This transcript is from a PodTech.net podcast at:
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PodTech Marketing Voices with guest Steve King

Steve King: The biggest shift that's happened is the change in terms of power and who has the power in relationships between corporations and their customers. What social media has done has shifted the power away from corporations and shifted it to consumers, and given the consumers the ability to better research products, better talk to other consumers about those products, and better understand what their best opportunities are in the market place.

Jennifer Jones: That was Steve King, senior advisor to Institute for the Future.

Announcer: This is PodTech.net. Welcome to Marketing Voices, featuring the fresh perspectives of innovative marketing leaders and examining how social media is changing marketing throughout the world. Here's your host, Jennifer Jones.

Jennifer Jones: Hi, I'm Jennifer Jones, host of Marketing Voices, which is a new podcast of PodTech.net. My first guest today is Steve King, who's a senior advisor of Institute for the Future, and it's a nonprofit think tank that does research on the future. And Steve's focus at ITF is really how new media and internet technology is really impacting consumers and marketing. So welcome, Steve. Thank you for coming to Marketing Voices and being my first guest.

Steve King: Well, thank you, Jennifer, for having me.

Jennifer Jones: So first, before we get into the whole social media, tell me how you really analyze the future. I mean not in long term, but in real short term.

Steve King: At ITF, one of the things we've learned is that the future doesn't happen quickly. Any new change or new technology or social innovation usually starts with an edge group. An academic institution may be a social group that's at the edge of general society. And then it tends to permeate back to mainstream users and become part of our day to day use. So the internet, for example, started in the 60s, didn't really become popular till the 90s, and today we talk about Web 2.0. It's a 30 to 40 year process. What we do is go out and try to identify those edge groups, users, applications, labs, where new things are happening, study those, and through a series of processes, traditional research, ethnographic research, expert interviews, Delphi methods, go through a process to identify which ones we think will most likely enter the mainstream and become important to us in the next decade.

Jennifer Jones: So where are you today in the impact of social media on the internet and technology and why we're here? I'd love to hear the highlights of what you're finding and the key thoughts.

Steve King: Probably the biggest shift that's happened is the change in terms of power and who has the power in relationships between corporations and their customers. And what social media has done, and the internet in general, but social media specifically has done, has shifted the power away from corporations and shifted it to consumers, and given the consumers the ability to better research products, better talk to other consumers about those products, and better understand what their best opportunities are in the market place. So the single biggest shift that's happened is the shift in power between companies and consumers.

Jennifer Jones: Shift in power. So in terms of like social media, what are we talking about in the power shift there? Let me first ask, what is the social media we're talking about?

Steve King: Social media, it's kind of funny, it's moving so quickly. There's already a traditional definition of social media and a new definition of social media, even though we kind of all call it new media in general. The traditional definition of social media includes things like blogs, wikis, podcasts, and RSS distribution systems. What's happening is a number of other things have entered into social media. Certainly, social networking software and social networking sites. Community web sites. Direct to consumer video has taken off recently as another form of social networking. And increasingly these things are blending and blurring, so it's hard to clearly define one site as being just a community site or just a blog or just a wiki. They're taking on attributes of all types of social software and all types of social networking systems and bringing them together in a way that adds more value to their users.

Jennifer Jones: You mentioned this direct to consumer video. Give me some thoughts on how powerful that is. We were talking about the use of that in corporations and what's so sexy about it. So what is so great about it?

Steve King: Direct consumer video is, quite honestly, a technology trend, a social trend, that has caught us off guard. It's happened much more quickly that we at the institute, and I think anyone in the industry, had anticipated. A combination of things has led to that. Broadband now has reached a point where it's in over a third of U.S. households. In other countries it's much higher, but in the U.S it's in about a third of U.S. households. There are now a number of easy tools that allow you to edit, create and edit, video software in digital form, video in digital form, and move it up to the internet. That combination of easy creation and low cost creation coupled with broadband distribution has created a market place where consumers are now downloading video at very large rates, and it's growing very, very rapidly. So you see it in the use of sharing sites. There's literally dozens of video sharing sites on the internet today, with Google Video and YouTube, and Ourmedia to a lesser degree, becoming very popular sites for sharing video.

Steve King: Corporations have looked at this and said, "Wow! I can create my own video, I can create my own commercials, I can create my own content with my messages embedded in that, bypass the traditional media distribution forms, and go directly to the consumer." And we've seen literally dozens and dozens of large corporations doing this, and my favorite example is Dove. Dovenight.com has taken a well-known director, and I won't spoil it by telling you too much about it, but a well-known director and a well-known actress and put that actress -- she actually, it gets merged in with sitcoms of the past -- and she talks about her life and interacts with those characters of the past. My favorite is her Leave it to Beaver episode. And then part of that has messaging around the Dove product line targeting baby boomer women and mothers in general. And so you can look across many corporations doing this. Budweiser has done this. Honda corporation has done this. General Motors has done this. There's a whole slew of companies that are building their own messages going directly to consumers with video via the internet.

Jennifer Jones: So you work a lot with big companies. Why is it really happening so much with the big companies? Is it because they have the budget for it or is it also applicable to the smaller companies?

Steve King: It's still experimental with the big companies, but we're starting to see a lot of activity. So a big company, even though they might spend a half a million dollars or a million dollars on a program, to a large company that is an experimental program. But they are moving aggressively to expand those programs. Given what it costs to create and produce video, even high value video at this point, with reasonable production levels, using the tools that are available, whether it's Final Cut on a Mac PC, or even iMovie, the cost is such that even small companies can create successful online video that's targeted at consumers. There's actually a really good example. There's a gun shop in Salt Lake City that has a very funny online video promoting their gun shop. Their target market is a gun users just in Salt Lake City, but it's become a bit of cult favorite on the internet and literally thousands of people watch this video on a regular basis. So even the smallest of companies, if they're interested, can create powerful and intriguing marketing messages using online video.

Jennifer Jones: So what do you think is then the next best thing besides video? I mean the thing is about video, it says so much because a picture speaks a thousand words. So are blogs sort of the next best thing after video? Or is it really podcasts? Obviously, podcast is what we're doing right now, but what is your gut on that?

Steve King: Well, I think all of these tools have purposes and all of these tools have places where they can be used effectively in the marketing process. Blogs are being used by a lot of companies. Certainly in the technology industry, almost everyone now has blogs. They tend to be used in customer support roles, working with high value customers around how to use the products in the technology world. I used to work at Macromedia. Macromedia has hundreds of blogs written primarily by the engineers and the product managers, and their job is to get information about their product out and receive feedback on those informations. Certainly Microsoft's Channel 9 is a great example of a similar type of support customer interaction blog. And I think blogs are very effective at that. Bigger companies are also using blogs. American Express uses blogs in some of their partner support programs. General Motors, of course, is well-known for their Fast Lane blog, where Bob Lutz, the Vice Chairman, speaks about corporate issues and corporate positioning, and they use other senior executives to provide other positioning information. So there's a range of things that you can use blogs for externally, customer support, customer relations, partner relations.

Steve King: When you start to get directly to sales, there are fewer examples of interesting and successful blogs that I've found, although I do like the Maytag SkyBox blog, which is a blog that helps sell a refrigerator that they have that's targeted family room usage by young adults that support sports teams. So basically it's a beer dispenser with your favorite sports team's logo on top of it, and they have a very effective blog that helps sell that. So there are sales blogs also out there. So there's a whole range of ways you can use blogs. The second way blogs are used, by big companies, at least, and also little companies, is internally. And I think that's a real low hanging fruit area where you can get a lot of value out of blogging. Using blogs as an internal way to communicate within teams and across teams within a company and use it as a knowledge management tool.

Jennifer Jones: So can you give me some examples of companies that are doing that or are actually using them internally?

Steve King: Yeah, it's interesting at this point. Every large corporation somewhere has an internal blog. And some of the companies I work with, Proctor and Gamble, have several blogs on technology that describe what's going on in the technology field and how it impacts Proctor and Gamble's business, how it impacts the business of retailing, and those blogs are done out of their information services group, but the target audience is the brand managers and the senior executives across the corporation. Several other companies I work with use blogs internally to keep their teams informed. Marketing teams or public relations teams in terms of what's happening with new product releases, what's happening in terms of their press activity or their marketing activities to help use them as a coordination tool to keep everyone in line. A number of other companies that I've worked with also use blogs to work with their business partners in particular, and so they're not public blogs, either they're password protected or they're behind a firewall, but they allow a corporation to then better integrate their activities with their business partners, whether it's an advertising agency, a PR firm or some other kind of service firm in the marketing area or within the technology areas or the production areas or their suppliers or their potential sales partners in channels.

Jennifer Jones: So all of these things are helpful. Are there other aspects of it that are not so good, that are actually so challenging that you kind of look at it and say "Gosh, these implications are bad and something that we really should be concerned about"?

Steve King: Well, I think there's always the risk as blogging happens, as you allow your employees to blog, you have to give them the freedom to make mistakes. And mistakes will happen. One of the things I find interesting about the use of blogs, I do have a client who thinks that the most powerful application of the blogosphere for that company is competitive intelligence. And they actively monitor and mine the information from employee blogs of their competitors. And what they're finding is they're learning about lay offs, new product introductions and other corporate actions before they become generally public, and sometimes before they legally should be public. And so, you do run the risk of both alerting your competitors of what you're doing prior to when you really want to, and there are legal risks just associated with letting people blog. Now, we've yet to have a corporation actually get in legal trouble over employee blogging yet. There are some test cases but it's still early. It looks like the legal risks are very slight, but they are there.

Jennifer Jones: So what about wikis? If you could give a short definition to the listeners. I don't know how many people are going to be saying, "Gosh, I wish they'd define what all these things are." So all of you, again I'm going to be giving an email at the end, so if you have some thoughts do email us, but let's start it now with wikis and define that quickly if you can, and then go into some examples.

Steve King: Well, "wiki" is actually a Hawaiian term meaning "quick" or "fast", and the easiest way to think of a wiki is it's a database. It's the simplest database that you can think of that allows for group editing of the documents. So if I put a document in, and the document might be a Word document or done in HTML native to the wiki, some sort of text where I say, "This is the latest product MRD," someone else could go in and then edit that and put their edits on top. And I would see their edits, I would see my edits, we would keep a history of those edits. So it becomes a group's document storage device, but also a tool for group editing. And the primary application for wikis is group editing and knowledge management applications.

Jennifer Jones: So a real tactical question here. When do you use a wiki and when do you use a blog? Cause in a sense from what you just said, it sounds like the two can be used similarly.

Steve King: Yeah, they actually overlap quite a bit, and I tend to use blogs and I tend to see blogs used mostly when I have one or few authors putting out information with people commenting back. I use wikis and I mostly see wikis being used when you want to have multiple authors editing common documents. So it's a difference around how many authors you have and what the goals and objectives are. So when I blog I'm blogging a set of information that in some ways I'm sending out and asking for people to provide input back through comments. With a wiki, I'm putting out information where I'm actually asking the other users to actually edit the actual blog, the actual wiki entries. But they are highly overlapping in terms of their applications.

Jennifer Jones: So as a marketer, I think, "Okay, this is really interesting to me, but in a sense why should people care about this?" They could say all of this technology, all of these things, I don't really care. It just doesn't matter." Why should they care?

Steve King: Well, I think both with blogs and with, to a lesser degree, wikis, and certainly with blogs, and I can come back to wikis. With blogs, it gives you another channel to reach your customers. It gives you another channel to interact with your customers. And it gives you a new channel in terms of getting feedback from your customers. And so if you care what your customers think, and hopefully if you're listening to this and you're a marketer, you care what you're customers think, you should be excited about the opportunity of a new way of getting information and feedback from them. And to me one of the most powerful applications of the blogosphere for any company is simply to mine the information that's already out there. And try to understand for almost any product category now, each week there are literally thousands of comments about that product category in the blogosphere. And it's just a great opportunity to have a living focus group, research group, insight into the customer base and tap that, mine that, and understand what's going on. I can then use my blogs to also reach into that conversation and become part of those conversations and hopefully also influence those conversations in a way that's positive to my brand and product.

Jennifer Jones: So again, what's the fear factor there? I know a lot of people will be saying, "Oh my gosh, but there's no way, because I just am afraid of what I'm going to hear and afraid of the criticism." So how do you deal with that?

Steve King: There's a number of pushbacks on this. I would say the biggest pushback we hear primarily is, "I don't have time. I've got so many other things to do." I'm interviewing marketing people and I'm talking to marketing people who are saying, "I'm so busy. I don't need another thing on my plate." And I think that's true. I think you have to start thinking about what else you drop off the plate, also to a lesser degree how you reallocate your marketing spend given this new world of social media. The companies that are aggressively pursuing social media from a marketing standpoint tend to fund that by reducing their spend on traditional media. So if you look at most companies their spend on traditional print advertising, their spend on broadcast tv, broadcast radio, the more unfocused broadcast marketing methods, they are reducing their spend on that and increasing their spend on the new media. And my pushback to people who say that they don't have time is that new media gives you a chance to get much closer or your customers, and also provides your customers much cleaner marketing materials, much stronger marketing opportunities, much more information flow will make you a better company. And if you don't, your competitors will, and you will lose out in the end. So I think it's a no-choice situation here for marketers.

Jennifer Jones: So what kind of money are we talking about that is actually being spent on this online media, social media, new media, whatever you want to call it?

Steve King: It's a tough industry to fully quantify. In the U.S. last year, online marketing spend was a little bit north of ten billion dollars in total. Now that includes everything -- search engine optimization, money spent with Google, and so forth. When you're talking about some of these new social medias, the spend in terms of traditional product IT spend and so forth is actually very low. To set up a blog is extremely inexpensive. The part that's expensive for any blogger, the part that's expensive whether you're doing a blog or a wiki, is the cost of having the human being blog and maintain that blog. And blogging is not easy. For a blog to be successful, it needs to be updated on a regular basis. It needs to be updated by someone who has something interesting to say. It has to use a voice that's interesting to the audience, and really does have the rigor of publishing on a regular basis. And that's a challenge that's hard. And if it's a written blog, the person has to know how to write. These are difficult things to do and that's why -- realistically, yesterday they announced that Technorati's quarterly review of the blogosphere said there are thirty-five million blogs out there, but at any point in time a third to a half of them are dormant. They're dormant because blogging is hard. And so the cost is the time, and that's the hard part about blogging. Does it take 20% of my time? Does it take 50% of my time? That's the part that's also hard to quantify. But the most important thing to work through is that you decide to go after a blog. Because a blog that's not updated regularly, that is not well-written, that does not have a good voice, that does not have information that appeals to the consumer will not be effective.

Jennifer Jones: So you bring up a whole lot of points about quantifiable and also basically metrics in general. So all of these companies that you're working with, how are they really judging the success of these programs they are doing? What metrics are they using?

Steve King: Yeah, right now metrics are extremely hard, and frankly almost all of the larger companies I work with for now have decided that they have to be in blogging, they have to be in the blogosphere in some form, and they're not overly focused right now on metrics. Part of that is right now the spending is relatively low. As time goes on, the metrics are going to have to be developed. And that's a challenge. I hear all the time, "How do I know that the blogosphere or my blogging efforts or my wiki, how do I know that's pushing my sales needle?" is a question I get all the time. And my answer right now is, you don't. And so just as it's very hard to quantify the impact of tradition PR, although we have an increasing number of tools and a belief we can do it, a little bit of it's on faith. Unfortunately, today the blogosphere is not yet quantifiable enough, the methods aren't there yet, that you pretty much have to take that on faith. I think that's one of the things that's holding back marketing spend in the blogosphere and on blogs in general. You look at something like search engine optimization that can be quantified down to the penny, and the return on investment can be quantified down to the penny. That tends to suck up more of the marketing spend because it is measurable, because it is quantifiable, and because they can come up with a ROI.

Jennifer Jones: So what about podcasts? You haven't spoken much about that. Where do you think the world is on podcasting?

Steve King: Well, podcasts are kind of interesting. It's still early. Not a lot of users are yet listening to podcasts. Although...

Jennifer Jones: Except for this show.

Steve King: Except for this show, right. Although it's growing very, very rapidly, and in certain niches it's extremely popular. And so, to me, podcasts are where blogs were about eighteen months ago. So they're at the very beginning at the curve in terms of listeners and audience appeal. Niche areas are getting a lot of activity. Interestingly enough, corporations are jumping pretty heavily into podcasts and for a lot of the companies I work with, the larger consumer-oriented companies, they see having podcasts less in terms of the direct impact of the podcast, more in terms of how it positions them with one of their key interest markets, which are kids 18 to 26 year old. So having podcasts on their sites, doing things with podcasts, particularly in the recruiting area. You'll see a number of podcasts on the recruiting websites of major corporations because they believe that makes them look hip and cool to younger consumers. And so right now the interest in podcasts is in that area. Of course, the second place where podcasts are very active, and we didn't call them podcasts before, but of course is investor relations and earnings announcements. There's been stored audio earnings announcements on people's websites now since the 90s. Now they're done as podcasts. So investor relations, human resources and to a lesser degree, in anything that they do that they're trying to appeal to a younger audience, large corporations are actively using podcasts.

Jennifer Jones: So what I'm seeing, actually, with the podcasts that I'm doing, people are also using for product announcements and even in some cases press releases, and they really try to give some sense of a voice to an entity. Are you seeing that in the companies you're working with?

Steve King: Absolutely, and in another area internally within companies for employee communications. A lot of senior executive speeches now are done as podcasts, a lot of internal announcements are done as podcasts. Employee communications, internal communications, and the way we look at it and at the Institute we are forecasting that to become an increasingly important item for corporations. As blogs and other social media expose more and more employees to consumers, it's going to become more important for those employees to be well-versed in the corporate strategy and be on board with the corporate strategy. A lot of trust research is showing that consumers now trust everyday normal employees, people that look like them, what they say a lot more than they trust what senior executives say. Senior executives have very little trust external to their own corporation, often times not a lot of trust internal to their own corporation, but certainly external. And so using podcasts to better inform employees has also become a very important piece. So in general, podcasting, because it does contain the real voice, it gives you the opportunity to be more authentic, and to add a little emotion to what is traditionally more sterile communication methods, like the traditional press release, like the traditional internal communications memo. Because of that, podcasts and videocasts are becoming much more popular.

Jennifer Jones: So do you think it's going to get to a point with these companies that you're dealing with that all of this new media, social media, is going to be say half of the marketing focus and budget or do you think that's just ludicrous?

Steve King: Well, again, it's going to depend on how you define it. Online budgets right now in most companies, most large organizations, are in the 5-7% of their total marketing spend, growing very very rapidly. Leading edge companies, some companies spend more, but in the 5-7% range. Over time, that is certainly going to move much higher. If you look at why they're doing that, consumers now spend about 15%, in 2005, about 15% of their media time online, but the online marketing spends only about 5%. Over the years, we think the media time spent online by the average consumer will grow to about 25% of their time, while the marketing spend will grow to about 15-20%. Because of the large amount of dollars involved, and also the fact that some forms of traditional broadcast marketing are still very effective, we think the shift will be slow, but we're talking about huge sums of money. A company like Proctor and Gamble spends six billion dollars a year on advertising and marketing. So when you talk about just moving five percentage points, you're talking about three hundred million dollars. So the absolute dollar numbers are going to be very, very large, and the marketing spend online and with social media is definitely going to grow rapidly over the next five years.

Jennifer Jones: Well, on that note we're going to have to be wrapping up here soon, so a question I want to make sure I ask every guest is - Who is your favorite corporate marketer?

Steve King: Ooo, that's very hard. I'm going to give you a few, I think, because I think picking one is just way too difficult. Certainly in the technology world, I, like everyone else, most everyone else likes Apple Computer. Their ability to evangelize their market place, their focus on design makes them a great marketer. In terms of understanding consumers no one does better than Proctor and Gamble. They do the best job I've seen by far of researching consumers, understanding what they want and then turning those wants into useful products. So I'd have to put Proctor and Gamble there. In terms of being innovative online I really like Unilever. They've done some interesting things with their AXE Deodorant brand, and that was actually highlighted yesterday in a Wall Street Journal article.

Jennifer Jones: Yeah, I saw that. I saw that.

Steve King: Yeah, they first started that almost eighteen months. It's interesting, again, how long it takes for things to ripple through.

Jennifer Jones: Yeah.

Steve King: They first launched their first AXE Deodorant website almost eighteen months ago, and it's still getting a lot of traction there. And I mentioned the Dove Night example, which I really like. So I really like Unilever in online. And then as an experimental firm, experimenting with online, pushing the bubble, General Motors isn't usually known as a company that pushes the bubble, but they came out with the first real corporate positioning blog with Bob Lutz in Fast Lane, which I mentioned earlier, and just recently they did a promotion where they asked consumers to submit advertisements that they would have around their new SUV, Chevy Tahoe. And this was a very risky thing to do, and about 20% of the ads that were submitted were actually highly critical of General Motors, but 80% were actually positive, and so very experimental and they're fun to watch. So I like a number of companies on...

Jennifer Jones: Okay, but I'm going to pin you down. I want you to give me just one, because my plan is to, at some point in the future, tally all this up and see who is winning in all of that in terms of this corporate marketing by all these visionaries. So pick one. You've got to pick one.

Steve King: In the end, I go with Proctor and Gamble just because of the breadth and depth of what they've done.

Jennifer Jones: Okay.

Steve King: And in the end, I believe you win by understanding your consumer.

Jennifer Jones: And they do it very well. Yeah, no kidding. So my guest today on Marketing Voices has been Steve King, who's senior advisor of Institute for the Future, and you can reach him at sking@iftf.org. He was very gracious in giving all of the listeners his email, so I hope he's not barraged by too many questions, but he said he would do that. And for any specific comments on Marketing Voices, please email marketingvoices@PodTech.net. And so until next time, cheers to all of the Marketing Voices listeners. This is Jennifer Jones, and I bid you a good day.

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