Implications for Marketers and Market Researchers
Dr Nicos Rossides, Group CEO
Introduction
Popular social networking sites, such as Facebook, MySpace, YouTube and Twitter, are changing the way we interact with one another – not only in forming but also sustaining relationships. More fundamentally for businesses, these sites have great potential to change the way we communicate with consumers or clients, and ultimately build profitable relationships with them.
One recent study puts the number of social networking sites at 250,000 – an enormous number by any account and one that is growing daily. Of course, some have only a small number of followers, and there are many niche sites that expose content to a more selective and targeted audience.
It is estimated that, at any one time, over 150 million people around the world are logged in to Facebook, updating their status, interacting with friends and interacting with brands. Barack Obama’s 2008 presidential campaign used Facebook, MySpace and other social networking sites to reach millions of supporters and raise nearly US $1 billion in campaign contributions. Research indicates that 10% of Americans (and 30% of Americans under the age of 30) used Facebook or other social networking sites to get information about the presidential election. And based on data from the comScore World Metrix audience, Russia has been found to be the world’s most engaged social networking audience, with visitors spending 6.6 hours and viewing 1,307 pages per visitor per month.
Apart from a very few, the platforms themselves have struggled to ‘monetise’ their networks, but, judging from their enormous market capitalisation, they do attract significant investor interest. MySpace struck a 3 year deal with Google recently that was worth $900 million. Facebook has been valued at more than $6 billion even though its revenue generating potential is still far from clear. More to the point for business owners, many of their users have gained financially, even if the sites themselves are not making money.
It is no surprise that businesses across the world are taking advantage of the marketing opportunities offered by these sites, but what is the best way to do this? Before jumping on the social networking bandwagon, there are a number of factors that companies should consider. But first, let us define some terms widely used in this area.
Social networks and social media
One of the distinctions that need to be made is that between social media and social networks, as often the difference between the two can be blurred, and the terms are often used synonymously. Perhaps the best distinction between the two has been coined by the social media expert, Lon Cohen. Writing on the cohcom blog, social media, he posits, can be called a strategy and an outlet for broadcasting, whilst social networking is a tool and a utility for connecting with others. He goes on to categorise sites/tools between those that can be regarded as social networks – such as LinkedIn – those that fall under the heading of social media – YouTube, for example – and those that straddle both, such as Twitter and Facebook. However, for the sake of avoiding unnecessary complexity, we have used the term ‘social networks’ in this paper to mean the broad category of both networks and media.
This is not just about technology
If engagement with social networks is merely considered from the viewpoint of technology, without the required commitment and follow-through, the results will not only be poor (low interest, few visits) but may even affect a business negatively, making it appear passive and unimaginative. First and foremost, the use of these networks needs to be supported by clear business goals and objectives. An organisation needs to determine what it wants from its engagement with social networks, and how active a role they want, or are prepared to take, in shaping the communication agenda. The very nature of social networking makes it diffuse, and reaching consumers needs more of a targeted approach than with traditional communications, otherwise companies can find themselves adopting a “scattergun approach”, which can be both ineffective and expensive.
Organisations need to be prepared to engage. As their name suggests, social networks require individuals and companies to actively socialise and communicate. This means that, while social networks may be in some ways free, they do require a considerable investment in time and effort - to respond to comments, put forward points of view and just to keep profiles updated and compelling. Indeed, one commentator likened social networks to gardening: sow a lot of seeds, water them and be patient. It is about taking part in conversations and contributing to them meaningfully. There needs to be commitment within an organisation to support and engage with the new media - blogs need to be regularly updated with new content, Twitter feeds posted, Facebook profiles updated, and customer and participant feedback both welcomed and responded to in the appropriate manner and style. Indeed, an increasing number of businesses are tasking senior staff with crafting strategies for social networks.
Beware of the downsides
Social networking, by its very nature, is fickle because of the youthful user base of many of these sites, a consequence of which is that they are unusually vulnerable to the next 'new new' thing. As quickly as users flock to one trendy Internet site, they can just as quickly move on to another. This means that there needs to be an appreciation of which networks are popular, and also an understanding of what advertising works on which networks and with what audiences. With little to no investment other than the time spent to develop any of these sites, it is quite easy to adopt a strategy of jumping with the crowd when they move: sometimes a matter of duplicating content or simply changing where you are posting. However, this may not always be effective, as what worked on one site or social network may not work on another. Advertisers need to be mindful of the need to keep their content fresh and appropriate for the media in which it appears. It is also important to track content on social networking sites in a timely manner in order to quickly respond to potential public relations issues; for example, Twitter messages complaining about one of your products or services.
Marketers should also be careful about drawing the wrong conclusions from the content of social networks. As Harvard Business School has recently pointed out, just 10% of Twitter users generate 90% of the content. The rest of them are passive users, listening but not participating in the debate. This echoes the words of Jimmy Wales, the Wikipedia founder, who has said that 1% of Wikipedia participants did 90% of the posting and editing, another 9-10% were somewhat active, and the rest just used the encyclopaedia without changing it. This means that while those active participants are opinion shapers and formers, they do not necessarily always reflect the views of the many.
The Impact on Marketing
Social networks are increasingly important for marketers. As their audiences grow, they receive considerable time and attention from their participants, and they are increasingly worth a lot of money, judging from the valuations that have been put on popular sites such as MySpace and Facebook. Eighty-three percent of the biggest companies in the US by advertising spend now have a presence on the Facebook portal, which has 340 million members worldwide. Companies such as Coca Cola and Starbucks have started brand “fan” pages on Facebook with followers numbering in the millions for each. Similarly companies such as Starbucks and Dell are making use of MySpace and Twitter to reach their audience.
The question of how best to leverage social networks for marketing is a hot topic at the moment. Expert commentators suggest that social networks can be integrated into every step of the marketing process, from the creation of ideas and product concepts, through to product development, positioning, communication and customer support. The willingness of an organisation to engage with social networks is dependent on their “stance and scope” , as Professor Mohan Sawhney describes it – in other words whether they adopt a reactive position to the social networks or choose to take a more proactive role. The most passive activity is simply to advertise on a site such as YouTube or Facebook. On the other hand, increasing levels of engagement range from participation in online debates via blogs and online media monitoring, facilitating debate through the creation of new social communications and outlets and, at the most active level, shaping the direction and content by actively creating social media.
One of the attractions for business, especially in recessionary times, is that engaging with social networks offers them the chance to do more, with fewer resources – in other words it helps productivity and effectiveness through better leveraging scarce resources. Those organisations that choose to actively engage with social networks can advertise their products at minimal cost compared to traditional media, where the ability to promote products or services was limited by the size of the available budget. In an era of recession and minimal budgets, that is very attractive to many businesses.
Harvard Business School research has indicated that the traditional-advertising business model may not work on social media, and the click-through rates of advertising on network sites is very low – because people do not go to these sites to look for information about specific products. However, viral marketing appears to a more effective means of reaching consumers, as it leverages the network aspects of these social media. Honda, for example, offered 750, 000 Facebook members a heart-shaped virtual gift for Valentine’s Day which generated an enormous response and interest in the Honda-brand.
The Implications for Market Research
The changing ways that people use to communicate has a major impact on online market research. Traffic through social networks now exceeds email communication, which makes it increasingly difficult to reach survey respondents via email. Secondly the incentives that respondents receive to complete surveys have changed. And finally, as a recent survey on the industry has identified, 67% of market research firms say that they will be doing more online research using respondents from social networks .
One major consequence of this fundamental shift with how people communicate is that retailers and manufacturers seeking to reach consumers are beginning to realise that they can no longer adopt a uni-directional communication strategy, where they tell their customers what they think they should know, but are prepared to enter into a dialogue, where the emphasis is on listening as much as talking. Leading market research firms have created separate divisions to mine social networks for market and consumer insights, using sophisticated tools such as Natural Language Processing (NLP), to interrogate vast quantities of posts, blogs, emails, Twitter feeds and other social interactions to uncover what people are saying about products and companies, and create reports for their clients.
Information gathered in this way can be more valuable than a Market Research survey because it is spontaneous, giving direct feedback as to how people feel about products and services, and the impact on their lives.
Typically, the main four types of information that clients ask MR firms mining social networks to provide are brand monitoring, trend analysis, customer information and the identification of current or future needs. Brand monitoring is the most common information requested, as companies want to know what consumers are saying about them and their competitors. Marketers also want to understand the trends in a market, and the direction a market is heading. This can be difficult to pick up in a traditional survey but can be gleaned often from blogs and social media research. Clients are also asking for more information about current and potential customers which media such as blogs are particularly useful in providing. Finally, it is also possible to collect information about what products or services customers wish they had now, or might want in the future.
Any research conducted among social networks, however, must recognise that the content being analysed may be generated primarily by a small minority of the network members (the opinion leaders) and therefore not fully representative of the whole network community, let alone of consumers in general.
Conclusion
The rise and exponential growth of social networks and social media more broadly, has changed the way that companies interact with their customers and the wider community forever. Companies that recognise and embrace the new business paradigm have tremendous opportunities to reach their audience in spontaneous and direct ways that they have never had before, but also face unprecedented challenges in the way they present, deliver and shape their message. No longer will the traditional methods of “show and tell” work in terms of promoting products and services. Organisations must be prepared to enter into a dialogue with current and potential consumers, and be humble enough to listen and learn from the feedback.
However, before actively engaging with social networks, there are a number of key questions that organisations should ask themselves , including:
-How does social networking support my business goals?
-How are we going to use social networks and for what ends?
-How much time and effort can we invest in these platforms? And
-How are we going to monitor their success?
Social networks represent both a major opportunity and a major threat for retailers and manufacturers. For those that regard them as a latest fad and approach them in either a lazy or superficial way, there are considerable risks in failing to tailor the content of the message to the medium and its audience. On the other hand, for those that have a considered strategy, are prepared to listen and, above all, engage, the new social networks offer them a substantial opportunity: to shape the debate and lead both current and future consumers in the direction that they choose to take.
References:
“The Facebook Era: Tapping Online Social Networks to Build Better Products, Reach New Audiences and Sell More Stuff”, Clara Sith, Pearson Education Inc. 2009
Quoted in “Russia has most active social networks? comScore on social media usage globally”, Nettie Hartsock, July 18, 2009
“Twitter:Hype? Or Social Media Ignorance? Harvard Business School Blows It”, Bruce Nussbaum, Business Week, June 9th 2009
“Facebook Attracting Big Audiences”, Financial Times, 11th August, 2009
“How news organisations can leverage social media”, Limor Peer, Social Media Marketing Symposium, May 9, 2007
“Social Network Marketing: What Works?” Sunil Gupra, Harvard Working Knowledge, July 27, 2009
“The Market Research Industry in 2009: A Topline Report”, Simon Chadwick, April 2009 (Survey completed by Cambiar, MROps and Peanut Labs)
“The marketing potential of Social Networks”, Dr. Nicos Rossides, The Cyprus Weekly, July 31st – August 6th, 2009