However, social media is transforming paid and owned media too so the complete picture regarding how social media is changing marketing is much more bone rattling than most think.

Social media impact on owned media activity. Beyond direct traffic the largest source of traffic to your website or Facebook fan page is usually search. According to Google adwords, there are 4MM monthly US searches for Starbucks and 16 million searches for “coffee”, driving a portion of the 2-3MM visits per month to Starbucks.com (according to Compete, Quantcast, Alexa). However, you will not be able to optimize search unless you master social activity as Google and Bing have each changed their organic search algorithms to include social media activity. Try it. I searched for “path to purchase” and a blog I wrote on this topic showed up fourth. On my daughter’s computer it showed up lower down. I am connected in social media to someone whose blog shows up highly in my results but doesn’t show up at all in the first two pages on my daughter’s computer. Implication: create sharable content (e.g. lifestyle pieces that reinforce brand values), offers, etc. and use sharing widgets to facilitate sharing.

Social impact on shopping choices. Yelp and Foursquare are mixtures of social and owned media. Check-ins and reviews are social activities that can persuade at the key decision-making moment. When I check in on my Droid at a location via Foursquare, I also check for offers at that retailer. If I am considering what restaurant to go to in a certain part of Manhattan, I always check reviews on Yelp. Not just what people say, but how many say it. The sheer number of reviews affects my choice of restaurants to dine at but the restaurant’s site must seal the deal.

Social media impact on paid advertising. This could be the biggest impact of all on marketing practice. What a minute, “paid advertising”? I thought social media was about getting people to talk about your brand so you didn’t have to pay for impressions. What am I missing?

Social media allows marketers to begin targeting advertising impressions based on behaviors and interests rather than just using demographics (the bluntest of targeting instruments). This is one of my suggested 6 big marketing mandates for 2012-2015. For example, Facebook offers a user’s profile of interests to serve up more relevant display advertising. You can also advertise your page to friends of those who have liked you, under the reasonable assumption that birds of a feather flock together. ShareThis classifies hundreds of millions of users each month based on their content consumption and sharing behavior across the web. This behavior is clearly indicative of both shopping intent and persistent life style interests and can be used very effectively for advertising. Social media boosts ad effectiveness as Ads can be liked, and offers can be shared as it has been shown that when a friend of yours likes an ad on Facebook, it is displayed for you and it creates additional lift to that ad’s impact.

As a proofpoint, Facebook is already a leading publisher in terms of display advertising revenues but this might only be the beginning.

I speculate it is possible that your liking and sharing behavior via Facebook Connect and plug-ins across many sites would allow them to more precisely model an individual’s interests and then using that to better address advertising across an ad network that extends beyond the walls of Facebook (hey, that’s a pun!). For example, if you sign into Huffington post using your Facebook or Google+ account the articles you read can become part of the profile of interests you hold (it already shows up publicly on the HuffPo page) and Facebook or Google+ could potentially serve advertising into inventory they have across the web. I predict that social log-in will become increasingly prevalent (Facebook, Twitter, Google+) because people prefer the simplicity of not having to remember a gazillion log-in passwords. More speculation. Imagine if Facebook becomes the way you “log-in” to view TV listings based on stored preferences when TV becomes completely digital. Facebook could get a piece of the 800 pound advertising gorilla. Google might even be ahead here with Google TV and Google +.

Social media not only creates the opportunity for owned media, it will profoundly affect paid and owned media as well, changing how marketers spend their ad budgets, away from demographics and toward interests, behaviors, and self-directed seeking.

I just bought a digital camera and here was my path to purchase.

1. On December 30^th, I realized I needed one for New Year’s Eve.
2. While in the car, I checked for deals on my foursquare and shopsavvy apps for electronics retailers near my location.
3. I chose a retailer to call and made sure they had cameras in the price range I was considering
4. I went to the store, chose a camera from an acceptable brand and got a memory card.
5. I then used Red Laser to image the UPC code of each and found lower prices at nearby stores
6. Rather than go to another store, I showed the results to the salesman who got manager approval to match both prices for a total savings of about $35.
7. I left the store feeling smart and successful and more likely to shop there again the next time as I know I will always get the best price there with the same shopping steps.

Marketers are training us to become system beaters. We all see a continuous flood of e-mails offering deep discounts and free shipping. Increasingly, marketers are making it easy for us by going paperless as we download the offers into our smart phones and loyalty cards.  Remember when we had to wait until Dec 26^th for big sales?  Now they start at midnight of Thanksgiving. And social media is a dream come true for system beaters; not only do we find the deals we want for ourselves but now we get to share them with all of our fans, friends, and followers.  We retweet the deals we find, and we like them via Facebook so all our friends see them too.  And by the way, looking for deals is a main motivator to like a brand page in Facebook in the first place.  Also, digital and mobile have compressed the timeline.  I now know I can wait until the last minute to start my research.

So, is this the end of branding? What should marketers and retailers do if shoppers are forever transformed into system beaters?  All is not lost as System beater behavior is itself habitual and selective in how a particular shopper goes about finding deals, just like we only use about 10% of the apps on our smart phones, and watch only 10% of the channels on our TV.  Study how consumers are seeking out deals…their system beating behavior…and then make sure you are ahead of competition at knowing how to use those promotional touchpoints to build habits.

Here are six marketing ideas to get loyalty lift from system beaters in return for hot deals:

1. Like-gate your promotion offers on Facebook
2. Use paid search to drive traffic to your owned media, where the landing page offers a relevant discount in exchange for some lasting marketing benefit;  people sign up for your e-mails, become members, download your app, or at the least, receive a cookie for subsequent promotional ad targeting
3. Make all of your offers shareable by including a sharing widget in the offer.  Reward the fan who shares the most.
4. For retailers, price matching should include matching Amazon online prices (as long as the item is new) so your store doesn’t become a showroom and you convert the trip into a sale.
5. Retailers should attach promotions to check-ins (like $5 off your purchase of $50 or more) to win the trip and build loyalty. (Check out Levelup which David Berkowitz from 360i made me aware of.)
6. Mastery of mobile is a must. Build apps that offer useful information as well as discounts so they turn your brand into a mobile portal. Also, please optimize your website for mobile.

Shopper behavior has forever changed and is forever changing and with it, the rules for branding.

Smartphones, tablets, iPod touch will create the mobile, app-enabled lifestyle and that means apps.  Why?  Because mobile is not like a computer with a small screen; it is transformational. Apps provide needed simplicity for mobile web access by extracting the essence of a service and put it right in front of the user, in a way that fits perfectly within the screen limitations and adds a localized dimension. For example, search for Walmart on your computer now do that on your Smartphone. Locations near your current location will be mapped and, if you click the link, you will get to a very app-like landing page rather than the one you see on your computer.  Search for eBay and the app itself shows up in the results.  They have optimized nicely for mobile search and perhaps that has something to do with their pronouncement that nearly $2 billion in gross sales were generated via mobile in 2010.  On the other hand, many grocery retailers are not yet optimized for mobile and you have to do the pinch and stretch thing to be able to read the website you get to, and then, only to find that the coupons need to be printed!

If there is any life activity that is crying out to become appified, simplified, localized and mobilized on your smart phone, it is shopping.  Furthermore, marketers want it too.  Imagine; you will be able to deliver messages and offers to a shopper as they stand right in front of your brand and its competitors that are customized from prior purchase activity.  This is behavioral targeting and recency, two principles of media placement, on steroids.

Look at this distribution of time spent on apps by category from Flurry; it appears that aiding shopping has not yet taken off.

1. Games: 47%
2. Social: 32%
3. News: 9%
4. Entertainment: 7%
5. Other: 5%

However, app developers are starting to work on this.  Modiv has been testing a mobile shopping solution called Scan It with Stop and Shop that is now about to be tested on iPhones.  It links offers to your frequent shopper history and knows where you are in the store.

Ad Age reports Finish Line unveiled a new app that is focused on shopper experience; it gives shoppers access to real-time inventory at the store nearest them. Users can check to see if an item is available in the style, size and color they’re looking for before coming to the store.

Amazon offers a price checking app so you can be in a Best Buy or Walmart, check the price of the same item at Amazon and decide if you want to order it from within the app.  Making a purchase at Amazon while standing in the Walmart “showroom”!

Truly it is the “rise of the planet of the apps”!  As an increasing majority obtains smart mobility, as smart phones replace PCs as the number one way of accessing the internet, as life becomes app-enabled, people will insist, “yeah, we want an app for that”…and they’ll get it.

In app-enabled lifestyles, marketers will see transformational opportunities to connect consumers and shoppers with their brand.  They will optimize their owned media for mobile. They will see new mobile ad units that are very impactful, and vertically integrate their relationship with consumers from the living room to the store, becoming relevant at the right time, right place, with the right message.

I’ll share more of my thoughts on the app-enabled lifestyle on Nov 30-Dec 1 at the SF Appnation III conference.

Now, since 2010, Google has started a campaign around  ZMOT, the zero moment of truth.  This recognizes that many shoppers actually start their shopping online via a search.  Again, true.

However, let me introduce “minus one” in path to purchase, because there is something that comes before search.

Most of search that refers traffic to a given site is based on typing in a trademark name, not a generic phrase like, “get the smell out of my carpet”.  So, how did someone get to know about that trademark that they thought to search for?  I think there are 3 main sources:

1. Push advertising on TV and digital display that creates desire and curiosity
2. Word of mouth and conspicuous consumption (those white earbuds on the iPhone had tremendous impact on creating societal acceptance)
3. Visibility at retail.    Yes, the first moment of truth can come BEFORE the zero moment of truth. In a way, packaging was the zero moment as it was the searchable content before mobile devices brought the internet into the store. Well, you knew linear marketing was dead, right?

So, I’d say that the moment of curiosity and desire that creates interest in learning more is the minus one moment of truth.  Minus one can be triggered anywhere; in the living room while watching TV, on the train, in the store, or in Facebook and Twitter (and now Google plus) conversation.

The mating dance between minus one and zero has always existed.  What I think happens is that unless you can quickly act on your desire, it dissipates.  Before internet search, when minus one occurred you needed to go to the store, or call a friend, or buy a magazine.  I have to believe that 90% or more of desire was squandered in the pre-digital age.  Now, consumers can instantly search for something they are curious about…from their computers at home or work, or mobile devices right in the store, or from 35,000 feet.  So what search does is it lets us act on our curiosity before it dissipates which is powerful for marketers.   Some marketers are ahead of the curve at turning minus one into zero anywhere and anytime but this is a big part of digital strategy…turning curiosity at minus one into a zero moment activity before it dissipates.  This should be a priority for a marketer.  How would you do this at shelf, online, in a TV commercial, outdoors?

So for moments of truth marketing, we need to keep a few pieces of advice in mind:

1. There is something before the zero moment of truth; minus one is the point at which desire and curiosity lead to the desire for search and seeking activity.  What is your minus one strategy?  Is it TV-based, social-based, store-based or something else?
2. A progressive marketer will find ways to enable people to instantly pass into the zero moment by fully leveraging digital, social, mobile wherever that person might be when minus one hits.
3. The second moment of truth is not just based on product use; it is based on experience with the brand which includes continuing to search and talk about it in social media.  The McKinsey consumer decision journey work proves this.  Hence, second moment and zero moment loop around and reconnect.

There are powerful concepts in moments of truth marketing, but don’t get too literal. The moments are not in a fixed sequence mapped to time and place even though they are numbered.  Mobile in particular, will bust up any thoughts of sequence.

Recently, I came across three great transformational marketing ideas based on this principle.

First up: Tesco in Korea. (Courtesy of Retailwire)

Thinking about how to grow sales without establishing more stores, Tesco’s research showed how Koreans are a hard-working, commuting culture.  So they came up with the idea of creating very realistic virtual supermarket store displays in subways.  A commuter would use the smart phone to scan the QR code of any item they wish to buy, which then goes into their shopping cart.  The groceries are delivered to their home within an hour of when they are scheduled to arrive at home.

Here is the link to the article on Retail Wire and please make sure you see the 2 minute video.

Second initiative:  How Hallmark uses Facebook Connect.

The integration is brilliant.  When you sign into Hallmark.com with your Facebook account, it accesses your friend connections.  Part of what Facebook does well is to keep track of birthdays, so that means that you get reminders for sending cards to friends as their birthdays are approaching.  This is integration of digital and physical worlds because you get the option of sending a physical card (free postage promotion codes available) where you can customize the card to a friend (change the song, message, upload a photo, etc.).

Third: Google + circles

Google is going to make a very serious run at the social space with Google +, currently in final beta testing. They state: “You share different things with different people. But sharing the right stuff with the right people shouldn’t be a hassle. Circles makes it easy to put your friends from Saturday night in one circle, your parents in another, and your boss in a circle by himself, just like real life.”

As a marketer, what I see is that the social media advertising is about to be taken up a notch, because presumably, a marketer will be able to direct messages about music to music friends, about business to business colleagues, about sports to my fellow Yankee fan friends, etc.  This has been a shortcoming of Facebook and is one reason why research shows that Facebook has a weaker relationship to the path to purchase when people are actually in a shopping process.

When digital is integrated into physical, it breaks the physical rules and marketers will have to work hard to remove the blinders they probably aren’t even aware of.  For example, “proximity” matters less when you can be standing in a Best Buy and do price checks in all local competitors and in Amazon who, because they are in the cloud, are actually everywhere.  TV advertising used to be separated by place and time from purchase; we can imagine a future where that will not be the case.

At Social Media Week in NY, Dennis Crowley, co-founder of Foursquare said their mission was to change the way people experience the physical world.  Put that thinking into your digital strategy and it will take you to new marketing activation ideas.