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The Age Of Relevance

Editor’s note: This is a guest post submitted by Mahendra Palsule, who has worked as an Editor at Techmeme since 2009. Apart from curating tech news, he likes analyzing trends in startups and the social web. He is based in Pune, India, and you can follow him on Twitter.

What’s the Next Big Thing after social networking?

This has been a favorite topic of much speculation among tech enthusiasts for many years. I think we are already witnessing a paradigm shift – a move away from simple social sharing towards personalized, relevant content.

The key element of the next big thing is the increasing significance of the Interest Graph to complement the Social Graph. While Facebook, Twitter, and Google are already working on delivering relevant content, a slew of startups are focusing exclusively on it.

Relevance is the only solution to the problem of information overload.

The above matrix is a representation of how the process of online information discovery has evolved over time.

Phase I: The Search Dominated Web

This is how Google began its dominance over the web two decades ago, using PageRank to surface the most popular web pages as identified by other web pages that linked to them.

Phase II: Web 2.0 With Social Bookmarking

In the Web 2.0 era, social bookmarking services gained significant traction, surfacing popular content. Sites like Reddit and StumbleUpon are hugely popular even today, driving millions of page views.

Phase III: Personalized Recommendations

Services like Hunch, GetGlue, etc. have focused on building an Interest Graph for users, to deliver personalized recommendations using a ‘taste engine’.

Phase IV: Personalized Serendipity

The latest crop of startups is focusing on personalization using a combination of Interest and Social Graphs. Personalized Serendipity is what Jeff Jarvis calls ‘Unexpected Relevance’. Examples include Gravity, my6sense, Genieo, and TrapIt.

What Exactly Is Relevance?

The battle against information overload is sometimes presented as a choice between Relevance and Popularity, where ‘relevant’ is equated to ‘personalized’ as against popular.

However, Relevance does not always mean Personalized. Relevance is very dynamic – it depends on the needs of a person at a specific point in time. There are times when users want to know about the most popular stories, and other times when they seek personalized content.

There are multiple approaches to filtering information for Relevant Content. Google, Paper.li, and PostRank are examples of algorithmic filtering, while Reddit, Hacker News use a crowdsourcing approach. Klout can be used to filter Twitter streams by influence, while Facebook uses social affinity as a filter for its newsfeed and social signals for its new Comments Plugin. Location is another high-impact signal for delivering relevant content, gaining importance in a mobile world.

In other words, Relevance spans across all the quadrants of the Discovery Matrix above, and none of the above approaches to filtering for relevance is the ‘best approach’. There is no killer approach to Relevance. Henry Nothhaft, Jr., CMO of TrapIt, described it as “the myth of the sweet spot”. The competitive edge will be with services that support multiple discovery methods, multiple filtering approaches, have flexibility, and support multiple mobile platforms.

Quora: A Showcase Of The Interest Graph

Quora has pioneered the use of the Interest Graph as a dominant signal for its newsfeed. Quora asks new users to select Topics to follow, as part of its onboarding process, which is the first revelation that Topics are as important as Users to follow.

Quora’s newsfeed is an interesting showcase of what happens when you mix an Interest Graph with a Social Graph – and the result is the mysterious addictiveness so many have experienced, but found difficult to explain. An item pops up in your newsfeed not because you were following a user, but because you were following a related topic.

This often leads to Personalized Serendipity – or Unexpected Relevance – which is why Quora gets many people hooked.

The war over the Interest Graph began between Twitter and Facebook last year, as Erick described so eloquently. So how did Quora beat them to this game?

For starters, Quora is built from the ground-up with the Interest Graph being a backbone of the framework. Twitter’s ‘Browse Interests’ is too broad and primitive to be of use, even at present. And while Facebook has a mechanism for allowing publishers to push new items to your feed, most publishers have been unaware of this functionality.

This is also the reason why Facebook’s Like Button now publishes a full news feed story. The future clearly belongs to who best captures the Interest Graph as Max Levchin and Bill Gurley put it.

The implications of a Relevance-driven web are wide-ranging and broad in scope. Better utilization of the Interest Graph by services will lead to better ad targeting, and a potential decrease in reliance on CPM/CPC-based advertising. Monetization focus will be on higher yields through transactions and subscriptions as Dave McClure once described. Online media publishers will focus on Relevance Metrics revealing engagement and time-spent on site, than primitive metrics like page views and traffic.

Social media may lose its obsession with follower numbers and traffic, evolving to context-driven reputation systems and algorithms.

Interest Graphs will be used to build Better Social Graphs. Today’s monolithic Interest Graph will get further specialized into Taste Graphs, Financial Graphs, Local Network Graphs, etc., yielding higher relevance for different needs.

The Age of Relevance beckons!

Understanding the Social Media ROI Cycle

Jamie Turner is the chief content officer of the 60 Second Marketer, the online magazine for BKV Digital and Direct Response. He is also the co-author of How to Make Money with Social Media. He’ll be speaking about his Social Media ROI Cycle at the SXSW Conference in Austin on March 15.

Not long ago, I wrote about how to calculate the ROI of your social media campaign, which generated a lot of interest from the social media community. The article outlined how businesses can use Customer Lifetime Value to calculate the return on their social media investment.

After writing the article, I started analyzing how businesses go about setting up, launching and running their social media campaigns. My conclusion is that there are three distinct stages to this process, which I’m calling the Social Media ROI Cycle. My rough estimate is that about 50% of the business community is still in the Launch stage, about 40% is in the Management stage and about 10% is in the Optimization stage.

Each one of the three stages has its own nuances, so let’s take a look at what happens during each. The percentages referenced in each stage are estimates based on my own experience.

Stage 1: Launch

During the Launch stage, 100% of a company’s focus is on setting up the big four: LinkedIn, Facebook, Twitter and YouTube. Some companies focus on the big four plus more such as Flickr, e-newsletters, blogs, SlideShare and other social media platforms. But most companies kick things off by quickly getting into the big four networks simply as a way to have a social media presence.

The approach during this Launch stage is very executional with very little long-term planning. The primary objective is simply to get started. After all, those in charge want to ensure the brand is utilizing cutting-edge techniques, so the marketing department typically responds by jumping in without much plan for the long haul.

Unfortunately, the results of the Stage 1 process are negligible. Sure, you’ll be able to claim that you’ve “got a social media campaign,” but you won’t really see much traction unless you move on to Stage 2.

Stage 2: Management

During this stage, roughly 60% of a company’s efforts are focused on the big four (or the big four plus more). About 10% of the focus is on creative and offer development, 20% on tracking quantitative metrics such as traffic, inbound links, Facebook “Likes,” etc., and about 10% on qualitative metrics such as brand sentiment, survey results and customer polls.

The approach during the Management stage is still very tactical, but the focus is on mid-term instead of short-term results, which is an improvement over Stage 1. The corporate objective at this stage is to engage prospects and customers in some way that gets them to connect with the brand. Ideally, this would mean buying something, but it can also mean downloading a white paper, liking a Facebook Page, responding to a survey, or any other measurable evidence that they’re connecting with your brand.

Stage 2 is where many of the more sophisticated companies find themselves right now. They’re managing their social presence, testing creative ideas, tracking quantitative metrics and analyzing qualitative data.

Most companies today are still at either Stage 1 or Stage 2. But many of the companies I work with have started to reach the Stage 3.

Stage 3: Optimization

About 25% of the focus at this stage is on the “big four plus more,” and about 30% is evenly split among creative and offer development, quantitative metrics and qualitative metrics.

Another 25% of a company’s focus is on improving conversion and optimization of campaigns. What do I mean by that? It’s all about tracking inbound leads and traffic across social media platforms, using tools such as Atlas and DART, and watching those leads turn into customers, either on e-commerce landing pages or through B2B lead generation programs.

It also means testing your way to success with social media campaigns. This can be as simple as trying two different landing pages to see which one drives more clicks. Or, it can be as complex as multivariate testing that analyzes more than one component at a time.

The final 20% of a company’s efforts in Stage 3 include measuring the success of the campaign on an ROI basis. And yes, you can measure a social media campaign on an ROI basis, despite what some social media “experts” will tell you.

The process involves understanding your Customer Lifetime Value (the total revenue the average customer generates for your business during the lifetime of their engagement with you) and comparing it to the results generated by your social media campaign.

For example, if you know the typical customer spends $10 per month with your company and stays loyal to your brand for an average of three years, your Customer Lifetime Value is $360.

Many companies are comfortable spending 10% of their CLV to acquire a new customer. So, in other words, they’ll spend $36 to acquire a new customer who will spend $360 during his or her engagement with the brand.

If your social media campaign costs, say, $36,000 a year to run, and it generates 1,000 new customers each year, you’ve got a winner on your hands. (For a more detailed explanation of this process, please see my previous post, HOW TO: Calculate the ROI of Your Social Media Campaign.)

The Bottom Line

In the end, all roads should lead to social media ROI. After all, businesses don’t do social media to be social, they do social media to grow sales and revenues.

If you carefully navigate your way through Stage 1, Stage 2 and Stage 3, you’ll eventually be able to go up to your CFO and say, “Hey, Chief Financial Dude, remember when you told me we wouldn’t be able to measure the ROI of our social media campaigns? Well, we’re already doing it, and we’re making a profit, you knucklehead. So there!”

Of course, you don’t have to use those exact words, but you get my point.

More Business Resources from Mashable:

– HOW TO: Calculate the ROI of Your Social Media Campaign
– Creative Constraint: Why Tighter Boundaries Propel Greater Results
– 10 Ways to Turn Your Local Business Into a Global Success
– 6 Top Tips For Managing a Coworking Space
– 3 Podcast Success Stories from Creative Small Businesses

Image courtesy of iStockphoto, ewg3D

More About: business, MARKETING, ROI, small business, social media, social media marketing

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