I recently came across this post from Nokia’s Arto  Joensuu titled Conversations are the New Conversion. In the accompanying SlideShare presentation, he makes the case that the traditional sales funnel is no longer linear and controllable. Consumers are now are in control and make their own journey through the “inverted funnel.” This puts new demands on marketers, as the traditional one-way forms of communication increasingly struggle to attract consumer attention. Arto’s presentation says that they have found that ~30% of engagements are generated from paid media, while the rest is generated through owned and earned media. This is why he argues that Social Media Optimization combined with SEO is critical. I couldn’t agree more. Whether you call it Social Media Optimization or Earned Media Optimization (which is the phrase we prefer), the basic message is the same: if you think that the media you own and the one you pay for is all you need to leverage in your marketing campaigns, then you’re missing a massive opportunity.

So what exactly is earned media? Earned media happens any time a brand or a product is mentioned or discussed in a place outside of a brand’s direct control. It can be anything from a positive review in the New York Times, to your best friend sending you a note via Facebook to check out this cool new product. Essentially, earned media is any media generated that you didn’t pay for directly, and if it is an endorsement or a recommendation by someone trusted, it can make all the difference. Conversely, one single bad review can be the ultimate deterrent, and ruin all well-laid marketing plans.

Now, it is important to note that while earned media occurs outside of a brand’s direct control, it does not mean that a brand cannot influence the process, or be part of the conversation. For one thing, PR has been – and still is – a proven tool for influencing influencers. And influence still matters today, even if the field of influence has fragmented and mutated into something many communicators are grappling with understanding. But crucially, it puts the onus on marketers and communicators to really understand not only what their target customers and their spheres of influence really care about, but how and where they talk about it. Because if you cannot communicate your message in a way that resonates with your intended target, they can skip it in an easy click.

And that is why the word “earned” is very apt. In an attention-deficit economy, it is harder and harder to earn the interest, attention, engagement, and ultimately, the trust of your customer. Therefore we think that it is critical for marketers to understand and optimize the impact earned media has on their brands. As Peter Drucker famously said, “if you cannot measure it, you cannot control it.” But understanding and optimizing earned media goes far beyond just measurement. As SEO and SEM pros will tell you, optimization means integrating analytics deeply into your planning process (and that planning process has to be actively managed and revisited). And it means going beyond “out-of-the-box” data. Data only becomes truly valuable when you apply the business context to it that makes it actionable to decision-makers. We’ll be posting more on Earned Media Optimization over the next few months, so stay tuned.

A recent study published in Booz Allen’s Strategy+Business, point to some of the same reasons  that we have found in our research for this effect, and include much that is relevant to communications professionals. The study, authored by Young & Rubicam’s John Gerzema and Ed Lebar, and titled “The Trouble with Brands,” presents data that makes the case that brands have been losing power over time, with the exception of a handful of brands whose values are afforded a premium and financially outperform their peers. This is based on intangibles the study’s authors call “energized differentiation,” but really boil down to having an emotional connection with customers (i.e., emotional loyalty), in that the brands speak to their customers (relevance) and have a unique meaning to their customers (differentiation). Further, these brands “add up to a more exciting, dynamic, and creative experience” to use the authors’ words. These brands have built valuable equity with both customers and prospective customers, creating intangible value. Apple is probably the most obvious example of such a brand at the moment, but since we do a substantial amount of work in the technology industry,they are an inescapable example. Apple has emerged as one of the more revered brands of recent times, and in our research the brand continually elicits a share of voice and sentiment that is completely out of proportion to its share of the markets in which it competes, be it PCs, laptops, mobile phones or consumer electronic devices. If you also look at market capitalization and valuation ratios, the company is afforded a rich premium by investors (PEG ratio of 1.5 and P/S ratio of 4.15 at this moment). Customers are also willing to pay a premium (Apple has a market share of 91% for all PCs priced over $1,000 – which shows clear dominance of the premium segment). And the media loves to write about Apple. Much of that is explainable by rational factors: investors like the margins and growth rates, and customers like the innovative products and product design. But, there is an emotional connection that causes both investors and customers to be willing to pay a premium and sustains the momentum. This premium is due to the company’s ability to excite the public, the fact that the products delight the customers, and the fact that a leader like Steve Jobs can captivate journalists to the point of worship.

PC/Notebook Market: Share of Voice Vs. Market Share

While these intangibles may seem very wooly, they are in fact very measurable. As an example, in the 90s I worked on building a customer satisfaction and loyalty program for a large software company who had a dominant position in one market and wanted to extend it to another – and they needed to understand how well loyalty would extend to this market that was relatively new to them. One of the key findings from our research – based on interviewing senior-level executives at the 2000 largest companies in the world – was that our client had two types of loyal customers: those who bought because they either had no choice or logic dictated it (e.g., because of issues such as compatibility, cost, or corporate policy), or those who not only stayed loyal because of the facts, but also showed a high level of emotional involvement in the purchase. They were more likely to recommend the brand (something Net Promoter has since exploited in its simple brand advocacy model), but they also exhibited other perceptions that indicated that there was an emotional connection that shouldn’t necessarily be part of a rational purchasing decision process. In understanding these perceptions lay the key to  a successful marketing strategy.

Ultimately, in our current environment where trust is easily lost and brand value is eroding, it is more important than ever for a brand to understand the strenght of the emotional bond with their customers, and to use that knowledge to better manage their brand. And if you think about it, much of what goes into creating that bond boils down to good PR strategy: design and communicate a clear vision of the brand that is distinct, is authentic, resonates and engages its audience (aka the DARE methodology employed by Text 100). Further, the leadership of a brand is key to communicating this vision, and marketing must back this up by sticking to the same message and effectively engaging the brand’s audience. Great brands don’t create value by accident – they do it through deliberate planning, thorough research and flawless execution. So if you do not have a clear strategy on how you will excite your market, then ultimately, your brand value will suffer. And of course, if you do not measure, you won’t know.