An Open Letter to CEOs of Social-Network Sites: Get a Relationship Point Person

Especially If You Want Brands to Commit to You for the Long Term

Posted by Ian Schafer on 04.11.08 @ 07:27 PM

Ian Schafer

Dear [insert social-network CEO name here],

I recently spoke to Silicon Alley Insider about why social-networking sites still haven't begun to realize their revenue potential, and I said: What the social-networking properties should have is a relationship expert or a user advocate who would also work with the advertisers.

Banners alone aren't going to cut it. Regardless of how much inventory you have, CPMs are going to continue to decrease because those banners lack effectiveness. And the advertisers that are willing to buy only that inventory are not going to be the brands you want to have long, big-revenue relationships with. Not that revenue from the same dating-site-shilling, mortgage-brokering, free-iPod-offering advertisers you're getting (and consumers are ignoring) now is a bad thing, but it won't be the difference in helping your property fulfill its true potential.

You need a new position: chief relationship officer. The fact that you've had chief revenue officers without this position is, frankly, disturbing. If you want major brands to commit to long-term relationships with you, you're going to need to commit to long-term relationships with them -- and help them create relationships with your users.

The role of the chief relationship officer should be to manage a series of relationships: between the website and the consumer, the website and the advertisers, and advertisers and consumers.

Historically, the relationship between website and consumer has been under the protection of your founder(s). But when your founder speaks of revolutionizing advertising at the expense of those consumers, the bond between your site and its users is weakened, and that's a difficult sell to advertisers.

Furthermore, the problems that you've had in attracting more "brand" (non-entertainment) advertisers are rooted in your product offering. The "products" you sell to advertisers are impression-based and promotion-centric and lock advertisers into campaigns that are too short-term to be part of an effective long-term social-media strategy.

If you really want to attract brands, change your approach by not even using the word "campaign" when speaking to them. The problem with "featured profiles," sweepstakes, gifts and applications is that they are effective only as long as they are promoted. What happens when the promotion ends? There should be no end to a social-media strategy. When campaigns constantly stop and start, advertisers are forced to constantly activate and reactivate consumers' engagement. It would be more efficient to maintain engagement through honest-to-goodness relationships.

There is a lot of money to be made from being a customer-relationship-manager for your advertisers. That represents a radical shift in thinking, pricing and inventory management, and it's a necessary evolution to undergo to avoid becoming just another ad solution that can be bought using an auction-based model.

Building relationships with consumers should be a fundamental part of every brand's strategy. As a social-networking website, you connect with people and you connect people to people. You can connect people with brands as well. But deep connections take time. A chief relationship officer must be responsible for making those connections a priority and for creating connection opportunities that can be monetized. And that means, as far as brands are concerned, throwing out the campaign-centric model in favor of one that is longer-term, more open-ended and provides greater opportunities to foster conversations, relationships, allegiances and ambassadorship.

With almost 25% of U.S. adults using social-networking websites (per a study from Ketchum and the University of Southern California Annenberg Strategic Public Relations Center) and more than 50% of U.S. teens having a profile on one or more social-networking websites (according to the Pew Internet & American Life Project), now is the time to figure out how to capitalize on these trends. Don't rely on media-buying agencies to figure this out for you.

Switching from an advertising-revenue model based upon impressions to one that builds lasting impressions starts with the installation of a chief relationship officer and the beginning of the end to the campaign as we know it.

So stand up for your consumers and advertisers. Change the way advertisers buy into social-networking websites and the way consumers buy into advertisers.