Burlingame: Facebook and Twitter may not be the biggest winners from social networking. Traditional brands may get the last laugh--or at least the richest laugh--on social networks.
So far, companies such as Facebook and Twitter have attracted all the buzz for creating social networking. Making money, however, has proved more challenging. Using Facebook and Twitter is something like hosting a big cocktail party, observes Brett Hurt, founder and chief executive of Austin-based Bazaarvoice, which offers user-generated review platforms and expertise to other businesses. "But nobody shops at a cocktail party."
Consumers, however, do shop at old-fashioned branded retailers--say anything from Office Depot ( ODP - news - people ) and Staples ( SPLS - news - people ) for office supplies to Macy's ( M - news - people ) and Nordstrom ( JWN - news - people ) for clothing. And when someone wants to buy a product, they often like to turn to their friends and colleagues for advice. "Where the action is happening in social networking is on the brand sites," contends Hurt.
Hurt is betting big on that insight. Bazaarvoice got its start by helping companies develop the technology for hosting consumer ratings and comments on their sites. But he's moving rapidly into social networking, using Bazaarvoice's technology to help consumers effectively shop with their friends.
User generated ratings, reviews
Bazaarvoice provides features like user-generated ratings and reviews for sites of manufacturers and retailers. Such mechanisms on Web sites can generate and increase word-of-mouth and viral marketing campaigns for products.
Classic social networks are almost like echo chambers, giving people a place to share their opinions and even educate friends. But consumers aren't usually focused on buying products when they're in the social networking milieu; purchasing decisions happen elsewhere, says Hurt. But when people go to shop, evolving technologies, such as Facebook Connect, can help authenticate users and transplant communities of friends elsewhere.
Kingston saw 10 fold increase in product reviews
A month after Kingston launched BrandVoice's syndicated reviews on OfficeDepot.com, Hurt says, the retailer saw a 10-fold increase in the number of reviews of Kingston products. More reviews translated into more sales; sales of reviewed Kingston products nearly doubled. Even sales of Kingston products that hadn't been reviewed grew 35%.
Such channel advertising, Hurt predicts, could become a disruptive technology in the future of online advertising. "It's the highest growth area of our business," Hurt says, "and the most exciting."
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