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The Web’s New Social Infrastructure

2011 January 12

The Web is a confusing place.  It confounds even the most well informed and insightful observers.  Whenever a future path seemingly becomes clear, something new arrives and muddies the waters.

For the past few years most of the excitement has been around social media.  As regular readers know, I’ve been skeptical about much that has been said (and most of it has indeed been silly).

However, with IPO’s of Facebook, LinkedIn and Twitter now imminent, we’re headed for another curve in the road.  It’s not what we were told to expect, but chances are, it will be more far reaching and important than anyone imagined.

The Unquestionable Value of Social Media

Last week, I explained how Facebook is probably worth $50 billion.  As better information trickles out, it’s beginning to look as if the company might be worth even more.  LinkedIn and Twitter will also be valued in the billions, although most probably in single digits.  That’s a lot of moolah!

The question, of course, is why?  Certainly not because social media platforms are such fantastic advertising vehicles.  Marketing efficiency on these sites is notoriously low and ad rates reflect that.  Even the much maligned Yahoo, with less audience, still earns far more than Facebook.  Most social sites will fail.

Marketers, it must be said, are only partly concerned with brand impressions which are, after all, only means to an end.  What they really want is us.  The people who buy things, with all of our passions, quirks and propensities.  This is what social media is beginning to unmask.

It’s Not All About The Conversation

Follow me around a cocktail party and eavesdrop for an hour or so and you will soon learn that I drink too much and say lots of stupid things that I don’t really mean.  Most conversations are pretty pointless.

That’s not always true, of course.  Some have enormous significance, like the ones between Truman, Stalin and Churchill or the Einstein – Bohr debates, but that’s not really social media fare.  As social listening tools progress, they are helping us glean meaning from more ordinary conversations, but still, we’re mostly just babbling.

What’s infinitely more interesting is the influence that conversations uncover.  We tend to be very willing to pay for the privilege of having someone talk to us from a stage, for instance, but not to mingle in a room full of people.  Conversations often tend to be one-sided with one person speaking and others listening.

And that’s where social networks become really important.  Not because of what’s being said, but the underlying linkages between entities.  Social media is creating a revolution not in media, but in the way information is structured online.

My Friends Are More Influential Than I Am

Authority is often elusive and always contextual.  As I pointed out in an earlier post, your influence has little to do with how many people you are connected to.  Spreading information involves more than just numbers, but how networks are structured and there has been a deluge of research that is beginning to uncover how it all works.

One thing that is becoming increasingly clear is that people at the center of a network tend to be more influential than those at the periphery, regardless of how many links they have.  Christakis and Fowler, in their book, Connected, show that a simple way of targeting the network core is simply to ask people who their friends are.  Through a quirk in network math, our friends tend to be more central than we are.

Moreover, it is not only direct connections that influence.  Christakis and Fowler have shown that it spreads to three degrees.  The friends of our friend’s friends, most of whom we have never met, have a profound effect on how we think, what we buy, how much money we make and even how healthy we are.

The reality that is emerging is far more rich than simple chatter or direct recommendations.

Networks Global and Local

Networks, of course, don’t exist in isolation.  We are embedded in networks related to our families, where we work, live, went to school, etc.  While these networks may seem unrelated, they are, of course, interconnected through us.  Together, they make up a more global network that is greater than the sum of its parts.

While our local networks are comfortable and familiar, they mainly contain information that we already know.  It is further out that our networks become truly valuable.  Mark Granovetter called this the strength of weak ties.  Global networks are therefore much more valuable and interesting than local ones.

Large social media sites, like Facebook, LinkedIn and Twitter function as global networks and that’s why they are becoming important.  Not as advertising vehicles, but as informational DNA.  Much like real DNA, they have the potential to affect the morphology of the entire organism in subtle, yet pervasive ways.

The Semantics of Social

While the details are far from clear, the outlines are beginning to take shape and they have little to do with the presentation layer of the existing Web, but rather the increasing value of the semantic web for marketers.  Underlying the tweets and status updates is rich data about connections and network structures.

The value of profiles is being leveraged further through programs like Facebook Connect, which allow users to log in to sites across the web without having to register anew.  Google and Twitter have similar initiatives and the information they uncover goes far beyond demographics or cookie tracking.

The immense reach of social networks will allow advertisers to aggregate information on a global scale, not as isolated data points, but as an interconnected whole which can be used to create advertising packages similar to ad sense, or fed into the demand side platforms that are being developed to run client campaigns.  Social data is already being incorporated into search engines.

A Brave New World

The future that is emerging will indeed be different, but in ways far different than many would have us believe.

Professional journalists, directors and producers will continue to provide the content that informs, entertains and excites us.  Consumers will be at the center, but because they buy products, not due to any social alchemy that transforms the mundane into the sublime.

Conversations will certainly take place, but mainly by people who actually have something to say to each other.  Businesses will need to listen (they always have), yet will continue to devote the bulk of their marketing budgets to broadcasting messages that promote their products.

What’s going to change is far more exciting (and more scary) than was presumed.  A media universe empowered by a global database that links us all to each other in ways that we’ve only just begun to imagine.

– Greg

22 Responses leave one →
  1. January 12, 2011

    Very good said. I like all the aspects of the post regarding Social Media.

    [Reply]

    Greg Reply:

    Spasibo Tihomir!

    [Reply]

  2. January 12, 2011

    “Social media is creating a revolution not in media, but in the way information is structured online.”

    Media – the way information structures online
    Social – complexity

    Here’s the fifty billion dollar answer….

    Social Media is then media that helps/drive/derive value from social

    This is what makes these platforms worth so much, because they are structured to help drive/derive value of complexity. (at least we think they do)

    On a more personal note in relation to myself, after a year and half of participating, observing, engaging, listening, speaking, writing etc. I realized that media in order to be innovative in relation to social, it must provide enough functional attributes to help each individual first derive/drive value from social themselves.

    Twitter may in fact be worthless if platforms like Tweetdeck and Hootsuite were not around, at least i know that i could not derive value from social if this media platform wasn’t around. Which brings us to the next level of media innovation for the purposes of driving value is functional jobs of each individual.

    and that’s where i think we are at now, the infastructure of individuals being able to take these “information structures” and derive value from the complexity involved.
    Spiro Spiliadis´s last blog post ..spirospiliadis- @bhc3 app business is a tough crowd it seems after reading some of the comments -

    [Reply]

    Greg Reply:

    Spiro,

    Thanks for this. It makes a very good point (similar to the one Richard Dawkins made in The Extended Phenotype).

    However, what I was referring to in the article was not how information is structured on the presentation layer (i.e. HTML), but in the data layer (i.e MYSQL). In other words, not information that we see, but information that computers act on.

    – Greg

    [Reply]

    Spiro Spiliadis Reply:

    I’m not sure but this is what Graham Hill talks about when he speaks of “real time decisioning”
    Spiro Spiliadis´s last blog post ..spirospiliadis- @bhc3 app business is a tough crowd it seems after reading some of the comments -

    [Reply]

    Greg Reply:

    Far be it from me to contradict Graham (for one thing I would never be able to get off Twitter!)..

    – Greg

  3. Martijn permalink
    January 12, 2011

    “A media universe empowered by a global database that links us all to each other in ways that we’ve only just begun to imagine”, i think you are right and the ‘six degrees of separation’ will be shortened in the coming months / years!

    [Reply]

    Greg Reply:

    The world does seem to be getting smaller:-)) Even from Kiev!

    – Greg

    [Reply]

    Martijn Reply:

    We already live in a small country (The Netherlands :))

    [Reply]

    Greg Reply:

    But with widespread influence (and fantastic language skills:-)

  4. January 12, 2011

    As I read your article, it reminded me of college when I worked in a grocery store. A year earlier, this chain had developed a ‘membership card’ program (you know, scan your card to get the in-store specials). People signed up to save money. I started to ask around about how all that information was being used. It wasn’t.

    As a budding marketing/computer guy I thought of all that data just sitting there. Buying habits could be identified, and linked to demographic info that the customer supplied. All sorts of fun stuff. But, none of it happening. The grocery chain just wanted to give the discounts to frequent shoppers.

    Flash forward to today. We get customized coupons at checkout, based on what we bought that day or in the past. In other words, that data is not put to use.

    Facebook was created as a way to communicate with friends. As you point out, that system has uncovered a wealth of data. Only now is it being put to use, in some very basic ways. The future may get interesting…

    Great post, Greg!

    –Greg

    [Reply]

    Greg Reply:

    Great example! I think the analogy is very apt.

    However, it also points out the problem. We certainly don’t want all of the information about us online to be able to be associated with our identity and sold. There will have to be a legal infrastructure that develops with the technological one.

    – Greg

    [Reply]

    Greg Campbell Reply:

    Agreed. Although I suspect that the legal processes will lag behind the technological ones. My impression of the legal system is that it is more reactive than proactive. I guess we’ll see.

    –Greg

    [Reply]

    Greg Reply:

    I think you’re right. We’ll probably have a big scandal, then an overreaction and at some point it will get sorted out.

    – Greg

  5. January 17, 2011

    “A media universe empowered by a global database that links us all to each other in ways that we’ve only just begun to imagine.”

    I think this global database is already existed. It is the links between websites, and the clicks that refer users between them.

    We at Publishedin exploit it, by connecting businesses with online publishers and automatically transform links from online publishers (websites) to businesses (websites) into relations.

    For example, in your post you have a link to http://connectedthebook.com/ now, imagine that there is a network where you were connected to this website, the more people click from your blog to the website, the stronger the connection (very similar to how we learn http://www.digitaltonto.com/2009/advertising-on-the-brain/ ).
    You probably will be glad to hear from the author and get more info, news and feedback, and at the same time the author will be glad to engage with you as you send potential customers to his website.

    We believe that the winners in the future will be the ones that have the largest network of relations with online publishers, bloggers and advocates who influence the purchasing decisions of others.

    [Reply]

    Greg Reply:

    Yossi,

    I completely agree with you that links already exist. However, what I think is new (at least on this kind of scale) is the database part.

    Good luck with your business.

    – Greg

    [Reply]

  6. January 29, 2011

    Very interesting post, Greg, as usual. I am not a marketer and still struggle to see all aspects of the marketing value of the social web. You mention discovering much of that is still a matter of the future.

    Anyway, I didn’t find Twitter icon below your post to share it…
    Stan Yanakiev´s last blog post ..Welcome to my Project Management site!

    [Reply]

    Greg Reply:

    Thanks, Stan. I’m always glad to hear from you.

    There’s a Twitter button on top. I’m trying to get the one on the bottom fixed.

    – Greg

    [Reply]

    Stan Yanakiev Reply:

    Yes, I noticed the Twitter button on the top afterwards. Saying there was none is an example of the lots of stupid thing one leaves on the web forever :)

    [Reply]

    Greg Reply:

    Or just bad usability… Like I said, I’m trying to fix the problem:-)

    – Greg

  7. March 17, 2011

    This is a fantastic article Greg! Thank you for your continued thoughtful insight.

    You’ve uncovered some really interesting points here that can be directly applied to magazine publishers’ business models today and in the future. Magazine publishers have a unique opportunity within the social media structure that you’ve identified as they are trusted influencers and therefore positioned closer to the centre of networks. It’s a given that social media provides additional platforms for publishers to broadcast messages, but monetization of these platforms seems problematic.

    You’ve uncovered a critical point that perhaps it is not the social media platforms themselves that can be monetized well, but where the real value lies is in the information that the audience provides back to the publisher. This is the first time that the powerful combination of the trusted relationship between the audience and publisher and the technological tools to gain insight into the audience are coming together. Exciting times!

    [Reply]

    Greg Reply:

    Yes. I read recently that Facebook “follows” have no value. It;s what happens afterwards that’s valuable!

    Thanks a lot for your comment.

    – Greg

    [Reply]

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