Why Facebook has a $10billion dollar valuation – Network Neighbors

Brands leveraging only demographic, geographic and psychographic information about a consumer is dead. This type of information is certainly powerful to gain insight into your consumer, but my belief is that this is only the tip of the proverbial ice berg.

While studying direct marketing at NYU in the late 90’s this information was the holy grail of marketing.  Today, it’s no longer the case.  As social media has become ubiquitous the manner in which people interact with each-other is now available.  This information is certainly more powerful, and more telling to a large brand regarding the consumers likes, dislikes and potential purchasing habits.

I’d argue that the more compelling information that’s available to a brand is who are Network Neighbors.  These network neighbors are consumers linked to a prior consumer. They adopt a service at a rate 3-5 times greater than baseline groups selected by the best practices of the firm’s marketing team. Analyzing the network allows the firm to acquire new customers who otherwise would have fallen through the cracks, because they would have not been identified based on traditional attributes. – Statistical models, built with geo demo and prior purchase data are significantly and substantially improved by including network information. More sophisticated network information allows the ranking of the network neighbors so as to permit the selection of small sets of individuals. with very high probabilities of adoption. As a traditional direct marketer within the Social Media world, this is very exciting.  This is why every brand needs to be engaging with their consumers in Social Media.

Brands and Social Media: Top 3 Reasons Why Every Brand Must get Involved

Brands continue to hedge regarding involvement in Social Media. Lack of control, a lack of knowledge regarding where to start, what to measure, and how to measure push brands into an inactive catatonic state of empathy regarding the whole of Social Media.  Dismissing Social Media is a mistake – ESPECIALLY if you’re a large brand.

Here’s why:

1. Social Media is the richest ecosystem of data that brands can leverage today. Firms make marketing decisions based on what they know about their customers and potential customers. Knowing how well a consumer is linked to existing customers is a powerful characteristic on which to base direct marketing decisions.

2. This is only the beginning – As more consumers create interlinked blogs, and have the opportunity to participate and create content, this is just the first iteration of a consumer based ecosystem of data that brands can have access to if they decide to participate.

3. Demographic, Geographic and Psychographic information is dead. Social media offers brands insight into communication between people. This communication is a better indicator of deep similiarity than any demographic or geographic attributes. Homophily or word of mouth is the best indicator of brand loyalty that has ever been available. Period