Eluma's VP, marketing & business development, explains how branded communities offer the advantages of social networks while enabling brand control.

Brand marketing certainly isn't what it used to be, nor will it ever be the same again. The democratization of the web is turning the world of brand marketing inside out.

In fact, a recent survey of industry leaders on Digital Media Trends by the American Advertising Federation found that 63 percent believe that Fortune 500 companies are "generally behind the curve when it comes to online ad strategy." What’s more, 58 percent of ad executives said that they personally are "struggling simply to manage existing online efforts, let alone stay ahead of the curve."

What has changed? In the last few years, consumers have become incredibly savvy and are turning a deaf ear to conventional marketing techniques, while peers -- "a person like me" -- have now become the most credible source of information about a company or a product (2005 Edelman Trust Barometer). 

As a result, many companies are looking to incorporate social networking -- where users can connect with like-minded users -- into their online marketing initiatives. Some marketers are opting to bring their brand to social networking destinations such as MySpace and Bebo. This strategy can be effective for new user acquisition IF this is the sandbox where your target market is already hanging out. But it's not without risk and it CAN turn out to be a lose-lose proposition. Why?

First, marketers lose any semblance of control over their brand. Imagine… you create a page on a social networking site for your brand and what happens next is beyond your control. What ad will get served next to my brand? What user's profile will show up there? Should you risk doing damage to a brand that has taken years to build?

Second, MySpace users are beginning to complain that their site is being overrun by corporate profiles. The growing corporate presence on social networks is creating quite a stir among users. "One of the reasons that user-generated marketing works is that people don't think of it as marketing," says Patti Williams, an assistant professor of marketing at the Wharton School at the University of Pennsylvania. "But if you try and trick people, you're undermining the power of the technique. Consumers are already becoming suspicious." (Information Week, "Fool Me Once, Destroy Your Brand," Aug. 23, 2006).

The power of peer recommendations is also championed by Emily Riley in "Managing Word of Mouth Online, Leveraging Internal Resources." Riley, lead analyst of Jupiter Research's Social Marketing Practice, indicated that word of mouth, defined as online conversations between two people that know each other, is the most trustworthy method to gain information. But she goes on to note that when many strangers enter the conversation, the effectiveness can wane. Says Riley, "Word of mouth online, when it's within a company's website, is considered more trustworthy than considered on a random blog." 

In this regard, an established brand has the home court advantage over a social networking site like MySpace-- it already has an established community of users with something in common: an interest in and experience with their products and services. The challenge for marketers, then, is to provide the sandbox for its customers to engage in meaningful conversations, ideally around their brand. By fostering interactive communities (and ideally sub-communities for microsegmentation) of like-minded users, marketers provide a customer-centric experience through which users can connect with one another in a safe, secure environment-- strengthening the user's emotional connection to the brand, and increasing the likelihood of action.

Examples of companies creating branded online communities are popping up over and over again. The Washington Post just announced that in the latest in its series of moves to become a "two-way" newspaper, it's gearing up to launch a social network of its most passionate readers. Martha Stewart Living Omnimedia is building an online community within marthastewart.com for women to share photographs, scrapbooks, recipes and projects with each other and home design experts. Kohl's recently launched transformationnation.com, where people are invited to talk about something that's transformed their lives. According to Julie Gardner, senior vice president of marketing, the goal was to create a website where consumers can find other people who share their passions.

A May 22 USA Today article cited Mycoke.com as an example of a corporation that successfully built a branded online community. According to the article, more than eight million people average five hours per month on the site, where they can write about their favorite bands, mix and share music, chat and upload short videos. They can post under vegos (short for "virtual egos") and rack up points to buy Coke products. "It has taken on a mind of its own," says Doug Rollins who oversees Coke's interactive branding.

As these examples highlight, social networking technologies have the potential to address some of the key challenges that marketers are facing today, as their customers become increasingly immune to traditional direct marketin