I have written about the concept of social advertising before, as a means to help improve a company’s chances in a changing economy. The idea of social advertising is starting to give rise to a whole new set of products devoted to it, from software to help companies focus on their existing social networks to companies trying to convince people to spam their personal networks with ad-based links.

Of the two sides of the coin, corporate and personal, the one that holds the most potential in my opinion is the corporate side. I recently had the pleasure of speaking with Juoko Ahvenainen, Chief Strategy Officer for Xtract, Ltd. and in telling me a bit about his company’s philosophy, he hit the nail on the head when he said “Companies already own a social network that they aren’t tapping”.

I think that is absolutely true. Every customer in a company has a network of friends and family, coworkers and employees. Often, these people using your product or service convince others to use it with them by word of mouth or by example. When an “alpha customer” signs on to (or, conversely, leaves) a service, they often bring others with them. These people are their network. These alpha customers often are connected to many of your other customers and potential customers.

Companies likes Xtract, Ltd are beginning to pop up to help companies tap this wave of social advertising from the inside out. By enabling the company to find and track its social networks of existing customers, Xtract and others like it help a company use that existing network to keep customers, get new customers, predict customer trends and tailor products and services to various niche markets that already exist within its ecosystem.

Xtract is taking the concept of social advertising to a deeper level. By providing white label solutions to companies seeking to better track and tap into their existing network of customers and find out how those customers interact with their networks, Xtract is helping companies stay ahead of the curve using social metrics. To do this Xtract enables companies to track a series of data and then apply it to trends, advertising, products and more.

During our interview, Ahvenainen used the application of Xtract via Social Revenue and Social Links in a telecommunications company to illustrate some of his points. Using Xtract, companies can track how their influencers and alpha users use their service: who they call, for how long, who calls back, what percentage of their communications are via text, email, internet or phone, and more. The company can then aggregate that data into useful reports to help retain customers or gain new market share.

I asked Ahvenainen about privacy concerns with that much data mining on customers, and he was quick to assure me that the company was careful to track only the ways the product was being used, not who was using it or their content. Even so, Xtract may find itself facing more of a challenge convincing future American markets that their information is secure and their privacy is being protected. Xtract has so far concentrated mostly on Europe and Asia.

Xtract is not the only company trying to help tap into the power of the existing social networks for marketing and customer retention. Companies like DNA13 and others are also data mining, though not everyone does it in the same way. DNA13, for example, tracks external data – following mentions of a company or person both on and off line to see how their customers and former customers, as well as business associates, are using their product or service. Xtract is the first one I’ve talked to, however, that had a firm grasp of the value of a customer and his or her potential sphere of influence as an existing social network that should be tapped more efficiently for the betterment of the company.

Related:

Entry was posted on Saturday, December 6th, 2008 at 4:50 am under Advertising, Social Media.

Read more entries by Leslie Poston.
Stumble It!