Reflection on Stephen Baker's New York Times article, Can Social Media Sell Soap?

How is social media changing industries like online advertising? Stephen Baker's great article got me thinking about social media - in order for advertisers to run effective campaigns using social media, they need to properly measure the right indicators.

The growth of social media has completely changed advertising. Social media has the ability to deliver qualified product and service suggestions to customers like never before, and many advertisers are excited about the possibilities this enables - a friend's trusty recommendation will always be more effective than a generic sales pitch.

Because of this, advertisers' jobs have changed. Like Baker discusses, magic brainstorming sessions and old school marketing techniques don't cut it anymore. Today's best advertisers are using data to drive optimal results.

But what data collected does an advertiser use and and how does it help them? I think Baker is right on - "When big new phenomena arrive on the scene, it’s hard to know what to count." Optimal results will be more subtle than any single metric. Advertisers need to have clear goals in order to properly utilize metrics most relevant to their business. This may require ignoring some metrics and emphasizing others. There is difference between each customer you attract, the ads you deliver, and the networks that bring customers to your company and products. This is a major reason why metrics are becoming more sophisticated, giving advertisers the ability to track very specific behavior and key actions like the amount of time spent on a site or a sign up following an ad click. Too much data is a nice problem to have - rather than the confusion that can come with more data than advertisers can handle, I foresee the use of data continuing to grow in innovative ways that increase ad relevance and effectiveness.

The new "Mad Men" leading the way for online advertising will be those advertisers inventing new, superior ways to measure success. I think this is what Baker was getting at with his article. The way we measure all things changes over time, but we haven't figured out how to measure the influence of social media yet. This is true for it's impact on all industries, not just advertising.

Baker still seems to leave room for the idea that social marketing is overhyped. Referring to social marketing as a kind of modern word of mouth, he says: “The hopes for such a revolution have fueled a market frenzy around social networks — and have also primed them for a fall.” I don't think there's much potential for a fall in the growth of social marketing. Ads will get more relevant to users, and users will purchase more products and services through social marketing. Businesses will gain more value in social marketing, which lead them to do more of it.

Baker finishes by referencing a point made by Dave Morgan from Simulmedia on electricity, saying: "In the late 19th century, most people associated the new industry with one extremely valuable service: light." Just like electricity became the infrastructure for countless other industries, social networks are a new infrastructure that will influence many new and existing industries. One thing is for sure: online advertising is one of them.