Edelman Study Shows That Only 25% of People Find Peers Credible, Flying in Face of Social-Media Wisdom.



Whom do we increasingly trust less? Us.

It's a finding that strikes at the foundation of many a social-media marketing philosophy: Tapping into peer-to-peer networks is a way for marketers to tell authentic, credible stories to consumers whose confidence in corporate CEOs, news outlets, government officials and industry analysts has taken a beating. But according to Edelman's latest Trust Barometer, the number of people who view their friends and peers as credible sources of information about a company dropped by almost half, from 45% to 25%, since 2008.

Richard Edelman, president and CEO of Edelman, believes it's a sign of the times -- and the lesson for marketers is consumers have to see and hear things in five different places before they believe it.

"The events of the last 18 months have scarred people," Mr. Edelman said. "People have to see messages in different places and from different people. That means experts as well as peers or company employees. It's a more-skeptical time. So if companies are looking at peer-to-peer marketing as another arrow in the quiver, that's good, but they need to understand it's not a single-source solution. It's a piece of the solution."

Consumers are a distrustful bunch in general -- the credibility of TV dropped 23 points and radio news and newspapers were down 20 points between 2008 and 2010.


CEOs up

And when asked how credible they deemed the information they get about a company when a "person like yourself" serves as a spokesperson the numbers again dropped. This year 39% of those surveyed felt the messages conveyed by consumer spokespeople was credible compared to 45% in 2009, the biggest drop-off among all categories.

Conversely, CEOs -- who have of late been trotted out as public faces of their companies in times of stress, such as General Motors CEO Ed Whitacre -- saw the biggest year-over-year increase from 17% in 2009 to 26% this year. Other groups seeing increases in the level of consumer trust were government officials (22% vs. 27%), a financial/industry analyst (46% vs. 52%), NGO representative (42% vs. 44%) and academic experts (61% vs. 64%). The only other group to see the credibility of their word diminish was company employees, which saw a drop of three points (31% vs. 28%).

If consumers stop believing what their friends and the "average Joes" appearing in testimonials say about a product or company, the implications could be significant not just for marketers but for the social networks and word-of-mouth platforms selling themselves as solutions to communicating in a jaded world. The influence of peers has been considered the leading rationale for brands' shifting marketing dollars to social media.

In some cases, social networks themselves may be contributing to the decline in trust. Platforms such as Facebook and Twitter have allowed people to maintain larger circles of casual associates, which may be diluting the credibility of peer-to-peer networks. In short, the more acquaintances a person has, the harder it can be to trust him or her. Mr. Edelman believes the Facebook component has "absolutely" played a role in diluting trust levels.


A changed game

"When you're seeing so much noise, it's very easy to dismiss a lot of it, and that's a problem marketing messages have had for a while now," said David Berkowitz, director-emerging media for 360i. "Facebook really exemplifies this with the live-feed and news-feed options," he said. "If you use the live feed and have a few hundred friends, some kind of peer recommendation, whether it's explicit or not, appears every couple of minutes and sometimes they come in a matter of seconds. If you're seeing all of that come in, it can be overwhelming."

Not surprisingly, Paul Rand, president-CEO of Omnicom Group's Zocalo Group and president of the Word-of-Mouth Marketing Association, said word-of-mouth is more effective than ever. But he does concede the game has changed.

"The mind-set is no longer 'I can just trust it because it's somebody's opinion,'" he said. "It's, 'I can trust that specific opinion because it's someone I know.'"

Another potential reason? People have caught on to the fact marketers are increasingly behind that influential blog post or tweet. Despite regulations regarding disclosure of marketer-driven efforts, consumers may feel that whatever it is these people are receiving from companies positively influences their endorsements.

Christina Smedley, global head of Edelman's consumer practice, said there is still a core group of influencers that can change how people trust and influence the actions of others. And consumers, whether they are close to them or not, will follow their lead.

"There are ... consumers who still only trust the people they see every day or their 120 friends on Facebook," Ms. Smedley said. "But there are those that trust all 380 of their friends on Facebook. And there's opportunity for brands with both groups. If marketers can find those action consumers, they can build campaigns that work through their parameters and get some very good results."




[adage]

According to its 7th annual survey, Alterian suggests that 66% of marketers plan to invest in social media over the next 12 months, but only 36% plan to monitor and analyze the success–or failure–of their efforts.

In fact, when you look at the breakdown, 40% of the 1,000 marketers surveyed plan to steal 20% or more of their traditional direct marketing budget to feed their new found social media marketing habit.

Considering Alterian recently acquired Techrigy, I’m sure they share my surprise–and maybe concern–that compared to the amount of spending planned for social media marketing, more is not being allocated towards actually monitoring and measuring that ROI.

This chart shows best the disparity between spend on each:

Yeah, I’m biased–I want you to use a social media monitoring tool–but really, would you consider launching an SEO campaign without having web analytics on your site? No? Then why would you spend hundreds of thousands on a social media marketing initiative, without monitoring your reach, response, and successes?

Of course, it could just be that these marketers are more thrifty than naive. After all, why spend thousands on media monitoring, when plans start at just $18 a month? A blatant plug, I know, but mama needs a new pair of shoes!


[marketingpiligram]

With the economy rebounding, is there any surprise that the world of social media might be primed to take a run on the stock markets? While a 140 banks were forced to close in '09, 140 characters became the digerati's new mantra. 

Where were you when Google and Apple went public? Sitting on the sidelines? Might be time to keep your ear to ground and listen to the growing digital drumbeats signifying that IPOs could be right around the bend.


Here is The list of Top Social Media IPO Contenders for 2010 or 2011. Please take our POLL at the end of this blog and let us know your favorite(s).

No.1- Facebook

Most imminent to tread the IPO waters is Facebook. The mega-social networking site that reached another milestone with 350 million users last month has also eclipsed its former rival network in ad revenues. According to a eMarketer report, it will surpass MySpace in ad revenues in 2010 when brands are expected to spend $605 million on Facebook versus $385 million on MySpace.

But more important than ad spend is Facebook's recent 'dual-class' stock structure that is making sure that the founders retain control of the company. With Class A and Class B shares, it appears that Mark Zuckerberg is protecting himself and his inner circle from the yielding the floor to outsiders if and when the company goes public. Google (GOOG) structured a similar deal for themselves prior to be listed on the NASDAQ.

A Wall Street Journal report says that, according to its sources, all current shareholders would be converted to Class B shares, which carry 10 times the voting rights of Class A shares. Based on this re-org taking place in late November, the company may be waiting till  Q1 of the New Year to issue an IPO. Having raised $600 million in capital from investors over the past five years, with the most recent coming from Russian investor Digital Sky Technologies for $200 million, "there are plenty of stakeholders among the gawkers," notes Tom Johansmeyer in a BloggingStocks.com report.

No.2- Twitter

Twitter, the 140-character wunderkind has rallied from the depth of criticism that it didn't know how to monetize one red cent to striking a lucrative deal with Google and Bing with just two strokes of the pen. Citing anonymous sources, Business Week reported the company received $25 million from syndication deals with Google and Microsoft that allow those companies to post tweets in real-time on their search results.

Coupled with raising a whopping $250 million at a $1 billion valuation and striking a deal with Mixer Labs and its GeoAPI service to develop location-based applications - can an IPO be far behind? While Twitter is a very methodical and financial savvy company, my thought is they  will continue to ramp up their geolocation technologies in 2010  - and hold out for an IPO roll-out until 2011.

No.3- LinkedIn

In a recent Reuters report one of the largest business-related social networks is mulling over the idea of an IPO. LinkedIn, with 53 million members worldwide is seen as a strong IPO contender and a Reuters poll found it one of the Silicon Valley's most eligible to go public.

Valued at $1 billion, the firm backed by Goldman Sachs, McGraw Hill, SAP Ventures and Bessemer Venture Partners raised $76 million in its last funding in 2008. While BloggingStock.com affirms that an IPO is part of co-founder Reid Hoffman's exit strategy, Hoffman sees an IPO as inevitable but is also not tying himself to a specific date. "Probably at some point a balance will occur when that's the right thing. (But) that will not occur in the near term," Hoffman said at a London event to celebrate the network's reaching 3 million users.

No.4- Yelp

In my previous blog, "Will Google Purchase Yelp To Create Its Own Foursquare," I felt strongly that Google was coveting this acquisition to get a more solid foothold in the location-based service space - a nut it hasn't been able to crack (even with its own LBS Latitude). While such a marriage would have added to Google's stock price, now it appears that Yelp might be prime to go public on its own.

In order for Yelp's founders to walk away from a $500+ million deal with the social engine giant, this does seem to indicate that the shareholders of this local community Web powerhouse might be seeking an IPO opportunity, in advance of Foursquare gaining any more ground in geolocation technology - which, if that happens could undermine its chances.

No.5- Zynga

One of the more controversial IPO contenders is Zynga. On December 16, Russia's Digital Sky Technologies which has a stake in Facebook (see above), and other investors have bought $180 of securities in social game company Zynga according to Chief Executive Mark Pincus. Industry analysts have speculated that Zynga could raise $1 to $1.2 billion in an IPO. Zynga makes games played by members of Internet social networks like Facebook an MySpace, and profits by selling add-on tools and "virtual goods." In my blog, "Scamville? A New Online Game? Who's Up For The Challenge?" I followed up Techcrunch's Michael Arrington's harsh criticism of Zynga's "scam-laden lead gen-type offers."  This was followed up by a Time Magazine expose' in November titled, "Troubling Rise of Top Game Company."

But as we all know, controversy is good for a company that is looking to scale its membership base quickly. And as of September according to both Inside Facebook's AppData and Developers Analytics, Zyngas boasts 129 million active users across its portfolio of more than 30 games.

The list above are the most likely to go public if the economy continues to stabilize. Other social media companies which might tap the public markets include  YouTube,  Delicious,  Digg,  StumbleUpon, Flickr and Technorati.

[inventorspot]

As marketers become more comfortable and more experienced using social media, they move from the trial phase of their marketing efforts toward strategic use of the channel. While the largest group of marketers is still somewhere in between, according to the “2010 Social Media Marketing Benchmark Report” from MarketingSherpa, about one-quarter of social media marketers have made it to the strategic phase of their efforts.

Gaining maturity means improving the ability to tie objectives to specific metrics. Marketers in the strategic phase are significantly more likely than those in earlier phases of the process to measure their success across all objectives. An increase in Website traffic was the No. 1 objective targeted and measured by all marketers.

“Defining specific objectives for a social marketing initiative is only half the battle. The other half is aligning those objectives with corresponding metrics,” according to the report. “This alignment is important because it enables an organization to measure its progress in achieving the objectives and proving ROI.”

MarketingSherpa found that retail and e-commerce marketers were more likely than any other industry to be increasing their social media marketing budgets next year, followed by publishing and media. Education and healthcare lagged, with less than one-half of marketers in the industry planning to up social media spending in 2010.

Most social marketing dollars (60%) next year will go toward staff salaries for activities such as blogging, content development and monitoring of social channels. Another two-fifths will be spent on outside help from agencies, consultancies and service providers.


[emarketer]