I recently spoke at Pipecon, in Toronto. They had asked me to give the keynote speech, and I was more than happy to. After my presentation, many people asked me to list off the many books I had referenced during the keynote. I had a hard time doing so because there were over 2 dozen different books and research reports referenced in my 1 hour speech. People then asked that I begin a reading club, and so this is the first attempt at this.

Book #1: The One to One Future, by Peppers and Rogers  circa 1993

In 1993 Peppers and Rogers wrote “The One To One Future”. It is a book on One to One marketing and the future of marketing. It is the basis for some of the best modern marketing theories, and a classic book for any modern marketer. You should not be able to call your self “educated” in marketing if you can not grasp many of the concepts outlined in this book. You should be able to quote this book, understand the lines of logic which follow from it, and keep it close by. It’s a book which I consider to be marketing canon, and the best place to begin the book club.

Here are a few notable quotes from it:

“It is information about individual consumers that will keep a marketer functioning in the 1:1 future. Without individual information, as opposed to market or segment information, 1:1 marketing would not be possible.
– Peppers and Rogers 1993

They wrote about the need to track people, and talk to people on a 1:1 basis before the technology ever existed. Despite what some people might claim, marketing automation didn’t exist until 1999. This comment from Peppers and Rogers was published in 1993. A full six years before the first full modern marketing automation tool (Eloqua) was created. That is called visionary!

“ When individual consumer information is added to the equation as an asset, the competitive battleground shifts. Using individualized information, you can achieve economies of scope, which can make your competitors’ economies of scale relatively less decisive. “
-Peppers and Rogers 1993

They write about the “Economies of Scope” which is a reference to the scope of your information on a single person. The more information about behaviors, preferences, and person the more relevant you can make your interactions and increase your brands value in your prospects eyes. It is only in our most recent time that we can use this information for truly dynamic content distribution, and the “Zero Click” website. It allows for even farther reaching things such as predictive experiences to take place.

“You must operate in realities, not abstractions of realities”
-Peppers and Rogers 1993

This is by far my favorite quote in the book. It is the best way to answer subjective opinions from marketers (or CEO’s) in a poignant and simple phrase. When your boss says, “I think”, you can respond with “the data shows”. Remember it is not what we think, but rather what the audience member infers, which matters. We must learn how they think, and that answer is held in their minds, waiting for us to extract it via questions, and data analysis. Excellence is not achieved via subjectivity, but rather from listening, and constant rigor.

Ponder this:

Life Time Customer Value: Peppers and Rogers outline the idea of tracking LTV on individuals, yet the best technology of the day was very limited at doing this. Modern technology can allow us to get very close, yet it is our business reporting methods which keep us from tracking it. It is a multi year number, which is not often accounted for in annual business repots. Consider how you would track, prove, and validate marketing spend if your business put an emphasis on the LTV rather than ACV (annual contract value), MRR (monthly recurring revenue), or other short term measures.

What metrics could you track to do this? Slack the brand new communications application is already compensating their sales team on Net Promoter Score (how likely a customer is to recommend the product to other customers), rather than explicitly on closed/won. This may prove to be a new and better way to value customers, and for business to lower their churn rates, rather than investing heavily in mass publishing.

This is just one example of the many questions this book should open up for you. Peppers and Rogers book, The One to One Future” is a book all B2B marketers should read. It is written with a lot of B2C references, but will get you in the right frame of mind to understand modern marketing. It is amazing to see this concept was written about back in 1993, six years before the technology ever hit the market.

Please share your favorite quotes below

Social networks have moved to the forefront of marketing, and their impact will only grow in the future. But what role will they play?

Not long ago, the standard social strategy was to amass followers, and great brands were judged by how many followers they had. Today there are better ways to use social networks. The cost of gaining a follower is ____, yet the cost to buy an engagement is a fraction of the cost. It is now more economical to simply buy audiences than to build them, so the question remains: What value does a social follower hold?

Answering this question requires a pragmatic approach. Three stakeholders derive value from the follow:

• The social platform that hosts the interaction
• The user who does the following
• The brand that is being followed

The follower’s value is different to each of the three, and only by understanding the relationship that each stakeholder has with the other can the true value of a follower be discovered.

The Social Platform

The modern social network is no longer just a place to keep up with friends, but rather it is a new way of experiencing the world. Social channels spread news faster than any news network can, and they are more relevant than any local news show. Even better, they are interactive and free. Social networks are the new NBCs and CNNs of the world. Names like Zuckerberg are the Hursts of the new era.

Yet as free services, social networks’ revenue models must be analyzed to determine the value of a follower. How does a social network that gives away its service generate scalable revenue? This is where social networks are learning from Google. Google made $43 billion in 2013 by providing a free search engine. It gives away search and sells advertising.

Google’s advertising is some of the most targeted advertising on Earth. The company can serve up hyper-relevant ads because it knows what its users are interested in and it allows brands to put the correct ad in front of a specific user at the correct time. Google has become the digital point-of-sale.

This is what social channels have to do. They have to allow brands to pay to be in a user’s social feed. Social channels have realized that the paid promotional model is the only way to scale revenue without charging users. From Q1 to Q2 2014, Facebook’s revenue shot up 60 percent, quarter over quarter, simply through the increase in advertising revenue. So just as Google makes its money by answering questions correctly, social networks will have to provide the richest and most engaging experience they can, while allowing brands to get their messages to followers.

Users’ news feeds pose a threat not only to traditional media but also to every advertising option currently available. Today, users go to Google to shop, which allows Google to sell advertising. But what happens when Facebook can do a better job and owns more of your day than Google? Your social network knows what styles you like (because it has every photo of you) and knows when you have money (based on the content of your posts). As a result, the social network can pop up the best piece of clothing you’ve ever dreamed of while you’re on your phone and allow you to buy it with one click, all without a search

This is the new immersive experience, one that supports self-discovery and allows a user to do everything he can dream of in the same interface. This is how social networks view their future role. For social networks to provide this ultimate experience, they need data. The more data they have, the better they can execute the immersive experience. So everything a person does on and off the social network will be aggregated, ensuring the social channel provides the best possible experience.

This specifically comes down to serving ads. Amazon.com recently decided to open an ad network. For each sale they make on Amazon.com, they make ten times the margin by selling the brand’s advertising for those products. The value of a follower to a social network is in the data.

When a user likes a brand, the social network captures a key piece of data it can use to target a user. A company can go onto Facebook and buy ads based on what people like. The more information they have on you, the more transparent they can be with targeted advertising. The more transparent an ad, the more they can charge for it. It is in the social platform’s best interest to have you follow brands so it can collect that data and better serve advertisements to you. The social platform owns this key data, which it can use to compete against other social channels for your advertising dollars.

The Follower

When users engage with a brand, it affects them personally. Some of the value a user receives is social goodwill. This is a low-level benefit, which is achieved by their “connection to a tribe,” as Malcom Gladwell says. This connection gives users a feeling of community. The emotional goodwill users feel when their membership to the tribe is displayed on your page allows others to relate to them. So it gives them value if it isn’t shown on their page, and even more value if their membership is shown to other users on the social network.

In addition to finding value socially, a user may garner financial value as well. Some users follow brands to receive special discounts or incentives. On the whole, though, following a brand seems to be mostly about connecting to others. However, of the three stakeholders, users are not the biggest winners.

The Brand

For the brand, the social follower used to mean having reliable direct access to their social feed. Instead of reaching users through email, a brand could reach them via a type of two-way engagement. This wonderland lasted for a few years, but now is long gone. The average organic reach a brand has with its followers is currently between 2 percent and 4 percent. This is expected to dwindle as more brands pay to reach their followers.

So a follower’s value for brands in the future has to be something other than push-button access to followers. Value must be looked at as an emotional connection. It is an affirmation that the company did something right and has built a connection. The question is, how valuable is this emotional connection? Measuring the relationship between emotional connection and the follower’s actions is impossible. The real value to the brand is in something much more predictable, scalable, and profitable than a subjective emotional connection.

Followers receive emotional benefit from their connections, but the brand receives data to better target users. When you log onto Facebook. 1,500 posts are ready for you. A brand doesn’t get into a person’s social feed by having them fan its page; a brand gets into their news feed by paying for ad placement. This creates a new way of looking at social networks. Marketers must answer two questions: Who do I serve an ad to? and, How do I beat out the other 1,499 ads that are paying to be served?

This is where the value of the follower comes in handy. When someone likes your page, it gives you highly relevant and hyper-targeted demographic data and allows you to market to the user’s friends and other people like them. Email addresses don’t do this.

The second question must be answered by the position of the ad in a follower’s social feed. Social SEO will come into play just as Google has done with SEO for organic search results. Social SEO will be derived from an algorithm based on lots of data points. One data point will be how likely an ad is to have a positive effect on a user’s experience. One way to determine this would be to look at the user’s data, see how well it matches others who have the same profile, and figure out how they engaged with the ad. If you have hyper-targeted ads because you have data from your fan base and you serve up great ads, it is likely that the ads will be served in more feeds at the correct time because the ads will make the social network money and help them balance revenue with a positive user experience.

The value to the brand comes from not only giving them better targeting data, but also giving them more social SEO power to make sure they can make it in front of the users they are targeting.

If there are multiple bids to place an ad in a user’s news feed, the social network’s system has to not only maximize financial value for the social channel, but also balance the effect on the user’s experience. To do that effectively, the social channels will have to measure brands and ads, just like Google does for a webpage. They will diagram the pages and have context from likes, fans, followers, sentiments, aversions, and all other natural language interpretation available. Then the social network can optimize for experience and subsequently optimize for value.

Here is a list Facebook published that outlines what it looks at to optimize a user’s news feed (2009)

• Whose profile pages you visit—and how frequently, how recently, and how often
• Who you message, and who messages you
• Whose walls you write on, and who writes on yours
• Who/what you search for
• What’s on your profile
• Who you invite to events and groups, who accepts, and who invites you
• Who you tag in photos, and who tags you
• Which News Feed items you’ve clicked on before

The brand that can get a user to fan their page and then serve ads that drive constant engagement will break through the noise.

Brands should also be aware of the quality of their fans. On social networks, the quantity of your fans is not as important as the quality. If you have 200,000 fans, but none of them are your core demographic, when you do a look-alike campaign, you are wasting money. Additionally, Facebook will remember this. If your brand shows an ad with low engagement, it will have a low-engagement score, which means it will not be shown to other people.

By having the right fans and showing the right message, you increase your social SEO through paid marketing efforts as well. So there is value in fans for this too.

Looking at the Stakeholders Together

Looking to the future, one must ask, how rare will a follower be? Currently when a user is new to a social network, they don’t really understand how much data will be coming at them, so they may follow lots of people, brands, and things. In 2014, 74 percent of all Internet users used social media, and the average person spent three hours per day on social media. So at the rate of three hours per day, it would take only nine years for 74 percent of the population to become experts at social media (experts determined by using the 10,000-hour rule). This means when people know what to expect and how to manage a news feed, they will be less likely to follow brands that do not provide them with value or that clutter up their news feed, just like they have done with email. So it will be harder for brands to gain followers in the future, just as email addresses have become harder to obtain.

The result of the relationships between the social platform, the user, and the brand is social experience. Experience is the new measure for future social engagement, just as SEO is the current measure for search results.

When a brand engages a user, a like has value, a fan has value, and a new follower has value. However, engagement isn’t captured by the number of likes a brand has, but by the overall quality of the experience it provides. To the social networks and brands, a fan is a new piece of the social SEO equation, one that they will need to master. Even though brands can buy direct access, it still behooves them to create experiences that people want to be a part of. When people engage with what brands offer, brands will be rewarded by users’ follow, fan, or subscriber status, not to mention all the data and long-term SEO benefits they will gain. Do not underestimate the fan.

A response to an interview on NPR

Written by: Mathew Sweezey
Edited by: Alberta Deacon

I was listening to an NPR interview with a lady talking about the hyper-personalization of the Internet and the opposite effects it is having on self-discovery of content. The conversation was about how the use of dynamic technology is changing the Internet experience into a hyper-personal one which is tailored only to you, so that each person experiences the Internet in a different way. She was mentioning her fear that this would lead us into a “hall of mirrors” and would take away from the Internet’s true value of self-discovery. When I heard this, I said “Genius. This lady is on to something. “As I’ve thought about it over the past months, I’ve come to realize she is missing a few key points which will ensure the Internet will always be a place of self-discovery and not just a commercial reflection of your past activities.

Self-discovery is the backbone of the Internet. Consider the three largest websites: Google, Facebook, and Twitter. All are discovery tools, tools used by consumers to get a large amount of value from their online experience while advertisers are able to derive some value by being a part of the experience as well. The term “hall of mirrors” is referencing the converse scenario whereby advertisers are gaining more value from the consumer than the consumer is able to gain from their digital experience. For you to fully understand how this could play out, the following must be understood.

1) Cookie Based Technology

Cookie based technology is a basic part of the Internet allowing for personalized experiences. A “cookie” is a little piece of tracking technology used to identify you as a individual. A domain uses a cookie to remember a person and personalize their experience based on the information captured by the cookie. Think of Google. The type-ahead function when you use Google search uses cookies to aid you in faster searching by remembering terms you’ve searched for in the past. The New York Times website uses cookies to better serve up ads to you, and Facebook uses cookies to remember who you are so you don’t have to type in your user name upon each login.

2) Programmatic Buying

Programmatic buying is a way for an advertiser to buy a digital ad in real time. Currently, we are seeing somewhere between 45%-65% of all online adverting being served up by programmatic technology because, with this technology, companies can buy one ad one time. This allows companies to get more value out of their ad because it is specifically targeted and requires less advertising to reach their core consumers. Because the technology allows for more value for the advertiser, it also cost more than it would to buy one which is not so hyper-targeted. A programmatic ad is more expensive than a traditional digital ad. How these ads are bought in real time is a bit complicated, but it is something you need to know to understand the concern of creating a “hall of mirrors.”

3)Real Time Bidding 

This is a newer technology and sometimes is referred to as programmatic buying. The website you visit has an ad inventory on the webpage you are visiting. In the milliseconds before the page actually loads, it asks for bids on those ad placements. The website passes along some information about you such as your IP address, some affinity information, and other data to help the advertiser make better decisions as to whether they should bid on it or not. Then the advertisers bid on this in real time; the highest bidder’s advertisement is then shown to the person. This technology allows for things such as “re-targeting”. So the next time you wonder how Zappos can show you the last pair of shoes you looked at on every website for the next 3 days, this is the reason why. These pieces of technology are being used in just about everything online you can imagine, which has created the fear by some that with this amount of hyper-personalization, we will lose the ability for self discovery and only be able to see reflections of our past self. Just like a mirror.

The Impending Result

If this was to happen all the time, the Internet would become a commercial vehicle for businesses and no longer serve the needs of its users. Advertisers are aware of this being a possible outcome, which is why there are many measures being taken to ensure this doesn’t happen. For instance, there is the IAB. The Internet Advertising Board sets rules and regulations around these technologies and dictates what is allowed to happen with online advertising. Earlier when I talked about personal information about you dynamically driving the bidding process, the IAB limits what information can be shared. There is no PII (Personally Identifiable Information) allowed to be given in the bidding process for advertisements. This means your name, personal address, or any other information about you, which could be considered a breach of privacy, is not allowed to be shared. Yes, this term “Breach of Privacy” may mean different things to different people, but the point here is there is a governing body in place already to protect consumers.

Next take a look at self-regulation by the companies who have the most to lose should Internet adverting lose its value. Google has rolled out private browsing to ensure its users can get the experience they want online and protect themselves from the “hall of mirrors” should they choose to. You can right now opt into this if you would like; just go to “preferences“ on Google and turn it on. Every major Internet browser has added this feature into his or her functionality. Google also turned off the ability for companies to see your key word searches when you are logged into Google. This really sucks for marketers, because we no longer can see the search term you searched for before you landed on our website. Advertisers were using this search history to craft content to ensure Google would index it correctly, which lead to many companies producing horrible content. Google made this change to force companies to place more  emphasis on the quality of the content that a website creates rather than just the key words people use to find it.

These two significant changes from Google are important to focus on. Why would a company that makes over $42 billion on Internet advertising each year put in place measures to make it harder for companies to advertise to their prospects? It’s simple: to prevent governmental regulation. Don’t forget we have a government run by people who often try to regulate communication channels to protect the consumers. The US government regulates the airwaves and Internet bandwidth; it regulated the telephone industry up to the 80’s, and still regulates the mail. Google understands if we fail to self regulate, the government will do it for us.

So if the system is regulating itself, why are crappy ads being servedwhich we don’t want to see? That’s simple. As my father says, “Not all doctor’s made A’s in school.” There are many marketers who have no clue they are actually damaging their reputation by misusing the advertising abilities they have though cookie based targeting and real time bidding. In a recent study I conducted, I found that out of 400 B2B buyers, 71% of them had been disappointed by the content they engaged with from a company. This is likely because the company focused on the conversion, rather than crafting a good experience for their consumer. The surprising part of the study was that 25% of them said they would never read content from that company again, and 64% said they are only slightly likely to ever read content from the company again. So it is easier to advertise to a specific consumer now, but also much easier to create negative experiences which adversely affect your marketing goals. This puts the focus back on companies to craft better experiences for consumers, and also emphasizes that the consumer is still in control.

Remember, online advertising is a combination of many things, only one of which is the targeting of the advertisement. The content being delivered via these vehicles is much more important than how and when the ad is served. The companies who know how to correctly use these tracking and real-time bidding technologies will be better able to serve up helpful and authentic content and provide a valuable service to their consumers. Those who fail to realize what their consumers want will create a “hall of mirrors” and eventually find themselves out of touch with their consumers. And out of business.

For the full “hall of mirrors” scenario to exist, one would have to assume there is a limited set of advertisers and experiences which you would be exposed to. The technologies we are talking about are open bid systems with very low barriers to entry. That means there are potentially thousands of advertisers in real time bidding on a single ad. The idea that the advertising options will be limited to a select few, creating a complete ”hall of mirrors,” is not true. As programmatic advertising becomes more prevalent, more companies will be using it, hence you are likely to see more varied content, not less. It is not correct to think that when companies are in direct competition for mindshare they will spend more money on the ad without being able to provide value on their spend. For them to generate value, they will have to ensure they are giving the consumer want they want so they will engage.

Really, it all boils down to the basic economics of marketplaces and producing value. If you look at it, you will see that providing a “hall of mirrors” to a consumer will not be profitable for companies or advertisers. In this situation, both businesses and consumers play a role. As the scope of the Internet grows, more places for a consumer to self-discover will exist. If consumers prefer to be in a “hall of mirrors,” they can choose to do so by the choices they make. If they desire a true self-discovery experience, companies will exist to provide this option as well. It will come down to which one can provide both the consumers and the businesses adverting on their site with most value.

So will we end up in a digital “hall of mirrors?” For a short time we may, but I do not expect it to last because it will not serve the consumers needs for self-discovery effectively or provide businesses with a high enough return on what is a more expensive adverting option. What I do expect to happen is the technology will be used by businesses to provide the highest value for their efforts, and this mean companies use it to accelerate self-discovery for consumers. Time will tell, but companies will have to find the correct equilibrium to satisfy both the consumers’ need for self-discovery, while maximizing their returns on advertising. It is more likely these technologies will provide a richer Internet experience for consumers in the long run than create a negative online experience.