Last week, I wrote a post about the difficulty marketers and agencies are having in developing the right kinds of social networking programs, applications and content. In short, no one brand has cracked the code, despite the hyperactive assault in the form of thousands of failed applications and some high-profile strategic gaffes (Beacon anyone?) across social networking landscape.

But that’s the perspective of marketers and advertisers – what’s it like for the social networks and the business of monetizing the web’s largest aggregated, engaged audiences? The USA Today ran an interesting piece today about the challenges social networking sites are facing in becoming profitable businesses. And while this story is not new, you can expect this issue to reach a tipping point in the near future.

The big players in the social networking space – Facebook, YouTube, MySpace – each with bloated valuations, all face a series of market forces that are conspiring to complicate both the marketing and monetization hurdles: increasing privacy concerns, a growing $50 billion online advertising industry, more and more new entrants into the social networking arena and the pressure that’s mounting on both marketers and the social networks themselves to effectively – and profitably – exploit the largest and most available online consumers.

The USA Today article includes some interesting quotes that are worth examining: Facebook’s new COO, Sheryl Sandberg makes the accurate point that ‘advertisers follow people,’ but dismissively suggests the obvious difficulty in turning these users into sustainably profitable assets for the company by stating, ‘[W]e have 70 million active members. Once you have engaged users, the revenue will follow in that order.’ Really? If so, how? And if this is simply a matter of allowing economics to take its natural course, when can we expect the revenue – the profitable revenue – to follow? In this context, I’m intrigued by this comment the author makes: ‘It is also conceivable that social networking, like email, will never make piles of cash.’ Now that’s a sobering thought for VCs, social networking sites and advertisers alike – and a topic I plan to explore in a future post.

The first iteration of the web saw the rise and fall – and then the rise again – of the Portal. Though obviously different in numerous respects, the business and monetization challenges between social networking sites and portals are remarkably similar. What portals didn’t do initially was act and behave like media properties – instead, they focused on acquiring millions of users, but with no real plan to turn these consumers, well, into consumers. ‘If you have the right audience and the right engagement, you can build a real media business.’

Stated Tina Sharkey, CEO of BabyCenter.com – a site (I like to think of it as a product) that BSSP led the wholesale redesign of last year. Social networking sites would benefit from adopting a similar mindset and accompanying set of strategies, embracing an approach that will continuously force business and management decisions that turn ‘active members’ into active consumers.

It seems the bloom might be off the Facebook Application already… Numerous articles and blog postings have suggested recently that brands, agencies and developers alike continue to struggle with how to develop, launch and sustain effective social-network marketing programs. Shocking.

While the Facebook phenomena is a wildly interesting study about the monetization of a social networking platform that boasts some 69 million members, I am more interested in exploring the craze, hysteria and near-panic that seems to accompany the Next Big Thing. Before Facebook, it was YouTube and before that it was MySpace, and before that something else…the point is, marketers rush to exploit these applications or new destinations before we fully understand them and the potential for marketing and advertising to peacefully coexist within these environments.

The decline in Facebook application development activity – already! – suggests that social networking applications may in fact not be the most effective or appropriate way to connect with your audience. Just because you can, doesn’t mean you should. The broader point that I’m trying to make is that it’s not about being first to market, it’s about being right in the market. Be sure your social network marketing strategy aligns with the broader goals of the brand and that the experience you introduce speaks to your audience in a useful, relevant and appropriate fashion.

Just a quick post to both announce the launch of the Blum Blog Gadgets and to thank Joseph Piro for creating them. You can get versions for your Windows Vista Sidebar, webpage or Google Toolbar by clicking here or on the “widgets and gadgets” link on the lower right-hand side of the page and then follow the download and installation instructions. Enjoy, and thanks again Joseph!

Blum Blog. Welcome.

It was just a matter of time before I started a blog. Truth be told, this has been in development for quite some time, and despite my obvious need for self-expression, I’ve been hesitant to start a blog… You’re probably thinking, ‘just what the world needs, another blog…’ Well, no one is forcing you to read it, and I’m not promising to publish everyday at this point…unlike the machine that is Ed Cotton and his highly ranked Influx Insights Blog, I’m just not sure I generate enough content to share on a daily basis. I will certainly post regularly, and eventually, maybe even daily… The slant , the purpose – if you will – of Blum Blog will be my focus on the intersection of brands, experiences and commerce – how are marketers approaching this new paradigm and a collective consumer mandate for companies to stand for more than the sum of their brands.

Ever since I can remember, I have been fascinated with consistency – and in particular, I’ve always paid careful attention to how companies and products presented themselves. Stating the super-obvious, the Internet has changed everything. But at the core, it’s fundamentally changed the way companies communicate with and engage their customers. Marketers have shifted from talking at their customers to talking with their customers. The web has also introduced the notion of branded utility and value that extends well beyond traditional forms of marketing and advertising. In the past 5-6 years, as the web has technically caught up with our deepest and wildest imaginations, it’s become clear to me that this obsession with consistency has morphed from the consistency in appearance, to the importance of the consistency in experiences – and there is a profound and important difference.

As brands continue to attempt to engage their customers through more and more hyperactive mediums, it is the experience that holds them together, makes them feel truly seamless, and generates an almost inexplicable satisfaction that comes from this type of integrated brand experience. Just think about how you feel when you walk into an Apple Store, browse their site, or first experience removing an Apple product from its packaging – it all hangs together, right? This is not an accidental occurrence. Is this brand-building or experience-building? It’s clearly both, but it’s the entirety of the experience that elevates companies from brands to super-brands. The point is, as brands have become more intimately involved in their customer’s lives, a common color scheme or matching logo is no longer the standard for ‘marketing consistency or dare I say ‘integrated marketing communications’ – nor should they be. They are best represented by the fusion of inspired thinking and technical innovation that not only solve real business issues, but that also elevate the brand to a status or level that far exceeds the sum of their products or services… take NikeID, Nike+ and the Amazon/Target shopping basket integration, as just a few examples of brilliant extensions of their brands that create brand experiences that strategically addresses a real business challenge, while creating a broader brand halo to play under. Pardon the shameless self-promotion, but BSSP’s whimsical Epsonality campaign and online application is a recent example that not only delivers an entertaining experience, but an application that delivers a valid, personalized recommendation that connects consumers with their printing personalities, their Epsonality.

Before I log off and given this is my first entry, and I’d like to take this opportunity to thank several people for making Blum Blog a reality:

• Tom Coates, one of BSSP’s creative geniuses, came up with the name Blum Blog – among others – but it just stuck.
• Mike Shine, who was gracious enough to spend at least 45 seconds on the illustrated caricature that serves as my logo.
• Vince Montelongo, who designed the site turned the caricature into something useable – thanks again Mike.
• Joseph Piro, who built the site and who makes managing Blum Blog hassle-free.
• Ed Cotton, for inspiring me to broadcast my perspectives.
• And finally to all of the partners at BSSP who have encouraged and supported me in this endeavor.

So, that’s it…my first entry is behind me…whew, that took some doing. I hope you’ll bookmark Blum Blog, subscribe to the feed postings regularly. I’d also love to hear from you – comments, dissenting opinions, even requests – so please post publicly or send me an email, I promise to try and respond to all correspondence. Thank you in advance for reading – subsequent posts will likely be much shorter.