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Social networking sites have bloomed in the past year or so, but just how valuable are they to marketers and how can that value be leveraged?
For the rest of the February 2007 issue of CRM magazine please click here
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Mothers, fathers, spouses, offspring, siblings, friends, neighbors, bosses, coworkers--for most of us these are the people with whom we develop relationships that influence, to one extent or another, how we function in society. These networks of social and familial contacts give us, among other things, many constructs for managing various aspects of life. In fact, part of how people define themselves is through these personal and professional connections. With more people living more of their lives online, new kinds of relationships--chat buddies, Friendster users, bloggers, MySpace favorites--have appeared, stretching the definition of both social and network. Social networking sites have exploded in number over the past two years, snaking their way through the Web like kudzu. It should come as no surprise that marketers have noticed and are busily cultivating methods to take advantage of this new type of opportunity. In July 2005 News Corp. CEO Rupert Murdoch purchased MySpace's parent company, Intermix Media, for a staggering $580 million (Murdoch walked away knowing he had gotten the better end of the deal). That's about when it dawned on many e-world inhabitants that online interaction would never be the same. Today, almost half (45 percent) of Web users are active on social networking sites according to the Nielsen/Net ratings. Although MySpace, and more explicitly Facebook, has a younger user base, both are becoming more popular among an older crowd: The sites boast 36- to 54-year-old user segments of 36 and 30 percent, respectively. At the same time, networking sites like LinkedIn cater exclusively to business professionals (see the sidebar, "Strictly B2B"). With so many people now attuned to the behavior, companies have been scrambling to stake a claim in this emerging space. Tens of millions of people--54 million on MySpace alone--now trumpet their identity, forge relationships, and engage in dialogue in the context of an online community. Where can businesses latch on to this trend? And in such personal forums, is it appropriate or useful for marketers to attempt to take advantage of social networking?
Nikos Drakos, a research director at Gartner, believes that leveraging social networks to connect with customers is not only appropriate but also crucial for companies to consider. However, he says, "When I and others say 'understand social networks,' it doesn't necessarily mean, 'go talk to MySpace.'" How one defines leveraging social networking depends on what the goal is. Viral marketing and brand promotion, for example, may be best done through established sites, as they capture the most traffic. However, this method poses some problems. Control Tapping into large, established sites like MySpace certainly provides one option, and many companies have gone that route. With so many people visiting these larger Web sites, a company has the opportunity to win much mind share, as well as to interact with its customers individually, thereby humanizing the brand and bolstering customer devotion. Burger King crafted one of the most successful viral campaigns of the past year with the creation of a MySpace profile for its mascot, the King. The profile (really a site within a site) offers those who wish to become Burger King's "friend" the opportunity to play games and download free episodes of TV shows like 24 and Pinks, as well as fancy Burger King logo backgrounds for their personal pages and funny Burger King--sponsored videos (i.e., free advertising). The page to date has attracted more than 134,500 "friends" (or fellow MySpace users) and was credited in part in helping Burger King to boost sales 6 percent to reach two billion in FY ending June 30, 2006. Other companies--Gatorade, Jack in the Box, and The Learning Channel--have found similar success going this route, but there are dangers and drawbacks to building into a preexisting social networking site--the model may not work well for every company. Companies without a strong brand-based message may get lost in the shuffle. Additionally, such sites allow the marketer virtually no control as to where the companies' message will go. Although loss of customer control is often the case for grass roots marketing, in the context of social networking this becomes even trickier as individual consumers expect to connect to the company directly. A simple search for "Burger King" on MySpace brings up the company-created profile as well as mock user-generated profiles masquerading as the King or "Burger King," many with explicit language, sexual content, and negative comments about the fast food chain that would give potential customers a perception of the product the company does not, most assuredly, want. It is virtually impossible to weed out the fakes from the originals. Also, "friend" profiles connected to a social networking page can have unsavory or unflattering content. Dan Calladine, research director at ad agency Isobar, says, "If you start a club and offer people free membership, you always have to be definite about who your club is and what your club is." The wrong crowd can drive off other potentially valuable customers. I'd Rather Do It MySelf.com MySpace, Facebook, and other such sites can serve as valuable marketing tools, but they can also be constrictive. If the framework of the larger social networking sites is not a good fit for your brand or your customers, you can cut out the middleman and create your own. Calladine says that as long as you have customers who are "really passionate and attracted to your product," a brand-based social networking site can be quite effective. "I think anybody can do it, whether they're an automotive, sportswear, or software company. If something is interesting and people want it, there's no sort of limit." Building and owning a site instead of squatting in a larger one can also provide greater freedom to interact with your customers in different ways, such as enabling blog or thread-driven dialogues between users, creating self-service features, or offering promotions, news, and updates with pertinent information. If a company is looking to build its own social networking site, it has myriad choices; social networking sites can come in many forms. "I think social networking is really something that takes place at [the conception level]. If they're not conceived well, they won't work," says David Ring, president of Sparta Social Networks. It is important to come to the table with a plan outlining what customers might want and how to best deliver this to them. The plan should also detail what a company wants out of the investment. Companies like Sparta, a white label social networking software company, can provide the means to make this idea a reality. Ring reports that he sees more companies jumping in, looking to create branded consumer targeted social sites. A year ago, he says, most of Sparta's business was from start-ups eager to become the new Facebook, but the client profile has shifted in the past six months to major companies looking to introduce Web 2.0 into their marketing mix. One of such client, Packet 8, a VoIP company, wanted to cut support costs and to create a forum for its users. In the spring of 2005, the company decided to try to reach those goals through the creation of a social networking site for Packet 8 subscribers. "The investment was very low in terms of getting it up and running. It was so easy; it was really just a matter of providing content," says Huw Rees, vice president of sales and marketing. The company created a site available to all Packet 8 customers, which they could link to through their account information page. The site now offers a place to meet and send messages to other Packet 8 users; the option to form online special interest groups; a classifieds page to look for jobs or housing; a blog written by Bryan Martin, Packet 8's CEO; and a forum through which users can ask questions about the product and lean on other users for technological support. The user-to-user help feature has allowed Packet 8 to see a decrease in service costs and an increase in customer satisfaction. A fear many companies harbor is that creating a space for free user discussion surrounding businesses will equate to airing dirty laundry in public, opening up a Pandora's box of negative feedback, much of which might be unfair or exaggerated. One look at the Packet 8 site illustrates why some companies shy away from these sorts of forums. A recent post on the site reads, "The customer service is GREAT....This company is great all around and so much cheaper than my land line." However, a later post reads: "Upset???? You have NO IDEA!!!!!. . . I am LIVID with the lack of customer support I have received with my most recent problem." Rees says that the company made a decision to monitor for foul language, but not to delete any negative posts. In fact, he cites the high level of interaction in the forums as a marker of success; customers care enough to interact with the brand. Additionally, this open dialogue enables the company to hear what subscribers are saying so that it can tailor its business approach to better accommodate customer wants and needs. To gain customers' trust it is important that they do not feel censored or that the social networking site is merely a sugar-coated advertisement to promote a purely positive image of the company. Matthew Lees, vice president of operations at Patricia Seybold Group, says, "You need to be genuine if you're going to have presence in this space. Don't be rigid with your brand. Try to be flexible to a degree that you're comfortable with." A case in point: In 2006, while the Packet 8 social networking site soared in popularity, Wal-Mart's MySpace clone TheHub was going down in flames. The site launched in July 2006 and had closed down by October. The site's failure was credited to overpromotion of the Wal-Mart brand and overly stringent control of user content. The site featured videos from "real kids" (aka hired spokespeople) talking through hangar-size smiles about how much they loved the superstore. Wal-Mart monitored all comments on the site and even sent an email to parents of users under 18 to confirm use of the network (a nail in the coffin for anyone trying to interact with a teenager). Users felt stifled--when dealing with a technology that centers on establishment of identity, a high level of restriction is often counterproductive. As with any public campaign, a failed social networking site can do serious perceptual damage to your company. Lees says of Wal-Mart, "Studies show [after the site failed] it had less trust and people are more wary involving Wal-Mart online." Companies must also be wary of the level of connectivity they ask of customers. If a site demands a high level of interaction, expect it to be used only by the most devoted customers. It would be impossible to connect to a network for every brand an individual buys. Drakos says, "Individuals are not going to be active members of different companies. It's bad enough trying to remember your password to check your flight details." If individuals do join your network, it is important not to bombard them with untargeted offers or irrelevant messages. Calladine explains that in the context of social networking, companies must think of the exchange in terms of friendship. "If someone is your friend, even if you really like them, you don't want the friend to ring you every day, asking you for something." Additionally, if a company creates a brand-based site targeted at its customers, the viral component drops significantly. If a person doesn't already strongly affiliate herself with a company, she will not to join its network. This effect can be countered by creating a tangential grass roots campaign driving foreign traffic to the site or Web page. Sparta does so through a YouTube video feature that allows companies to create and spread around a film clip with the logo of their Web site attached. Your Oyster Although the potential dangers might frighten some companies away, the proliferation of social networking sites makes it impossible (and inadvisable) to ignore the opportunity. Denis Pombriant, managing principal at Beagle Research, says, "There are a lot of cool ideas that business people are now trying to figure out how you can make money from. You certainly have the attention of millions of people. Corporations are thinking that there's got to be a pony in there." With online social networking still very much in its infancy, it's hard to tell how big the pony is or exactly what it will look like; however, for creative companies, the possibilities are quite literally endless and the potential benefits equally so. One notable social networking development has been virtual environments like Cyworld, a Korean site, and U.S.-based Second Life. People create visual personae that can then walk around, interacting and talking to other users inside of a video game--like interface. Dell has opened up a virtual store in Second Life, which allows visitors to use virtual PCs for their second lives and physical ones for their corporeal lives. With progressions like these, it's not surprising that Calladine thinks of social networking as a kind of limitless comet: "MySpace is the very general head, but it will get to be a long tail." Contact Editorial Assistant Jessica Sebor at jsebor@destinationcrm.com. Strictly B2B B2B companies' customers may not be interested in filling out personal pages about their favorite books and music. However, there is much to be gained through social networking from a B2B angle. Mark Organ, CEO of demand generation software developer Eloqua, says, "I think social networking is massively underutilized by B2B companies for generating leads." Organ sees great potential in sites like LinkedIn (a MySpace for professionals), where companies can find business connections and possible customers. Companies like Eloqua can further automate this process through sending a trackable link in a personal email and make this more of a visible process from first connection through to the sale. Companies can make internal social networks to help employees understand whom their coworkers know and who might be available or appropriate to reach out to. Social networks can also provide great sources of information for companies wishing to connect with others in their field to stay up to date on the most recent progress and innovations. --J.S.
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