Social Media Optimization (SMO) is the art of creating linkbaity content (bacon explosion anyone?), and driving traffic to that content through social media services like Digg , Reddit, Hacker News, Twitter, Facebook, etc. Besides the content itself (often in catchy, Top Ten List format!), the trick is to have a network of popular, credible, friends on that particular service that can seed your message with a enough votes, tweets, comments, to give it traction.
The end game of SMO is not the traffic. Typically, traffic from services like Digg is close to worthless - both in terms of monetization, and the quality of content contributions. The end game is links. Some percentage of the folks who see your content will grab your URL and link to it, which will help your ranking in Google, and which will presumably drive you the sort of traffic that is appropriate for your content.
Many of the top SEOs that I've known for years are now almost exclusively practicing SMO. Why? Because the link and long term traffic ROI on SMO has been better than what they can accomplish with traditional SEO - tweaking title tags, scrounging for links, etc.
So the recent launch of the DiggBar is really, really big (and bad) news for the SEO / SMO community. As Greg Boser says:
Before the DiggBar, (and with legit shortening services) all those links would point to your url. Now, a large percentage of them are going to be links pointing to a page on Digg.
Now if you are Yahoo, CNN, or the BBC, that isn’t really going to
matter much. You don’t have to spend time thinking about building link
equity, because you already have it. However, if you are a newer site struggling to build trusted link equity in the current black hole environment we live in, the mass adoption of the DiggBar is a serious issue.
Digg could have used 301 redirects with its Digg Bar that would pass the link juice to the content host, but instead used 200 redirects. This was no accident.
My guess is that in addition to providing an easier, distributed way
to Digg stuff, another purpose of the Digg Bar is to eliminate a
crucial incentive for those that would game the system.
The question is: will Digg's "regular" users care about the
linkjacking taking place? If they don't and Digg stands firm, the SMOs
just lost a huge property, and my guess is that Reddit and Hacker News
better batten down the hatches.
For more, see TechCrunch and Daring Fireball.

