Wikipedia defines Social Media Optimization (or SMO or Social SEO) as the "methodization of social media activity with the intent of attracting unique visitors to website content. SMO is one of two online methods of website optimization; the other method is search engine optimization or SEO."
There are two categories of SMO/Social SEO methods:
(a) Social media features added to the content itself, including: RSS feeds, social news and sharing buttons, user rating and polling tools, and incorporating third-party community functionalities like images and videos
(b) Promotional activities in social media aside from the content being promoted, including: blogging, commenting on other blogs, participating in discussion groups, and posting status updates on social networking profiles
What does all this mean?
Social Media Optimization (SMO) matters!
In the "old days," we "SEO experts" could optimize a website–both "onpage" and "offpage"–to attract as much free, organic traffic as possible from the search engines.
As you may know, social media posts have a tendency to go viral–it is not uncommon for a funny YouTube video to reach a few hundred thousand visitors in just a few days.
That sort of popularity will drive a TON of traffic to your website (if you do it right).
Just like there is onpage and offpage components in search engine optimization, so, too, is there on- and offpage social media optimization. Refer again to a) and b) above–a) can be thought of as "onpage SMO" whereas b) can be considered "offpage SMO."
In essence, there are things you can do on your website that can serve to leverage social media: Things like placing social media buttons on your site that allows visitors to share your information easily, encourages interaction, and gives users incentives to participate in the discussion going on at your blog (there are actual plugins that reward frequent commenters on your blog, for example).
Offpage SMO can be publishing your own content on Facebook that links back to your site, tweeting about topical interests, and placing videos on YouTube and other video-centric social media sites that leads back to your website.
An extremely important development in the world of SMO is the tight integration between Facebook and the Bing search engine. Microsoft and Facebook have partnered to deliver a potentially better user experience than Googel will ever be able to deliver (time will tell, of course).
Sidenote: It's astonishing that Google has been dominant for so long in the search engine space. It's equally astonishing to me how they let Facebook move in so easily on social media search. But that's another story…
Social media "buzz" is now appearing in search engine results on both Bing and Facebook. Google has announced its readiness to build social media into its search results; however, it is at least a year behind Facebook and may not be able to catch the leader.
So, pay attention to your SEO and SMO with respect to Bing and Facebook. They may dominate these two converging spaces for the next several years, especially if Google finds that it cannot compete.
In summary, keep a sharp eye towards social media optimization. Good onpage and offpage SMO, as well as SEO, will set you ahead of your competition, perhaps for years to come (early adopters). Don't neglect Bing or Facebook any longer; additionally, keep up to date on SEO, especially with respect to Bing.
Their partnership with Facebook is H-U-G-E! Do not underestimate this synergy.
Of course, adding SMO to an already confusing and hard-to-decipher SEO landscape makes things much more challenging, but to those of us who follow this stuff and figure it out, the fruits of our labor will be well worth the inconvenience we're experiencing right now.
Some other information: