It is always dangerous to make any conclusions based on only your own behavior.  You need to look no further than the failure of Webvan, which raised $1 billion based on the premise that everyone in the U.S. was like San Franciscans.  But I still find it fascinating that I am more compelled to write about people than products.  Perhaps it is the nature of my job or personality type.  Or perhaps most of us talk more about people (i.e., generating more word of mouth) than products in everyday life.  Let’s not forget how many Americans voted on the last American Idol (74 million in the last round).

In a previous post, I gave the three reasons why I believe consumers write reviews: 1. ego, 2. social connection, and 3. good karma.  But these three rules may be slightly different when writing reviews on people.  The majority of reviews I have written on people have been on LinkedIn.  LinkedIn recently reached a tipping point, as you may have noticed from the increased number of "let's-connect" invitations that you have been receiving.  The network effect is kicking in (more on that subject in the brilliant book Information Rules), just as it has for eBay, Amazon.com, MySpace, Facebook, Second Life, StumbleUpon, Digg, Threadless, and many other businesses literally built on community.

I am often solicited to write these reviews (on people), not dissimilar from the way we at Bazaarvoice suggest our retail clients encourage their customers to write reviews on their purchases.  But I have a more emotional connection to people than I do to products, and therefore I am likely to act when asked.  And writing a review on a former employee or service provider on LinkedIn takes me a lot less time (5 minutes) than writing a recommendation letter for an MBA applicant (2-3 hours).

In any case, I believe that reason #1, “ego”, needs to be replaced with “emotion”.  I am compelled to thank the person publicly by writing the review – it's the reciprocity principle in action.  The other two reasons, “social connection” and “good karma”, fit fine.  I’m also not sure if the "J-Curve" will hold up when reviewing people.  From my own experience, I haven’t written a single negative review on LinkedIn.  I just won’t write the review at all if I don’t feel comfortable with doing so.

But that may be different on Avvo.  One thing is for sure with their launch – it is a whole new world for lawyers.  Just wait – this is coming for doctors, dentists, teachers, consultants, and all forms of service providers in a big way (I say “big” because there are already examples of all on smaller-trafficked sites).  Imagine for a moment joining a new HMO and having access to all members’ ratings on pediatricians.  Revolutionary, yes.  Incredibly useful, yes.  Scary, for some.  But I am convinced that it is just a matter of time before every person, place, product, service, or thing becomes reviewable – and very easily accessible to all.  And I am optimistic about this future, ultimately believing that it will lead to more accountability and better service overall.

But like I said at the beginning, let’s not make any conclusions from my own behavior.  As the founder of Coremetrics, spending seven years immersed in Web analytics, I learned that data tells the real story over time.  We’ll analyze Avvo and other clients as they build people-review volume and report back on the trends once they become clear.  For now, I would love to hear from you.  Do you review more people than products online?  Why?

Update 6/16: What timing!  I am a little behind on my TechCrunch reading, and was alerted by one of our Sales Directors that Avvo is now being sued by lawyers that are unhappy with negative reviews!  This is pretty ironic given my post yesterday was about how skewed to the positive I am when rating people. 

I'm assuming that Avvo expected this given the nature of some lawyers.  Avvo's CEO, Mark Britton, responds to the lawsuit on Avvo's blog.  There is a heated debate between readers of each blog post that is worth reading (although the reactions are as you would expect).  I applaud Avvo for providing a controversial, and highly useful, service.  And I hope that ultimately this press helps Avvo establish a well-known brand early in their history (remember that they just launched in beta).  My prediction is that the lawsuit gets dismissed and Avvo gets a ton of free press out of it.

 

1. Please define "Millennials" and provide our readers with links to your research on them. 

I’d refer your truly curious readers to Litmus, Resource Interactive’s white paper on this economically influential but somewhat mystifying generation of consumers. You can also see a slide summary of the presentation and hear the millennials in their own words at our MySpace page. 

Born between 1982 and 2000, digital millennials, as we refer to them (they detest the moniker Gen Y as it implies some similarity to Gen X) grew up while technological convergence was making its way across giant industry sectors and small digital devices alike. Small wonder, then, that digital millennials’ lives are also blending formerly discrete spheres such as private and public, consumption and production, entertainment and education, socializing and creativity, shopping and self-actualization. 

As a result, marketers have to rethink how brands must follow suit and be a thorough blend of commerce and culture.  This is, of course, why there’s no end to the talk about content—what value to assign to consumer-created content, how brands can provide content—beyond slogans and jingles—to the moderately-connected majority of people online who can “resell” the brand message if sufficiently informed.In terms of psychological makeup, millennials are a fascinating generation, and inspire radically diverse opinions. Most demographers anticipate great things from them due to their optimism and social conscience—but not all. Some researchers believe millennials’ heavy reliance on digital devices for socializing and their parents’ non-authoritarian and indulgent child-rearing styles have bred attitudes of extreme self-entitlement and have stifled their interpersonal skills.Our research led us to formulate five millennial ‘demandments’ that play to their needs and wants:  KEEP IT REAL (wow, can they detect inauthenticity), HEAR ME OUT (they have a high regard for their own advertising savvy—and have been taught teamwork at school), BE ORIGINAL OR DON’T BE (novelty has grown in importance because it keeps commoditization at bay and fuels the influentials’ social credibility), MY WAY NOW (instant gratification doesn’t seem unrealistic to this generation), and ENTERTAIN ME (fun and funny are the two killer apps for a media-clogged world).

2. How will brands market to them when the Web is completely ubiquitous and mobile?

Millennials’ social lives we know to be mobile phone-intensive—they’re tethered to their handsets—and with national wireless programs catching on, their world will soon be one giant ‘hot spot.’ This means marketing can accompany millennials everywhere. But there are new rites, rules and priorities. Here are a few:

• Be real-time because millennials are attracted to spontaneity as an antidote to their overly scheduled lives.
• Invest in geo-targeting. Devise marketing—and pop-up retail events—that support the sudden convergence of cell phone-communicating people.  If you don’t know the meaning of ‘swarming’ or ‘twittering’, (folks communicate where they are and what’s going on by text messaging…) you have some millennial homework to do.
• Always be permission-based. A web-everywhere world holds great potential for the abuse of consumer intimacy. 
• Support co-shopping or social shopping because millennials confer with friends on their path to purchase.
• Make your marketing pass-along worthy.
• Be open to consumer participation in your brand.

3. Your new book, "The Open Brand", is coming out soon.  What are the top three lessons for marketers in "The Open Brand"?  Are we in the midst of a permanent shift in marketing?

Absolutely. The shift has already occurred, but marketers haven’t quite caught up to the reality. We’ll experience it full-throttle in the next few years.

As for the top three lessons…really, Brett, there are four. In a web-made world, “open for business” doesn’t mean what it once did. In fact, it now means “never closed.” But we think today’s brands need to go beyond the traditional hours-of-operation and instead hang out a sign that proclaims them to be truly O.P.E.N. These four lessons are handily summarized by the book’s title: brands have to be O.P.E.N.—On-demand, Personal, Engaging, and Networked.

O…Is FOR ON-DEMAND.

Today’s consumers want—and often get— whatever they’re seeking “right now.” In a world where instant gratification is a way of life, on-demand is consumerism taken to its logical extreme. The timeline of desire to decision to purchase to acquisition is now condensed to a fraction of the old standard, fostering an immediate, intimate connection between brands and consumers. Of course, being an on-demand brand isn’t easy: The logistics, infrastructure and resources needed are infinitely complex, from just-in-time inventory systems to online order/in-store pick-up services. But brands can no longer opt-out of being on-demand if they want to capture the hearts and wallets of today’s quicksilver consumers.

P…IS FOR PERSONAL.

It was easier to address a homogenous audience when consumers were merely consuming. But shortly after the web proved itself a serious channel for both brand-building and direct sales, it became the teeming province of the people, not marketers. Millions leave traces of their individuality every minute, everywhere on the web, and even when forming an ad hoc consensus about products, services, or issues; even when helping to build Web 2.0’s architecture of participation, their voices and interests are irrepressibly distinctive. An open brand gets personal—not with one market of many but with many markets of the one—through constant consumer dialogue and the latest in cross-channel profile management that brings the brand closer to consumers’ real-time needs and wants.

E…Is FOR ENGAGING.

Brands used to compete primarily with each other for consumers’ mindshare, but they now have to share the spotlight with creative consumers, whose post-prime time long tail of personal narrative, mixed media entertainment and worldly appetites writ large make a TV spot look static and solipsistic. Marketers have to study what engages the masses, and how it is made meaningful through high concept and high touch, then apply this to brands in a bid for their own place in the social web. Interactivity holds a key to deeper consumer absorption in a brand’s value system, so open brands should start here: with the sine qua non of digital marketing.

N…IS FOR NETWORKED.

A single consumer has exponential brand potential when she goes online. She has a potential lifetime value, as she always has, but she also has viral value as she engages with her various online communities. Open brands become part of social networks by marketing to the niche of communal consumers who interact with other, like-minded consumers online. Though niche marketing is hardly new, the exponential network effect of online word of mouth marketing is. So the more the brand works the network, the more the network works for the brand.

4. Do you think marketers will ever figure out how to advertise on social networks? 

Of course! But not without the loss of a few jobs…and the creation of a few new ones. It’s not a lack of imagination that has created a gap between marketing and Web 2.0; it’s the infrastructure of our entire industry that has slowed us down a bit. Reorganizing even the nimblest agency around consumer involvement means conceding some creative rights to outsiders.

It’s a different paradigm. It’s not traditional advertising, but consumer-endorsed media. It’s where the consumer is out there placing the ad for you—through the tools the brand provides—whether it’s wallpaper downloads on a MySpace page, etc. 

5. How will they do so without violating the space?  Aren't these forums ad-adverse by the nature of the visitors, who are there mainly to "hook up" with friends (i.e., isn't it kind of like advertising in a dorm room at a party)?

Social networking is in its infancy as a medium. It will undergo the same changes other media undergo in our long tail economy—once critical mass has been achieved, or the hits have been proven, there’s a splintering of interests—and consumers. Take 43things.com, for instance, a social networking site based on postings of the 43 things people want to achieve in their lifetimes. If one of the more popular goals is to learn a foreign language—how far is the leap from this to foreign language learning products? The majority want to vacation in Paris or Mykonos? Enter travel companies with relevant messages. And, if those companies are successful, consumers will port those advertising messages into their social networks.

6. What kinds of new advertising do you think user-generated content will lead to? 

We’ll see a gradual shift away from anonymous spokesperson endorsements to icitizen endorsements. Icitizens have used Web 2.0—and the democratization of fame/celebrity—to create their own personal brands. Those (what we call ‘elite’) icitizens who have achieved a significant following achievable only online (where sufficient popularity breeds more popularity) are, literally, the next face of your brand.

We’ll also see more emphasis on narrative, homegrown and marketer-produced, that celebrates consumers’ customization of a brand for their personalities and lifestyles. Advertisers won’t talk the talk of a car or an audio system being right for ‘you’—the homogenous audience—because no one believes in that monolith anymore.

Last but not least, we’ll see campaigns based on a tighter integration of consumers’ desire to create, share and influence—the three dominant social web behaviors—and marketers’ accommodation of these behaviors through digital DIY tools—widgets, cut-and-paste mashup materials, blog toolkits w/built-in RSS functionality, etc. There won’t be a pre-built campaign; there will only be these personalized permutations.  

7. What do you think about Pete Blackshaw's new marketing framework?

Well, we love it because we have a similar chart in The Open Brand: 

8.  Which brands already embrace the principles you lay out in The Open Brand? 

We cite over 20 examples in the book. Here are just a few:
Webkinz® from GANZ, is not simply a line of collectible stuffed animals, but a toy phenomenon triggered by the appeal of its personalized online playground. Each stuffed animal (enjoyed primarily by kids 5-11), comes with a secret code. When kids type in their unique codes at Webkinz.com, they receive a pet avatar that looks like the stuffed one they own. The kids also gain access to KinzCash to create and furnish rooms, and buy food and clothes. Kids see Happy, Healthy and Hungry meters for their “pets” that let them know if they’re taking good care of their pals. Additionally, kids can play arcade games to win more KinzCash to support and accessorize their pets, and can chat safely online with friends using stock phrases (without revealing any personal information).

NIKE, one of the most recognized sports brands in the world, is expanding beyond its long-time strategy of endorsing celebrity athletes; it’s getting personal with everyday athletes. With NIKEiD, consumers can express their personal style by customizing made-to-order shoes, apparel and accessories. Nike’s teamLOCKER site invites sports teams to collaborate on customized products, enabling voting for best individual designs for group purchase. And, Nike+ sneakers, in combination with Apple’s iPod nano, provides a personal trainer of sorts: The shoe’s sensor communicates via a receiver plugged into the nano and a voice (male or female option) describes the runner’s stats, calories burned, and distance remaining. The system even provides a motivational boost by playing (pre) self-selected power songs. Runs are automatically tracked at nikeplus.com, where discussion boards, school challenges, and consumer-recommended runs around the globe can be found.

Pontiac teamed with Yahoo! to launch Pontiac Underground, a new online destination for Pontiac owners and enthusiasts. In response to a Yahoo Autos study conducted by J.D. Power and Associates that found that 94 percent of respondents who use the web said they believe consumer-generated content is an important source when making buying decisions, Pontiac wanted to support and connect its existing but disparate communities. Pontiac Underground centralizes Pontiac-related content from various Yahoo groups such as Flickr (photos), Yahoo! Answers, and Yahoo! Video and integrates links from outside Yahoo! in conjunction with its “Inside Track” blog and other social media tools. The site also offers RSS feeds of user posts from niche advocacy groups into the broader clubs area of the site.

For more words of wisdom from Kelly, I highly recommend her blog, one of the few I regularly read. 

In any case, I view the Mozilla news as very significant.  Just like del.icio.us and StumbleUpon have Web browser plug-ins that drive high adoption of their services, so will "The Coop".  Instead of visiting Facebook as a Web destination, The Coop integrates it directly into your Web browser.  Kelly Mooney of Resource Interactive showed a great demo of "social shopping" at the Shop.org Annual Summit last year.  Resource Interactive had created the demo for Victoria's Secret Pink.  Via mobile and the Web, they made it appear easy for an in-store shopper to share an outfit that she was thinking of buying with her friends online.  Everyone benefited from the resulting feedback and shopping list it created for all.  Millennials have been shown to follow each other more than the more "independent" generations of the past, so the Resource demo seemed like a natural evolution.  And it is no mistake that The Coop chose Facebook as their embedded partner, as Facebook is most heavily used by Millennials.

The Coop will accelerate the hyper-education of consumers that is underway.  It is just a matter of time when consumers have nearly instant access to global peer ratings and reviews on any product, service, place, person, or thing.  Access no matter if they are shopping online or offline.  While that may sound scary, it will actually be a beautiful thing.  Markets will become democratized, the voice of the marketplace will be "rediscovered", smart companies will react quickly, and as a result "consuming" will be driven to higher levels as shoppers gain more confidence to buy when leveraging the wisdom of the crowd.  Manufacturers will build better products, service providers will respond with better services, and companies will become more customer-centric.  Everyone will benefit, but the short-term disruption will make the old guard question the revolution underway.  Change is often difficult.

Expect Microsoft to quickly follow Mozilla, as they did with tabbed browsing and other Mozilla-led innovations.  It is just a matter of time before social networking becomes intimately interwoven in all Web browsers.  And then we will all wonder why it took so long as adoption skyrockets.

And speaking of revolutions, have you seen the short film, "Web 2.0 – The Machine Is Us/ing Us"?  The Kevin Kelly article it references is brilliant, and the film itself is pretty cool.  It's a powerfully brief summary of Web history. 

I read about Caitlin just this afternoon as I was reading Boing Boing, my favorite blog.  Sorry Sam!  Xeni Jardin, one of BB's editors, links to a compelling story entitled "Say Everything" at New York Magazine.  I highly recommend you read the story, but the main gist is that the proverbial "younger generation" is shamelessly comfortable with revealing the details of their personal lives to the rest of the world in the form of TypePad posts, Flickr photos, YouTube videos, and the agency of a thousand and one (and growing everyday) new social networking and community tools and websites.  The article provides a glimpse into the lives of several of the young people driving this trend, some of which have been burned by the limelight but others that can't seem to get enough of it.

If your time is scarce, save reading the article for later and just check out the spread on Caitlin, a teen that has thoroughly documented her life (and blast-off into adulthood) on Flickr, Facebook, Vimeo, MySpace, and her own personal website.  While Caitlin's portfolio of self-generated online content is impressive, she isn't an outlier.  There are thousands more like her and they have been generating content for all the online world to see since their first broadband connection. 

Thinking beyond the novelty of this, Caitlin is an archetype for the customer of tomorrow.  Consider your customers of today and the relationships you maintain with them, in the context of your target demographics.  Direct mail?  Email newsletters?  Loyalty programs?  Now fast forward just 5-10 years and imagine competing for the attention and loyalty and walletshare of someone like Caitlin.  Like her peers, she has an amazing ability to multi-task and juggle connections with real world friends, virtual IM and chat buddies, websites and online communities, brands, products, and the list goes on.  Where do you fit in? 

I wish I had a clear answer for you, but I don't.  I do believe, however, that the starting point to building a long-lasting relationship with customers like Caitlin is to start speaking their language.  They talk, they post, they share everything online.  Resistance is futile.  At some point, they will talk about you, your brand, your products, your services.  Will it be good or bad?  You can control this to a degree by striving to make every customer interaction the best it can be, with the full awareness that there is a new currency by which your success and desirability are measured.  Call it buzz or word of mouth or whatever you like, but the concept is pretty simple: Are you worth talking about?  

If the answer to the question above is no, the next 5-10 years and beyond won't be much fun.  But my question is a bit more complex than it reads.  What I really mean to ask is are you inviting consumers to talk about you?  Are you encouraging, enabling, and participating in the discussion?  Are you willing to take a little bit of constructive criticism along with the praise you believe you deserve?  Again, if the answer is no, you may very well lose all relevance in the next 5-10 years.  The customers of tomorrow, the thousands of Caitlins out there and the millions that will follow her, demand a voice.  If you give them a voice, they will talk and they may just talk directly to you!  If you don't, they will talk elsewhere and that may include talking to your competitors.  

Pete is well known on many levels.  He was helping CDnow run analysis back in the pre-boom times.  He has been very outspoken in the age of digital music, advising music companies on how to market in these rapidly changing times.  I remember him best as my Markstrat professor, one of the better MBA classes I had the pleasure of taking.

Dave is also very well known.  He consults for companies all over the world.  He served as the Executive Director of the Marketing Science Institute.  And few know him as the co-founder of BizRate, where he served on their Board of Directors from its inception to when Scripps bought the company for $525 million in cash almost two years ago.

So begins our interview…

1. You two have studied and taught marketing for your entire academic career and now teach at my favorite business school.  What do you think about the recent trend of user-generated content?  Will it change the world of qualitative and quantitative marketing analysis?

Dr. Fader:
First, it’s extremely important to distinguish amount different types of “user-generated content.”  There’s a huge difference between a daily blog entry versus posting some comments on an open-ended discussion board versus a customer filling in a feedback form on a commerce firm’s website.  And this doesn’t even get into “real” content such as a homemade video.  It’s a big mistake to treat all of these sources of customer input as interchangeable with each other.

Second, yeah, there’s a ton of new stuff being created every day, but the big question is whether customer behavior is fundamentally different than before, or are we just getting a new window to help see the behavioral process in a way that we could never see it previously?  I tend to be relatively conservative about this (i.e., I believe more in the latter than the former) and this has important implications for model-building and analysis.  Too many people are saying that it’s a “whole new world” and are throwing out the old models/metrics.  This was an enormous mistake for many firms at the dawn of the Dot-Com era, and I think history is repeating itself again.  As a specific example, most of today’s research on social networks is inferior to work that was initiated back in the 1960’s.  The available data are way better today, but firms are drowning in it and not being very thoughtful about how they use it.  Too many firms are coming up with “fun facts” to impress senior management or investors, and not drawing specific, meaningful insights that really add value to the data-collection process.  It’s important to do some serious thinking before looking at any data.  Come up with some specific hypotheses, or guesses, about the relationships you expect to see, then test them.  The complete opposite of this is “data mining,” which is what most companies tend to do.

Dr. Reibstein:
First, I agree there are different types of “user-generated content,” and they should be treated differently. 

Let me add that there is a reflection that there is significant bottled-up sentiment that many people have to share.  Let me start with a caution about some of this content, however.  As with survey research, and the same holds for user-generated content, beware of non-contributors.  In survey research, we would refer to this as non-response bias.  Nixon (I am dating myself) referred to it as the “silent majority”.  The question is what are the feelings of those that didn’t reply or generate any content.  Were they more satisfied and didn’t feel a need to comment?  Dissatisfied customers, experiences, generate many more comments than satisfied.  Mediocre experiences generate the least.  The assumption with survey research, customer satisfaction surveys, and beyond is the non-respondents are not any different than the respondents.  And, in many cases, that is correct.

All of that being said, there is the common belief that consumers trust other people’s opinions and content more than they trust that of advertisers.  Advertisers’ motivations are to represent their products/services in the best light.  Other consumers are less biased.  Of course, this is a universal statement that should be challenged.  It would be safer to assume that some consumers are more willing to rely on other users’ input.  The question is what proportion.  I am sure this percentage will differ by category.

It is the case that consumers can probe and interact with other consumers in a way they never have previously been able to with companies.  Companies, in general, have not been able to figure out how to deal with the multitude of customers and address each of their questions, yet given a large number of customers, it is likely that customers could ask very specific questions and find user-generated answers.  Some companies have been able to harness this “community of users” to help address such individual questions.  For example, P&G has a user group for detergent where people can ask and get responses about how to launder and so forth and get responses from other consumers.  This has proven very powerful.

As for the impact on research, my suspicion is no.  The type of “user-generated” data does not fit traditional modeling and it is coming in such mixed forms, people have yet to fully figure out a systematic way to analyze it.  Let the fun begin, but as Pete says, don’t throw out all the good we have learned to this date about how to analyze problems.

2. What does this consumer-as-producer trend remind you of most from your background?  In other words, is there a previous marketing framework or trend that you relate this to?  [I am a believer that most trends are cyclical – and that is part of the reason I chose the word “bazaar” as the first part of our company name].

Dr. Reibstein:
I believe the “consumer-as-producer” trend is a recycling of all the old research from the 60’s of “word-of-mouth” communications.  We saw it resurface recently in such things as “buzz marketing,” “guerilla marketing,” “coolhunting” (the article), or even Gladwell’s The Tipping Point.  None of these were looking at the electronic world, but all were looking at how some consumers were influencing others.  We can even take this back to Veblen’s The Conspicuous Consumer from the 1890’s to see how far this really dates back.  No, I do not date back that far!  All the trend setting from the fashion world has been based on this understanding.

3. What do you think about the current trend of user-generated advertisements?  Do you think this is a fad, or a permanent change in the way ads will be constructed?  Will we see more of less of this in the future, and how will it evolve?  Some recent examples: Doritos, Oscar Meyer, GM Tahoe, and Yahoo!.

Dr. Reibstein:
In some sense user-generated advertisements are not as unique as they might seem.  Companies have previously tried to harness these consumer-initiated responses by showing ads which were interviews of “customers on the street”.  In these cases, it was sponsored by the companies, but they were selecting real people and getting authentic reactions.

Today, there are major differences—first of all, in the company-sponsored ads, they were able to be very selective and only show the ones that were positive for their company.  Today, it is out of their control.  Secondly, the technology is so much better, accessible, and less expensive, that people can develop their own ads.  The examples you gave are all very energizing and giving the power to the consumer, yet, once again, we have the companies selectively editing the ones to be shown.  So, this is no different.  Nonetheless, the approach has now got some customers energized to create very clever ads.  The agencies should be worried.  (I might note, this is consistent with the notion of reality TV.)

Another comparison is companies putting their name on apparel for customers to wear around.  This is a little different, but to a very large degree, it is having individuals electing to be walking billboards for their products.  It is one thing for Polo to put their brand on shirts and everyone can see who is wearing them.  It is another step forward for Budweiser or Harley to have their name on t-shirts and have people wearing them around.  This has been a long-time strategy of having users influencing other users and a form of pre-Internet social network marketing.

If this approach grows much, we can anticipate the novelty to wear off pretty quickly.

3b. I remember how often companies used video testimonials in ads; that is a good historical point.  The difference now is that consumers are creating the ads themselves.  And the main incentive for consumers to do so is social recognition.  That feels like a major shift to me and another unforeseen benefit of the Internet as a low-cost, easily-accessible, globally-connected form of communication.  Isn’t this the start of a permanent shift for agencies?  How do you think they will adapt?

Dr. Reibstein:
I agree that self-created is a shift, but the ones we cited are not truly self-motivated.  In each case, the action was initiated by the firm.  To the degree there are ones that are self-developed, like when people tattoo a brand on themselves, as has often happened with Harley, that is a real shift, but didn’t just start now.  It is a true sign, though, of consumer commitment.

Dr. Fader:
As Dave suggested, right now it’s a pure novelty, kind of like e-mail marketing back in 1999.  I can assure you that there will be no fuss about user-generated ads in the 2012 Super Bowl.  That doesn’t mean that such ads won’t exist, but no one will care.  This is my main point here: customers do not care about the origins of ads (how many consumers can name even one ad agency?).  They only care if the ad moves, entertains, or persuades them in a meaningful way.  If consumers can do a better job of this than advertising professionals (which, in general, I doubt they can do), then that’s great.

There is a huge difference between user-generated ads and user-generated comments.  Yes, consumers often want to see opinions from other regular people.  In that case, the source of the content really does matter.  But this is entirely different from advertising, and when the two come together, bad things happen…

3c. Pete, will you elaborate on what you mean by “bad things happen…”

Dr. Fader:
I’m sure you’re familiar with the growing list of stories that involve a firm posing as a regular user and “seeding” comments in a user forum.  And surely, for every firm that’s been caught with their hand in the cookie jar like this, there are a hundred others who have gotten away with it.  Not only do these episodes harm the credibility of the firm but they also harm the credibility of the forum itself (even if it’s not necessarily their fault for letting the fraudulent comments get through).  Anyway, this is the red zone between user-generated advertising and user-generated comments, and firms will continue to find ways to toe the line…

4. How do you think brands will figure out how to advertise in social networks?  Obviously the “eyeballs” there are enormous as MySpace is now one of the top-ten sites of the Internet.  And eMarketer predicts that social network advertising will top $1 billion this year (5% of what eMarketer projects will be spent on online advertising overall).  But are these mediums the right place for a brand to reach a customer?  MySpace users seem to fight “the intrusion” often.

Dr. Reibstein:
If you have people going to MySpace or YouTube or other social network sites and searching for keywords, they become primary venues for firms to do their advertising.  The risk is alienating potential customers by invading their space.  I suspect customers will be ready to adapt and not be too offended as ads start to appear more and more often.  For some customers, it will even have appeal as they are interested in certain topics and finding links to products/services might be of interest or ease for them.

An interesting phenomenon I am aware of is some companies, particularly start-ups, are producing their own video’s and rather than buying airtime or webspace are putting up these ads on YouTube and encouraging some individuals to go there and to “forward to a friend”.  So, these social networks are being used directly as an advertising medium.

[Note from Brett: see Wayne's post on Blendtec for an example.]

Dr. Fader:
RetailWire ran a discussion about this recently, and here’s what I had to say:
“I frequently use Facebook to snoop around on my students and I see many of these commercial-related groups there.  People gladly align themselves with brands that they favor, but this by itself doesn't mean anything.  No one really does anything there, and they can't compare to more socially oriented user-driven groups such as "So-and-so was incredibly drunk last weekend and I have the photos"!  So it might seem like a "competitive necessity" for brands to stake out some turf in these new worlds, but I don't really see why.  Many of these networks will collapse under their own weight due to excessive meaningless links (I think MySpace is in great danger of that right now), and serious investments that some brands may make in this arena will be largely wasted (albeit in a different way than the students they are trying to appeal to)”.  The full discussion is here.

And then there’s the use of these networks for “viral” advertising.  See my comment about e-mail marketing above…  much of it will diminish as the novelty wears off, but there will always be room for really good ads to be accessed and shared on YouTube, etc.  But the metrics that firms use to gauge the success of these ads needs to change.  I’m a firm believer that the Subservient Chicken campaign, for instance, was useless, regardless of how many people (including me!) wasted time on it.

4b. Dave, I hear what you are saying about YouTube and the viral effect of some video ads online.  Philips took a risk with the “Shave Anywhere” campaign and it paid off.  But it seems to me like it is going to be hard for YouTube to monetize their traffic unless they add a pre-roll or post-roll ad to each video.  And won’t that hurt the pass-along effect?  I can see how a company can produce a “made for YouTube” ad as a standalone “unit”.  But a pre-roll or post-roll seems much more difficult to me (yes, Yahoo! has these for their videos, but they don’t have near the video traffic that YouTube has).

Dr. Reibstein:
I think we will easily adapt to pre-roll and post-roll ads and learn to skip them.  Look at CD’s, videos, and DVD’s that have all added pre- and post-promotions.  We have learned to accept this, and in some cases, because of the capability of the targeting, have even appreciated the ads because they are relevant to us.  Certainly, when we go to movie theatres we now see the bevy of ads before the feature, not just trailers, but also for other products.  We have accepted these, and as I suggest, even enjoy them in some cases.

4c. Pete, doesn’t your response contradict one of the goals of branding?  If it is about mind-share, doesn’t it matter that PINK Victoria’s Secret has 210,620 fans?

Dr. Fader:
Sure, any PR is good PR and all that.  But the value of these connections is minuscule.  I suspect there is no discernable difference in the collective lifetime value for these V-S customers with or without these connections.

Likewise, I’m not saying that Subservient Chicken, et al, are bad ideas – I’m just saying that they don’t generate nearly as much in the way of sales as these firms would like to believe.

So it’s great for firms to jam a stake in the ground and say “we’re here!”, but they shouldn’t expect much economic reward from it.  The same is true of most branding efforts, even in traditional media.

5. Dave, you served on the Board of BizRate (now Shopzilla) since its founding.  Obviously that business was based on consumer-generated ratings of retail businesses, which powers their shopping search results.  Now new shopping search engines like Wize.com and Become.com are popping up frequently.  How do you think customer ratings and reviews will help evolve shopping search?  What opportunities does this pose for marketers?

Dr. Reibstein:
As a co-founder and board member of BizRate/Shopzilla, I, from the beginning, have believed that consumers want to hear from other consumers about their product and merchant experiences.  It is an unbiased (or less biased) view that has some greater degree of trust.  The first opportunity this provides to the marketer is the feedback from the marketplace about how consumers perceive the offerings.  In some sense, the marketing research is being done for them.  The opportunity is to listen to it, not just to cringe from the bad ratings.  It will also be the opportunity to observe what seems to matter.  Is something poorly rated on certain dimension, yet still captures sales?  There is information in these ratings.

6. We started this interview with how the world of marketing analysis is changing.  I would like to revisit that in two ways.  First, what are academics doing to evolve that, given that both of you agree that companies are drowning in data and the methodologies being used are not advanced enough?  And, second, what would you recommend to companies that are planning to embark on a user-generated content future in their marketing so that they ground themselves properly? 

Dr. Fader:
Unfortunately, the gap between academics and practitioners in marketing is widening further than ever.  We teach the same old stuff as we’ve taught forever (albeit with fancier technology), and much of the content and methods we teach are far removed from the needs of managers.  This is particularly true in data intensive businesses such as e-commerce.  So we deserve most of the blame, but managers bear some responsibility as well.  The 24/7 crisis mentality of today’s executives makes it impossible to be thoughtful and deliberate in approaching data.  Quick and dirty solutions are not only tolerated but they are rewarded, while doing things the right way is not a popular path to follow.  So overall, it’s a pretty grim situation, which is very disappointing considering the coolness of all the new data that are coming out of companies like Bazaarvoice and its clients.  And there’s no indication that things will get substantially better in the near future – both sides will continue to drift further apart…
 
Dr. Reibstein:
I believe there have been several academics that have been making some good strides in understanding the wealth of data we now face.  One of them is my colleague and co-responder in this blog interview who has been too modest, Pete Fader.  He and some of his former doctoral students such as Bruce Hardie (London Business School) and Wendy Moe (University of Maryland) have been leading the front in how to analyze the onslaught of data.  Others such as Alan Montgomery at Carnegie and Florian Zettelmeyer at Berkeley have also been making major strides.  The outlook is not nearly as dismal as Pete paints it.
 
There are some companies as MarketingNPV and others that have been groundbreaking in helping firms organize their data and connect it to marketing outcomes.

Dr. Fader:
Too many people in the “user-generated content” area (as well as its cousin, social networking) think that everything is totally new and there’s nothing to learn from the past.  They would be amazed at some of the work that was done in sociology and other related social science disciplines years ago.  Likewise, they would be amazed at the power of the statistical methods that were developed back then (and unfortunately long since forgotten by marketing types).

I can suggest a few readings – a couple of classics are listed below.  But note that both are out of print, which speaks volumes about the state of affairs in this area.  Both require a bit more than the usual MBA statistical training.  It is essential for an advanced manager to have such skills.  In fact, I go further to suggest that any CMO (or CMO wannabe) should be able to read and appreciate this kind of work.
 
Greene, Jerome D. (1982), Consumer Behavior Models for Non-Statisticians, New York:Praeger.
 
Massy, William F., David B. Montgomery, and Donald G. Morrison (1970), Stochastic Models of Buying Behavior, Cambridge. MA: MIT Press.

My hope is that Bazaarvoice, with its deep grounding in fact-based management, will be able to escape the morass of today’s custom analytics, and I am eager to help them on this important mission.

Thanks again to both Pete and Dave for doing this interview.  They encourage you, the readers, to ask further questions or make comments via the comments section below.

Again, Second Life may not be the 3D Web to survive – it is very early in the adoption curve and it all depends on their execution (the good, old basics of business).  But this move should be the spark needed to fuel further interest in the 3D Web as the next-generation medium for shopping, browsing, and socially connecting.  Just look at what happened with FireFox, based on the open-source Mozilla Project.  It now represents over 4.5% of all Web browsers in use.  That may seem like a small number, but remember how many people are online now (over 1 billion).  And don't count the market-share leader, Microsoft, out in adopting the 3D Web.

At last year's Shop.org Multichannel Executive Symposium, Tony Lenk said that today's 2D Web is like shopping in a store one square foot at a time.  I think that is a little extreme (site search from Endeca and Mercado, to name just one example, help you instantenously find what you are looking for as opposed to hunting for it in a store).  But he makes a good point, and his recent DHTML enhancements to Gap were designed to make online shopping more tactile (and it paid off).  Second Life and its 3D Web successors will definitely improve online shopping in a major way.  Remember that scene in The Matrix where Neo says, "guns, lots of guns", and the endless row of guns comes streaming by in real-time?  Kind of like that… but smarter.  The key is adoption (wide availability and easy installation), speed (Second Life needs a heavy-duty machine and bandwidth to run well), and a relentless focus on serving their users well (Mark Cuban says it well).

If you missed my in-depth Word-of-Mouth Wisdom interview with Giff Constable, who builds a 3D, virtual presence for businesses in Second Life, you can read that here.

Well, the answer to that question is something I have been thinking about ever since launching Bazaarvoice with Brant. Why do people take the time to write reviews? [We will announce next week that we served over 19 million reviews on Cyber Monday!] Why do people take the time (like I did this morning) to vote on community photos for JPG Magazine? Why do people take the time to label images Google has crawled? [Google's top contributor, "wordgirl", has labeled 1,335,500 images since they launched this only three months ago - that is a staggering 14,839 images per day since launch!]

The answer is actually more complex than you may think. It is a combination of ego, social connection, and good karma. Let me explain:

1. Ego – At Bazaarvoice, we know that a reviewer comes back to our client's site three times, on average, after submitting a review to see if it has posted yet. When people take the time to share their opinion, they want to know the world heard it. This fact alone gives our clients three opportunities to resell a customer. In a recent report, Patti Freeman-Evans researched these reviewers.

2. Social connection – Why do you share your favorite movie with an acquaintance? Do you care if they watch it? Why do we talk about our favorite music? The answer is linked to human nature. We all care about connecting with each other as humans. This is what drives the creation of culture.

3. Good karma – A universal truth is that if you help someone, it makes you feel good. When reviewers help each other shop, it saves time. Saving time is one of the most important things we can help each other do, especially in the manic, multitasking world we live in today.

Now, if you apply these three elements to JPG Magazine, it all begins to make sense.

Obviously, we are thinking about the power of photos in customer-generated content at Bazaarvoice. A while back, we added Photo Reviews to our feature set. Wayne blogged about this recently. If you think about the three elements above, photos are a very strong component. Experts believe that the advent of the digital camera is one of the keys to why MySpace took off versus its predecessors (Geocities, etc).

How should you leverage photo reviews? With contests and multichannel recognition. Don't just run a contest for a gift certificate give-away for customers that write a review and include a photo, post the winning photo on your home page! Use it in an email campaign. Use it in a circular. Use it in an in-store display. If your community of customers sees that all three elements – ego, social connection, and good karma – are maximized by you, then it will spark customer participation unlike anything you have seen before. Threadless' entire business model is based on this, and I think it is a brilliant application of the three.

For fun, here is a photo we recently moderated that you won't see on one of our client's site because it came from a rejected review. Alas, it added no obvious value, there was no text review associated with it, and I think this person was just bored (they were thinking about element #1 above only – ego). But, it does grab your attention!

Monday:

Yahoo! has acquired many Web 2.0 / social networking properties in the past year, including del.icio.us, Flickr, Upcoming.org,  and WebJay (plus they are rumored to be shopping for digg).  Yahoo! also launched 360 last March, Shoposphere in November, and Yahoo! Answers in December.  From my perspective, they are turning to social networking as the answer to competition from Google.  At Bazaarvoice, we know that people who write reviews on a retail site return an average of four times just to see if their review posted yet.  This shouldn't be that surprising as the social call-to-action to write a review in the first place would lead one to want to see that their own word-of-mouth actually "went public".  Yahoo!'s strategy seems sound to me as they have a diversified portfolio of services to get users addicted to, and therefore monetize more advertising.  Therefore, the more repeat visits, the better.

So, it makes sense to me that last week Yahoo! announced a contest for users to create their own Yahoo! advertisements.  This is a smart way to generate word-of-mouth for the new Yahoo!  It reminds me of what General Motors did recently for The Apprentice.  Here is my blog entry on that topic.  You may want to check out some of the new Yahoo! user-generated ads – some of them are quite clever and entertaining.  There is a lot of talent out there waiting to be tapped (remember crowdsourcing?).

Update on 8/15: Data released by Neilsen/NetRatings shows visitors to Google-branded sites in July spent less than an hour a month while AOL visitors logged 5 hours 35 minutes and Yahoo! visitors logged 3 hours and 10 minutes.  This made Terry Semel proud, as clearly his diversified media strategy is his core competitive differentiator.  Google visitors are reported to be more like "hunters" while Yahoo!'s are "gatherers".  No doubt this is encouraging for Yahoo!, but what really matters for both Google and Yahoo! is how well they drive customer acquisition for their clients.  Google's entire business model is based on that goal while the majority of Yahoo!'s is (they are more revenue diversified for obvious reasons).  I believe that Yahoo!'s user-generated ads strategy will only drive more awareness of why people need to spend more time on Yahoo!.  Are companies looking for hunters or gatherers?  Obviously the answer is a mixture of both.

Thursday:

Wayne Stribling, our VP of Client Services, sends me this article.  I am struck by two things.  First, this quote:

• "The voice of the customer is actually getting heard by the manufacturers," said Neal Oddes, director of product research and analysis for J.D. Power. "They are understanding what's getting replaced, what's going wrong, and then they're taking that information and designing better products."

Second, the fact that General Motors has two of the brands in J.D. Power's top five most reliable.  This reminds me of my blog entry about the change in General Motors culture brought on by word-of-mouth techniques (such as their blog).  I like the fact that J.D. Power's is now showing quantitative evidence of this change.

I have long believed that the Internet and the power of word-of-mouth will make companies more customer-centric and, therefore, products and services far better than in the past.  An educated consumer serves as a wake-up call – no more being lazy.  Co-creation will generate more sales and customer satisfaction.

Friday:

Google, not to be outdone by Yahoo!, invests $900 million in Rupert Murdoch's MySpace to become their exclusive search engine provider.  Instead of Google creating the social networking properties, like Yahoo! is doing, they decide to partner with the best of them (the traffic growth for MySpace is off the charts).  Here are the words from Eric Schmidt, CEO of Google, from his speech at the Search Engine Strategies conference this week:

• But the "development to me that's most interesting is the social networks as online lifestyles. That's a really new phenomenon," [Schmidt] said. It's a phenomenon on scale with the rapid-fire adoption of instant messaging, he added. "It's [social networks] a big deal."

$900 million is a lot of money, no doubt.  But there are two reasons why this makes a lot of sense for Google.  First, eMarketer announced that ad growth on social networking sites will grow astronomically ($280 million in 2006 to $1.9 billion in 2010).  Second, MySpace is the favorite destination for the IM Generation, which all marketers will need to learn how to advertise to.  They distrust traditional advertising (and companies) more than any other generation (because they are the most educated, due to the Internet), and they turn to their friends for recommendations (i.e. word-of-mouth) more than any other generation.  For more research, see my blog entry on the IM Generation.

Pivotal changes are underway… and that creates a tremendous amount of opportunity for marketers if they navigate these new waters correctly.