Arrington is back. And he dropped a nice post today over at TechCrunch indicating that he believes it is time to start thinking of Twitter as a Search Engine. In general terms I agree… but as always the devil is in the details.

There is one major hole in Arrington’s theory, but that hole is HUGE. The fact is, Twitter Search isn’t a search engine. It is a simple keyword search which returns results in chronological order. That is very useful in some ways, but it negates every example Arrington cites in his post.

People searching for news. Brands searching for feedback. That’s valuable stuff.

Twitter knows it, too. They’re going to build their business model on it. Forget small time payments from users for pro accounts and other features, all they have to do is keep growing the base and gather more and more of those emotional grunts. In aggregate it’s extremely valuable. And as Google has shown, search is vastly monetizable – somewhere around 40% of a ll online advertising revenue goes to ads on search listings today.

In reality FriendFeed’s search is much better positioned to execute a “search engine” strategy. Why? Because they have measures of relevance, authority, and rank via comments and likes. We know these things matter when people search – how? Because Google won the search engine battle – and by no small margin – and did so on the simple idea that the results have to be ranked by relevance (i.e., PageRank). Excite, Yahoo and a bevy of other search services completely missed the boat by failing to realize that in search the relevance of the returned information to the user’s question is everything. Without that there is no revenue from ads – because if the ads are not relevant they are worthless.

Can Twitter build a relevance engine into Twitter Search? Maybe, but execution is everything. And thus far Twitter’s execution has been lacking in almost every regard. More importantly, since every Tweet is indexed by Google and (potentially) pulled into FriendFeed – two companies who’s ability to consistently execute far exceeds Twitter’s – they will face immediate and stiff competition for those search dollars.

As importantly, for companies (and “brands” – for example, musicians, movie stars, etc) search isn’t nearly as interesting as being able to take the raw data and analyze it. For what? Whatever it is they want to know. I can not predict what Peter Himmelman will want to discover today (or next week) about what his fans say on Twitter – so why would I offer him a canned report that only tells him one or two things?

So, while search will matter to Twitter in terms of revenue generation (I’ve officially boycotted the term monetization – but that is a subject for another post) – I’m not as sure as Arrington is that it is the key to selling services to brands.

And I’m not just shooting my mouth off – I’m betting I’m right by using justSignal to set the data free. justSignal will collect Tweets and make that data available to our customers. Not in a fancy report that tells you something I think is important, but in raw XML format – allowing you to analyze the data for what is important to your business. Again – the value is in the Signal – and you are in a better position to determine what Signal you are looking for today (and I know it will be a different Signal tomorrow).

I’ve been re-reading Ron Chernow’s excellent book – Titan: The Life of John D. Rockefeller, Sr.

This is a wonderful book in every respect – but during this time of Financial Crisis it is also very illuminating to see the parallels between the period of 1870 – 1900 and the last 30 years or so.

The Industrial Revolution transformed the US from a largely rural agrarian society to an urban industrial society. In the process it forced us to adapt our culture, politics and laws to cope with this transformation. What most people have forgotten is that prior to the industrial revolution the US operated an almost entirely free market economy. Regulation was unknown, and regarded as an evil force. Sound familiar?

The result of this lack of regulation led to a series of economic disasters – boom/bust cycles, political corruption and mega-companies referred to as trusts (who often, but not always practiced monopolistic practices).

The industrial barons of this time were not evil men – as a matter of fact many of their greatest legacies are their charitable works, Carnegie, Rockefeller, Vanderbilt, and Stanford set new standards for charitable works – as are Gates and Buffet today.

They simply sought out the most efficient means to make money given the environment they operated in.

Those who today advocate for extremely limited regulation (or no regulation at all); or for the lack of intervention by governments in business should read Chernow’s book. Contained within it’s pages you will find the world for which you advocate.

Please don’t misunderstand me – excessive regulation is as problematic as none. What is important to understand is that the market is not perfect – it is a contrivance of human beings, just as is government. Neither is perfect, neither can solve all our problems. The solution is in the balance we create between those forces and regulation is necessary to create that balance.

I give credit to Shel Isreal for prompting me to write this post with the following tweet:

I’m starting to tire of warning that US is killing free market & going socialist. No oversight or governance is as much anarchy as FM.

It seems to me we have forgotten the lessons of our past and are busily repeating them. Those lessons do not come from the great depression – but from the Industrial Revolution. It is not our reaction to the crisis – but our decisions which led to this (and more properly stated – this series of) crisis.

It is time we began working together to re-define the balance needed between a free, agile and prosperous market and the society (government) within which it operates.

David Alston of Radian6 stopped by yesterday and commented on this post.

This video is a detailed explanation of my views on Social Media, Brand Monitoring, and operationalizing and scaling those things in companies.

Video Blog 12-19-2008 | The question of Scale & Social Media for Brand Managment from Brian Roy on Vimeo.

Trying something new… my very first video blog post – fueled by cold medicine. Don’t say I didn’t warn you.

Video Blog Post – 12-16-2008 | Paid Blog Posts and JustSignal IM from Brian Roy on Vimeo.

As promised here is the link to the FriendFeed Conversation about Paid Blog Posts.

Here is the link to the JustSignal forums on cosinity.com

The revolution of Web 2.0 (everyone as a content creator) begot the Social Media revolution (discussion as content)…

Social Media is in the process of birthing a PR/Marketing and Branding revolution (click here for google results if you don’t believe me).

And that is a good thing… but there is a secret buried in there…

The secret, of course, is that word of mouth was always the best PR, Marketing and Branding. What has changed isn’t which mechanism is better – the traditional PR/Marketing megaphone or word of mouth – it is the relative power of the platform.

When word of mouth was limited to the small group of people any individual customer could interact with over a given period of time you knew, with absolute certainty, that the power of the Megaphone would win. Why? Because your message – clear, repetitive, and powerful – would overwhelm the disjointed, contradictory, and often biased word of mouth.

The reality was that it didn’t matter if a large segment of your customers didn’t like your product or service. The reality was that 15% of your customers being dissatisfied wasn’t a big deal – because you had the megaphone… and they didn’t. You were in control of your brand, you decided what your brand was and how it would be messaged.

As an example of the megaphone:

The megaphone gave you the ability to control the conversation and the perception. Your dissatisfied customers could tell friends, co-workers and family, but their reach was limited and the message was disjointed.

Social Media effectively neutralizes the megaphone – simply by providing every dissatisfied customer with access to a megaphone equal in size and capability to yours. Ten years ago, no customer could afford a 30 second TV spot or half page print ad – today they can all create YouTube video, blog or Twitter account from which they can tell everyone what they think of your product or service.

Perhaps most importantly these messages, while lacking in production quality, are 100% authentic. They are not carefully crafted, on message, or chock full of reassuring language – but they are how your customers talk to one another:

This is the new word of mouth. This is Social Media. This is you no longer being able to control the conversation.

The irony of this is that for years companies have yearned to tap into their positive word of mouth. And – to be sure – there are voices evangelizing your company, products and services in Social Media. These are the same customers who provided you testimonials before – the only difference is they no longer need your megaphone to be heard.

The new reality is conversational. Your brand reality is the current state of the conversation. Your PR and Marketing efforts are simply a part of the larger conversation.

The real question you need to be asking yourself is – am I in the conversation in a relevant way? Am I engaged, empathetic, and listening – or am I attempting to shout down my critics?

Any effective Social Media branding/marketing strategy has to include your company engaging in the conversation. You can’t control it, you can only influence it – and the only way to do that is to engage in a meaningful way.

I’ve spent a large part of my professional life dealing with the realities of having conversations with customers. In every type and size of company imaginable. And there is one single reality that holds true:

Your brand is what your customers say it is… regardless of your best Marketing and PR efforts.

With the rise of Social Media this reality is even more true. Not because you ever really controlled you brand – but because word of mouth just got global, social and the biggest megaphone you could have ever imagined.

It used to be a single pissed off customer might only impact 10 or 20 people over the course of 3 months. Now a single dissatisfied customer with a Twitter account or Blog can reach hundreds of people in a single day. And, as a rule, if you are doing (or not doing something) that makes customers mad, you do it to more than one per day.

So feel free to create all the marketing material and press releases you want lauding your superior product or service and you commitment to great customer service. In the old world that might have worked. But today it simply can not compete with the conversations your customers and prospects are having about you. You are what they say you are.

If you want to really impact your brand – and how it is perceived by your customers and prospects, get in the conversation.

Your PR and marketing staff will tell you to invest in Social Media Monitoring tools like Radian6 and Techrigy to gather Social Media data to analyze for your next marketing campaign. And I concede – monitoring what is said about you is a positive first step. The challenge with this strategy is that you are still trying to control the conversation.

What you need to do, what you should be doing is participating in the conversation.

Provide Solutions, Inform, Listen and Respond

The most important branding you do (and can do) is in the conversations you have with your customers and prospects.

Think I’m nuts? Great – Let’s look at two examples:

Motrin’s Blunder:

Motrin released an ill conceived ad. And it isn’t that they didn’t realize their mistake – it was that they weren’t engaged in the conversation. Because of that there were 4 days to allow the controversy to reach significant proportions.

Links:

http://mashable.com/2008/11/16/motrin-moms/

http://www.readwriteweb.com/archives/motrin_bows_to_social_media_pr.php

http://www.blogherald.com/2008/11/18/exploring-social-media-the-motrin-moment-impact-of-social-media/

http://blogs.reuters.com/mediafile/2008/11/18/motrin-moms-and-the-perils-of-social-media-marketing/

Ford’s ScottMonty:

ScottMonty from Ford is actively engaged in Social Media. And because of that he is able to react in real (or near real-time) to negative and positive brand messages. This allows Ford the opportunity to actively engage in the conversation and refute false perceptions and reinforce positive messages.

Links:

http://friendfeed.com/e/a8d15997-12ec-eeee-921b-61c96ed66d27/Why-I-love-the-US-auto-industry/

http://friendfeed.com/e/e34bb7df-5a8c-4d1c-84cb-d16e0fa09099/I-am-watching-CNN-and-seeing-bad-employment/

http://friendfeed.com/e/b4753ec3-a123-6ef4-6671-cdd7ef10e4b5/Glohamar-Here-are-a-few-of-Ford-s-other-Twitter/

http://friendfeed.com/e/45cec2a1-17c8-3e26-3afc-4a9d3897c15a/ScottMonty-scottweisbrod-LisaHoffman-1-2-Bill/

The takeaway:

Analyzing the data and reacting is about how fast you can “clean up the mess”. It pre-supposes you can megaphone your brand message and shout down those who have a different point of view.

By participating in conversations about your brand you have the ability to prevent situations where the perception becomes the story. You have the ability to turn negative experiences into positive brand affinity moments that increase your customer loyalty and enhance your brand in the eyes of those watching. And in this new Social Media world we are all watching.

I hope you had fun. I was at Phoenix Startup Weekend working with a team of smart, energized people to create a new company in a single weekend.

The result – Reserve Chute – is sheer genius.

This one time, at Phoenix Startup Weekend (http://phoenix.startupweekend.com) actually held in Chandler, AZ, a band of brothers, and one sister, came together to create a new company called Reserve Chute. With it’s main offering a personalized data backup service that permits users to grab their data from online sources like GMail and others and save them to a storage device of their choice. This is one cool and innovative service that should be on your “Must Have” list. Your data on your terms for when Web 2.0 becomes Web 2 point Oh no! What more could you ask for. For more information, visit www.reservechute.com and sign-up for this unique and powerful service offering.

If you use online applications to run your business you need to check Reserve Chute out. It might be the best thing you ever do for your business.

The following photos are courtesy of Adam Nollmeyer – Thanks Adam. You can find Adam’s work here.

UPDATE – The photos below are actually courtesy of ccl1111 – you can find his photos here. Adam’s photos are still great… be sure to check them out as well.

Great post today from John Furrier on Furrier.org.

He points out – rightly – that:

I fully agree that it is the best time to start a company both for entrepreneur and the venture capitalist. In fact the angels are out there. I ran into one yesterday (granted I live in Palo Alto and you can swing a dead cat without hitting an angel or VC). There is big interest in seed, super seed, and full blown Series A deals.

In these downturn times the opportunities just fall out of the trees. In a downturn the noise level is reduced and it’s all signal. Thanks to the memo from Sequoia which was a strong signal from the Silicon Valley elite money machine on which behavior will be tolerated (translation they want less Seesmics and more real companies). The other them is that innovation is coming out strong. The real opportunities are presenting themselves. The real web 2.0 will emerge from this downturn.

Or – in the language I would use:

If you are building a startup that delivers real value to your prospective customers – real value they will pay for – now is a great time to get started. If you have a cool idea that lots of people will sign up for, but you are not sure anyone would pay for – keep your day job.

The idea that you can do something cool and aggregate subscribers and only then “monetize” the subscriber base is dead (and hopefully gone for good).

TechCrunch published a post referencing Paul Graham’s (of Y Combinator) advice on why you should start a company now. He makes some great points. I would argue that Mr. Graham’s advice should apply in any economic environment.

A financial nuclear winter may be upon us, but many startups will still survive and even thrive in this environment. Y Combinator’s Paul Graham argues that, in fact, now may be the best time to launch a startup. In an essay titled “Why to Start a Startup in a Bad Economy,” he notes that “what matters is who you are, not when you do it.”

[From Paul Graham’s Startup Survival Guide For The Coming Nuclear Winter: Be a Cockroach]

One of the downsides to VC funding is that it forces a company to immediately chase exponential growth – ready or not. Often that leads to strange thinking. The metrics become out of touch with reality and revenues (and profit) take a back seat to subscriber growth, or aggregating eyeballs (remember when portals were huge and search was not?).

Listen – VCs are smart. But they want big multiples (if the invest 3MM they way 300MM back – that is their ideal deal). The problem with that is it is really, really rare. You should take Mr. Graham’s advice and focus on managing costs, generating revenues and being sustainable.

I can’t take it anymore – I just can’t.

NOTE – this post was triggered by a fine post (and subsequent FriendFeed discussion) by Mark Evans – which you can find here.

The idea that you can create a “cool” service, attract massive numbers of subscribers, and then monetize the subscriber base is insane. Always was, always will be. But it is the Google model. They created a web search service (cool) and then once they became a powerful player in web search they became an ad platform (monetization) – right?

That however, is a myth. The reality is Google was solving a real, important problem. The web was growing really fast. Creating a way for people to find the content they were looking for was a known problem with existing solutions (remember Yahoo and Excite were already out there). The existing solutions were already generating revenue – by placing adds in their content (remember the whole aggregating eyeballs thing?). What Google did was create a better search solution (product innovation) and refine the exiting business model from ad placement (putting ads on your blog) to becoming an ad platform (business model innovation).

So the reality of Google is that they solved an important problem via product innovation and solved an important problem via business model innovation – by creating an advertising platform which could be leveraged by any advertiser.

But the myth is so much more fun – couple of guys create a really cool way to index the web for relevance and everyone wants to use it. Now they can figure out how to make money. We all took the bait. The Bubble 2.0 story became “create a cool service, generate buzzz, aggregate tons of users, and then generate revenue”.

Here is the bad news – that is the same myth that created Bubble 1.0 – remember? Bubble 1.0 said – “Don’t worry about revenues – just grow really, really fast – once you have lots of growth revenue and profits will come.”

As Britney Spears would say “oooops, I did it again“.

What is real is that the winners solve important problems that have enough value that people will pay for them. Finding a business online (Google) – huge problem, great solution = $$$. Selling stuff I don’t want/need to someone, anywhere who does want/need it for as much as possible (eBay) – huge problem, great solution = $$$.

So let’s make a deal. Let’s stop talking about “cool” services, how fast they are generating page views or subscriber growth or any other measure until they tell us how they are going to make money. Let’s get back to creating services that generate value for the prospective customer – value that they are willing to pay for (again – ad placement is just a way of getting your user to pay for the service).

It isn’t important that the first business model is the “right” business model. What is important is that we are re-focusing all of our frenetic energy on what really matters.

VALUE = REVENUE