Today there are 70 million active Facebook users and three billion YouTube video downloads every month, which means that new media channels represent enormous potential for businesses

Some of the largest IT acquisitions during the past few years have been of Web 2.0 companies, such as Google’s $1.65-billion purchase of YouTube and News Corp.’s $580-million purchase of MySpace. It’s safe to say that web 2.0 has gone mainstream.

Web 2.0 is the increasingdy two-way, interactive nature of the Internet, as seen in phenomena such as blogs, user-created videos, wikis (web pages that allow users to contribute to and modify the content), and social networks. These are viewed as the second evolutionary phase of the Internet, from Web 1.0, where ordinary users accessed a one-way information flow by browsing websites, to Web 2.0, where ordinary users have themselves become creators of some of the most significant and popular content available online.

In Atlantic Canada the revolution is just getting started. In a world where geographical distance becomes less important each year, companies no longer need to be located in Silicon Valley or even southern Ontario in order to be firmly in the mix. Progress takes a look at three Atlantic Canadian innovators in Web 2.0.

From art to science

Modern Media’s street-level headquarters faces Spring Garden Road. Outside the plate-glass windows, the business and shopping crowds hustle along one of downtown Halifax’s busiest streets, their noses buried in iPods, cellphones, and BlackBerrys. Inside the office, the minimalist decor and low-slung leather furniture fit in with the chic boutiques that line the area.

Standing in front of a wide-screen LCD display is Jamie Davison, Modern Media’s owner and president; he’s cycling through the slides he uses for press conferences and clients. “The media world is changing beyond recognition,” he says. He’s right, of course. Davison recalls that when he was growing up, there were half a dozen channels on television. “Now there are thousands,” he says. “There are digital recorders that allow you to tape live TV and skip commercials. There’s satellite radio, satellite television, video games, and the Internet.”

This is the phenomena of media fragmentation, and it has been the bugbear of the advertising industry for a decade, driven by a proliferation of new media platforms. Media fragmentation has caused a dramatic decline in the ability of advertisers to reach mass audiences. “When I was a kid I could go to the schoolyard, and everyone in class would recognize the same ad jingles,” says Davison. “We were all watching the same thing, so you could target 70% of the population with one ad. Media is so fragmented today that you’d be lucky to get 7%.”

Faced with the declining effectiveness of traditional methods, advertisers have bombarded consumers with messages from all angles. Davison clicks through a set of images showing ads painted on baggage carousels and the undersides of escalator steps. “They’re trying to break through this clutter,” he says, “but the reality is we’re getting hit with more and more messages each day, and we just become immune to them.”

In the midst of this turmoil, Davison saw an opportunity for a new approach to marketing. In 1996 he became interested in the potential of the Internet and new metrics while designing Halifax-based Clearwater Seafood Ltd.’s first business-to-consumer website. In 2005 he founded Modern Media, with the intent of taking advantage of online marketing’s unique ability to navigate a media fragmented world. Modern Media accomplishes this for clients in two ways: first, by linking certain URLs and promotional codes to particular ad campaigns, the company is able to analyze its effectiveness by determining which ads generate the most traffic and what that traffic does. And second, by profiling each visitor’s online behaviour, the company can personalize a retargeted marketing pitch based on that visitor’s interests. “It’s the opposite of spam,” says Davison. “It’s value-based communications.”

The backbone of Modern Media’s marketing-intelligence operation is Sift Marketing, a PHP-based, homegrown software product that collects offline and online data-such as ad buys, call centre activity, and web traffic-and analyzes and displays them in a web-based dashboard that clients access themselves. While Sift was originally created primarily to facilitate Modern Media’s consulting services, Davison now feels that the software could compete on its own as a product.

In March, in conjuction with the Province of Nova Scotia and its business development agency, Nova Scotia Business Inc., Modern Media announced a five-year growth plan that called for adding 30 to 100 employees, supported by a payroll-tax rebate of up to $927,000. Most of the growth will occur in the product branch of the business, as Davison takes Sift to the world market. “It’s got some legs,” he says with a grin.
 

The radiant world of social media

Marcel LeBrun, the CEO of Fredericton–based IT company Radian6, loves social media. He maintains a blog called Media Philosopher and has a Facebook profile where he can interact with, among other people, his teenage children. He browses YouTube and LinkedIn. He’s on “microblog” site Twitter, where he follows about 900 fellow twitterers’ constant stream of sentence-long, spur-of-the-moment posts, often sent in from mobile devices.

It’s only fitting that, as a prototype of homo conexus, the plugged-in human of the future, LeBrun is helping lead not only Radian6 but also an entire industry to boldly chart where none has charted before: Radian6, the company’s eponymous software product, is one of the leading social media monitoring tools in North America.

Like Sift Analytics, Radian6 is about taking advantage of the inherently measurable quality of the digitized space of the web. But while Sift tracks the internal effects of a company’s marketing strategy, Radian6 turns its gaze outward, to powerful web crawlers to find things such as blog posts and YouTube videos, in order to present what LeBrun claims is a nearly complete picture of the conversations taking place in social media. “If you are interested in conversations about a particular industry topic, a particular product category, or your brand, and you want to see everything that talks about it,” says LeBrun, “you would use our tool, put in those topics, and then dive into those conversations.”

So far, after closing over $4 million in seed financing last year, Radian6’s most eager adopters have been marketing and communications professionals. “In the last couple months, we have had about 100 agencies sign on with us,” says LeBrun. Companies such as Moosehead Breweries and Bell Aliant have also signed on to Radian6 in order to facilitate their customer-service and market-research operations.

Radian6’s timing couldn’t be better. For the marketing and PR worlds, social media was the buzzword of 2007, and it’s well on its way to retaining that status in 2008. Many are predicting that this vast network of user-created blogs, videos, links, profiles, and comments will engender a revolution in the way that companies, customers, and the general public interact. “It’s not just that you have some new sources of information out there,” says LeBrun. “It’s fundamentally changing how companies need to behave and need to relate to their customers.”

As an example, LeBrun highlights the case of Vincent Ferrari, now considered a bellwether for the rising significance of social media. In June of 2006, frustrated by his inability to cancel his account with AOL, Ferrari recorded a conversation with a belligerent customer-service representative and posted it to his blog, where it tapped into an undercurrent of resentment against AOL’s aggressive customer-service practices.

The original posting was soon linked to and reposted on countless other blogs, including major aggregators such as Digg. Millions of page views later, Ferrari ended up on national television being interviewed by Today Show co-host Matt Lauer-an interview that, in turn, was posted on YouTube and viewed hundreds of thousands of times. AOL took notice, fired the representative, and apologized to Ferrari. “That week Vincent completely sideswiped their brand and their multimillion-dollar marketing budget,” says LeBrun.

The point is not simply the ability of issues and ideas, or “memes,” as they’re often called in the blogosphere, to disseminate rapidly and widely through non-traditional channels. The point is that the way in which this conversation takes place is out of the hands of both companies and mainstream media and in the hands of consumers. “Your brand is now the sum of conversations about it,” says LeBrun. “Instead of marketers sitting in an office saying ‘OK, here’s what our brand is going to mean, let’s go buy some ads and push it out there,’ they now need to do it by joining the conversation.”

Colouring outside the lines

For two guys whose industry is being turned on its head, Chris Keevill and Carman Pirie seem awfully relaxed. Comfortably dressed in creative-agency casual, they’re hanging out on a pair of sofas in their Halifax–based office complex. Under his blazer, Pirie is wearing a T-shirt that reads “If you talked to people the way advertisers talked to people, they’d punch you in the face.” The pair’s relaxed demeanour might just be because their marketing-and-communications agency, Colour, is one of the region’s leaders in new media. Aggressively embracing the disruptions caused by emerging technologies, last December Colour became Atlantic Canada’s first, and thus far only, agency to open a social media division.

Colour’s predecessor, Corporate Communications Limited, was organized into traditional disciplines, with separate silos for PR, creative, and advertising, each with its own general manager. Since being brought in as president in 2003, Keevill has worked to mould Colour into the hybrid he believes the fragmented media landscape requires. “The catalyst was that consumers were changing,” says Keevill. “When you’ve got change at an accelerated pace, you have opportunity. And you need to have new models emerge.”

Today Colour’s various functions take place within the same open office space, where on any given lunch break you might find workers from creative, PR, and advertising all kicking the same soccer ball around the room. Most importantly, Colour has sought to bring on board people such as Keevill and Pirie, who have mixed backgrounds in technology and marketing.

As far back as the early ’90s, Keevill says, the marketing industry was seeing the first signs of the power shift from companies to consumers, based on the emergence of e-commerce and the attendant wealth of choices offered to online shoppers. With the advent of Web 2.0 and social media, that power shift has spread to include how companies, prodects, and brands are perceived, necessitating new approaches to communication.

It’s a shift in values, from the old one-way approach of formulated messages, targeted slogans, and slick creative execution to the two-way system of transparency, value-adding information, and informality—which are, after all, the values of good conversation. “I think that in many cases, PR firms have gotten it a little quicker,” says Pirie, the principal of Colour’s social media division, “because good PR firms haven’t always been concerned with creativity for creativity’s sake, but rather with the conversation.”

Atlantic Canada 2.0

Rather than threatening to supplant traditional advertising, social media has interacted with and even amplified it in interesting ways. Pirie cites Colour’s own Landlord Lou campaign for Killam Properties, a publicly traded Atlantic Canadian property agency that rents apartments to students. At the beginning of the campaign last August, Colour stashed thousands of sink plungers around student hangouts and offered rewards for collecting them, up to a year’s free rent. It was a classic guerrilla-marketing campaign, with the twist that the plungers served as a means for Killam Properties to enter the social media conversation. “We noticed Facebook groups starting up to collect plungers, discussion forums, LiveJournal blogs,” says Pirie. “The social media conversation that was sparked because of this ambient campaign was huge, with considerable results for the client.”

Compared to U.S. and Central Canadian markets, the social and technological changes driving Web 2.0 have been slow coming to Atlantic Canada. Much of this has to do with the region’s small population and smaller number of media outlets. “Some would suggest that Atlantic Canada is the least media-fragmented market in North America,” says Pirie.

Continuing growth here in social media and Web 2.0 modes of entertainment and communication is inevitable. This, in turn, will create opportunities not only for early adopting companies and their markets but also for Atlantic Canada in general. For a region that is fairly geographically isolated, the diminishing importance of distance to the online economy can only be a good thing. The increasing reach of the Internet, and its organization into communities of interest, will give companies the opportunity to tap a global pool of consumers at a much lower cost. “The fact that we’re Atlantic Canada–based is no longer a disadvantage,” says Keevill.

While flashy campaigns such as the Dove Evolution viral video and H&R Block’s tax-calculating Facebook application get most of the attention, it’s the grassroots connections via blogs and other social media that form the real substance of the Web 2.0 revolution. These are accessible to businesses of any size. “They are zero-cost technologies,” says Keevill, “so small businesses especially will be able to take advantage of them.” Modern Media’s Davison agrees: “It’s probably a better time for small and medium-size businesses to focus on advertising than it ever has been. Because of fragmentation, you’re actually able to hit a specific audience.”