In Tuesday’s FT Chet Henderson of Unilever Insight (the multinational’s research arm) discussed with Carlos Grande why the company had taken the decision to move 80% of its market research to the web. “Internet response are more honest than those gained by traditional methods,” Henderson observed. The article points out that the market researchers hope to save 10% to 20% of the cost of traditional methods. Grande estimates Unilever’s annual market research budget at €400m (£272m) which represents a big endorsement for the credibility of web-based research methods. The article appears to be talking only about focus-group work. There is a lot to be said for such methods, and companies like Baldo Faieta’s Synthetron have some interesting solutions for establishing focus groups online.

Unilever could also consider making use of the data that consumers volunteer themselves online in blog, messageboards and review sites. The advantage of using consumer-generated content to generate insights as to consumer tastes is that it really does give you an honest view of how the consumer feels - as the opinion has not been elicited by a leading question from a market researcher. The companies who use our reporting are somewhat shocked by how rude consumers are online, but once they have recovered from their immediate defensive recoil, they find the honesty of great value - and of course the same consumers are just as rude about the competition! [hat tip to Flemming for spotting this!]

Charlene Li gave an interesting and wide-ranging keynote Friday morning at the New Comm Forum. She took a 30,000 feet look at social media, with particular reference to blogging, aiming her sometimes impassioned comments at a broad audience.

“Social media is all about ceding control to build the relationship with the consumer. They won’t put up with anything else, as the processing power has moved to the edge of the network, the consumer has been empowered by it.

“Look at my own situation - I can work anywhere. The rest of my team works remotely from me. I am displaced.

“What has made this possible? Cheap hardware, for one. Have you seen this $200 computer? Incredible. The impact of RSS - I don’t have to go looking for information, I can subscribe to it. It finds me. Sites like Trip advisor[travel reviews], Blogger, Wikipedia, eBay, Google and services like Bit Torrent [file sharing], the Linux operating system show this in action. Technology has moved towards the “people”.

“Like anyone, I trust recommendations from friends and family first, followed by online recommendations way ahead of other sources. Brand loyalty is declining. It is down from 59% to 54% in two years between 2002 and 2004 in Europe. It may not sound like much but 5% over two year is a major decline. The new technology has empowered communities, not institutions.”

Li mentioned as case studies some work done by Umbria about mobile pricing plans, analysing customer complaints online and using them to create a more consumer-friendly offering. She cited the website istockphoto, which derives its inventory from user-generated photos, and mentioned Burpee seeds, who have given their business a huge fillip just by shrewd use of RSS feeds of seasonal offers.

“Brands are being defined by the communities that accept them. For example on Bob Lutz’s famous GM blog, there is a Community-driven conversation about the Solstice” Li reported an exchange between commentators on the blog …

“Guy one: I can’t wait to own a Solstice: it’s a chick magnet of a car

“Guy two: What about us family guys?

“Guy one: Get rid of the kids.

“The phenomenon of Digg [tech-focussed news where the item’s prominence is driven by social bookmarks] derives from the same motive. If you are a corporation, you have to let the customers become the brand. This is what Nike ID have done with their software which lets you design your own shoes, and then encourages you to let other consumers vote for your design. Similarly with CNet, they have taken the decision to window other sites’ content

“From companies I hear from corporations a lot about the risks of ceding control - the fear that the employees and executives will say something bad: ‘We can’t have negative opinions on our site’

“But the point is that constructive criticism should be welcomed. Sure, you don’t need abusive comments, but it is better to have your brand advocates engage you directly with their constructive criticism, than have them do it behind your back. People say: ‘We’ll lose control of the brand’. I say: ‘You already lost control of the brand.’ They say: ‘People will delete the RSS feed.” I say: ‘Do you really want to send unwelcome emails, instead?’ People say: ‘We’ll get sued.’ I think those risks are easily manageable.

“So, how does your company get involved with all this? First: decide how involved you want to be with social computing. At a minimum listen to what is being said in message boards and on the blogs. Test the waters and immerse yourselves in the tools. It’s a new mindset and you are not going to get the hang of it straight away.

“Take the case of Dan Entin: he blogged that he couldn’t find his favourite deodourant (Degree Sport, as it happens). A sharp-eyed Unilever employee spotted the post got in touch, advised him on local stockists and then gave him a box of the stuff. He blogged it, naturally. That is a huge PR win for Unilever.

“I would argue that companies should focus on the relationship, not the technology. It is not so much about blogging or about podcasting … it is about the relationship with the consumer. Technologies will come and go, but the relationships will outlast them.

“For companies my advice is: start small and prove the business case. It’s a mindset: it will take some time. It took eight days to set up the small block blog. If you want to get your feet wet I would suggest that a recruitment blog is worth having. You always want to attract new talent to your company. Or at the very least ensure that your press releases are in RSS, or that when you do an earnings call you make it available as a podcast. You don’t have write new stuff necessarily. You probably have some existing speeches from executives that you can repurpose.

“The key thing to consider is to let you cusomters tell you when you are doing it right and also when you are doing it wrong. And then measure engagement, measure frequency of visit, length of stay, links. And benchmark your position before and afterwards.

“I hear about return on investment: Typepad costs me $15 a month and I have got $1m of business off it in the last year

“In conclusion: what does it all mean:

“Social computing will move into the enterprise. Wikis and blogs are perhaps even more effective internally than they are externally.

“Consumers want to create their own applications. Jeff Bezos said that Web 2.0 was all about computers talking to other computers. That makes it easier for consumers to use applications to create new applications of their own. For example you can take Google maps and overlay something else

“I predict that Community-based political systems will emerge, where people who share common views will seek out candidates to represent them.

“Finally social computing will become like air, as it becomes part of everyone’s experience, it will disappear …”