There’s a lot of interest right now from advertisers, investors and entrepreneurs in social media marketing and advertising.  Using a person’s social graph to optimize where, when and how brands deliver their message is the hottest of topics.

There seems to be a general thesis on the topic that says something like this:

  1. Social Media Marketing: Social communities, while they experience scale and ROI constraints, are the most effective way to stay close to your core customer group and leverage it for word-of-mouth marketing and insights.
  2. Social Media Advertising: Social graph information (the online connections that I make with people, places and things) can be used to increase the effectiveness of an advertiser’s message and improve ad relevance.

For social media marketing, I believe this thesis has largely proven itself out.   Marketers have flocked to Facebook and Twitter to build communities that started out as experiments but are quickly becoming core to communications strategies for both top brands and small-to-medium-sized businesses.  When created and utilized correctly, social communities can help spread word-of-mouth messaging, help increase customer lifetime value by decreasing churn and offer qualitative, fast consumer insight data that was previously unavailable.

Social media advertising, on the other hand, is closer to its infancy. Different firms are experimenting with all different types of executions; some are proving very effective for increasing ROI on ads (improving advertising relevance and efficiency).

Existing case studies aside, I believe there is still some disconnect between social graph data and the real social currency of value; the taste graph.  For example, I have over seven hundred friends on Facebook, but not many of them can tell me where the best Yoga class is in Manhattan, or which digital camera I should order.  Lots of my friends on Facebook have digital cameras, but there’s almost nothing that aligns my tastes and needs with theirs.  We’re connected because of our shared real-world interactions, but those are pretty random and have zero correlation with our individual tastes about cameras.  Because we are not connected over our love of digital cameras, finding out what cameras my Friends on Facebook like probably isn’t that useful for anyone.

I’m more interested in taste graphs because they’re infinitely more relevant than my Facebook social graph.  Taste graphs are build around shared interests, likes and dilikes:  these are relevant when it comes to buying things.  Information about products and services work best when the following characteristics apply to that information:

  1. I trust it (experts in the category with expertise that I can verify),
  2. It’s about the topics that I’m interested in, and
  3. I have shared tastes with the expert.

This doesn’t typically happen with my friends on Facebook.   I think that until taste is solved in a scalable way, social media driven advertising will still have a ways to go before it reaches its full potential.  This is what Facebook’s Open Graph,  hunch and others are tackling directly, and where a lot of untapped value in advertising still exists.