To rent or to own? With social, it depends

CRM: To rent or to own? With social, it depends

Home ownership is often connected to the notion of “freedom.” It’s also, historically, been an investment that appreciates over time.

65% of Americans own their homes. In Canada, it’s closer to 70%. On the flip side, there are many other parts of the world where people tend to rent rather than own.

During the economic downturn, the debate over home ownership versus renting has been heightened. In Britain, there’s an opinion that¬†“declining home ownership is a national crisis.”

For marketers, “owning” a direct 1-to-1 connection with the right consumer is the holy grail. In spite of this, the advent of social media has resulted in brands shifting their CRM focus from owning to renting consumer connections.¬†

In the world of social media marketing, the absolute number of fans or followers is often connected to the idea of social media “success.” However, a Page owner’s ability (or inability) to reach these fans through posted content has been a topic of much discussion. At the core of this challenge is that these fans are, in a sense, rented from Facebook, Twitter or other social channels. As a result, brands have less freedom, less control.

Just like monthly rental fees, the cost to reach your social fans or followers will continue to increase over time. As more money is spent, the benefits of owning a valuable group of consumers will not be realized.

When building CRM and social marketing plans for 2013 and beyond, you have a choice to make. Continue to borrow fans? Or, make it a priority to convert a percentage of social fans (and their data) into your consumer database system?

Just like in the property market, building longer-term equity through ownership may not make sense for everyone. There are many short-term brand benefits in continuing to activate fans on a 3rd party social platform. But, before blindly continuing down the path of spending money to connect with fans, have you at least weighed the pros & cons of renting versus owning?

  • Interesting way to pose the question. The attraction of Facebook connections is that you can quickly reach great scale with high target precision, and the barrier to always-on connecting is generally low and low friction. The cost is more of a long-term tax, and it sure is going up over time until the supply-demand forces really balance themselves.

    But in terms of owning your own connections, what does that really mean? Having names and emails and mobile numbers? Having their mailing addresses? Having their demographic, psychographic or interest profile data? Having their shopping or other behavioral data? Once you define what owning your connections means, you then have to develop a total cost model that also incorporates the propensity for response. One of the things that made Facebook so valuable in the first place is the low-friction to engagement. While Facebook is getting more crowded, it’s still a great place to go to achieve response with targets. That is one reason why call-to-action ads work so well when they involve a native Facebook follow-on experience, and not when actions involve some activity off of Facebook. (Which also explains why the vast majority of destination FB Ads destination URLs remain inside of Facebook.)

    But at the end of the day, I think you’re right in how you’re approaching this. Facebook’s revenue model now is that of being a publisher. But it’s strategic purpose is being an identity grid. The only other types of institutions I know that do that to the extent of Facebook are banking and government.

    • “Identity grid,” very catchy!

      Max, you’ve proposed another good question that marketers need to ask themselves: “Have we defined what owning our connections means?” Too often, people jump into collecting inconsistent data without any regard for identifying which data permissions will drive actual value for longer-term business objectives.

      Thanks for your perspective.

  • Yes.

    Yes I have.

    To add:

    Forrester Research put out a paper strongly advising marketers to maintain their own data. It’s wise advice. I agree with them.

    I believe that social data belongs to the individual. It belongs to the person. It’s owned by the individual. Marketers aren’t so much renting from the social network in as much as they’re renting from the person. The social network might be a great piece of infrastructure. An enabler.

    And third parties have an important roles to play in maintaining components of that infrastructure.

    The marketer is always renting the most important information about people. I think that’s the starting and ending point.

    Congrats on the new blog Matt. This is great.

    • Chris makes a good point about the person owning his own data. That’s a fundamental value, and a prerequisite to trust. Meaningful relationships and connections are earned, not less bought or owned by a marketer. And the fewer intermediaries, the better, unless those intermediaries add value.

    • Chris, you were right to highlight that. Social data belonging to an individual is an important distinction. Unfortunately, 99% of people don’t realize the extent of personal data that they are knowingly (or unknowingly) renting to networks and marketers at any given time.

      Knowing exactly what you own in the physical world is usually a given. But in the digital world, it’s a challenge… and an opportunity.

      As usual, thanks for your insight.

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