Last week, a Google Android prototype was unveiled at the Mobile World Congress in Barcelona, Spain, giving the industry its first peek at the software that aims to bring the power of desktop computing to handsets. Google wants Android to become the predominate operating system for what is expected to be the world's largest communications channel. Android's open-source platform allows developers to create any number of applications for mobile phones, which are expected to debut in the second half of this year.

Android may finally offer portable rich-media capabilities, allowing brands to integrate online, text and e-mail marketing into a lower-cost smart phone that fits into consumers' pockets. Android has its competitors, but marketers, already familiar with Google's ad-revenue model, are drooling over the software's possibilities for fostering trackable, one-on-one relationships with customers.

"This will be the first step toward making phones truly open," says Pat Conroy, U.S. consumer products leader at Deloitte & Touche. "You're going to see things [in the U.S.] ratchet up very quickly in terms of capabilities, as they are in Japan and Asia. Bar code scanners will be on phones, Web-browsing capabilities truly will be 10 times what they are now, and things like the iPhone will look like a baby toy in two, three, four years. All of the online research (buying-decision info) is moving from your desktop to the point of sale via people's handheld phones. Cell phones soon will be 'sell' phones, because these capabilities are going to exponentially rise, and it brings countless possibilities for companies in terms of how to reach out to consumers."

Conroy adds: "We're seeing a market turn transparent in front of our eyes, and it's going to be a time of high risk as well as high opportunity for a lot of companies in how they deal with it. The old days of 'new and improved' won't carry the day in the future."

The Android platform could potentially work in other environments, outside of mobile devices. If successful, it could take the Internet to a new previously unimaginable level, surrounding consumers wherever they may be. So the question for marketers becomes more urgent than ever: Lip service aside, how well do they understand word-of-mouth communications? Most say they've bought into the idea that consumers increasingly control the conversations surrounding their brands. But how well are they listening to and shaping those discussions, in light of the technological advances that are making that form of communication ever more dominant?

"Most brands do a pathetic job listening to consumers vis-a-vis existing tools, whether it's through 800 numbers, call centers, 'contact us' feedback forms," says Pete Blackshaw, chief marketing officer of Nielsen BuzzMetrics (owned by Adweek parent the Nielsen Co.). "The reason I say 'pathetic' is those listening tools aren't terribly assimilated into the new Web 2.0 culture, where people talk with audios, photos, videos. Most companies assume consumers speak in one language and that language is text, when consumers actually speak in a much more robust language."

Blackshaw argues that client customer-service operations should become the new industry media department.

"There is such a viral effect being created by what brands do -- whether it's through products that work, customer service, the way employees behave -- that we also need to listen to understand the cause and effect between brand experience and consumer conversation," he says. "Things consumers may have otherwise not talked about 10 years ago are now being talked about with great intensity, partly because the barriers to feedback have gone down so dramatically. The big challenge for advertisers: It's both the pro and con of word of mouth. The conversation overwhelms the ad spend. At some point, if the conversation is running against the brand spending, where is the ROI?"

Media campaigns, with their boxcar numbers, are finite. With the amplification borne of a new digital voice, one consumer's opinion lives indefinitely in cyberspace. In a 2007 survey from Deloitte's Consumer Products Group, almost two-thirds of respondents -- 62 percent -- said they read consumer-generated reviews on the Internet. The good news for marketers: 82 percent of that group said they subsequently made a purchase. The bad news? Just as many of them said the reviews changed their opinion -- and they bought something else -- as said they purchased their original choice of product (43 percent in each case).



Even the largest of retail institutions is bowing to the demands of the individual. Last July, Wal-Mart began posting consumer-generated ratings and reviews on Wal-Mart.com, saying it was the No. 1 customer-requested feature for the site. (Wal-Mart estimates that 75 percent of its 130 million weekly U.S. customers are active online.) In an earlier test of the feature, the retailer received double the number of submissions it had anticipated.

"Marketers are beginning to realize that less and less they are the sources of authority and more and more they are the sources of authenticity," says Rishad Tobaccowala, CEO of Publicis Groupe media and advertising consultancy Denuo Group. "Marketing is increasingly being outsourced to the consumer. The chief marketing officer is being replaced by the chief facilitations officer."

Tobaccowala uses one of the fiercest brand battles of the day to underscore his view: the race between Democratic presidential hopefuls Barack Obama and Hillary Clinton. Politics aside, he believes one of the reasons Obama is outperforming Clinton is that the New York senator is borrowing from marketing practices circa 1980, while Obama's strategy is rooted firmly in the present. "With Clinton, it's been top-down, command and control; with Obama, it's been grassroots facilitation," he says.

For one thing, Obama portrays an inclusive image: He uses the word "we" instead of "I." Tobaccowala believes Obama has delegated more authentically and his grassroots organization has proven deft in planning and managing the chaos of a campaign. As Clinton's organization has fumbled, her top-down style raises questions about her ability to run a country. While Obama's grassroots approach has helped him raise a lot of money, Clinton spent aggressively on a one-hour town hall meeting telecast on the Hallmark Channel this month, billed as "largest, most interactive town hall in political history." In fact, only 540,000 households saw it, and the town hall ended with Clinton being cut off in mid-sentence by a previously scheduled program, the perhaps aptly named A Season for Miracles. Obama, meanwhile, benefited from a tribute video produced by will.i.am of the Black Eyed Peas, at no cost to the candidate, inspired by Obama's "Yes, We Can" speech. It is now approaching 10 million views on YouTube.

If political candidates are having trouble with the idea of ceding some control, corporate marketers at companies like Coca-Cola and Procter & Gamble are coming to grips with it. Last year, Coke launched in a virtual world, conducting an on- and offline competition to design a "Virtual Thirst" Coke machine in Second Life. The winning design featured a series of puzzle bottles that dispense interactive experiences and Coke-branded virtual gifts. The beverage marketer worked with marketing consultancy Crayon on the initiative, and the agency's chief strategy officer, Greg Verdino, explains the new phase of Coke in Second Life this way:

"Puzzle solvers can copy the prizes they receive and gift them to their friends. Land owners can place bottles on their property, and the interactive experiences can be shared by anyone that happens to be nearby when a resident solves a puzzle. In other words, rather than taking the standard marketer approach of sinking money into an island [on Second Life] and hoping to attract residents to visit the brand, Coke is giving residents the power to distribute the Coca-Cola brand essence throughout Second Life, wherever and however they see fit."

Companies like P&G have long recognized that consumers have always helped define brands. But nearly two years ago, the company's CEO, A.G. Lafley, acknowledged the extent to which that influence has grown. His "Let Go" speech, delivered before the Association of National Advertisers, has become a corporate mantra at the Cincinnati packaged-goods giant. He said at the time: "We need to learn to begin to let go and try to stop thinking of brands from our point of view, the manufacturer's point of view, or from the industry point of view. Because in a very real sense, consumers are beginning to actually own our brands and help us define our brand equities and evolve our brand equities and participate in our brand messaging."

P&G set up Tremor, its word-of-mouth marketing unit, in 2000. The company has enlisted nearly 700,000 unpaid mothers and teens -- consumers who have greater-than-average daily contact with their peers. Tremor works for 50 clients, with about half of them outside of P&G's consumer-goods empire. Tremor used its research for one of P&G's own brands, Dawn, to help position an extension product using the detergent's new foam technology. P&G sold nearly twice as much Dawn in the market where Tremor was used.

"In almost every category and country in which we compete, if you look at every point of consumer contact -- TV, print, coupons, in-store demonstrations -- word of mouth always comes out No. 1 or 2 as the most powerful, to the degree it influences consumers about the brand," says Steve Knox, Tremor's CEO.



Tremor's base of consumers skews largely female, and Knox says they present a unique opportunity. "Women talk to their next-door neighbor, to people in their office, in a horizontal way," he says. "But what is surprising is how vertical those conversations are -- these women talk to their parents and to their kids. They talk in 360 degrees."

How they talk on Tremor's message boards has provided keen brand insights. "One of the fascinating things you get is the language of consumers," Knox says. "If you're in the business of a woman's brand, for instance, it's important to know the language consumers use about you -- and it's not always the language we use or our agencies use."

Exactly, says consultant Jeff Jarvis, who blogs about marketing at BuzzMachine.com. He likes to quote the first three theses of the Cluetrain Manifesto: "Markets are conversations. Markets consist of human beings, not demographic sectors. Conversations among human beings sound human. They are conducted in a human voice."

Over three years ago, in a now-infamous attack on Dell, Jarvis took the company to task on his site over its customer-service and product deficiencies. As more and more customers jumped on Jarvis's bandwagon, Dell responded a year ago with its own blog, IdeaStorm, where customers can post reviews and offer input. Within 24 hours of launching the site, it had more than 250 members, and some 175 ideas were offered to the company. Even Jarvis was surprised at how Dell embraced those Cluetrain imperatives.

Unhappy customers like Jarvis show "evidence of extreme anger, and it's the blowing point where the consumer leverages all tools, all capabilities, all weapons, all sticks and stones to make their point. And that's where brands find themselves very much at risk," says BuzzMetrics's Blackshaw. "The fact that these are atypical consumers is moot, because these consumers are now painting the brand billboard that everyone sees. Brands right now focus on satisfaction, the traditional scorecard of customer loyalty, but I don't think loyalty is enough anymore. It's almost a question of 'Are you connecting with consumers in such a way that you drive advocacy? Are people willing to advocate for or against you, and what does it mean for your brand franchise?' Loyalty metrics alone are not sufficient in the age of virality."

Blackshaw further explains why he believes customer services is now the media department:

"If we boil this down to simple advertising principles, you want to maximize favorable impressions for the brand. You can do that in a couple of different ways. You can buy impressions, which is the traditional media model -- you buy audience, you buy impressions. You put together well-qualified commercials that, at least in theory, make consumers feel good. Or you recognize that good business processes, good customer services, begets good media impressions.

"I know from monitoring conversations for the past eight years or so that there's an unmistakable connection between good customer service and consumer-generated media. That's why I call it CGM rather than consumer-generated content -- I really wanted to underscore that it acts like media. Customer service is one of the No. 1 drivers of consumer-generated media. Therefore, the media planner of the future needs to think much more strategically and tactically about how investment against customer service actually begets favorable or non-favorable impressions."

Dell's experience in turning bad PR into good word of mouth by becoming more transparent, Jarvis says, should be a wake-up call to agencies about how quickly their world is changing.



Jarvis asked to visit the company, and did. "My conclusion, coming back from Dell," he says, "is your customers, posting their own experiences and advice, are your best advocates. Here was a company collaborating to create content, media and marketing without content, media and marketing partners. Agencies have been criminally lazy about recognizing the potential of this new world. The fact that they are paying more for TV, even as audience levels decline, is proof of their insanity. Every aspect of media is going through massive upheaval. Are agencies going to be like music companies and ignore this? The Internet kills the middleman and agencies are the ultimate middlemen."

Still, Knox, a P&G veteran of 31 years, says consumer buzz needs the kind of traditional media support agencies produce. "Word of mouth in the absence of all other marketing doesn't work as fast," he says. "A base level of awareness is necessary. It should be an integral part of the overall marketing mix."

As some companies have learned from consumer communications -- Wal-Mart, for instance, which has endured controversies over labor practices -- a good public relations strategy may also need to be part of that mix before a marketer attempts to be more transparent via consumer outreach initiatives.

"For certain brands, before reaching out to consumers, it is key to first come face-to-face with corporate responsibility and social issues," says Peter Kim, a senior analyst at Forrester Research.

Public relations firms may in fact succeed in the future where traditional agencies fail. In an increasingly transparent world, consumers not only look for information about brand experiences, they also want to know about corporate ethics and practices. In light of the China product recalls of last year, Deloitte's Conroy says marketers should expect another new area of inquiry from consumers: sourcing. As an example, he cites a popular nutrition bar -- he declines to name it -- that he says contains not a single ingredient produced in the U.S.

That demand for more complete and objective product information is growing along with technological advancements. The result? Conroy believes the consumer-products industry may find itself at an inflection point this year unlike anything it has seen for the last two decades.

Consumers have never had so much access to online information, and it's not just about posting their own product reviews anymore: New retail tools are popping up on the Web all the time. Information aggregators offer comparative information about local pricing and availability for everything from consumer products and autos to gasoline. Amazon customers use its affiliated search engine, Pricenoia, to find the lowest price at Amazon sites around the world. In China, consumers indulge in "mobshopping," signing up at sites like teambuy.com.cn -- a consumer phenomenon Conroy believes will come to the U.S. (An example: Up to 500 shoppers agree to converge on a retailer at a given day and time, demanding volume discounts of up to 30 percent on items like TVs.) New comparative Web sites like NearbyNow, Slifter and Frucall allow consumers to check for availability and compare prices of products.

Conroy envisions this scenario: A consumer is shopping at a big-box retailer, looking at big-screen TVs. He or she can use a mobile phone to visit a comparative-shopping site, type in a UPC for a particular model and find places online to buy the same unit for cheaper than what the store is offering. The customer, using the physical retailer, not the Web, as the research tool, can even then buy it from one of those online competitors.

"If you're a retailer, it used to be you had a captive audience," says Conroy. "Sure, consumers may have done their research before they got there, but then you had them. Now you don't, because that whole world of commerce is available in the palm of their hand."



Kate Sayre, a partner in the New York office of The Boston Consulting Group, cautions that such behavior doesn't necessarily suit all shoppers -- or all product categories. "If you're looking for a TV, it works well," she says. "You've done your research, you enter the product number and acquire it a lower price. But it's harder to do with things like apparel, where trends change so quickly and there are no model numbers and you have different sizes. These kinds of search applications favor products that are research-driven, high-involvement. They work less well with more impulse-driven products, items you buy more than once over the course of the year."

For marketers, new applications like Slifter -- which returns sponsored product information based on keyword/location searches -- take the Internet's search-advertising model to mobile phones. Launched at the end of 2006, Slifter now has 250 million product listings at over 100,000 locations. "We're not a fixed cost [for advertisers]," says Alex Muller, Slifter's CEO. "A billboard will cost you X number of dollars, whether five people see it or 500. We have a pay-per-click model. It's very much a pull-marketing technique."

So how does a marketer respond to new pressure on pricing? Conroy offers one suggestion he discussed with a CEO that may apply to other companies in different businesses.

"You need to figure out how to creatively bundle and sell solutions as opposed to products," he says. "If you're trying to compete on an individual dimension-by-dimension basis, that's not a place where you'll want to be. Unless you're the price leader, you don't want to compete solely on price. Unless you're the quality health-and-wellness or low-calorie, best-warranty, best-service provider, you don't want to compete on just that. You're never going to be the best in class at all of those. What you need to figure out is how to bundle those parts in a way where the sum is greater than any individual dimension. So the customer might say, 'I've added up those 10 things, and they've bundled six of them in such a way that they are more appealing to me than any one of those six.'"

While the debut of Google Android last week was a relatively low-key affair before a group of mobile-industry execs, the implications may well reach beyond handsets and to a new consumer world in which the Internet is accessible by any number of touch points throughout the day. Google may well be on the way to becoming the world's largest ad agency, powered not by messages forged from focus groups -- populated by people who may have little or no knowledge about the brands involved -- but by consumers with a definite point of view. Marketers ignore those voices at their own risk.

"Brands give short shrift to aspects of CGM that indicts or exposes the brand, and they really have to think that one out," concludes BuzzMetrics's Blackshaw. "Yes, Dove's 'Evolution' won the Cannes film prize, but the more celebrated stories that consumers have talked about online really focused on embarrassing moments for brands. The Comcast 'Sleeping Technician,' the AOL customer-service snafu-- those things find a whole life on the Internet that companies really need to internalize, because they act like advertising. And it's almost impossible to erase off the slate, as Google search results make very, very clear."