5Qs: Rishad Tobaccowala

What I call the people network is a very significant thing. It’s as big if not bigger than search was. It’s linking up the fact that we have all of these amazing networking technologies, and historically people have always liked to create and connect. Because of these networking technologies they can do it as scale. There’s a human need there. Clients are extremely keen about social media and earned media from an intellectual perspective and a we-need-to-pay-attention perspective. You have to be dead not to see what’s going on around us. Clients actually use Facebook. They’re beginning to see interesting case studies leveraging these technologies, like the Pepsi Refresh project, Best Buy’s Twelpforce and what Dell is doing.

I’m seeing every agency decide they do social media. There’s also now a specialist movement afoot. I’ve seen this movie before. When something new starts, clients tend to go to experts instead of generalists. You saw that in the media industry, in digital and in search. It’s hard in this space, where it’s noisy, for a company to explain exactly what it does. You have a listening platform like Converseon that also provides agency services on top. There are companies like Buddy Media. Are they middleware companies, platform companies or agencies? There are new kinds of companies using social to get into the agency business in a very big way. McKinsey partnered with Nielsen. Look at what Dachis is doing.

I worry whether the industry is actually thinking about how social media helps build a brand or sell a product, or if they’re doing things because they need to do things. All early indications are the more fans you have the less engaged they are. It’s less than one half of 1 percent that engage with the brand. In the course of a month after they fan you, less than one out of 200 will actually visit your page. Less than one out of 1,000 will leave a comment or like your content. It’s a fraction of a fraction of a fraction.

What brands are doing on Facebook is crazy. The only way you can get traffic on Facebook is to advertise on Facebook. The only Facebook advertising that works is that which tells people to do things on Facebook. I’m not anti-Facebook. But clients are not being advised correctly. Almost all these companies advising clients have been born have been born on one platform. Almost all the companies doing the middleware do things on one platform.The simple question is what is the value of a fan, and when you get one what the hell do you do with it? I’m worried clients aren’t being advised correctly. It’s very clear that a fan doesn’t convert into much of anything.

Our bet is over the next three to five years, while paid will be the dominant form of media, there will be a budget shift. There will probably be a 10-15 percent reduction in paid media on a real basis. A lot of that will go to earned and owned. Owned to a great extent means content. The publishers have to figure out they’re not in the content distribution business but in the content syndication business. I make content that I put out there, but I have content creators and archival content I should be syndicating to marketers even though they’re going to use it in some ways compete with me. Too often the content industry has focused on monetizing through distribution. They’re going to have to do more with syndication. i don’t think marketers are going to be very good at creating content themselves. Publishers can help.