The New York Times this week produced a very good analysis of the way Obama used the Internet to rise from relative obscurity to President-elect in an amazingly short period, illustrating how the senator grasped the power of Web 2.0 just as Thomas Jefferson “got” the power of the newspaper, Roosevelt the radio and John F. Kennedy television.

A few months back, during his battle with Hillary Clinton in the primaries, I thought that if he gained the nomination this would be the first proof of a seismic shift of power away from traditional media to the Internet. That shift can no longer be doubted. Where other candidates rely on phone banks, journalists, voter lists and direct mail, the Obama campaign relied on direct spread through social networks and opt-in emailing lists. From a purely business point of view, Obama’s fundraising record was phenomenal, but the ability of a campaign to mobilise support was if anything even more impressive.

The New York Times article also suggests that Obama’s use of social networking platforms, which he has indicated will be an integral part of this government, is a two-way street, entailing commitments to supporters as well as help from them. He seems to be anticipating this quite happily using his change.gov to encourage participation. This certainly seems to be a healthy antidote to being led by special interest groups. Increased internet influence will no doubt scare some, but, though it might be a little idealistic to say so, the whole story seems to affirm the power of the Internet to harness the common sense of the masses. Election smears that would have sunk as junior a candidate as Obama in any other election were quickly rebutted on the web, supporting the old adage that you can’t fool all the people all the time.

Now it would be very easy to say that what Obama’s supporters achieved applies just to political campaigns, and perhaps to business-to-consumer markets. But it’s important to be very critical of that attitude: after all, it’s not so different from the attitude that Republican party and the Clintons had. The fact is that there are now just many more ways to communicate and collaborate, and the greening of technology will probably accelerate this as it becomes less acceptable to pile on the business miles (there is already speculation about how this will affect telecom sector in the US under an Obama presidency). Even in specialized markets, there is likely to be some impact from these new modes of communication.

Perhaps I’m being a bit forward, but I think we will already be moving towards “Web 3.0” by the time of the next presidential race, given the speed the development of apps on mobile platforms, increases in connection speed, and more intelligent and interoperable software. It will be interesting to see which politicians, in the US and in other democracies, will be ready for that, and whether the Obama initiative will still be setting the agenda. And, of course, which companies learn from his strategies.

Location-based social networks have been a theme for a few years now, but pretty much dropped off the radar until recently. Until iPhone apps, that is. There are different services, but essentially all of them help you locate friends and services the same time and place as you, so you can, for example, see that Joe is shopping in the same street as you right now, and find somewhere to invite him for coffee. Now these apps seem to be making headway, and could be a great route for local publicity, as local as the newspaper and as immediate as local radio - and targeted, too.

The Washington Post did a good review of location-based social networks for the iPhone last week, so here's a very short view of the main players. The early leaders, Loopt and Moximity, came out well before the iPhone, but are heavily targeting it now. Moximity uses your existing contacts from Facebook and Twitter; Loopt has even given TechCrunch its own version so TechCrunch followers can meet each other at conferences. Pelago's Whrrl, for example, is strong on local information, whereas uLocate's "Where" app or the Limbo service, with its own Facebook-style wall, provide the chance to meet new people. Zintin, has a group chat feature, too. All are on Washington Post partner TechCrunch's Crunchbase service for more business background details. Washington Post's view is that none of them is quite a killer app yet, and that it's a matter of time before MySpace and Facebook come in and take over.

What's wrong with this picture? Well, for one thing Facebook was there when the iPhone launched, and that has not stopped others getting the funding or the kudos, e.g. Pelago's recent successful round. I don't think we can be sure Facebook is going to be a winner here despite an early advantage. Location-based services are different from the home social network, because they are perfect when you are not at home, and not much use when you are. "Cometh the platform, cometh the app" could be the story.

It's not just the nature of the service, but the way the market grows. Though Loopt etc. were originally aimed at the whole mobile market, the key platform is now the iPhone, with strong sales, user-friendliness, strong sales, and of course the Appstore. So the market also contains an interesting positive feedback loop that is different from PC sales. The mobile phone is a social instrument at heart, and location-based social networking apps could be as attractive to some users as SMS. If the vehicle is the iPhone, and the app catches on among groups of friends, that will push sales of both phone and app, a from of localized viral growth that depends completely on adoption within particular groups. Perhaps a key to what happens next is how other phone manufacturers will respond to the threat of Apple getting the kind of market traction they did with the iPod.

US marketing and branding company Cone Inc. has just published a survey on using social media to promote businesses, with pretty dramatic findings. According to the survey, 93 percent of Americans believe a company should have a presence in social media, while an overwhelming 85 percent believe a company should not only be present but also interact with its consumers via social media. In fact, 56 percent of American consumers feel both a stronger connection with and better served by companies when they can interact with them in a social media environment.

When asked about specific types of interactions, Americans believe:

• Companies should use social networks to solve my problems (43%)
• Companies should solicit feedback on their products and services (41%)
• Companies should develop new ways for consumers to interact with their brand (37%)
• Companies should market to consumers (25%)
  

Cone also point out that this is a marketing lifeline for desirable but elusive prospects such as men in general, particularly, young men, and wealthy households. I think anyone would say these figures are high, but a little thought suggests they shouldn’t really be so surprising. In online marketing, the classic AIDA rules, Attention, Interest, Desire, Action, are more like:

• Get attention
• Drive to your website
• Encourage interaction
• Move to action

The middle two points can be weak points in the chain, and this is where I think social media make marketing more effective.

Why "driving to your website" is hard

People come online with a view formed already of where they want to go. Particularly, I suspect, men. Most men I know like to (in theory at least) do their shopping with a kind of military attitude – decide on the shop/s, what they’ll buy, how much they’ll pay, and what time they’ll be home again. If we imagine them transferring that mentality to the web, diverting them is going to be much harder than interacting with them where they are, and much easier if you have already started the interaction there.

Really encourage interaction!

People like the feeling that they are the one holding the remote control. No matter how friendly your website is, users don’t normally get that sense, because you decide the content and the rules. Social media offers a “home space”. If users can interact with you there, they don’t relinquish control.

In Europe, too?

Social media sites, YouTube, Flickr, MySpace, Facebook etc, are doing pretty well in Europe. Facebook is apparently having difficulty getting the numbers in Germany, and actually hiring students to introduce them, but I think this reflects their being a little slow to localize, and maybe a preference for local rather than US sites. So with younger people social media are important, and the US experience is definitely relevant. For the rest of the market, we may still be a few years behind the US in using web features, so perhaps there is time to let this develop. But there’s no disadvantage to being on the scene early.

When Naked Conversations: How Blogs are Changing the Way Businesses Talk with Customers, by Robert Scoble and Shel Israel, was published a couple of years ago, the idea swept through the world of online PR that you have to be authentic. It has grown stronger through the influence of wikipedia and social networks, which mean, in effect, any attempt to dress yourself up can be ruthlessly reported on, and you'll end up looking dishonest and stupid. That's the first reason you need to be authentic. The behaviour of the social group on the web is to be very open and communicative. If you join the group (and this means any level of real public engagement on the web) you have to play ball. If you don't join the group, the web won't do very much marketing for you.

That's actually a very good thing - and it's pretty deliberate. The Open Source movement is very influential, for example - think of Netscape (or, now, Mozilla) and Apache. Of course, the web's straight-talking ethos is also enshrined in the W3C guidelines. Without strong checks you can say more, of course; and the more powerful you are, the more you can say. Which means the powerful end up manipulating the medium and damage the integrity of the web. Clearly it's in the common interest that everyone can get at the truth, but on the web, uniquely, it's easy for people who passinately uphold this idea to actively fight misinformation with every weapon they have, fair or otherwise. And that's why companies have to be extra careful.

Authenticity is not just for the web, of course. A couple of decades ago, I worked for a growing chain of bicycle shops. We felt we were doing well, and wanted to present an upmarket image. We had the glossiest bike ads in London, maybe in the UK, for a few months. I don't think they sold a single bike for us. What in fact customers loved about us was that we were down-to-earth (many bike shops talk down to customers, most of whom, understandably, don't know how it all works or what all the bits are called). We also gave good advice and service, explained how things worked, and gave our honest opinions. The reason the business grew was that our customers recommended us. And when we identified the secret of successful customer interactions and multiplied it through relationship marketing, business grew fast. So the second reason you have to be authentic is, it works everywhere.

Web 2.0 - the social web - actually does resemble real society in many ways. The reason is straightforward - if it resembles what we know, we will adopt it faster and know how to use it. So what works for word-of-mouth will normally work on the web. The key is finding out what makes your best customer relationships work, and reflecting that in your web presence - best of all through interactive tools.

The title is a great line from David Meerman Scott, in The New Rules of Marketing and PR. Arguments about who Shakespeare really was will probably never die out. And, though they are important, they really can't be all that important. The debate never seems to stop us going to see the plays, quoting lines and phrases from them (normally unknowingly), and watching Hollywood adaptations of them. Likewise, though your marketing tries to tell the world everything important about you and the excellent and innovative products you have created, is it important that people are interested in you for your own sake?

Up to now, probably yes - the way people learnt about products was marketing collateral and websites. Now, though, they are just as likely to find out about them through users and reviewers online. And that's not just consumer products - there are forums and blogs on the web for the most technical of subjects, and sometimes the more technical, the better. So, as people are starting to spend less time reading marketing literature, the literature is starting to look a little inauthentic.

This has been a long time coming - look at the trend in films and TV for real-life content, from "reality TV" to Michael Moore's documentaries. Now it's coming to you. The only way to respond to the challenge is to write what people want to read because they are interested in the subject, not because they are especially interested in you. So, practically, what does that entail?

Effectively, what you need to do is to start an interesting conversation with strangers. An easy analogy is being at a party where you don't know many people. As you drift around, you hear people talking about something you know about. You smile, catch someone's eye, find an entry, introduce yourself and talk a little. But most of all, you keep listening. Find out what interests people. Then, if that's something you can do well, and you're sure they want to hear from you, talk about it.

Same thing on the Web. Listen, join in, find out what people need to know. And publish a useful article on it, if it comes to that. Building the relationships is an absolute necessity in the process, so that you have a really good idea of people's information needs, and have a ready audience that will enjoy, critique and pass on your content.

You can't afford to drop conventional marketing and PR, not now or in the foreseeable future, but your main interface with prospects and even customers in the future will likely be the audience you are building now with these online activities. So now is a good time.

First practical step is, list all the online information resources, including blogs, that are important to you, your customers and - perhaps even more important - your customers' customers. Second step, think and observe. What can you bring to the discussion? What interests people? Third step, communicate. Blog comment, blog, forum post, for now, later maybe articles and ebooks. Just publish - don't sit and plan too long - it's time to start!

Xing has come in for some negative comparisons over the last while for being a weak European version of LinkedIn, but they are now registering very healthy numbers, having taken over Turkish business-people social network

Cember.net during the year, and Spanish networks eConozco and Neurona the previous year. Much of the revenue has come in from online ads (premium members have an ad-free service, but banner ads are seen by others who look at their profiles). These brought protests from users originally, but that doesn't seem to have hurt too much!

According to Heise Online (my translation):

The online portal operator Xing has nearly doubled its revenue in the past quarter ... the company also celebrates the best quarterly sales in its history, at 7.51 million euros. In the same quarter of last year Xing's revenue was 3.93 million euros. The operating profit ... amounted to 2.64 million euros, compared to 0.53 million euros a year ago.

The company ... attributed the increase in sales mainly to the growth in paying ( "Premium") members. In the three months to the end of March there were 58,000 new registrations, and within the year an increase of more than 60 percent to 420,000. A big turnaround in Xing now - also due to acquisitions - with 5.71 million users, 170 percent more than a year ago.

The business model introduced in the fourth quarter of 2007 led to 20 percent of total sales in the first quarter of 2008, Xing stated further. It accounted 520,000 euros to "Advertising" and 960,000 euros to "commerce" with the "Xing Marketplace." Xing was founded at the end of 2003, then still under the name BC Open. Premium members pay just under 6 euros per month for a "broader range of services".