Overstock CEO Byrne Says Social Media Casts Consumers in the Leading Role
In his keynote address at the All About eCommerce Virtual Conference & Expo presented by eM+C on June 4, Patrick Byrne, chairman/CEO of the online closeout retailer Overstock.com, implored audience members to use social media as a tool to help their businesses "put consumers in charge." Social media enables companies to communicate with, not at, their customers.
With social media still in its infancy, it yields many misconceptions. So Byrne laid out several current myths about social media and countered some of them:
- it's a fad: Social media has had an adoption curve that's even more aggressive than the early Internet adoption curve, Byrne said;
- it's too complicated;
- it won't work for my business;
- it's for kids: You see quite a bit of penetration in the 35- to 49-year-old age bracket, Byrne noted;
- it takes too much time;
- it costs too much; and
- you can't measure the success of social media: Unlike advertising broadcast on radio or TV, where you have to approximate the ROI, there are many aspects of social media that you can track, Byrne said.
Reasons to use social media
The days of tricking consumers are over, Byrne said. People are rational, and they know how easy it is for companies to manipulate centralized information sources (e.g., radio, TV, print ads). “You can't get away with being the bad guy anymore,” he added.
In order to manage your brand — i.e., consumers’ perceptions of what you're about — it's necessary to speak with consumers on a real-time, conversational level. Social media allows this and offers the following benefits, although Byrne readily admitted that no one has really figured out how to monetize social media yet:
- it's targeted;
- generates word-of-mouth;
- relatively inexpensive, although this could change if someone figures out where the niches are and how to monetize it;
- draws direct feedback by inverting the relationship between the corporation and the consumer, putting the consumer in charge;
- gains the same conversion tracking as a normal online marketing channel; and
- provides nimbleness, which demands a much tighter marketing cycle.
Interruption-based versus permission-based
“We have to rethink our conventional approach to marketing,” Byrne said; “to get away from interruption-based to opt-in.” The old way of marketing allowed companies to control perceptions of reality; with the new wave of marketing, including social media, reality is perception. “If a product is fundamentally lousy, the public's going to know about it,” Byrne said. “If that's the reality, then that's going to drive how it's perceived. It's going to be less about spin and more about walking the walk.”
Such outbound marketing tactics as e-mail blasts, direct mail, trade shows, print and broadcast ads are taking a back seat to inbound marketing — SEO/SEM, blogs, viral videos, RSS, social networks, new media — in this new wave of permission-based marketing.
For Byrne, marketing has transformed from broadcasting to narrowcasting to now inbound. “When people want information on something and they're indicating through their behavior that they want something, you want to be there so they can then get that information. It's no longer tricking people to pay attention while they're watching something else,” he said.
Social media is completely divorced from the paradigm that marketers will cram something down your throat, Byrne added. It's much more about the company being there to serve the public.
We'll continue our coverage of Byrne's presentation next week, where we'll discuss his thoughts on reputation management, social media for e-commerce and how to measure social media success.