McKinsey on Social Media

I was quite intrigued by this piece from the McKinsey Quarterly, as two people whose views I respect were quite negative about it. In essence the piece argues that two insights are key about Social Media. The first is (I abridge):

The power of importance

An effective way for a brand to be useful in the context of social networks is to make people who originate a word-of-mouth conversation seem important within their own social environment. Recognition by peers is a powerful motivator, and brands that allow users to gain it deliver real perceived value. When users publicize that recognition, it translates into word of mouth. Companies can confer this kind of importance—for example, by issuing achievement “badges” that users can post to their Facebook profiles or by deploying leader boards or achievement scores of all types. As Web sites evolve to become increasingly dynamic experiences that let people interact in real time, the value to core users of being recognized for their prominence in a community will only increase.

and the second....

The allure of virtual items

It’s our strong intuition that virtual items play an important role in facilitating virtual word of mouth. This belief, at its core, is based on observing user behavior. While the notion of virtual goods—nonphysical objects used in online communities and games—still puzzles many executives, it’s quite apparent that consumers love them. People acquire or compete for virtual items obsessively on Foursquare, Zynga, and many other sites. It is estimated that virtual goods have become a very real $5 billion industry worldwide.

So why do consumers pay real money for online objects that don’t actually exist? Their motives reinforce our notion that users seek online importance: they purchase virtual goods primarily for self-expression (such as virtual houses or virtual gifts) and for recognition (such as virtual badges for becoming, say, the “mayor” of a bar on Foursquare). These behaviors are too widespread and intense to be fads, and marketers need to recognize them as meaningful. Brands should actively experiment with ways to use virtual goods as catalysts of word-of-mouth media.

And a final thought:

One final recommendation: no gimmicks. Forget dancing monkeys, artificial contests, or stupid tricks; they add no value and waste people’s time. A commitment to being useful in social-media activities means a commitment to creating only high-quality interactions.

So, now having read it, my thoughts are that:

(i) For anybody who is familiar with the Social Media story over the last few years these are hardly "insights" - it is pretty basic stuff, but then the intended audience of this article is mainly large corporate types (the majority of the readers of said Journal) to whom this is all new, rather than the early adopters. It's aim - and thus language - is to speak of Social Media in the lingua franca of Large Corporations (the piece's author works for a large media company now - 'nuff said. ....). The TLA's and Re-Engineering Methodologies are sure to follow now

(ii) To give the author some credit, much of the Early Adopter thinking is about the technical "how" (or even wow!, gee whiz!, etc) rather than the economic "why" or the executive's "what". For all that these are not new insights, they are definitely ones that are Following The Money - ie these are major areas that are directly translateable into the business plans that mainstream adoption requires. In that, it does make a refreshing change from the financial otherworldliness of some early day Social Media evangelists

(iii) To an extent this is "The Death of Social Media" as Adriana Lukas puts it - ie it is the end of it as an early adopter experimentation era, a transition from the romance of infinite possibilities to the pragmatism of (very) finite probabilities, the shift from small, sexy startups to large, boring conglomerates, a shift from huge promises to cheese paring profits (and Google too is having another go, by the way.) and very likley its absorption into the Standard Business Processes. (The real end is when the SAP module comes out....)

The risk is that in the corporate rush to Colonise, Taylorize and Strip Mine the Social Media Golden Goose, said Goose is strangled by the corporate's red tape decks - as the author notes:

Word-of-mouth marketing through social networks could emerge as an important tool in the marketer’s arsenal. That will depend on whether marketers can tame the fundamentally unpredictable and serendipitous nature of word of mouth without losing what makes it so valuable in the first place—its authenticity.

Ah yes....authenticity. Been a bit of a problem so far, that. Still, if one can fool enough of the punters for enough of the time.....

What would I do differently if I were the McKinsey Quarterly?. I would probably reach out to a host of other alumni who are also working in this area to get a richer, more nuanced view.

Like me for example