The Role of Social Media in Retail Part 1

Will Beresford of Beyond Analysis wrote an article on Wise Marketer about key trends in advertising that will be driven by social media. I don’t disagree with a lot of them, but there are two that I take particular exception to: first, that social sites like MySpace and Facebook are fads, and second, that many agents or middle-men will find it more difficult to do business because people will rely more and more on their networks. I’m writing about this only because I think social media will play a hugely important role in retail – a topic I’ll probably take some time to explore more fully in the future.

So let’s tackle the first one: social networking sites are fads. Disclaimer on my part: while I have vowed to set up profiles on both MySpace and Facebook, I somehow have managed to avoid doing so so far. Yes, it’s true. You won’t find me on MySpace. But you will find me on LinkedIn, and Plaxo really does provide a critical service for me, because I’m horrible about keeping my address book up to date. And I’m probably responsible for getting a lot of the word out on Spock simply because I was a tad indiscriminate in sending invites out for that one when I signed up to try it out myself (sorry about that, for those of you who are still wondering what the heck Spock actually is. I’m still wondering that myself). While I have found utility in using these sites for business connections, I see no need for something like MySpace to manage my personal connections – I use other tools to do that, like IM and the old-fashioned but ever-useful phone. However, there are a few trends developing around sites like these that makes me think they are here to stay:

Openness. A funny thing happened to my Plaxo account the other day. It got eaten up by a “Comcast Universal Address Book”, and Plaxo now offers ways to tap into address books stored across a wide variety of sites – truly becoming a universal address book. And news pops up every day about how IM services are integrating into Facebook, or other social media-type sites are using API’s provided by MySpace and Facebook to automatically update profiles there. So if I post a blog, it automatically updates my MySpace page, or if I digg something, same thing happens. The more a user hooks things back into a profile space, the more valuable that space becomes. These high-profile companies are very much aware of the network effect – and are creating these API’s for that exact reason – to keep their relevance to users very high. There might be something that comes along that is “way cooler” than Facebook, but only because it takes the concept to another level, not because the concept loses its cachet.
Evolution. Part of the reason Beresford thinks these sites will lose favor is because people will realize that it’s not actually such a good thing to bare all to the world. But I see evolution happening with both Plaxo and LinkedIn, and I have to think it won’t be long before other social networking sites figure this out too: we all have many faces. In Plaxo, it’s overly simplified, but I have two spheres I can use to manage my contacts – personal, and business (and both). I can restrict business contacts from seeing my personal info, and I can restrict personal contacts from seeing my business info, if I really want to. In LinkedIn, you can designate the type of relationship you have with a person in your network – a colleague, a business partner, etc. Sampa, a personal website builder, lets you build a site that is available to everyone, or just to people you invite. So if you don’t want recruiters to see pictures of you getting trashed at a bar, you can restrict access to those pics so that only your closest friends see them (and then, of course, they will send them around to everyone they know in order to embarrass you).

Now, on to the second point: agents will become disintermediated thanks to the power of personal networks. While I agree that the travel agent is pretty much going the way of the dodo, it’s wrong to think that forums aren’t serving an agent role. Even MySpace serves something of that role – there is too much information out there, and we all need filters to help us sort through it all. MySpace becomes the moderated, filtered, value-added collection of stuff about “me”. TripAdvisor is the portal to all things vacation-related. We’re not getting rid of agents and middle-men, we’re in an age where new sites are cropping up in order to take on that role by providing context and moderated, filtered content based on that context – thus increasing the value of information that honestly is already out there – if you can find it.

I’m not sure that Facebook, with Beacon, will become any kind of advertising powerhouse that has the ability to bring life or death to brands. But I do know that retailers should definitely pay attention to how this space evolves. As I’ve said before, as soon as consumers adopt a new technology, one of the first places they take it is shopping. How will social media impact shopping behavior? What a juicy topic! You’ll definitely hear more from me on that one.