Headline from the WSJ: GM pulls advertising budget from Facebook! Days before the IPO, that’s just plain mean spirited. If I was banking on a $100bn valuation, I might be a tad concerned about this development. With a budget of over $3bn to spend on ads, GM is the third largest spender in the US (P&G is #1). Perhaps they were miffed that they only have a $33bn market cap after all these years, and quite a few motor cars sold. Either way, the implication is that targeting Facebook members as advertising opportunities is the principle value from the site is missing the point. Facebook is a treasure trove for companies.

I am of course, looking to the social voice of the customer. I’ve made the gross generalization in the past that advertising spend is simply a tax you pay because your customers are not advertising your product for you. That’s extreme for effect. But it is true that companies with higher NPS don’t need to spend as much money on ads as those who have lower, to get the same result. It’s a logical conclusion from the word of mouth economics studies we have done around NPS.

But for many companies, the first instinct when a new medium comes along is to rush to buy advertising space. And if people don’t respond to the ads, what interest do they have in that medium. Respectfully, let me suggest they start by listening, not talking. Facebook, like much of social media, is a gift for companies around viral word of mouth. Spend a fraction of that advertising budget on understanding what customers are telling you on Facebook, understanding who your promoters and detractors are in social media, figuring out your Sparkscore; companies may discover that the real financial return comes from the positive word of mouth they can create rather than the ads they serve. It’s what Net Promoter 2.0 is all about.

See you in London!

I recently saw a presentation from ad:tech San Francisco in which the following phrase was used:   "Recommendation is the new advertising."

The substantiation for this claim was that 90% of online consumers trust recommendations from people they know more than any other source. This of course starts one to wonder whether advertisers have entered the world of recommendation, in which they can try to influence that recommendation to achieve business benefit.  In considering this trend, I've also noticed that the window from Buy to Advocate in most of the advertising models shows this cycle as very short – meaning once someone makes the decision to buy, they immediately become an advocate.  This may make for an interesting model, but we all know what happens in between buy and advocate: the customer experiences a company’s brand, product, services, support, etc.  And along the way, perceptions are created that either serve to counter that initial buy decision or enhance it.

True recommendation comes from a positive feeling created through a multitude of experiences – it is a natural extension of these experiences, not a manipulation. Understanding these experiences – both online and offline – is still vital to any long-term customer strategy. As we know from word-of-mouth analysis, the value of a Promoter is both their lifetime purchase behavior in combination with their positive referral behavior. The combination of the two yields a total customer's worth. And we also know that the value of that referral behavior has exponentially changed through social engagement. Promoters are referring at greater rates across industries. Undeniably, social influence is growing.

Social media is opening new, unexplored avenues for influence, and permitting promoters to reach a broader audience than ever before. The social web is a critical channel for understanding the experiences that delight promoters (and mobilize them), gaining strategic insight about core issues being voiced by the market, understanding the influence of both active promoters as well as detractors, and prioritizing action accordingly.  So as you look at your social media strategy, recognize that the total customer experience is a cumulative activity which manifests itself in positive and negative sentiment about your brand, product quality, and value. This sentiment not so surprisingly can translate to a form of social web "promoters" and social web "detractors" which forms the basis for something we call Social NPS. How Social NPS aligns or calibrates to your structured NPS will be the topic of upcoming thought leadership and technology innovation for us. I look forward to your thoughts, comments, and questions.