Platt Perspective on Business and Technology

Reciprocal links, value chains and strategic development in a business ecology, and creating value through business social networking

Posted in social networking and business, strategy and planning by Timothy Platt on June 18, 2010

A couple of days ago I attended a marketing event and in the course of my networking and conversations, met someone who surprised me. The person I write of meeting with in this posting is an online marketer, but unlike most with that professional focus she takes a very emphatic position that social networking does not (and probably cannot) add monetizable value to businesses. Her focus was on marketing and I admit that her negative assessment in this has a well established historical pedigree, going back to the first dot com bubble burst that was fed by a failure in turning eyeballs on the web page into sales and monetizable transactions. That bubble burst led to a great deal of disenchantment as to the value of simply being seen by the public, and certainly by the numbers. According to this argument, social networking is simply the Web 2.0 manifestation of the Web 1.0 eyeball and sticky eyeball mirage. (Here eyeball means they go to your site and sticky means they do not immediately leave it.)

What surprised me was not that this marketing professional has reached this conclusion, but that someone in this crowd would so loudly and forcefully declare the king to have no cloths, to cite the childhood fable. This is because for many businesses social networking really is just the newest spin on the pre-bubble burst eyeball fixation of a decade and more ago. But this is not the type of thing that online marketers seem to want to hear let alone repeat. Social networking and the dynamics that support it can, however, be used as a foundation for developing real value and that is what I want to discuss here.

The discussion this came up in was B to B, or business to business oriented rather than B to C and business to consumer so that is the context I want to address here. I will pick up on the B to C side to this complex of issues in my next posting. And for now I want to start by posing a couple of questions and by offering what might be at least possible beginnings to answers to them.

• Operationally, how would a business go about developing and implementing social networking as a value generating resource for its marketing and sales?
• How would they best determine the monetizable value of this investment in their top and bottom lines, so as to be able to strategically plan and prioritize their business and meaningfully track performance?

I want to start my approach to addressing these questions by briefly reviewing a piece of internet business history with the advent and evolution of incoming and reciprocal links as a web based resource for creating business value.

Search engines and web sites have been in effect conducting a low level but still quite persistent little war since the initial inception of search engines with the early development of the World Wide Web. The businesses and organizations that set up and maintained search engines were continually trying to refine their algorithms for assigning search relevance to the sites they found online, and for possible search terms that people would use, and businesses and other organizations that put up these web sites were continually trying to find ways to boost their search positioning by in effect gaming the systems developed into these algorithms, insofar as they could discern their details by studying their output decisions – these algorithms have always been maintained as closely held proprietary business information so this has always involved a combination of guess work and detective work. So to cite a very simple example, HTML was drafted to include features like the key word metatag for site owners to label what their site was about and even on a webpage by webpage basis. And sites began abusing this by padding this metatag with potential search terms that might not be relevant to them but that would raise their search engine positioning and visitor count. And the search engines responded by changing and limiting how they used this metatag and its data in their scoring.

One web site feature that came to be seen as important for search engine positioning in these algorithms was presence of incoming links from other web sites. If another site linked to your site, that probably meant that that site’s owners saw your site as offering relevant value. So incoming links started to gain prominence and value, and exchanging reciprocal links became a common practice where web sites would link to each other to reciprocally create and share this form of value. And this created a business opportunity for gaming this part of the algorithm system and the so called link farm site was born. Basically, a link farm site is just a jumble of links to web sites that pay for inclusion to increase the count of links from other sites feeding into them. The idea was that no one would pay all that much for inclusion on one of these sites, but a business could set up multiple link farm sites, each with its own separate URL and IP address, and each such site could add in endless numbers of client links – each with its own individually small but collectively significant revenue stream. And the search engines responded by adding to their algorithms to identify link farm sites by their richness of links and poverty in all else, and to in fact penalize web sites for using these services, reducing their search engine priority positioning for that type of incoming link. But incoming links from what these algorithms determined did not look like link farms still added positively to the search scores and to a site’s search engine positioning. After all, a lot of sites legitimately link to and reciprocally link with other sites relevant to them and their target audiences.

In a Web 1.0 ecommerce and e-marketing sense think of linking simply as a numerical exercise and with link farm inclusion as focusing on those eyeball and sticky eyeball counts. In a Web 2.0 and social networking context the analogy has to be with simply networking by the numbers and with whatever tools and formats that seem to draw in the largest numbers of connections – and regardless of the specific identifiable value of any of them and either individually or collectively. In this case, however, the reality check filtering is not being carried out by a search engine algorithm, but rather by the monetizable evaluation of the marketplace, one transaction and one increment to a closing rate, or lack thereof at a time. Both of my search engine examples above can be viewed as quantity alone versus quality as a focus and that is what is important here.

The real issue here is not whether social networking per se can add value to a business through its marketing and sales, but rather of what set of social networking tools and approaches can add value for you and your business. And once you start focusing on that, you need to complete the process and look to ways to monetize your valuation metrics for this for the connections you do make and maintain. And at this point I add that any effective approach has to be focused on connecting to the right people and in the right ways – not simply doing it by the numbers where quantity of connections dominates quality.

I turn to my laws and principles of good social networking practice here and point out that offering value in exchange for value, and at all levels and stages in the networking process is not just about being nice. It is about being effective and in developing a basis for realizing real benefits for yourself too. Social networking can help drive business and in a monetizable way but you need to focus on value and both value offered and value received to make that happen.

In a B to B context, this means identifying your key partners and potential partners in the business ecology you function in and it means developing a valid value chain with suppliers and customers, channel partners and others who would and could share and create value with you. And your networking with them needs to be focused on specifically offering value to them and in ways that would support and facilitate their offering value back to you in return. That will draw them into seeing value in doing ongoing business with you and in offering you that value in return.

• Who are your best potential networking contacts now? Start with them, reaching out to them to offer networking resources as a means for sharing value with them.
• Tap into these contacts and connections for insight on their current and developing needs and with an eye on learning how to more effectively address them through your products and services.
• Tap into them for insights as to how they are innovating in-house and starting from the off the shelf products and services they do acquire, as a resource for identifying new innovations you can build into your offerings as your innovations too.
• Go from this foundation to help identify new potential market opportunities – turning insight gained from your business networking to help you spot trends and emerging opportunities, and to identify where markets may be getting saturated and even be starting to shrink.

What online social networking tools and venues should you use for this? Social networking does not begin or end with Facebook and its profile and wall-centric focus on developing new contacts as a goal in and of itself. Setting up and maintaining a business Facebook page with its various add-ons will just give you numbers but it will not necessarily offer any real value from any of them.

• What tools would help you better craft and deliver specific value-oriented messages?

Oracle offers a wide range of business supported and business focused blogs that are maintained by employees at all levels and a growing number of companies are starting to take a similar approach to expanding their message base beyond the web site. Instant messaging can be used to connect with specific businesses and individuals to create dialogs and connections, in building and strengthening value chains, and in ways that more generic, standard customer support and help desk capabilities cannot generally match. Tools like Twitter can be used to share word of updates and breaking news. Choosing the right tools in this context is all about really knowing what your intended messages are and where your intended audience for those messages would be comfortable receiving them, and connecting back in response. That may mean setting up product and service user online groups, and perhaps private groups only visible and accessible to vetted members.

• Who are you trying to reach and where would they be comfortable connecting and sharing value with you?

Monetizing this becomes a matter of tracking response and that means using unique URL’s to track response to specific campaigns and it means adding in specific offer codes that would be used and other standard marketing tools. In this, social networking is simply B to B marketing and sales with an expanded reach, and at least as importantly and expanded range of opportunities offered for reaching back to you too.

Tomorrow I am going to continue this posting and with a focus on the B to C, or business to consumer context.

3 Responses

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  1. […] more from the original source: Reciprocal links, value chains and strategic development in a … If you enjoyed this article, please consider sharing it! […]

  2. Social Computing Platforms said, on June 18, 2010 at 3:06 pm

    […] Read more: Reciprocal links, value chains and strategic development in a … […]

  3. […] two part series on creating value, and monetizable value from social networking for a business with Reciprocal Links, Value Chains and Strategic Development in a Business Ecology, and Creating Value T…. My focus there was on going past the simple quantitative-only approach to social networking and […]

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