Permission based marketing and the closed web

With social media, mobile devices and single purpose apps taking over the consumer segment, there is a need for new marketing mechanisms and a new type of relationship with consumers. Apple, Facebook, Google, Yahoo and AOL are aiming at reinventing the web experience and relationship marketing. To do so they need to successfully become the middleware platform of choice. the platform on top of the platform..

Few years ago, when launching Office Live, I remember the discussion with Baris Cetinok ,our leader for product management and now SVP at American Express. We had over 100,000 customers on a waiting list in few days after announcing the upcoming release of the product. Microsoft was still lukewarm to the concept of ad based monetization or any form of alternative monetization for business focused products. Baris and I promoted that, thanks to the low cost of technology, having one hundred thousand people willing to talk to us was already a win. It allowed us to establish a dialog in a web that was polluted with spam and lack of intent from end users.

Today, the situation for most companies is the same. More eyeballs are online. Mobile Internet access forecasted to be bigger than desktop access by 2014 (I bet it will be faster, maybe 2012, helped by Apple devices and Google Android), yet the lack of purchase intent and the lack of tools to manage the dialog online are affecting the effectiveness of online marketing and making bigger the gap between online advertising growth and online eyeballs growth.

Users closed the doors to marketing dialog, because of the nature of Internet relationships. Spam in all forms, inefficient direct marketing via email, social media marketing that became a Ponzi scheme with thousands of false Twitter followers over night, or quick recipes to get mentioned on every blog. Users are leery of positive reviews posted in social media thanks to sophisticated rumor-mills creating false promoters.

But there is a parallel web. A closed-web. A Facebook realm with 700 million users (250 million through mobile devices), an iTunes/apple apps realm with an ecosystem of +400 million users (iPad, iPhone, iPod touch), and upcoming closed webs with Wii, Xbox, etc.

The challenge for most marketers is the lack of tools to make actionable that closed web. Most SEO or analytics providers can do nothing to really manage my company's Facebook page, where I have more users than what I ever got thru the open web. Most traffic on the open web was garbage, even the social traffic. On the closed web, each contact took the initiative of "liking" me, or downloading my Apple app, and that is a great way to start a dialog through permission-based marketing. No spam, no false promoters, no Ponzi schemes. Apple, Facebook, Nintendo have all access to more behavioral data than any provider of content or behavioral targeting can dream of.

Managed properly, this can lead to a new type of web, with users controlling the dialog and getting perfectly targeted promotions, advertising, content, referrals and value.

Of course these players will need to learn how to play the platform game, allowing developers and entrepreneurs to build the right tools to get value out of this relationship marketing on the closed web. Apple and HP have advantage understanding what "platform" means. Facebook finding their way through painful trial and error, but with 700 million UU it is strong enough to win through perseverance.

There is an emergence of permission-based marketing at scale, and another portion of the $700 billion devoted to advertising, will migrate to online mechanisms. The users will be the winners as those $700 billions will deliver real value in the form of great social solutions, communication and collaboration, single purpose apps, social games, productivity tools. Users will get all of this in exchange for permission to deliver the relevant ad at the right time, in the right location, through the right device, to the proper individual. Permission-based marketing post web 2.0

Facebook and the hijacking of the web – do you really need a web site?

eMarketer estimates that +57% of Internet users, or +125 million people, will use a social network at least once a month this year. Facebook hijacked the web and created a powerful “web inside the web” that allow marketers to tap into viral marketing and classic CRM mechanisms without spending much money.

Marketers and researchers used to stay away from social networks because it represented a minority of the population, but now with hundred of millions of users, Facebook has a representative population, in fact it is the whole population of target customers most marketers need to reach. Almost 2/3 of Internet users are 35 to 44 and 50% of users that are in the 45-to-54 age group will use social networks at least once a month. (eMarketer)

Most of those individuals experience a “closed web” created by Facebook. In an attempt to keep users inside the FB experience, most links to external sites are now replaced by links to pages inside FB (this subtle change happened few weeks ago).  Almost all major advertisers are now including the FB or Twitter logo as part of their traditional media campaign, asking people to visit them in the other web, the one created by Facebook. The “Like” button quickly propagated across the web and now almost every web site displays that logo, connecting the exterior world with the closed-web managed by Facebook.

Facebook succeeded at creating this closed system by offering a social experience that is first and foremost centered on the user interaction with friends and with trusted relationships. Privacy controls are still not perfect and cause much controversy, but there is no better mechanism for marketers to leverage on the powerful word-of-mouth that drives 2/3 of the USA economy. Word-of/mouth has always been the number one marketing mechanism. Social networks made it actionable and measurable.

Over two-thirds of Facebook users in the USA said a Facebook friend referral would increase their chances of purchasing a product or visiting a retailer, according to research and consulting firm Morpace. For most small and mid market businesses in the USA, having a Facebook page makes more sense than creating a traditional web page, using a custom domain. For sure one can use Flash, HTML5 and other tricks to create visually stunning web sites, but what most businesses need is not a stunning web site or a clever five-letters URL. They need visitors. Facebook give them a way to connect with their customers, create promotions to reward their promoters via coupons and discounts, create applications that replicate virally and drive more fans, and enables a permission based marketing that it is very hard to implement for most small businesses otherwise.

There is a +2 billion-dollar industry selling domain names and hosting dormant web sites. Most small businesses thrive with fewer than one thousand loyal customers. To keep a relationship with those customers the answer is not Google adsense, Bing search, GoDaddy domain names or a myriad of marketing potions available as SaaS.  For the average small business in the USA, a Facebook page delivers much better results and is becoming the preferred path for many marketers.

This is life inside a closed-web after Facebook successfully hijacked the web, as we know it. And they keep augmenting it: analytics tools for the closed system, virtual currency for the closed system, apps for the closed system, and merchant payments for the closed system. If you are one of the 600,000 entrepreneurs that start a business in the USA every year, you should probably start in the “closed web”. It is seven clicks away and give you access to +125m users.