Think back to the fax machine. When only two people had fax machines, the fax machine was an interesting new technology with limited value but as more people had fax machines the value increased massively. More specifically when there were only 2 fax machines the value of the network was 4 but when there were 10, the value of the network was 100, i.e. a 5x increase in nodes increase the value of the network by 25.

I was mulling this theory as I was trawling the Facebook pages of various major brands. Take for example, Starbucks, generally held out as a leader in using social media to build its brand. Starbucks has almost 6.5 million fans on Facebook. Impressive numbers.

If you compare this to Dunkin Donuts, a competitor, Starbucks has more than 4 times the number of FB fans compared to DD’s 1.22 million FB fans. I will spare you the math but by my calculations Starbucks FB network is 28 times are powerful than DDs versus 4x the number of fans.

Is Starbucks getting 28 times more value out of its FB fan base than DD? Probably not. I am betting the value is probably closer to the 4 x difference in fans.

Why? The connections are mostly 1:1 or at best 1:few as major brands use their FB pages to communicate out a lot and listen a bit. At the moment, brands are using their networks as a low-cost way to broadcast messages and get feedback in a scalable way. This in itself is very valuable but to my mind the big opportunity is untapped.

The exponential value is the permutation of connections between nodes, the FB fans. As a brand marketer your network is only really working as a network when the fans communicate with each other about you. In Starbucks case this does happen a bit, as fans share their desire for a Frappacino or how much they love Strabucks over other brands. It’s a great start and with brands that customers have a real passion for  like Starbucks, it happens without much intervention. My gut feeling is that there is a huge untapped potential that very few marketers have even begun to exploit.

Imagine if Starbucks and DD ran a similar promotion where you could share a promotional offer with other fans. If network effects apply, Starbucks should get 28 times greater ROI than DD for the same promotion.

The comments are VERY interesting. There is a raging debate as to whether it’s a fake and an early April Fool’s joke. I haven’t a clue. To me the coolest thing is that if it’s real they won’t need to spend a red cent advertising it.  In fact they could make money selling ad space. Add to this that the Facebook group post about the video had 100+ “likes” and over 350 comments.

Devlishly cunning!

Altimeter Report: The 18 Use Cases of Social CRM, The New Rules of Relationship Management « Altimeter Group : A Holistic Approach To Emerging Technologies.

Walmart.com – Elevenmoms.

Yet, where are more than 75% of the marketing dollars getting spent? yup – TV, print and radio. OK, internet is growing at the expense of all other media but this year, internet spending may break 10% of media spending.  The fact is that marketing investment and consumer behavior are diametrically out of whack.

Change is hard. Everyone is experimenting and gradually making the shift but frankly none of this is happening fast enough.  Right now there is no incentive to change dramatically as everyone’s playing a massive game of chicken. “I don’t need to change because the other guys hasn’t changed”. But what if a new guy comes into your market, one that doesn’t play by the old rules? Would they spend most of their dollars the way the incumbents do? Doubt it. Most likely they would look at consumer buying behavior and allocate their investment very differently.

Cluck cluck