With the imminent float of Facebook later this year tipped to be the biggest since Google’s, there can be no doubt social media is no flash-in-the pan industry.
But while the value of these and other social media phenomenon such as Twitter and LinkedIn is predicated on the size of their respective communities, the industry remains at a fairly nascent stage when it comes to converting those numbers into dollars.
In fact it’s one of the biggest questions plaguing would-be Facebook investors. On the one hand the subscriber base is huge, but there are real concerns about how the community would react once pressure from those investors appears in the form of more commercially oriented activities such as advertising.
The incredible amounts of customer-related data swirling around the internet on sites such as Facebook, Twitter and even LinkedIn creates exciting opportunities for more targeted and therefore more profitable marketing campaigns.
But companies need to be careful not to cross the line. Given the nascent nature of social media as a tool for business, exactly where that line is remains a little unclear. Unfortunately for most companies today, it’s only after a particular campaign or activity inspires a backlash that they get an inkling.
Target created a stir in retail circles last year when it revealed it had managed to predict when customers were pregnant, often before they knew themselves. While the retailer certainly garnered some kudos for the feat, there were many people who felt it had encroached a little too far into people’s privacy.
It’s often tempting for companies to challenge the trust of their customers by trying to exploit information about them in their marketing programs.
But as consultant, author and part time director with eStore Tony Gattari explains, social media is not a platform for selling.
“Once you start selling you’re finished,” he says. “One of the most important things to not do in social media is betray trust.”
So, can social media actually make you money? Moheb Moses, director of business consultancy Channel Dynamics thinks so.
“If we’re involved in discussions and share our insights, then people will say ‘hey that guy knows what he’s talking about’. It’s good for increasing your personal brand awareness.”
In essence, he explains, “it’s like being the trusted adviser, only in real time”.
Of course, the massive reach and immediacy of social media has its downsides.
The ability of millions of people to use social media channels and share negative experiences about a brand has seen many a company suffer the sort of immediate and universal brand damage that would not have been possible years ago.
Qantas and Telstra are among the many recent examples. Then there’s the risk of your own staff stepping out of line, if there was even one there in the first place.
As Moses explains, posting on your Facebook page or other social media account can be like committing the old faux pas of clicking copy-all in an email.
“There is still some misguided belief that information will be treated as if it’s private.”
Ignore at your peril
When it comes to whether social media can make you money, futurist Ross Dawson prefers to address the question in terms of the potential losses arising from ignoring it. But to realise its potential, companies must have robust policies governing its use (see chart below).
And most importantly, they need to have figured out why they are on social media sites in the first place before taking the plunge.
“Know why you’re doing it – know your objectives and prioritise them,” Dawson says.
Most of the CRN Fast50 companies surveyed for this article indicated they had initiated polices for the use of social media, with some dedicating human resources to developing strategies for extracting value from it.
“You need governance frameworks – this is something most orgs don’t get right,” Dawson says.
“[Social media] needs to be an enabler as much as risk control. You need to understand and recognise the relevant risks and approaches to address those. You also need to understand the potential for value creation and the risk of not doing anything.”
And it’s the risk of not doing anything that Dawson feels is the biggest.
He explains that the key objectives of any business are to be visible in the marketplace, to attract the most talented people, be productive and to be perceived a leader by clients and your industry peers.
“If you don’t engage in social media you will find all of these things difficult, which will impact your competitiveness.”
Dawson feels that social media is more relevant to the technology sector and its channel than it is to almost any other sector. For one thing, because of the very nature of what technology companies are selling, their audience is already likely to be engaged.
“There’s an expectation that if you’re in the tech sector you’ll understand these things,” Dawson says.
Missing the boat
Olivier Choron, founder of UK-based channel consultancy and business solutions developer Purechannels, says the IT industry, in particular the channel, is falling behind in terms of social media strategies, despite being in the industry which arguably has the most to gain from it.
“The IT industry and others are missing the boat.”
CRN asked last year’s CRN Fast50 winners to rate the importance of social media to their businesses on a descending scale of 1 to 5. Only a handful of respondents gave the top rating of 1, with the mean response being 3.
Purechannels’ flagship offering is a solution called socialondemand, a social media platform initially designed to enable better communications and sharing of marketing collateral between IT vendors and their partners, although Choron says it is already garnering interest in other information-rich industries. But in IT he says, it has particular potential, especially in helping partners improve relationships with their customers.
“Social media needs to be a true partner activity, to become a very large end-user engine to reach new customers and prospects by leveraging the trusted relationships partners have with customers.”
Choron first got the idea for socialondemand years ago when he started thinking about the truly vast quantities of information generated by IT vendors. With all of the different products, pricing, and support documentation such as white papers and manuals, he began to think that most partners would probably struggle to keep up with even a fraction of it all, let alone their customers.
He set about designing a system that would enable vendors to post their content online while allowing partners to create personalised settings regarding what they received. The content is published first to a vendor’s social media presence and is then syndicated through those of its partners and finally to customers.
Socialondemand also allows vendors to gain insight into which of their partners have the biggest social media presence and how active they are, in addition to providing analytics to determine the success of a particular post.
Read on for the multiplier effect
The multiplier effect
Choron recounts that a recent customer saw more than 40,000 downloads and clicks on company documents resulting from just 100 initial posts.
A recently launched social app with profound implications for the business world is the Klout score. Your Klout score is the measure of your digital influence via sites like Facebook and Twitter and is already being used by companies to develop, among other things, a more tailored approach to customer service.
Its relevance for Australian businesses is perhaps not as great as in other parts of the world, given what appears to be low levels of B2B social media engagement here. Facebook, for instance is used in a B2B context way more in the US and Europe, although many see the balance starting to shift locally.
Like most experts in the social media field, Purechannel’s Choron says companies need to be sure what they’re posting is actually meaningful, the challenge of which may have contributed to the low levels of B2B activity in Australia.
“Posts should always have a call to action such as ‘attend this webinar’ etc.”
And the right information needs to get to the right people. With socialondemand, a public relations manager could approve posts for the US while the marketing manager in Australia could request the content be tweaked slightly to better fit the local market.
Purechannels is also now working on a tool called newsondemand which would also allow partners to create information filters and separate the wheat from the chaff when it comes to communications from vendors.
“Partners are often bombarded by emails and other messages,” Choron says.
Winning friends and influencing
Just like in the consumer social media world, having important people following you and being your friend in the corporate social media environment can be very powerful. “If you follow someone you value what they say more,” Choron explains.
Whereas in the past much of the communications between vendors, partners and customers might have come via direct or email marketing, social media allows for more targeted messaging and information sharing between business partners.
“If it’s a partner you are going to read what they say, compared to email marketing which is non-targeted and typically reactive.”
The service is also a way for partners to be more active in terms of marketing to customers, something which many lack the resources to do effectively.
“Here you are creating the relationship and enriching it with content,” Choron says.
Socialondemand was launched commercially last year and so far has six customers signed up, including storage and disaster recovery specialists Acronis, while negotiations are progressing with global distributor Avnet. Local pricing is yet to be fully finalised but in the UK it is roughly $2000 a month for 100 resellers.
Choron explains the value proposition in terms of the typical partner having on average 300 connections.
“So mailing 100 resellers, that’s 30,000 connections.”
Channel Dynamics is the platform’s sole agent in Australia at the moment. Director Moses explains that socialondemand isn’t all that different to what newspapers have been doing for a hundred years: syndication.
“But the challenge here for vendors is to make the content interesting enough,” he says.“
Vendors that use social media purely to talk about products will be shortlived on this. It’s about quality engagement and positioning yourself as a thought leader.”
And brevity is important.
“Social media folk tend to be young and talk in 140 characters or less.”
Of course it’s not just the big three of Facebook, Twitter and LinkedIn that companies need to be thinking about. Several other interesting sites have emerged in recent years and months.
Take Pinterest, which works like a digital pinboard for web-based images. Largely used by companies and professionals in the fashion and design industries, it has started garnering attention from companies in the consumer electronics space.
And Dawson advises companies to pursue blogging also.
“The advantage of blogging is that it can be in a more human voice. Find someone inside the org who’s suited to that sort of engagement.
“You have to create value for people in order for people to be engaged. If it’s just self-promotional that’s not going to go very far.”
There are many blogging sites, with Wordpress among the biggest and most respected.
But without a doubt the most important takeaway from social media experts is to ensure that the message is already established before companies jump online and start blowing their proverbial bugles. If selling is the worst sin for social media, then being boring and or irrelevant must surely come a close second.
After all, the reason why so many people are signed on to Facebook etc is that it’s fun and – depending on your point of view of course as well as the quality of your acquaintances – it creates interest.
Social media is also about creating a genuine community and as we all know people who fail to make meaningful connections struggle to make any headway in the social department. They quickly get found out and are rarely allowed back in.
It’s about knowing who you are and there can be little doubt that the scope and immediacy of social media networks is focussing companies’ attention on their core message more than ever before.
For the channel, social media is a way for you to lift engagement with customers and to build trust. Once you hang out the shingle and try to flog your wares, that trust is well on the way to being burned.