Last week, after he turned in better-than-expected earnings and tried to explain to a worried Wall Street how the search algorithm changes at Google, called Panda, were significant but not devastating to his business, BoomTown had a short phone interview with Demand Media CEO Richard Rosenblatt.

To ask even more questions about Panda! Grrrrr…

Actually, Rosenblatt was as cordial as ever about what is a hair-pullingly critical issue for his newly public company, which has really been under investor and other scrutiny from the get-go about the way it handles content.

Which is to say very much differently than traditional media companies had done in the past, with an eye on how to optimize traffic and advertising revenue by using tech to know exactly how much each piece of content online is actually worth and how much it should cost.

Them’s been fighting words for a while, with accusations by detractors of Demand’s system that it is little more than a “content farm,” producing poor quality fare.

Rosenblatt has battled that charge all the way through a lucrative IPO, but the company definitely got caught in the Panda maelstrom, as Google has tried to cull out bad results (and make itself look better, it must be said).

This has put Demand in an awkward position–trying to minimize the damage, real and perceived, created by the changes, and also making sure Google does not become even more aggressive by tut-tutting those changes.

It’s a delicate dance for Rosenblatt, as you will see from my handful of questions (especially since Demand’s stock has been badly hit):

Q: What were you trying to communicate in the call, especially since investors seemed very focused on Panda?

A: I was trying in the simplest way to explain the way we figure the relationship of how much traffic to ROI (return on investment) and RPM (revenue per 1,000 impressions).

We really need these kind of signals to shake things up.

Explain what you are doing to improve quality–does that mean longer articles or paying more for content to get better stuff?

A: There are some topics that do not deserve more than 500 words, and some deserve more.

We would spend more on a post on “How to Build a Deck,” for example, if Home Depot were interested in sponsoring that content.

Q: Given Google’s shift in its algorithm, are you shifting your distribution, such as toward social and mobile?

A: If you look at where trends are going, that’s where we are going to be.

If you are out there with our data and our assets, you change as the market changes.

Q: How are you changing the continued perception that Demand is a content farm?

A: I don’t think anyone has defined what a content farm is and I am not sure what it means either.

The only way we are going to do that is continued growth in revenue and showing that we are doing this for the longterm.

Twitter has quietly been reaching out to marketers about its new ad platform for a few months, but now it’s a full-fledged marketing blitz. The messaging service rolled out its ad strategy to the press last night; today it’s going directly to the ad industry, via COO Dick Costolo’s presentation at Ad Age’s Digital Conference.

I’m not sure how much more Costolo will reveal that Twitter hasn’t put out already–or may be waiting to talk about at tomorrow’s Chirp conference. But since I’m here I’ll liveblog it anyway.

Liveblog

Costolo says he has been waiting five or six months to give this presentation. It’s time to walk through the rollout, he adds, making note of his “fascinating nontraditional” prediction last fall.

He explains the Twitter ecosystem. The ad platform has to go everywhere, not just to Twitter.com. He refuses to call the ads, “ads.” They’re “just tweets.”

“Promoted tweets,” that is.

He walks through the @hashtagtees example.

There’s a menu from which ad buyers can pick search terms and associate them with specific tweets they’ve already published.

Promoted tweets look and act like regular tweets except that they’re labeled as promotions and stay at the top of the Twitterstream.

A promoted tweet “combines earned media and paid media in one space,” Costolo says.

“Earned” media are free, Costolo reminds the audience. That is, if people retweet your paid tweet, there’s no charge additional charge.

The pitch continues: Ads are “real time,” and so are analytics–you can see how ads are performing second-by-second.

Twitter will start with Twitter.com search. That’s phase one. The plan will roll out more broadly, but the company is doing it this way because it wants a “thoughtful, user-centric approach” to figuring it out. “We will quickly expand into syndication…all of our syndication partners.” And here, Costolo specifically mentions UberTwitter in the list of partners.

Important: Twitter will definitely expand into the regular timeline at some point. That is, you will be getting ads in your stream whether you search or not. Ad-free Twitter is over.

Costolo talks about the “resonance” metric Twitter will use to figure out which promoted tweets show up and where.

Each ad partner will see a scoreboard with different metrics: Retweets, @replies, #tag click, avatar clicks, link clicks, views after RT.

Advertisers won’t pay for ads that don’t resonate with users.

Next, Costolo describes communication on Twitter as both “one to many” and as a “real-time interest graph.”

Pricing will start as CPM. Twitter is doing this because it doesn’t know how to correlate “resonance” with value yet. As the company figures this out, it will move to a pricing model based on ROI.

Here comes Porter Gale, VP of marketing for Virgin America, a launch partner. She notes that @jack is flying VA right now.

[You're not missing anything here.]

Um, here’s a free ad for two-for-one tickets on Virgin. Don’t really follow it but sure you can figure it out if you’d like.

And here’s Ellen Stone, SVP of marketing at Bravo.

She is also excited!

[You're not missing anything here, either.]

Stone describes some sort of live, real-time convergence between shows broadcast and users’ tweets. Makes my head hurt. Hope it doesn’t pop up during “Top Chef.”

Back to Costolo: More monetization coming. Commercial accounts coming after promoted tweets will “feather into this platform very very nicely.” One dashboard will manage both products.

Q&A

Will tweets be syndicated to Google (GOOG), Yahoo (YHOO), and other partners that take the stream?
Costolo says yes, without mentioning any specific search engine or media pub.

Will there be revenue-sharing with publishers and bloggers?
Yes, with developers and publishers. Costolo says Twitter will talk about this at its Chirp conference and focus on the syndication piece there. Revenue sharing will be “very transparent,” he adds.

Early reaction from consumers?
Yes, Twitter is getting a “wait and see,” Costolo notes. [From whom? Who's seen it?] The company will take its “learnings” from search and go forward. Twitter ads should be live and running now.

What CPM are you charging?
Twitter is playing around with different numbers, trying to figure it out. When a term is owned or created by a client, like Virgin America, should it have “rights” to that hashtag, whereby no one can outbid it? Some hashtags only have value at certain times. Like “Super Bowl,” which is only useful for a couple hours in the year. So we have to play around and test different kinds of pricing. “We don’t know the answer to that yet.”

What kind of reactions are you looking for from users?
Costolo says Twitter is looking to see whether people click or interact with ads and paying attention to the tenor of reaction: Positive or negative, etc. Think about the iPad launch this month. People were having battery issues. Someone could have jumped in in real time and bought a promoted tweet that dealt with that. Twitter’s hope is that when people see these, they’ll get why they work.

Please talk about search volume.
“Massive. It’s huge.” Will talk about hashtags tomorrow. But on Twitter.com, it’s a small piece of traffic. So we’re not maximizing revenue now. We’re figuring it out.

How will location work with ads?
“We think significantly.” There are lots of opportunities down the road. As this gets more sophisticated, will see opps for small and big business.

Will marketers be able to get resonance scores for companies that aren’t using promoted tweets?
Not at first. But possibly.

Will you share revenue with TweetDeck, etc.?
Yes. We’ll talk about this tomorrow so we can save something for those guys. Revenue-sharing will be very transparent. Costolo name-checks Iain Dodsworth of TweetDeck and Loïc Le Meur at Seesmic.

Finished up. I will have some questions for Costolo myself, a little later this afternoon.

Industry analysts, at least in the case of the Altimeter Group, are ultimately becoming market catalysts.

With today’s news, this is of course, only fortified.

The Altimeter Group released a new report on social customer relationship management, and while analysts release reports all the time, this is different. The report is free to read and share under creative commons, and this is a big disruptor, one that reflects the socialization of information and the spirit of social media. By giving away insight, Altimeter ignites change and thus brings its report to life.

As such, the Altimeter Group is demonstrating how new models are needed to thrive in the social economy and concurrently putting into practice the ingredients of an effective social CRM framework.

The New Rules of Relationship Management

The essence of the new report by Altimeter’s R “Ray” Wang and Jeremiah Owyang is putting the customer first. While that seems like a simple principle, it’s easier said then done. The case the duo make is rooted, of course, in social media and the self-actualization of personal influence.

As the report notes in the beginning:

“Rapid adoption of social networking enables users to connect with individuals and communities who share mutual interests, increasingly leaving organizations out of the conversation.

Simply hiring more people to keep up with social marketing, sales, and support will not be sufficient, as consumers and their new channels will always outnumber employees. As a result, companies need an organized approach using enterprise software that connects business units to the social web–giving them the opportunity to respond in near-real time, and in a coordinated fashion.”

And indeed, they’re right.

Social media didn’t invent conversations, it simply amplified and connected them to audiences and the actions that are triggered as a result. With the right tools, and more important, mindset and resolve, we can now uncover these incredibly valuable, insightful and prominent conversations where and when they happen. Listening is only the beginning however. As in anything, we need a little less conversation and a little more action.

As the report notes, social CRM does not replace existing CRM efforts, it complements them with an outbound extension to connect with the very social beacons that shape and steer perception–those previously untouched with inbound-only infrastructures. Essentially the “s” in sCRM should be viewed as a verb…as in socialize. Actions speak louder than words and thus, sCRM transforms words and intent into action.

As the “godfather of CRM,” Paul Greenberg, notes, “We’ve moved from the transaction to the interaction with customers, though we haven’t eliminated the transaction–or the data associated with it….Social CRM focuses on engaging the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted and transparent business environment. Social CRM is the company’s response to the customer’s ownership of the conversation.”

The Socialization of an Entire Organization

The social customer is only one part of the equation. As any listening program will reveal, conversations map specifically to departments within an organization and as such, all units affected by outside activity will socialize over time. This is why I believe that over time, we should focus less on the “C” of sCRM and focus our attention, energy and ingenuity on the aspects of SRM–social relationship management.

The social Web is distributing influence beyond the customer landscape, allocating authority among stakeholders, prospects, advocates, decision-makers, and peers. SRM recognizes that whether someone recommended a product, purchased a product, or simply recognized it publicly, in the end, each makes an impact on behavior at varying levels. Therefore customers are now merely part of a larger equation that also balances vendors, experts, partners, and other authorities. In the realm of SRM, influence is distributed and it is recognizes wherever and however it takes shape.

“SRM is a doctrine aligned with a humanized business strategy and supporting technology infrastructure and platform. SRM recognizes that all people, no matter what system they use, are equal. It represents a wider scope of active listening and participation across the full spectrum of influence mapped to specific department representatives within the organization using various lenses for which to identify individuals where and how they interact.”

But we must begin somewhere and for many businesses, the evolution from CRM to sCRM is in fact, revolutionary.

After months of study and interviews with over 100 organizations, Altimeter Group identified 18 use cases for Social CRM to help businesses assess, adapt, and create new programs and processes to socialize their brands.

As the report notes, social CRM programs start at the departmental level, but require corporate support to transform fiefdoms into united efforts. The challenge lies in mobilizing and organizing resources around distributed conversations and building the connectors that link CRM systems to social networks. And, organizations must set priorities based on market demand and technology maturity.

Customers have already migrated toward new channels and in the process, companies that are not in pursuit are quickly falling behind. Relationships between organizations and customers might be better defined simply as “relations” as the existing framework was traditionally optimized around the organization and not the customer.

“Traditional CRM projects have failed to grasp the complexities of the customer-company relationship. Though these CRM programs started out with the goal of providing a single customer view and 1:1 relationship management, early efforts quickly refocused on automation of front-office tasks and improving management visibility across marketing, sales, service and support. Because these programs have often failed to support the front-office worker’s needs to manage relationships, internal adoption halted as users grew to resent, and in some cases revolt, against CRM.”

To begin at the beginning, businesses must deploy social CRM for business value and not get caught up in the hype of Twitter and Facebook. We have to go where our customers seek, discover, and share information. Alitimeter suggests focusing on bite-sized entry points as today’s tight budgets, limited resources, and little time will ensure that companies get the most bang for the buck initially. (Click graph below to enlarge.)

In the report, each one of the 18 use cases brings definable metrics that should be incorporated in each Social CRM program.

- Begin with the end in mind

- Metrics should be aligned with an organization’s entry points

- Quantify the baseline and determine the effort

- Adjust ROI targets to align resources with efforts to move the needle

- The goal–drive business value

The 18 recommended use cases are organized in seven categories and in order of operations. As observed, most organizations start their initiatives by building out the “5 M’s” and deploying a customer insight program that matures with experience and earned intelligence. I previously discussed the maturation of social media infrastructure in business usually evolves in at least 10 stages. (Click table below to enlarge.)

Social Customer Insights form the Foundation for All Social CRM Use Cases–Everything begins with listening

1. Social Customers Insights

Social Marketing Seeks to Achieve Customer Advocacy

2. Social Marketing Insights

3. Rapid Social Marketing Response

4. Social Campaign Tracking

5. Social Event Management

Social Sales Enables Seamless Lead Opportunities

6. Social Sales Insights

7. Rapid Social Sales Response

8. Proactive Social Lead Generation

Social Support and Service Drives Sustainable Customer Satisfaction

9. Social Support Insights

10. Rapid Social Responses

11. Peer-2-Peer (P2P) Unpaid Armies

Social Innovation Streamlines Complex Ideation

12. Innovation Insights

13. Crowd-sourced R&D

Collaboration Reduced Organizational Friction and Stimulates Ecosystem

14. Collaboration Insights

15. Enterprise Collaboration

16. Extended Collaboration

Seamless Customer Experience Sustains Advocacy Programs

17. Seamless Customer Experience

18. VIP Experience

The Customer (R)evolution
The methodologies, systems, and people that entwine CRM are unquestionably forcing a historical (r)evolution from the outside in. As customers earn prominence online and ultimately in the marketplaces they define, CRM is far more consequential to the prosperity and relevance of businesses, than perhaps ever before.

This is about earning a prestigious position in the hearts, minds, and ultimately, decisions of customers, prospects and those who affect their actions, today and tomorrow. Essentially, with the socialization of media and the redistribution of authority and influence, we are competing for the future simply by listening, responding, learning and adapting.

Social customers are disrupting the balance of power and actively exerting their new found eminence within every social network and community that thrives off of shared experiences. The socialization of CRM is effectively measured by the dedication of resources and resolution the organization commits not just to social media, but to all existing channels where customers, influencers and prospects seek help.

Divided we share…united we change.

“We had a good third quarter with strong traffic and revenue growth across all of our major geographies thanks to the underlying strength of our core search and ads business. The measurability and ROI of search-based advertising remain key assets for Google,” CEO Eric Schmidt said in a statement. “While we are realistic about the poor state of the global economy, we will continue to manage Google for the long term, driving improvements to search and ads, while also investing in future growth areas such as enterprise, mobile, and display.”

Google shares rose some 8 percent in extended trading following the news.