Twitter was great for communicating with the West, but other online tools aid increasingly sophisticated activists

By Jia Lynn Yang, writer

During protests in Iran this summer over the re-election of President Mahmoud Ahmadinejad, social networking tool Twitter’s raison d'être overnight went from frivolous to vital: The world outside Iran followed every spurt of  information that trickled out on mobile phones outfitted with the Twitter application.

Since then, activists have only grown more sophisticated in how they organize protests and spread information online. These days all the action—inside the country and among politically active émigrés—is on Facebook and a Digg-like site called Balatarin.com.

Nikahang Kowsar, an Iranian political cartoonist based in Toronto who also runs an Iranian news hub, has more than 11,000 friend connections on Facebook. The limit per profile is 5,000, and so Kowsar runs three profiles, spending 11 hours online a day, responding to emails, running his news site and maintaining his profiles.

Iranian journalist Masih Alinejad, who’s been living in exile in London for two years, also maintains three profiles. Alinejad says she asked Facebook to lift the limit, arguing her profile was a tool for political protest. She says Facebook denied the request.

How protesters protect themselves on Facebook

The Los Angeles-based founder of Balatarin, Mehdi Yahyanejad, attributes Twitter’s rise last summer to the fact that it was the only English-language source of information during the first few weeks after the disputed June 12 presidential elections. And so the Western media instantly gravitated towards it.

But, in fact, other social media are more popular among Iranians, especially educated, middle-class folks who support opposition leader Mir-Hossein Mousavi.  “In Iran people use Facebook,” says Yahyanejad.

Iranians also like Yahyanejad's Balatarin, a community site that helps users find online news and information about Iran and issues of interest to Iranians around the world. Though Balatarin (the name means "highest" in Persian) officially has been blocked inside Iran for three years, politically and tech savvy Iranians have found ways to get to the site.

To protect their anonymity, some politically active Iranians still inside the country adopt pseudonyms, such as changing their last names to “Irani.” The fear is that the government will use Facebook as a tool for spying on its citizens. Journalist Alinejad says that when one of her friends in Iran was arrested, her brother sent a message to her through Facebook saying he was removing Alinejad from his sister’s profile, so the government couldn’t use the connection to incriminate her.

Balatarin's Yahyanejad and others also said that people entering Iran have been stopped at airports and asked about their Facebook profiles. As a result, there is advice spreading that people take down their profiles before entering the country and then reactivate them after they leave.

Accounts suggest the site is blocked inside the country, although protesters can use software to get around the filters.  Facebook told FORTUNE it could not release the number of users in Iran, or confirm whether the site was being blocked.

Alinejad recently organized a whole campaign from London using just Balatarin, which focuses on political news coming out of Iran, and Facebook. In the most recent wave of demonstrations, centered around National Student Day last week, the Iranian government apparently arrested Majid Tavakoli, a student leader, and forced him to go on TV wearing a hijab, traditionally an item of women’s clothing. Alinejad wrote a post on her blog suggesting that other men wear hijabs too in solidarity. A link to her site wound up on Balatarin, where a debate ensued, and soon the campaign moved to Facebook, where men began posting pictures of themselves wearing hijabs. Alinejad says more than 500 people have sent photos as part of the campaign.

Says Alinejad, “[The government] thinks if they arrest journalists, they can stop news from spreading around the world, but they can’t.”

With its “Give It A Ponder” campaign, the handset maker walks the line between lecture and laughs

LG's viral marketing campaign is using humor to get teens to think before they text. Image: Facebook.

One in five teenagers have received a naked picture in a cell phone message. That's one scary stat that LG marketing executive Ehtisham Rabbani uncovered while researching how teens use mobile technology.

Most interesting, though, is what Rabbani did with the information. Rather than ignore the trend – or engage in a lot of hand wringing about the problems with kids today – he set out to change it. To that end, he and his team built a unique yet risky marketing campaign about bad mobile manners like sending racy pics, bullying and spreading rumors. Called "Give It A Ponder," it embraces YouTube (GOOG) videos and Facebook networks to spread its message virally online, and tries to convince teens to think before they text.

The risk? Well, as any parent will tell you, teens don’t like being told what to do – so Rabbani and his team had to be sure and get the tone just right, or they’d end up alienating the very audience they are trying to influence.

“There was a certain amount of nervousness about having this conversation with teens and how well it would be received,” Rabbani says. “So we did a bunch of research.”

To figure out the right approach, LG set up a series of mini focus groups, interviewing young people in groups of three so they’d be more comfortable saying what they really thought. Fortunately, the teens really opened up.

Ehtisham Rabbani, vice president of marketing for LG Mobile Phones, set out to talk to teens about their behavior without sounding preachy. Photo: LG.

“What we heard over and over again was, this is a message that teens are ready to talk about,” Rabbani says. “But it was important that whoever led that discussion didn’t talk down to them. And it had to be somewhat humorous, entertaining, and at the same time provide kids with a guiding principle.”

What they ended up with was an edgy video series starring James Lipton of Inside the Actors Studio. Though Lipton isn’t the obvious choice to reach a teen audience – he’s 83 – he has established his comedy chops in stints on Saturday Night Live and Late Night with Conan O’Brien. In LG’s “Give It A Ponder” videos, Lipton removes his beard and lends it to teens so they can stroke it as they think twice about sending risqué messages. There's nary a BlackBerry (RIMM) or an iPhone (AAPL) in sight – all of the teens in the commercials, of course, use LG phones.

The videos seem to be a hit so far. Since the campaign launched late last month, the Ponder Beard Facebook page has snagged more than 1,000 fans, and the YouTube videos have pulled in nearly half a million views. And that’s just the online audience – LG is also showing the ads on the Channel One network in high schools and in movie theaters before teen-centric movies like The Twilight Saga: New Moon.

The early success is a source of satisfaction for Rabbani, who has a personal connection to the campaign. At a recent family gathering, one of his teenage nephews left the room upset after receiving an intimidating message from an acquaintance – an example of mobile bullying, which LG’s survey found is even more common among teens than sending naked pics.

So Rabbani hopes LG’s message about mobile manners continues to catch on – and, he insists, not just because it’s good brand exposure for LG. “We have literally seen the traffic since the day we launched it go up 10x every single day,” he said earlier this month. “I’m hopeful that as the word gets out it will become a destination for kids to have a conversation.” It’s too soon to say whether LG can convince teens to change their mobile manners. But it's certainly built some nice buzz.

The newest trend in e-commerce: Social media meets local networking.

Social commerce site Groupon offers daily deals to nearly two million subscribers in 27 U.S. cities.

When David Morton, owner of the Pompei chain in Chicago, signed up with an Internet startup to offer a coupon online, he expected to sell a few thousand at most. Instead, during the 24 hours the coupon was posted on November 22, more than 9,000 local consumers purchased an offer that got them $10 worth of pizza for $5.

The coupon was an all-time sales record for Chicago-based Groupon, a hot startup that brings the buying power of the masses to the social web. After launching with local merchants in its hometown one year ago, Groupon today offers deals to nearly two million users in 27 cities in the U.S. including New York, Charlotte and Austin.

Here’s how it works: Groupon sends a daily email to subscribers with a deal, or “Groupon,” for a local business or event, like a salon, restaurant, class or concert. If they want in, users then sign on to Groupon’s site to pay by credit card and have a year to redeem the coupon.

Before “the deal is on,” however, a minimum number of users must agree to buy. This spurs buyers to post the deal to social networks like Facebook and Twitter (or go the old-fashioned route: email) so the quota will be met. Many of Groupon’s offerings also tend to be social in nature, like attending a class or an event or checking out a new restaurant, making them ideal for rallying Facebook friends.

“Groupon layers nicely on top of the social graph that’s developed over the last few years,” says Groupon CEO Andrew Mason.

The site shows nearly one million Groupons sold, claiming to have saved users over $42 million. The company, which takes a cut of the deals it sells, is profitable and predicts revenue of $100 million over the next 12 months.

Investors get their Groupon

These numbers caught the eye of exalted venture capital firm Accel Partners, which led a $30 million investment round with New Enterprise Associates, announced last week. The infusion will go towards hiring, investing in technology, growing the customer base and expanding geographically.

Accel, an investor in Facebook, doesn’t need to be convinced of the social web’s potential: Another portfolio company, Playfish (it makes "social games" for Facebook and other social media platforms) last month sold to Electronic Arts (ERTS) for $400 million.

“We’re in the middle of another transition, of search to the social web,” says Accel’s Kevin Efrusy. “Just as Google [through its search business] enabled a whole new crop of businesses, the social web is enabling a lot of things that just weren’t possible before.”

Groupon’s model is appealing to investors in part because of is its operational efficiency. There is no need for inventory or shipping–users simply print the Groupon and take it to the vendor. And unlike other group buying sites, because most of the offers are services or experiences, there’s a nearly unlimited supply. (Some offers do need to be capped though, as Mason experienced when the company sold 4,000 Groupons for a nail salon with only two technicians, which was booked solid for months after).

Groupon might not the best idea for impulse buyers on a budget. But much of what the site offers are things you might do anyway: get a haircut, go out to eat, attend a sports events. And Groupon claims a high threshold of quality. “We knew that if we did bottom of the barrel, that would be self-fulfilling, we would be bargain basement, cheap stuff site,” says Mason, referencing past Groupons for James Beard award winning-restaurants and the Art Institute of Chicago.

Word-of-mouth, Facebook-style

For all Groupon’s promise and buzz, it’s still early days for the space and not everyone is convinced. Forrester analyst Nate Elliott points out that buying clubs and word of mouth marketing have been around for years. “Look at Avon, Tupperware, Amway—these are five to ten billion dollar companies. Marketers have long understood the power of influence marketing.”

But Groupon's advantage seems to be its ability to harness the power of local communities online. “Groupon really cracked the code because they realized it was about local business,” explains Efrusy. “Local has been difficult to make money on since beginning of the Internet. How do you find out about yoga, a hair salon, a spa? Word of mouth.”

In addition to being an untapped source of ad revenue, local businesses are an attractive target for Groupon because they are highly relevant to users, who enjoy discovering new places and events in their hometowns.  This also helps create the perception that Groupon's deals are more about content and information, rather than advertising.

“We’ve been a Chicago institution for 100 years, but we thought this was a way to reach new customers,” says Pompei owner Morton. “It’s much more powerful and direct than traditional media.”

Living in the post-Visa world

By Roger C. Wood, CEO, ORCA Inc.

Wood: Currency is a-changin'. Photo: ORCA

When I was contemplating moving from the wireless sector to the Web sector, I read just about every column Nick Negroponte wrote as a columnist for WIRED Magazine. His departing piece, entitled “Beyond Digital” was published in December 1998 and served as an inspiration to me. After reading it, I left my role as general manager of the International Division for the consortium of mobile start-ups (Voicestream, Omnipoint, Aerial and Powertel) that became T-Mobile USA  and joined Reebok International to launch the first multi-national interactive division of any Fortune 1000 company, launching e-commerce sites in 36 separate countries. This opinion piece is an ode to that pivotal article.

Nine-year-old Boy #1 – “I like Fusion Fall. It’s kind of a mission game; it’s not like a chatting game. Sometimes I like to play chat, that’s why I like Club Penguin. But now I like Fusion better, mostly it’s just more fun to earn Taros and Nanos and Fusion Matter. I like spending Fusion Matter because I can get more HP and cool clothes. And, it loads my clothes super fast.”

Nine-year-old Boy #2 – “I hate Adventurequest because it’s just an RPG and it looks like no one else is there. I like to earn prestige and HP. I get hurt all the time, so I need to buy HP all the time. I haven’t figured out all of the shopkeepers in Fusion Fall, but there are different types. The power shopkeeper seems like the best.”

“Load my clothes”? “Prestige and HP”? “Power shopkeeper”? If you have no idea what these kids are talking about, welcome to the post-VISA world of virtual currency.  The very nature of basic transactions will be transformed by this generation and this piece of a kid’s conversation is just the beginning.

No matter what you call it – virtual currency, s-commerce, contextual payments, in-apps buying or stored value – young people want to pay for things in little pieces without leaving the entertainment experience.

For instance, the kids above want their avatar warrior to walk up to an avatar merchant and buy some digital medicine to repair their digital muscles. As Apple's (AAPL)  iTunes has shown the world, most people want to buy digital stuff in little tiny pieces, for less than one dollar or euro, without entering a credit card number each time. This is what the interactive media industry calls a “micro-transaction.”  Using virtual currency and the concept has forever changed the world.

The primary way to accomplish all of this, while maintaining the security controls of the global personal banking system, is with stored value and virtual currency. Converting real money to virtual currency gives life to all kinds of marketing applications, as we have seen with “frequent flyer points,” one of the most successful forms of virtual currency around the world.

Having consumers load real money into accounts, “storing” the value, then drawing down on the balance in the form of points or credits as required, is a good idea for a lot of reasons.

• First, it minimizes interest impact from using credit cards for the consumer. In some countries, they don’t even like credit cards. In many parts of the world, interest is considered a sin.
• Second, it minimizes transaction fees from the Web site.
• Third, younger consumers want to make their spending modular. This demographic often subconsciously segment their spending into categories like phone, games, clothes, etc. Stored value and virtual currency helps them to facilitate the process.

As millennials — people born after 1978 — begin to play a bigger role in the global economy, we will see a blossoming of innovations using stored value and virtual currency in new and exciting ways. Lending will be restricted, credit will be scarce and young people will adapt faster than older generations. To paraphrase Negroponte, virtual currency will be noticed only by its absence, not its presence.

Virtual currency will be intrinsic to each and every transaction. Maybe one day, we will log on to Yahoo! (YHOO) and check our Yahoo! Coins balance. Then pay for dating services, games and comedy video with the Yahoo! Coins you bought. Or, AOL will give you AOL Coins for sharing TMZ videos and news items from PopEater, which you can then use to buy stuff on Sorority Life or Farmville, while hanging out on Bebo.

It will seem antiquated to use real money to pay for anything. Real money will be something you load into a stored value account for some specific purpose and the virtual currency will be what you actually use to pay for something. Virtual currency won’t really be a topic for discussion. The real excitement will come from the transformation of our lifestyles, business models and how we come to value intangible digital goods.

Below is my version of the five forces driving the irreversible trend towards ubiquitous virtual currency.

One World
American Express (AXP) travelers checks got it. Frequent flyer consortiums got it. In the future, new payment networks will emerge. Kind of like JCB, Visa and MasterCard, but a lot more flexible. When kids see a virtual currency payment network logo, they will assume the virtual currency they hold will be valid, regardless of its origin. It could have been earned on AOL, bought on Arkadium or gifted on Facebook. Kids want “one world” and they will spend their time on digital properties with open payment networks that allow them to move virtual currency around at a fraction of the fees and regulations required for moving real money.

Social Buckets
Our first Web portals (AOL, CompuServe, etc.) essentially were “social circles” didn’t translate in that digital world and were replaced by what I call “social buckets.”  There is no universally accepted social rank anymore or transfer of social status from one digital world to another. I’m a god in digital music bucket if enough people download my self-published iMix collections on iTunes, but that celebrity doesn’t translate to YouTube. Ten-year-olds kick my butt on FusionFall (the aforementioned multiplayer game) and my ability to throw a knuckleball in the real world means little to them.  I’m certainly no sociologist, but I do think that our concept of social status varies by digital bucket. Virtual currency will be the only common denominator.

Who owns your friends?
Imagine you get together with some friends at the pub. Your friends arrive then proceed to talk, drink and have a good time. Each one of your friends also brings a representative from their financial institution that they will use for individual transactions. Every time one of your friends buys a drink, their financial institution’s guy starts talking to them and you have lost your ability to host effectively. Sound chaotic? Even ridiculous?

This is what it feels like today for a digital media company. Every visitor to their site uses a payment method that oversteps it bounds and dominates the conversation with the consumers. The digital media company brought everyone together, yet the digital payment companies, offer businesses and payment gallery operators start dialogs with the visitors that prevent the digital media company from properly hosting the party. In the future, digital media companies will take control of the conversation with their friends through their own branded payment options.

Size Matters Not
Virtual currency will make the size of the digital media company irrelevant in relation to its potency. Virgin, Airtran and JetBlue are all really small airlines that used effective virtual currency and stored value business models to make a lot of trouble for Continental, Delta and United in long-haul air travel. A small Web site with a great concept of virtual currency and stored value can have a disproportionate impact on the marketplace. Just look at ActiveCause.com or Causes.com, versus United Way. I meet lots of 28-year-olds in my work life, and I really don’t know many that donate to the United Way.

Net Worth
Net worth was once judged by the difference between one’s assets and one’s liabilities. Both were valued in relation to money, which represented ounces of gold. What will the world be like when digital goods, images, ideas, concepts are a central part of the equation? I create a character on Blizzard’s World of Warcraft or Eve Online and it’s a hit. Hell, who knows, it might just be the next Avatar, SpiderMan or James Bond. I’d probably make out a little better than if I’d owned, say, a million shares of Washington Mutual stock. Thought products, secured by virtual currency, will likely make the next tycoons. Ralph Lauren, Paul McCartney, the mysterious founders of Skype, Steven Spielberg and even Jay-Z, all created multigenerational wealth through digital assets that none of us can actually touch. I’m sure the folks at TenCent, China’s most popular Internet portal, would agree.

Bye for now, I’m signing into WeeWorld to download a Justin Timberlake digital jacket for my avatar using my green diamonds.

Wood is CEO of ORCA Inc., a provider of electronic payment and transaction solutions for social interactive media.

CEO Benioff goes from "cloud" to crowd.

Benioff chats about Chatter. Photo: Salesforce.com

Marc Benioff, the man who invented cloud computing at least as much as Al Gore invented the Internet, is pushing a new idea. It's called Chatter, a mashup of Facebook and Twitter for the workplace that his company, Salesforce.com (CRM), plans to begin selling next year.

Salesforce.com's main product is something most worker bees will never see. It's an online tool that salespeople use to record their prospects and completed deals. It has done so well because it mimics far more expensive software pioneered by Siebel Systems, which is now owned by Oracle (ORCL), where Benioff began his career. Benioff, a relentlessly effective marketer, pioneered the concept that companies could rely on Web applications for what previously had been complicated software programs that resided on corporate computers. Salesforce.com is so successful (and popular with investors) that it's worth $8 billion, a mere 100 times Wall Street's estimated earnings for the company's current fiscal year.

The reason Benioff is jazzed about Chatter is that it represents an opportunity for everyone in the corporate world to use Salesforce.com software, not just salespeople. Chatter gives all employees the ability to broadcast and tune in to people in their own company, much in the way the two buzziest social-media sites enable communication among groups of like-minded people and, more specifically, their friends. "Twitter and Facebook have opened the door to the enterprise world to  walk through," says Benioff.

I saw Benioff Wednesday at his San Francisco office, where a couple of his people — he has lots of them — gave me a demo of Chatter. In short, I was impressed. It allows users to post their corporate activities as well as to choose whose activities in the company they want to follow. The key is that it's a walled garden. You only follow or broadcast to colleagues. In effect, Chatter does what IBM's Lotus Notes and Microsoft's Sharepoint do, only Chatter is far more flexible, and, at the risk of sounding silly, fun.

The corporate possibilities  are many. People involved in a specific deal can form a group. An embedded Twitter application makes it easy to track comments about competitors — or your own company. Routine business events, like purchasing data, could be posted online, but shared only with employees who have permission to view it. The allure is that all these  concepts work within an easy-to-use online tool that's already been around for a decade and has been refined accordingly.

I have no idea if customers will cotton to this idea, and, more importantly, if they'll pay. (Existing Salesforce.com users will get Chatter for free. Salesforce.com will try selling a Chatter-for-the-rest-of-us edition for $50 per user per month.) It looked cool to me, though.

I tend to squirm at the request LinkedIn makes of me to update my profile with information about what I'm doing. There's no way I'm telling my competitors what I'm doing. Ditto for Facebook, where my "friends" are an assorted lot that may not care about my work. Twitter gives me a way to communicate to strangers, which I appreciate, but I'm going to be guarded in how much I share with that audience. Would I post to a select group of Fortune editors and writers, however, what story I'm pursuing and who my next meeting is with? Might it improve communication for a distributed team whose left hand often doesn't know what the right hand is doing? Absolutely.

The social gaming company behind FarmVille is seeking the spotlight. Some analysts sense an IPO.

Mark Pincus, founder and CEO of Zynga

If ever a company had a moment, this is Zynga’s.  The small, privately held company that makes games for Facebook and other social networks is getting publicity and attention companies many times its size would love to have.

The force behind the FarmVille sensation has appeared on the front page of the New York Times, and been featured in Time, a BusinessWeek cover story, The Economist, and this website's magazine. During a recent trip to New York, Zynga’s spunky CEO Mark Pincus was scheduling meetings with reporters until he reportedly lost his voice.

Then there are the billboards on Highway 101 in Silicon Valley. Both showcase animated characters from Zynga’s games and attempt to lure employees. Earlier versions showed a black silhouette of a bulldog against a red backdrop (Zynga is named after Pincus’s deceased American Bulldog, Zinga).

The promos – and the flood of (mostly) positive press – have gotten more than a few tongues wagging: Is Zynga priming the public for a stock offering?

One of Zynga's new billboards in the San Francisco Bay Area

“Zynga is on the forefront on the business, the clear number one leader,” says ThinkEquity LLC analyst Atul Bagga. “They’re a cash flow positive company, with potential for high leverage in the business model, and are generating revenue at a rate that would allow them to go public.”  Zynga, which declines to comment on such speculation, is on track to surpass $100 million in revenue this year, and the company is profitable.

Go public, sell out, or raise more capital

But Ben Bajarin, director of consumer technology at analysis and strategic planning firm Creative Strategies, thinks it’s too early for Zynga to take its business model to the public market. “There’s still a lot of economics to be worked out,” he says. “IPOs that have done well lately have been companies that have been in business for a while and have a proven revenue track record.”

Wags suggest Zynga's charm offensive in the press might also be a way of reminding rivals of its prowess and potential.  The big game publishers haven’t kept pace with the industry shift to the so-called "social games" that Zynga and others develop. In early November, gaming giant Electronic Arts (ERTS) acquired Playfish, a major Zynga competitor, for as much as $400 million.

Or Zynga could be looking to add to its coffers. The company recently received a $15 million infusion from undisclosed investors, on top of an earlier $39 million. Another social gaming contender, Playdom, announced $43 million in venture funding in early November, valuing it at $260 million. Should the battle turn on which company can snatch the best games first, having cash in the coffers could be crucial. (Playdom acquired Green Patch and Trippert Labs after announcing its financing, while Zynga has snatched YoVille, MyMiniLife, and GoPets.)

At the very least, Zynga has a bit of defensive marketing to do. In early November, the startup was at the center of controversy when players discovered that in the process of attempting to earn in-game currency, they had signed up and were being billed for unwanted mobile services.

Scam offers embedded in games

Zynga has since discontinued the scammy offers in its games, allowing that it may reinstate some of the more qualified partners. Although it could be written off as a blunder typical of any young company, Yankee Group analyst Carl Howe recommends caution. “They need to clean up their act because a tarnished brand will hurt both of their exit strategies.”

Whatever path Zynga chooses, the clock is ticking. Today there may be 68 million would-be farmers tending their crops, but tomorrow, who knows?

“Five years from now, I can safely say a lot of us will still be using Facebook, but I can’t say that a lot of us will still be playing FarmVille,” says Gartner analyst Ray Valdes. “The longer term challenge is how they can create follow-on titles that are good replacements from a business perspective when the current novelty has worn off.”

Then there is the omnipresent specter of new platforms and technology like Twitter, which Valdes points out, the social gaming developers have yet to figure out.

Zynga, to be sure, is more than a one-trick pony: including FarmVille, it boasts four of the top 10 social games. But in this hits-driven business, it will have to keep churning them out. “These consumer attachments don’t go on forever,” says Yankee Group’s Howe. “You either capitalize on them or say, ‘We should have sold.’”

Marketing online is about more than jumping on the social media bandwagon

By Sam Cece, CEO, StrongMail Systems.

A decade ago, the term social media didn’t mean much to consumers, let alone marketers and corporate executives.

Cece says platforms change but good marketing principals prevail. Photo: StrongMail

Today, none of us can get away from the term – it’s everywhere. Companies are jumping on the social bandwagon, erecting fan pages on Facebook, developing corporate Twitter accounts, creating groups on LinkedIn and producing channels on YouTube–all in the name of reaching, engaging and influencing customers on a more personal level.

While the game has certainly changed, it feels as if the social media pendulum has swung a bit too far in one direction. But by taking a closer look, it becomes clear that the more things change, the more they stay the same.

Social media isn’t new (email is considered by many to be the first social network), word-of-mouth marketing has been around for decades (look at the way Amway and Mary Kay Cosmetics products are sold) and viral marketing isn’t a fresh idea (arguably the pyramid scheme, which dates back to Charles Ponzi, was fueled by viral marketing).

Yes, the mediums have changed, but the underlying fundamentals and human motivators have not. People know how to share information. Companies that recognize this are not pushing content, but are promoting engagement, looking at their customers as skilled knowledge brokers who are adept at reaching the right audiences with the right messages at the right time.

Transparency is paramount…

In doing so, these savvy organizations are becoming more open and transparent with their customers. Recent research shows that a company’s willingness to be open is directly tied to revenue growth.

Take for example an online stock trading and information company that we recently worked with on a campaign designed to motivate members to refer friends to their service. The company initially developed a list of promotions they believed would work for their customer base. These included a wide range of offerings from free iTunes gift cards to non-profit donations in exchange for referrals.

But over a period of six months, the company found that none of the incentives they tried were creating a significant lift in business.

…but cash is king

So, they went back to the drawing board, looked more closely at what their members were telling them and decided to try a motivator that was related to what they knew – money. The company offered a $50 cash incentive for referrals, and the response was overwhelming. Since introducing the campaign, the company has seen an 800% lift in new account acquisitions and is now testing similar cash incentives to continue the social sharing trend.

An online provider of personal finance solutions was recently faced with a similar challenge. The company was keen to develop a social channel through which it could drive new customer acquisition. The company tested a number of sharing incentives, including free iPods and other product offers. The initial results were disappointing. After researching the highest potential incentives that would resonate with its customer base, the company offered members access to new product features that weren’t yet available to the entire member base, in exchange for referrals.

The offer was made via e-mail. Some 48% of recipients opened the e-mail, and 10% of them became "influencers" for the company’s brand by sharing the invitation with an average of five friends each.

These two scenarios provide good examples of how establishing a dialogue with customers instead of merely pushing a one-way conversation can enable businesses to prompt identified influencers to carry their messages to new audiences.

By taking the time to understand the principles for motivating these influencers to invest their time, and inserting more social sharing opportunities into existing programs, organizations striving to be more social can create compelling, actionable communication strategies that go beyond the overhyped tactics we’re hearing so much about today.

I’m not knocking Facebook fan pages or the use of Twitter. However, those companies that are willing to step back and take a more philosophical approach to social customer engagement will benefit from stronger customer relationships, more trusted, recognizable brands and incremental revenues.

Cece is CEO of StrongMail, a Redwood City, Calif.-based provider of online marketing solutions for email and social media.

Survey finds young executives embrace online social networking tools to market their companies and themselves

A new study on top executives' use of social networking tools shows that sites such as Facebook, Twitter and LinkedIn have made serious inroads in the C-Suite.

According to a survey of chief executive officers and other senior staff, two-thirds of respondents say online networks play an important role in deepening relationships with colleagues and clients. The study of 100 executives, conducted by public relations firm Margolis & Co. and the Young Presidents' Organization, will be released later today.

Not surprisingly, business-oriented networking site LinkedIn is proving to be the most popular social network among the respondents. Some 75% of those surveyed say they use LinkedIn; Facebook attracts about 62% of this high-powered crowd (the respondents can list more than one site) and Twitter pulls in about 42% of those surveyed.

Simon Preston, chairman of YPO-WPO International, notes that executives who join a global professional association such as Young Presidents' Organization are already hip to the benefits of networking.  And given that the members are, by definition, young, it stands to reason they'd embrace high-tech networking, too.

"Peer-to-peer idea exchange remains the core of our member experience," Preston says. "Now, we're looking at the next generation of social media, which will have many of the same features that have been so successful in Facebook and LinkedIn.

"It's a phenomenon that is very much on our radar and key to our continued relevance for a future generation of young global business leaders."

The study suggests social networking has infiltrated the business conversation in a meaningful way. Nearly 45% of respondents say social media topics surface in executive-level conversations "very often" or "often."

That's a fairly high level of interest considering LinkedIn launched in 2003 and Facebook only opened its platform to non-students in 2006.

"Nearly every company we surveyed has social media on their radar screen and their leaders understand the potential," says Dan Margolis, president of  Santa Monica, Calif.-based Margolis & Co.

To be sure, executives in professional services and technology sectors tend to rally 'round social networking tools, according to the study. But 80% of respondents say their companies plan to invest more resources in social networking funding and staff in the next two years.

"We believe 2010 will be a turning point in the business to business sector," Margolis says. "By this time next year, the landscape may be completely changed."

How social networking can transform the CIO into a superhero

By Alan S. Cohen, vice president enterprise, Cisco

Workers unite! Cohen says social networks can empower employees. Photo: Cisco

I recently spent a few days with 100 of Cisco’s (CSCO)  top customers, Chief Information Officers (CIOs), representing a range of industries – private and public and geographies. These folks are often the unsung heroes of  their organizations, enabling employees to perform great technological feats while helping management wring huge cost savings from their budgets.

During our time together, the conversations focused on how work has changed: from local to global, from centralized to decentralized, and increasingly, from live to asynchronous or even virtual.

In the past 20 to 30 years, our customers’ organizations have invested tens of billions of dollars in transaction systems – from ERP to email – to reduce latency and inefficiency in value chains. This considerable investment underpins the heart of the “Six Sigma,” process-driven revolution that became the ultimate strategy for operational excellence. However, today we’ve reached the zenith of transactional gains.

So, from where is the next wave of innovation and productivity emerging? Allow me to posit a simple answer: from people.

For most companies, people represent an untapped asset – a resource that becomes especially important for companies that must grow their business without adding personnel.

This means that corporations must design a cognitive stimulus plan based on employee contributions, and business must embrace some admittedly unusual notions about how, where and when work occurs, and how employees collaborate. Some of these notions recently arrived from the Web 2.0, social networking realm.

There is definitely something going on at Facebook: you do not add a subscriber base the size of the United States in a few years unless there are benefits to the community (Facebook added over 50 thousand new users in the time it took me to write this blog).

The sea of changing perspective on social networking struck me during our CIO conclave. Some call it social computing. We at Cisco simply call it collaboration.  Our customers recognize the critical nature of social networking as a component of collaborative business processes.

But collaboration in the workplace also requires careful integration and regulation to enable success.

No one advocates that employees post personal pictures of weekend activities in lieu of working. It is time, though, to recognize that community is at the heart of teaming and teaming is at the heart of workplace collaboration.  And collaboration is where we find innovation and operational excellence, by tapping into knowledge at the source: from one functional group to another; from one business unit to another; and from one company to another – as partners in a distributed valued chain.

We need variety, a notion at odds with the predictability advocated by Six Sigma.  Actually, in his speech on “consistency,” Mark Twain effectively made this case:

“I am persuaded that the word has been tricked into adopting some false and most pernicious notions about consistency – and to such a degree that the average man has turned the rights and wrongs of things entirely around and is proud to be “consistent,” unchanging, immovable, fossilized, where is should be his humiliation.”

To be sure, for social networks to become the next great tool in the CIO’s daring arsenal, they need to evolve. They need to be secure. They need to integrate into corporate information systems. They need to support work processes that deliver business results.

Collaborative social networking would benefit from rich voice and video systems, something that current consumer offerings lack. Often, a text message does not contain enough context.

Finally, management needs to view collaborative social networking differently.  As Morten T. Hansen notes, in his excellent new book, Collaboration, they must oversee the adoption process and change culture to achieve positive results.

To some degree, every aspect of information technology is in transition: cloud, virtualization, collaboration, and consumerization. CEOs want more and CFOs want to spend less. I could go on and on with challenges for the CIO. But what about the people who actually use all this technology, day after day, to get their jobs done?  What are they telling us about how they want to work?

The millennials, the largest presence in the workforce, are already “black belts” in virtual communications and collaboration.

Is the new CIO super power enterprise social networking? Or is social networking the kryptonite? I see a cape in the sky. (A bird? A plane? A CIO!)

Cohen is vice president, enterprise, at Cisco Systems, the San Jose, Calif.-based maker of networking equipment.

Online jukebox Lala hooks up with Facebook and Google. Together, can they mount a serious challenge to Apple?

Lala's Nguyen aims to challenge Apple's iTunes. Photo: Lala

Apple rules music retail for now: iTunes passed Wal-Mart (WMT) last year to become the top-grossing music store in the world. But that doesn’t mean things will stay that way.

The latest challenge to iTunes comes from Bill Nguyen, the serial entrepreneur who founded Lala.com.

Palo Alto-based Lala is an online jukebox with 8 million songs; you can buy the rights to stream a radio-quality version of any song for 10 cents or download a higher-quality version for 99 cents. He says he’s averaging about $67 per year from paying customers.

By itself, Lala poses no threat to the iTunes juggernaut. But now it’s teaming up with Google (GOOG) and Facebook, arguably the two hottest properties online. Late today Google is expected to announce a partnership with Lala that should drive massive amounts of new traffic to the service.

And just last week, Lala announced that it will team up with Facebook and its 300 million users to push a new form of music distribution: song gifting. Soon, Facebook’s legions of social networkers will be able to do more than chat, update and poke — they’ll be able to buy each other songs, right within Facebook’s payment system.

We caught up with Nguyen soon after the Facebook announcement to ask about his vision for digital music, and why he dares to take on iTunes and Apple (AAPL).

Fortune: What’s the elevator pitch on Lala. What business are you in?

Nguyen: We’re a music service. But I think what makes us different from some other music services is we focus so much on helping you discover new music by using social behavior. There used to be such great radio and MTV that would help us find music, and a lot of those sources don’t really exist in the same way anymore.

So how long did it take this deal with Facebook to come together?

We’ve been having conversations with a lot of different partners about how to make Lala a part of what they do. There’s a lot of music out there — there are 8 million tracks. A lot of companies say, “there are 8 million tracks, come to our site and knock yourself out.” The reality is none of us have the time or the patience or even the knowledge to find what we want to listen to.

So we’ve been working for the last couple of years to try to add context. We launched a service with CMJ, we launched something with Pitchfork, we launched something with the guys at Billboard. And the reason why we did that is, those guys are curators. They were telling people what was good. In summer of this year, the conversations really picked up around, how can you connect with some much bigger websites? We’ve been talking to Facebook for almost a year about how to take advantage of all the amazing social features they have on their site. It’s been an ongoing process.

You’re going to be selling 10-cent song streams and 99-cent downloads. Right now you deliver about 5 million songs a month. What do you expect these new partnerships to do for your business?

It takes music and makes it a new product, in the same way that ringtones did. You buy ringtones to tell everyone else what you like, not for your own personal listening. So I describe it as jewelry, in a way. Gifting is like that. It’s a really cool way of expressing how you think.

We think what’s exciting about gifting is, people don’t have to even give us money. They can use the payment system already built into Facebook, which people are already using for everything from games to personal gifts already. It’s kind of like a greeting card. When you get it, it’s inside of your feed and you can listen to it.

So the social aspect is what makes this different from iTunes.

It is. We live in this age that I think is the best time for music, ever. It’s so much easier to create music because there are digital tools like pro audio. There are really no limitations for distributing your music like there used to be. You really don’t need a label or a studio to get your music out there. But iTunes doesn’t help you find out what to listen to. It just gives you the top lists. [Editor’s note: The latest versions of iTunes actually do include “genius” song recommendations based on your interests.]

Why are virtual gifts such a big deal?

Gifts are driven by events. I can give someone a song because I want to say something to them, personally. We think it’s so much more targeted than just browse and collect your music. It’s a very personal thing. And what’s nice about it is, it’s already happening. It’s not a new business model. Virtual gifts on the web are actually a really big business. It’s everything from what Facebook’s doing to Zynga with games. We think giving music is so much more tangible. People might not know what a virtual carnation is, but they definitely know what a song is.

How will the economics work for Lala? How much will you make from each sale?

I got in trouble for talking about it. I’m not allowed to talk about it anymore. But we’re happy with the relationship. One of the unique things about the Facebook relationship is they’re handling the billing and the credit card transactions. It’s a great deal. We’re really happy about it.

I’ve seen you quoted as saying it’s similar to the split that Apple does on apps in iTunes, so you get 70%, Facebook gets 30%.

I’m really not allowed to talk about it anymore.

You’ve also been working on some mobile stuff. What can you tell me about the iPhone app?

That’s a really good way to segue into some of the things we’ve been doing. On a mobile, it’s really not easy to get a song over the air. There are no free streaming services on the mobile platform [for streaming specific songs]. When you buy a song on Lala, whether it’s Facebook or anything else that we do, that music will be instantly available on a mobile device. That will be beginning with the iPhone.

It’s streaming. You’re hardly going to know the difference between that and an MP3 file. It’s flawless. There’s smart cacheing so it’s available offline for you if you’re in a bus or lose the connection. It’s pretty amazing.