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Social commerce for discovery: the renaissance of recommendations

January 12, 2012

Image courtesy of Drizzlin Media

The age of social discovery is upon us. On everything from search engines, to basic shopping, to how we use our mobile phones, and yes – even extending to our word of mouth promotion of great experiences, products and services, we are surging into the renaissance of local community discovery through personal, contextual recommendations.

It took us a while to get here, but technology has finally gotten us to the point of being able to rely solely on word of mouth – not just because we want that, but because it’s commercially sustainable to do so now.

Transactional business models – the likes of which we see in e-Commerce, typically facilitated by firms like PayPal and others, are finding ways to start integrating learnings about customer and potential customers from the social graphs of our various interactions and preferences online. Most notably, pundits look to future developments from Facebook and Google+, but even in current state, businesses and communities are able to tap into Facebook’s social graph to make recommendations of relevant products and services.

We are Hunted's music discovery capitalises on the social graph

A great example of this I recently reviewed is the quickly growing ‘We Are Hunted” music site. By tapping into your social graph across Facebook and Twitter, as well as the on-site community of music consumers, the site makes recommendations of music that are tailored to your preferences. You can play the music through the site, and create and comment on playlists – the site does all the work of helping you discover new music based on what your friends and people who share your tastes think. Then, as you discover new music and listen to it, you can click through to a number of e-commerce sites including iTunes to buy it (from which the site would undoubtedly . Which, of course adds to your growing graph of music tastes that perpetually improves the recommendations you receive.

I’m sure you’ve heard it before, but this is the technological replacement of word of mouth. What you don’t get when you go to a proper social commerce platform like this (there will be many in 2012) is lots of advertising being thrown at you. This is because with a transactional business model, such platforms make money off their share of the actual transaction that occurs when someone buys a product that has been recommended to them.

This helps to keep businesses honest (as a business with a bad reputation does not get recommended), while reducing the need for businesses to spend large portions of their budgets advertising or actively selling their product. The implication is that a business with a good product, that is in demand, that delivers good service, will start to achieve recognition by customers via the social graph. In this way, the business can then spend more of their bottom line either developing the product, or simply spending less on selling it, buying advertising space, and the like.

It’s a fairly significant step forward in terms of the supply chain of a business, effectively opening the way for business to make their sales and marketing expenditure more accountable than ever before. In its most pure, perfect form, social commerce will enable a business to spend no money on sales and advertising, while ensuring that they only ever pay money to a marketing provider when an actual sales transaction is made. That is, in no uncertain terms – 100% accountability of their marketing expenditure.

Imagine that – a world where people discover new things simply via word of mouth (expressed online via the social graph). Before advertising was even invented, this is actually how business was done, remember? And the recommendations human being made to one another were always relevant, based on the contextual relationship you had with the person making the recommendation to you.

It was T.S. Eliot who wrote during the last century: “We shall not cease from exploration, and the end of all our exploring shall be to return to where we started, and to know the place for the first time.”

While I’m sure Eliot had little knowledge of social media, social commerce and the renaissance of word of mouth recommendations, there is an eerie relevance to this situation. After hundreds of years of people paying money to advertise products and services, could we really be on the cusp of technology replacing the need for it?

Only time will tell.

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3 Comments
  1. are among the former students of White who elaborated and championed the analysis of social networks. Other groups developed at University of California Irvine , including Linton Freeman; at the University of Chicago , including Joseph Galaskiewicz; at Michigan State University , including Nan Lin and Everett Rogers ; and at University of Toronto , of which Elizabeth Bott was an alumna, including additional former students of Harrison White . A more detailed summary of the development of social network theory and analysis is found in Linton C. Freeman (see Further reading ).

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