For some time, start-ups and marketers alike have been salivating over the concept of a social graph as though it were the Holy Grail of me-to-you marketing.  Recently, Fred Wilson of Union Square Ventures opined on the value of the mobile phone address book functioning as a keystone for the social graph. His thoughts were also published on AllThingsD and are a great example of how that graph can grow.

Using examples of Kik and Beluga, Fred’s point was that “When you download and startup these apps, they do a query of their user base against your contacts and allow you to easily and quickly add all the people who are in your contacts to your network in these services.”  This certainly makes it easier to connect with the growing number of friends or contacts acquired across different networks. But what intelligence can be drawn from such connection? Established companies and start-ups percolating in Silicon Valley are hoping to crack the code on social graphs and offer companies marketing services, such as behavioral targeting, to target your friends, or your fellow graph-ites with ads, then share aspects of your multidimensional behaviors or chartable buying preferences with advertisers to target you again - 360i is among the most notable of these companies.

Another way to approach the social graph, at least in the Facebook way, is to chart your friends and try to trigger some homespun word-of-mouth advertising, or in FB vernacular, the “wisdom of friends.” This is essentially capitalizing on a user’s network, and the trusted conversations in that network, nudging folks to talk about a product, then serving ads or products based on that conversation.  FB’s Dan Rose explains in VentureBeat.

There is no doubt the social graph creates a tremendous amount of intelligence for a company smart enough to know what to do with it.  But it seems that, again, listening and analyzing will create a much greater advantage than pushing ads out to unsuspecting users. The issue of privacy is still lurking (sort of the way The Bush Man of Fisherman’s Wharf lurks then scares the heck out of passers-by) and will jump at us soon enough. There is a subtle difference between intelligence gathering and using raw data to serve ads or products, and users nurture much of that nuance in their trusted connections.  Privacy certainly comes into play in that trust and etiquette is equally important. Mathew Ingram notes in GigaOM, there are few Americans worried about their privacy at this point, though if there is one catalyst for a user uprising around privacy, my bet is on the social graph. We’ll grow tired of ads served according to the tastes of our friends and feel suspicious of the outreach that generates. Like unsuspecting Fisherman’s Wharf tourists, companies that rely on social graph ad targeting may be shocked in the near future – plus there are so many other aspects to online conversation. 

The challenge for companies is to determine the strategic value of the social graph and implement that in ways that are sustainable and respectful. This, again, creates the argument for a skilled monitoring approach, because understanding the needs of consumers is more telling than invading trusted networks to sell product.