. If we take a look at the growth in web sites then we discover the Fibonacci projection for the period 1995-2010 suggests there should have only be just over 9 Million web sites in the world in 2010. There was an estimated 234 Million. A number projected for 2018. Meanwhile if we look at Twitter’s growth over the past 3 years we discover no year on year or month by month correlation. Any correlation that does exist for Twitter requires manipulation of the time scale (i.e. A logarithmic transition from days, weeks, months to years as the network grows) to achieve a closer match in the Twitter growth pattern.

As I have said before it is the technology (i.e. the Tool) that shapes the behavior and the iMag is a terrific tool for media consumption tool but it has somewhat limited value as a tool for expression. Time that was once spent hammering on the keyboards of the netbook have been replaced with browsing on Flipboard and retweeting interesting links on Twitter. After that there is the totally addictive interactive comic section (e.g. Angry Birds). So for all intents and purposes the iPad, as anticipated, represents pretty much a recreational time sink.

Anyway I was playing around with the Korg Analog Synthesizer app on the iPad and it left me thinking about feedback loops. More specifically it left me wondering if we had made the mistake of confusing social feedback loops for social networks.

You see if the economics of Facebook, Twitter, Linked In and Google + – and even the web in general – are in reality more about economics of the feedback loop than networks it would probably explain why there is little to no correlation between network theory’s like Metcalfe’s and Reed’s Law and the economic realities of the social networks.

It also echos what Bill GATES said about the internet in 1995 [The Internet Tidal Wave is a positive feedback loop] “The more users it gets, the more content it gets, and the more content it gets, the more users it gets”. I Suspect we can apply this same statement to Facebook or any of the other social networks or social media platforms. They are first and foremost social feedback loops rather than social networks and this probably explains why Twitter is more of an echo chamber for personalities and ideas than a theater for social influence.

In the end though this idea of the social feedback loop fundamentally changes the way we need to think and interact with the So.Me world. It also brings into serious question the value not only of the networks but also of the eco-systems that have been developed around the So.Me (e.g. Social and Viral Analytics). It probably also explains why this whole concept of monitoring, measuring and managing social media influence has proven to be so fauxionary.

The world changes considerably if we stop thinking about revolutionary new platforms and start thinking about what the next global/local feedback loop is going to be.

This idea of thinking of Social Networks as Social Feedback loops doesn’t render the current debate over the value of Friends and Followers, Lists, Groups and Circles redundant but it does significantly reposition how we should be thinking about what the solution to these problems may look like in the future.

Postscript

Within the context of a network the idea of managing relationships looks complex and time-consuming. Within the context of a feedback loop managing this “problem” is as easy as turning the “knob” on the feedback controller. Depending on your mood you just dial the knob(s) to increase the level of feedback (i.e. noise, randomness or chaos) flowing into your social device to either amplify or dampen the effect. Think of it as a Crowdsong effects box similar to the effects boxes we have for the electric guitar . There could be a social flanger, echo and beatbox.

Take the idea a step further and plug the social feed into a music synth and tapping into the social crowdsong could become the new world music. A sort of evening song or tribal chant meets electro or house that you can personally mix on the iPhone.

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