It’s the annual event all self-respecting observers of the online world look forward to with breathless anticipation: Mary Meeker’s Internet Trends report. Meeker has been doing this report for 26 years now. Was there even an internet to report on then? Yes there was, and Mary Meeker was there, meticulously analysing the development of what we once called the Information Superhighway.
Meeker is an analyst and venture capitalist of long-standing. Formerly of Morgan Stanley and Kleiner Perkins Caufield & Byers, when it comes to internet trends and happenings, she has seen it all. So in a manner similar to Warren Buffett’s annual Shareholder Letter, people listen very carefully to what she says.
Among Meeker’s most interesting insights this year is one about the power of referral and recommendation online and its effect on consumer purchasing decisions. In marketing circles, it’s always been a given that strong word of mouth and positive referrals are gold. But as Meeker identifies, social media has amplified the value of the recommendation economy. The power of referral and recommendation signals a broader shift in understanding about how consumers use the internet, including social media.
This is Meeker’s recommendations equation: Effective + Efficient Marketing = One’s Own Product + Happy Customers + Recommendations.
Marketers are waking up to the internet’s transformational effect on communications and consumer behaviour. On how people buy things. In essence, we’ve been going through, as marketing expert Paul Rand notes, the ‘beginning’ of the social media age:
We’re now at ‘the end of the beginning’ of social media marketing. While nearly every business and organization has adopted foundational social media platforms, many brands are now asking how they can effectively use these channels to engage their consumers. The answer? For businesses to succeed in the social media-rich world, they now have to transform their business strategies. They have to make their brands the most recommended.
Social media users have led this transformation, while marketers have blindly followed, scrambling to comprehend what it all means, and how they can use these new tools to connect and sell to potential customers.
Mostly we’ve seen a hybrid transitional model in action, where content and ideas from pre-existing mediums like TV and radio have been grafted on to the internet or repackaged fit-to-purpose. The marketing orthodoxies of old have been used as guide maps that barely correspond to the new terrain. For example, though it has been repackaged and sold as something new for the social media age, most influencer marketing is little more than celebrity product endorsement. American golfer Arnold Palmer was doing it back in the 1950s and it was probably going on a lot earlier than that too.
Marketing has been adrift without a map trying to work out how to leverage referral and recommendation online. The internet, even more so social media, has given everyone the opportunity to opine, share a story, voice their concerns. That is the thick chatter of the social media jungle. It’s cacophonous and unintelligible at times, but it’s where real insights can be gleaned and where new forms of power and influence have taken hold.
Don’t believe me? Then how did Facebook, a company barely more than a decade in existence, so rapidly rise to the point of becoming pivotal to the election of a U.S. president? You may not use it yourself, but social media is the medium by which the message is carried for billions of people around the world.
Everyday, people use LinkedIn for business; Twitter to follow and comment on news events; Instagram to like and buy things. The essential connecting commonality to all of this is that it is communal. Whether that is always a good or bad thing is not the point. The point is that our new medium is about communality and interacting with others. We look to others, sometimes maybe celebrities or authority figures, but most often family and friends for advice, opinions, validations, refutations, recommendations and referrals.
As Meeker has identified, referral and recommendation is about to become the heated new battleground for brands and marketers.
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