Earlier this week, Mediapost came out with an article entitled "Social Media Fails to Manifest As Marketing Medium, Report Likens Twitter To TiVo: More Hype Than Reality". According to analysts from Knowledge Networks, "social media is having a profound impact on the way people connect with each other, but that it's not becoming a very meaningful way for people to connect with brands, or advertising promoting brands." While I understand where they're coming from, I have to say that I disagree heartily with many of the assumptions and statements made in the article, for the following reasons:

1.) Knowledge Networks separates word of mouth advertising and social media. I find this to be a serious error, because most interactions in social media consist of word of mouth. Main example: crowdsourcing. People looking for any product— a restaurant, tax accountant, hotel, even a pair of shoes—often crowdsource on Twitter, Facebook, and Tumblr. Last week, I was trying to decide between Jet Blue and Virgin America for an upcoming flight to Los Angeles. I polled my Twitter followers, and received an overwhelming response that Virgin was the right choice (including a response tweet from Virgin America itself). Largely because of this, I ended up choosing Virgin. If that's not a powerful example of word-of-mouth, I don’t know what is.

2.) It seems to me that Knowledge Networks is looking at social media marketing as an end-all and be-all solution-- in a sense, giving in to the hype that they claim is the problem. I think it’s the wrong attitude. Having a presence in social media isn't about shouting at your target audience to "buy! buy! buy!". It's about being there for the consumers who want to reach you in the environment where they feel most comfortable—like having another webpage. If someone is looking for you on Facebook or Twitter and you’re not there, it’s a huge opportunity loss.

3.) I also take issue with the notion that because Twitter is used by the “coastal digerati”, it some how loses value as a markting tool. Sure, Twitter may not be used by a lot of suburban late adopters, but that doesn’t mean it isn’t really valuable. In fact, there are entire brands who are desperate to reach the elusive upscale, tech-heavy, urban consumer who spends a lot of time on Twitter. As I’ve said many times before, social media is not one-size-fits-all. Brands need to consider whether or not their audience is using these tools extensively enough to merit an investment—just like any other medium.

4.) I think that, overall, this is a correct statement: " Twitter is less a way to directly reach customers, and more a way to reach passionate voices who may influence perceptions of your brand." The problem with the way that this statement is phrased is that I feel that Knowledge Networks' analysts are discounting the immense value of those passionate, brand perception-affecting users.

Social Media is a fairly new phenomenon, and as such, it's going to take a while for everyone to understand how exactly marketing is going to fit in as part of the equation. However, I find it to be short-sighted and premature to wholly discount social media as a marketing tool so early on in the game.

Aside from a few exceptions, the currency of the web (or at least, social media) is social capital. You know, the number of friends you have on Facebook, your 2 million views on YouTube, your “SuperUser” badge on Foursquare, your hundreds (or thousands) of followers on Twitter and Tumblr. None of those things have any direct monetary value, although some people are trying to cash in on them through things like the Twittad network, or a good old fashioned TV deal-a-Tequila. As things currently stand, money can’t buy you love or Elite status on Yelp; the only way to get that is by earning it through creation of “compelling content” and/or being an “influencer”.  But something is in the works that’s going to change that, and potentially the way we view social currency in the online world.  

Picture this: you’re playing an online game. You run around and interact with other players of the game, and get points for everything you do. You can buy things with these points, and give these points to other people. You can spend real money to get these points, or you can just earn them (although to get the really good stuff, it’s going to take a while). Sounds familiar, right? It’s Second Life, or World of Warcraft, right? Wrong. It’s Facebook. Or it will be, in about 6-12 months.

Last week, a sales rep from Facebook came to Flightpath to have a discussion with us concerning the most recent changes to the site. During the course of the meeting, he revealed that Facebook will soon be allowing users to earn Facebook Credits by simply engaging with their friends, whether it’s by “liking” a status, adding a friend, or posting a video. People will also be able to gift Facebook Credits to others, along with using credits to purchase gifts. In short, Facebook is going to have a currency. Holy Terms Of Service.

According to the calculations of Lightspeed Venture Partners, Facebook made $35 million on Facebook Gifts in 2008 alone. That’s right. Those tiny little icons for $1 (or 100 credits) netted Facebook tens of millions of dollars last year (which is paltry compared to Zynga's $50 million). Ok, you’re saying to yourself, so what? I don’t care about little icons on my profile. Facebook isn’t going to make any money off of me. Well, you’re right—for now. You’re also probably over 25. And while you may not care about a teddy bear icon or some other form of digital embellishment, there are at least 27 million other people who do. They’re kids under 12, and they’re the people Facebook is ultimately planning for.

Maybe not all of you have kids. But those of you who do, or who have ever been around a kid who’s 12 or under, know about Webkinz and Club Penguin. For the uninitiated, Webkinz and Club Penguin are sites that are essentially Facebook for the under 12 set, only instead of a picture of yourself and your dog, the kids are COPPA-compliantly represented by animated animals. A social network combined with a game, they can play for free, but the really good stuff (digital furniture, digital pets, special invites, etc) goes to those who fork over the dough.  And fork over they do: with only 12 million registered members, Club Penguin made $35 million in profit ($65m in revenue) last year.

So what does this all mean? Well, it basically means that Facebook has the potential to make a lot of money. Kids who grew up having online access from an early age don’t have as many mental barriers between the online world and the real world. They don’t have problems spending a lot of (your) money to make their online room just as cool as their physical, brick-and-mortar room. Talking online for them is just another extension of talking in real life. So by attaching an actual value (10 credits, 15 credits) to the various actions one takes in the course of a 20 minute (or 4 hour) session on Facebook, Zuckerberg and Co. are actually monetizing social capital, which is pretty revolutionary. If you can get a special invite to a new Facebook feature by possessing a certain number of credits, you’ll essentially be able to buy your cool—which, ultimately, isn’t that different from the real world. But it’s certainly going to be a profitable revenue stream.

When it comes to business tweeting, there are certain Dos and Don'ts that can make you or break you. I put together this document for the Flightpath office so that everyone can use our Twitter (@flightpathny) effectively, whether from the office or at an event. Hopefully you'll find it to be enlightening.