Adam Penenberg has a proposition for social media companies struggling to make money and marketers fighting to tap into the phenomenon they’ve created. Find the most prolific users and treat them like partners, then let marketers loose on them and their vast network of friends. Essentially, he is saying companies can monetize the viral expansion loop, the very mechanism of word-of-mouth and pass-along responsible for the growth of online networks. Not only has he written a book about it called Viral Loop, he’s developed an app by the same name that puts a dollar value on prolific users and potential influencers on social media sites.
Penenberg sums up his argument in an article for Fast Company, discussing the impetus for his book and app. Marketers have been getting it wrong by relying on conventional techniques on social sites, and the companies running these sites aren’t helping. He draws a great analogy to how Google upended another so-called convention to become a multi-billion dollar company. While Yahoo! and Microsoft stuck to conventional wisdom that search engines can’t be monetized, Google figured out the formula is incorporating advertising into the mechanism of what it provides. Instead of selling banners, Google sold ads that appeared as returns on search queries. Users saw the practice as enhancing the service Google provides. Social media companies can help marketers by waking up to the fact that the value in their sites isn t just the audience they have amassed, it s the networking mechanism.
Read Penenberg’s piece at Fast Company.
