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There aren't many silver linings in this economy, but there are a few companies that have figured out how to profit from popularity online. In the social media space, branding specialist Buddy Media has worked with such brands as FedEx, New Balance, Time Inc. and Microsoft. As the economy has tanked, Buddy Media has seen profits grow. In the last quarter of 2008, the company posted revenue growth over 100% and they are set to see similar returns this year.

This week, I wrote about how app and widget makers have rebooted their business model to monetize after the economy shifted. I also caught up with Buddy Media CEO Michael Lazerow to find out what works for brands in social media and who should get canned for their lack of effort in the space.

Tell me a little about Buddy Media. You grew revenues 138% in a downturn last year. How did that happen?
We help our clients build out their presence on large social networks. When we started a year and a half ago, a big part of our business was building apps. We built out custom applications that helped companies market themselves on Facebook, MySpace, LinkedIn and other locations.
With the Buddy Media Page Management System and other things, we’ve focused on building a presence – a home away from home on social networks for companies — and then marketing it.

How has social media advertising changed in the last year?
Our primary business has stayed the same – helping companies market better in the social network space. What has changed the most is the launch of the social profile for brands. Historically for a brand to launch their presence on Facebook, you really had to do applications because the page’s product just wasn’t evolved enough. You couldn’t do that much within the Facebook pages product before March 2009. Facebook had relatively flat pages that couldn’t integrate Flash or anything. With the growth of Twitter and the growth of the Facebook page as a very viable home on the Facebook network this whole idea of a social profile for brands has become very important. We have many clients who have more people visiting their Facebook page and responding to them on Twitter than they have visiting their corporate website.

In a world where people are experiencing you through Google and finding you on social networks, you need to build out really robust destinations.

How are things different now from when you started?
Apps used to be the cake itself. Now the apps are the icing on the cake and it’s your social profiles that are the cake. Apps are more tactical than strategic. Launching your social profiles, that’s the strategy. You need to build out your presence where the user already lives.

Facebook apps are set to make more money than Facebook this year. Why is that?
There was a time when social network ads weren’t proven. We’re seeing that advertising on social networks is really starting to work. Take Bud Light – in terms of what’s out there right now, they have a page that launched in June or July with Buddy Media. It’s Facebook.com/budlight
They have 146,000 fans. Some of their updates get thousands of comments. They have 3,600 comments on their update “Bud Light would like to thank President Obama on his choice of beer.” People that took the time to post things. If Bud can scale this page to millions of fans, that becomes one of their most important channels with potential beer drinkers. I think it’s very early on – a lot of this is unproven – one of the things we know for sure is that building out your presence and marketing that presence on social media is very viable.  Facebook is doing a lot of things right. I think they’re soon going to be the biggest Internet company next to Google.

What are some things that have worked for brands in social media?
We’ve tried different ad formats within the social media application space in the past year. The one thing that has really surprised people is how active brand social profiles are. We know that when you have friends and you upload pictures people often comment. We didn’t really know that about brands. The one thing that I’m more psyched about is the level of engagement that fans or friends of brands are having on the social nets.

Long term we’ve gone from a world where we shout at consumers with the loudest and brightest ad units we can come up with to engaging them in a dialogue. We’re seeing that this connection between brands and people is real. Brands are an important part of people’s lives.

What hasn’t worked?
Running display ad units within the social media space is a huge disaster. I think that’s why you see Facebook getting into much more engaging ad units and keeping display ads out of their property. Also, not being honest and real hasn’t worked out too well. Companies that have launched stuff that isn’t true to their brand have learned that.

It’s still so early. Even though we talk about what hasn’t worked or what has, we’re still learning as we go.

But for CMOs at major businesses, it’s no longer “should we do social media,” it’s “how do we do it today in a way that will scale in the future.” If CMOs at major companies do not do social media, they are not only grossly negligent. They should be fired. It’s like not having a website in 2002. At a certain point, you just gotta do it.

What is the major lesson learned in social media over the past year?
I’ve been saying that the business of aggregating an audience and selling ads to that audience is just a colossal waste of time. There is unlimited inventory and impressions are like air. You had some monster companies that raised tremendous amounts of money trying to aggregate an audience and sell ads to them.  And they found out that just doesn’t work.

Meghan Keane

Published 7 August, 2009 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

721 more posts from this author

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Jeff Molander

Jeff Molander, CEO at Molander & Associates Inc.

Long term we’ve gone from a world where we shout at consumers with the loudest and brightest ad units we can come up with to engaging them in a dialogue.

Yes, indeed... mumbling with them and they get to mumble back.  This is the answer to "what worked?"  Goodness!  That's what's causing record profits for Mr. Lazerow's company?!?!

We’re seeing that this connection between brands and people is real. Brands are an important part of people’s lives.

IMO, this is illogical and far fetched.  Call me crazy but when someone says to me "reality" is "what works" I just have to start rolling my eyes.

That's seriously the anser to "what works?" Mr. Lazerow?  Aside from that being kinda wacky, where's the proof of a "real" connection between brands and people?  The relatively mindless chatter on Facebook pages?

And more importantly, how can we really equate mindless chatter to being an "important part of people's lives" when, in fact, 95% of what happens on Facebook is casual -- relatively UN-important?

The fact that nobody calls "social media experts" on this stuff is a little surprising.  Am I the only one who questions this stuff? 

about 7 years ago

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Jonathan Salem Baskin

Presence, engagement, dialogue, robust destinations...had marketers talked about all those 'old' media channels with similarly vague terms, they would have been fired.  No, wait...they did get fired.  Still do.

No communication, old or new, can be considered a success unless it links to sales.  Businesses are in business to accomplsh little else, at least fundamentally.  The connection between marketing artifact and ultimate purchase may be complicated and spread over time, as well as causally dependent on other artifacts.  But the connection needs to be there, and be explicitly expressed beyond happy reports of time wasted in a Facebook page.

Some marketers have been defending 'branding for branding's sake' for a long, long time.  It's a no-win argument.  Nobody buys it anymore -- if they ever did -- and at least not once they see that there are no tangibly meaningful or reliable numbers to support the belief.  I correlate the CMOs who are adopting social media with the fact that the average employment tenure for CMOs is 18 months (and probably falling).  Most glorious new branding campaigns are usually followed by exec departures and agency firings, thereby freeing them up to wreak similar damage at another business.

While we blather on about the new reality of the marketplace, the keepers of the older, true reality -- the operators of the business -- are laughing.  And then they're firing us. The nature of the social space suggests a lot of substantive, operational opportunities...few of which have anything to do with talking for talking's sake.

I'm happy that Buddy Media is making a lot of money.  They should invest it in something really secure, because the spigot is not going to stay on for long. 

about 7 years ago

Jeff Molander

Jeff Molander, CEO at Molander & Associates Inc.

But the connection needs to be there, and be explicitly expressed beyond happy reports of time wasted in a Facebook page.

Thanks, Jonathan.  Interestingly, what happens when Facebook application geeks get together with companies like Burger King?  Magic: Direct response marketing.  I'm referring to the "Whopper Sacrifice" which was killed off by Facebook why?  Because there wasn't any money in it for them. 

Short version: Un-friend your friends that aren't really friends at all and get a free hamburger coupon.  No strings attached.

For Burger King, it was a social media campaign that created measurable, tangbile value to customers -- by REWARDING them to unload FB friends that were dead weight (that they secretly wanted to un-friend but had no real incentive to do so).

Here's where it gets better: Burger King was able to track back the coupons provided to SALES.

And why would the brand kill it off?  They claimed publicly that the brand was being harmed -- all that un-friending was hurting people's feelings. No mention of it the real reason: it was diminishing the net worth of Facebook which is measured how today?

QUANTITATIVELY (number of friends and relationships)

Smacks of mass media.  Let's face it, guys and gals, banner ads may not work but they're where ALL the money is being spent right now... to the extent that when there's a direct response success story to be had it gets PULLED by companies like Facebook who have yet to UNDERSTAND it.

Prediction: They're learning -- and fast.  I'm willing to bet that Starbuck's recent ice cream give-away was all about direct response and was likely paid for using DR mechanisms ("coupon downloads" not "impressions").

about 7 years ago

Jonathan Salem Baskin

Jonathan Salem Baskin, Author at Histories of Social Media

Hey, all you socially-engaged brands out there (wherever 'there' is): tweet me a discount coupon, and I'm in!

about 7 years ago

Jonathan Salem Baskin

Jonathan Salem Baskin, Author at Histories of Social Media

Backlash.  LOL

The mechanism of social experience -- from awareness, through to endorsement and recommendation -- is about 2,000 years old, give or take a few centuries.  Talking about it as if it's a new media phenomenon is fun, though very little of it, if any, has to do with 'brand building' (which was a mid-20th Century creation).

Have fun!

about 7 years ago

Jeff Molander

Jeff Molander, CEO at Molander & Associates Inc.

Hey, Steve...
Since you were so kind to share links and wisdom I decided to go taste some.  I noticed your advice:

12. Listen – to best understand your audience’s pain, pleasure, motivations, and their vernacular.
13. Test – ensure all communication supports your set positioning statement.
14. Monitor – search for references to your company/brand.

... and figure I'd offer a comment around it that relate to Jonathan's (and my own) criticisms. 

It is the "doing" that we're concerned with.  What are brands DOING with this information.  Specifically, why aren't any of the social media gurus preaching marketing science -- why are they preaching more nebulous, un-measured "branding" balogna? 

Also, it would be refreshing to hear you -- or someone else -- step up and take issue with some of the comments Jonathan and I have dished out.  In the end, the high level statements need to circle back to the tactics OR, at least, address "the getting of" SALES or sales LEADS. 

We seem to be taking issue with a large segment of the interactive marketing/advertising industry that is very busy harming itself with high level statements that don't have a payoff in the end.  Thanks for considering.

about 7 years ago

Jeff Molander

Jeff Molander, CEO at Molander & Associates Inc.

Hey, Steve...
Since you were so kind to share links and wisdom I decided to go taste some.  I noticed your advice:

12. Listen – to best understand your audience’s pain, pleasure, motivations, and their vernacular.
13. Test – ensure all communication supports your set positioning statement.
14. Monitor – search for references to your company/brand.

... and figure I'd offer a comment around it that relate to Jonathan's (and my own) criticisms. 

It is the "doing" that we're concerned with.  What are brands DOING with this information.  Specifically, why aren't any of the social media gurus preaching marketing science -- why are they preaching more nebulous, un-measured "branding" balogna? 

Also, it would be refreshing to hear you -- or someone else -- step up and take issue with some of the comments Jonathan and I have dished out.  In the end, the high level statements need to circle back to the tactics OR, at least, address "the getting of" SALES or sales LEADS. 

We seem to be taking issue with a large segment of the interactive marketing/advertising industry that is very busy harming itself with high level statements that don't have a payoff in the end.  Thanks for considering.

about 7 years ago

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Michael Lazerow

First, let me be the first to admit that the interview above doesn't do justice to social media branding. I was called by the reporter and asked a series of questions. I kept the interview very high level and there's only so much detail you can get into in a 20 minute phone interview.

Second, let's discuss the heart of Jeff's position, specifically "why aren't any of the social media gurus preaching marketing science"?

This is exactly what Buddy Media does, and we do it quite well, thank you. You don't go from zero to 100+ clients, including some of the largest, most sophisticated marketers in the world (Anheuser Busch, Amex, Starwood, P&G, etc.), without proving your worth as a partner.

Social media is a key part of the sales funnel. John and Jeff, you may discount the value of a consumer who decided to spend "time wasted in a Facebook page" (or branded application on Facebook, MySpace, the iPhone, etc.). But those are people who have raised their hand and expressed interest in a brand or product or service. Some of these handraisers are spending close to 10 minutes each with our brands!

A consumer who has engaged with one of our brands is much more likely (7-10X more likely in many cases!) to be activated by a brand. The same can be said of the friends of the "engagers." The actual activation is tied to each client's sales funnel -- for some clients activation is tied to a lower-funnel action like signing up for a newsletter and for others activation is tied to actual purchases, like visiting a theme park, booking a trip or buying something online.

Social media is a great place to spark interest in a product (ads), engage consumers (apps, Pages) and activate those engagers and their friends. I'm not interested in releasing the data here, but I have the data from our 100+ clients showing significant engagement and activation from social programs.

The most exciting work we're doing right now is helping brands build their own social graph of consumers and their friends who are loyal to a brand and much more likely to pull out their wallet.

Jeff, I'll be in the office much of the day tomorrow. Feel free to email me at michael @ buddymedia dot com to set up a time to discuss in more detail. But based on the tone and content of your blog and comments here, it seems like you like bashing more than innovating!

I just visited your site and your three most recent posts are about what you don't like, including "1800 Flowers Facebook experiment is misguided, doomed" and "There is no such thing as social 'media.''  These aren't exactly breakthrough ideas! I couldn't find any useful information on your site for marketers about how to reach the 1B+ consumers who use the social networks (340M on Facebook alone!). Please do share any insight you have b/c all I can find is your opinion on why other marketers and programs suck. You can find plenty of actual white papers and case studies at http://www.buddymedia.com.

Lastly, Jeff and John, we're still at the top of the first inning in social media marketing. Anyone who says they have all the answers are full of it. We have a ton more data today than we did a year and a half ago when we launched Buddy Media. But everyone is still experimenting. Nonetheless, the experiments are starting to bear fruit. And we're not talking about small fruit. We're talking about huge watermelon, growing from trees! Massive, juicy fruit for our clients!

Speaking of which ... here are three great FB Pages created by Buddy Media that shows the power of social media (travel, beverage and retail).

Atlantis: http://www.facebook.com/atlantis (just check out the comments and how Atlantis is tracking sales through its custom tab).

Bud Light: http://www.facebook.com/BudLight (one recent status update received close to 4000 responses!!!!)

JCrew: http://www.facebook.com/jcrew

about 7 years ago

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