How Can Firms Monetise Social Media?

In the world of social media, impermanence reigns supreme. Today’s Twitter can easily become tomorrow’s sixdegrees.com, an attempt to virtually connect everyone on the planet that soon collapsed. For CEOs – whose exposure to social media often extends no further than banning employees from updating Facebook in office time – the topic is a mess of intangibles, unproven technology and alien terms. Little wonder that only 19 Fortune 100 CEOs have a Facebook page and 13 have a LinkedIn profile, according to the ÜberCEO blog.

 
Broadly speaking, social media covers channels which help people connect, update or collaborate more instantly and interactively than email or message boards. Its numbers are impressive. Twitter (home of the 140-character update) has 10 million users and rising, while China’s social network explosion is led by teen-targeted website QZone, which claims to have 200 million registered accounts.
 
The biggest worry about social media is its ability to become a PR disaster. Say something uncool and it’s viral in minutes. The experience of U.S. congressman Peter Hoekstra is a case in point. Taking part in a top secret House Intelligence Committee visit to Iraq in February 2009, he tweeted his arrival (“Just landed in Baghdad”) and provided regular updates on the committee’s movements, to the delight of political bloggers.
 
And then there’s ROI: too much social media involves building a virtual infrastructure on a new platform which could quickly become obsolete. But far-sighted companies are discovering cost-effective ways to use social media, internally and externally. The key is a realistic scale and clearly defined objectives. Matthew Fraser, senior research fellow at INSEAD, says: “If you’re in a competitive industry, you need to be on top of these tools. If your competitors are engaging customers in a way you’re not, that puts you at a disadvantage. For CEOs, they can help with branding, engaging, learning and leading.”
 
Three Golden Rules
So what are the golden rules for effective social media?
 
  • Start close to home. The best way to begin is with employees, or another tightly defined group of stakeholders. Company-wide discussion tools, if monitored properly, can boost morale, and have other benefits: the U.S.-based Centre for Technology Assessment is building a Facebook-esque network that will allow inventors to discuss innovations with peers, a move that could reduce the patent enquiries it receives.

 

Many large companies have discovered the benefits of wikis – online information repositories that collate facts and can be edited by a defined community. In a corporate setting, wikis organize disparate information and make it available to staff regardless of location and server access.

 

Their collaborative nature helps uncover duplicated effort and missed opportunities. Nokia and Commerzbank are wiki fans, while on its vast Intelpedia site, Intel has logged all current and historic projects, keeping staff up-to-date and on-message. Intelpedia receives 13 million page views a year. The site’s technical architect, Jeff Moriarty, highlights one drawback: “Employees can be frustrated that somebody else edited their work”. Particularly when that person is further down the food chain.

 

  • Know your audience. The business you are in, and your relationship to your customers, should define the scale and nature of your social media involvement. An investment bank CEO with clients as Facebook friends would be in trouble, but a high-tech company which ignored social media would also look bizarre.

 

That’s why most CEOs who blog work in the tech sector. But that is gradually changing: Bill Marriott, chairman of Marriott Hotels, is among the non-tech execs finding an audience. Writing your own material, in a natural style, and keeping sales-talk relevant earn those bloggers online respect. The downside? It’s near impossible to quantify a sales uplift from such activities.

 

Choosing your medium carefully is equally important. Will the new social media sensation prove a passing fad? When virtual world Second Life became a media darling in 2006, Second Lifers could kick back on Vodafone Island, take a stroll down BNP Paribas Place and saunter through the Fujitsu Siemens virtual showroom, which featured the site’s only interactive game of Pong.

 

None of these companies, like most of those who followed them, is on Second Life today. It’s worth giving new technology time to mature before diving in. Channels which start small (like Facebook) often last longer, as they get adopted by users before the media catches on.

 

The jury is still out on Twitter, but online retailer Zappos’ Tony Hsieh – the poster boy of social media-literate CEOs – is a devoted user, firing off conversational tweets to his 11,000 followers, giving them a sense of the company’s internal culture. “We don’t market at our customers,” says Zappos’ head of marketing and social media, Aaron Magness. “If you only talk to them when you want them to buy something, you quickly alienate them.”

 

Some CEOs make Hsieh look like a social media wallflower. When Blendtec CEO Tom Dickson posted viral videos of himself dropping iPhones and hockey pucks into a Blendtec blender to answer the eternal question, “Will it blend?”, he attracted more than 100 million viewers, and sales soared 500%.

 

  • Be in for the long haul. Carnival Corporation is a rarity among Fortune 500 companies: a multinational integrating social media successfully into its marketing mix. With dedicated resources and a willingness to experiment with different channels, the cruise operator has reached new audiences, says manager of online publishing Stephanie Leavitt. “We don’t view social media as a campaign or short-term project. Our efforts tie into an overall strategy that includes branding, sales, trade and more.”

 

Carnival has employed blogs, online video, RSS feeds (that aggregate information and ‘push’ it to users) and Facebook marketing to build customer loyalty and generate new sales leads.

 

Planning for the long term, Carnival is less reliant on immediate ROI. But elsewhere, social media is starting to pay off, although the success stories often relate to cost-cutting. Many companies are using specially designed software to ‘trawl’ LinkedIn, gathering details of potential recruits who meet key criteria, and bypassing agencies. Headhunters routinely stalk the site, and some are conducting more business there than in real life.

 

An ambitious project underway at a British hospital will use social networking to link patients, medical records and health professionals, giving people with chronic diseases immediate information and instant access to doctors, cutting down on appointments and improving quality of care.

 

Intuit may be the best example so far of profitable social media. The accounting software maker noticed that many visitors to its tech help site were answering each others’ queries rather than waiting for an official reply. When it released a new version of its QuickBooks program for SMEs, it created a dedicated social network where it drove registered users. Calls to helplines plummeted, 70% of questions were answered without the company’s involvement and Intuit was able to make significant savings on tech staff costs.

 
Taking the plunge
Companies burned by the dotcom bubble – or by early forays into the medium that didn’t generate appreciable returns – could be forgiven for taking a wait-and-see approach to social media. Having a website became non-negotiable some time ago; being on Facebook won’t seem as crucial to the marketing mix for some time, if ever.
 
PR problems weigh heavily on CEOs’ minds. Viral formats can tarnish corporate reputations in minutes, but social media’s immediacy also means instant feedback and interaction with customers. The key is to find a platform that fits with your brand, and time your foray into social media carefully. Twitter’s decision to launch a premium service for major businesses in 2010 shows the industry believes there is plenty of mileage left yet in corporate social media.
 
About the Author
Katie Jacobs is a staff writer at KPMG Agenda, the quarterly magazine of Big Four accounting and consulting firm KPMG International.

 

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