Is Influence the Currency of the new Social Economy?
Understanding influence is central to understanding the future of business
The rise of social media and influence monitoring tools like Klout means that we can now measure the previously invisible interactions that mark and transmit influence within human networks.
In the increasingly important Social Economy, influence is something that brands and marketers are struggling to understand and to harness.
The new connected economy
We are witnessing the rise of a new connected economy where value is delivered across human networks. Relationships and personal interaction form the foundation of this economy, and the subtle currents of influence through these networks are being recognised as a powerful force which affects the broader economy.
This social influence has always been important, and has become enshrined in many cultures as class and political structures. The rise of social media has allowed the rapid and massive measurement of units of human interactions for the first time, leading to the development of a whole influence industry – as covered in this article on The rise and rise of influence.
For the last couple of hundred years our economy has been built on transforming our interactions into transactions.The most successful businesses have built industrial processes which deliver value and captured profit. Success in this economic model is measured by profit and capital. To increase the market for a product or service, industrial marketing strategies and tools (broadcast, advertising, interruption based marketing) were used to increase the number of consumers entering the sales funnel.
Influence trumps advertising
People are much more likely to buy a product because a friend recommends it, rather than because you saw an advertisment. Most consumers today avoid most of the traditional advertising channels. This is causing real headaches for big brands which have relied on industrial marketing campaigns to feed their business models.
Brands are turning to social media and advocate marketing to capture the power of influence over consumer buying decisions. Without understanding the economics of social influence they risk poor outcomes and even brand damage by applying industrial marketing models to the social mileu.
The Social Economy is Built on Relationships Within Networks
New social and technological transformations are causing an growth in a parallel economy of relationship and networks. In this economy, success is harder to measure – we are still learning how to measure engagement, influence, connection, and relationship.
Can Influence be converted into Profit?
Naturally industrial businesses want to know how this new currency of influence can be turned into the old currency – something they can put in the bank. Likewise many people who enjoy the Social Media experience are interested in turning their influence into cash – whether it is a “pay per tweet” model or representing a business as their “Brand Ambassador”.
Without understanding how influence works in a social economy we risk destroying social credibility if we attempt short term capture of profitability from influence – we’ll “kill the golden goose”
What is the role of influence and the network economy in business thrivability and profitability?
We’ll cover that further in our upcoming post and webinar on Brand Elevation.