Vesta Digital Blog

The Promises and Perils of Social Media – What A Business Needs to Know

Posted on: April 20, 2010

Use cautionAs millions of people flock to social networks like Facebook and Twitter to chat, share and connect and reconnect with friends, businesses have the chance to tune in to billions of digital conversations. The phenomenal popularity of social media presents a tantalizing opportunity for companies big and small. They can pitch a product, listen to customer feedback and ask for ideas. If they work it right, customers might even produce companies’ advertising for them and promote products or services with friends for free.

With these vast opportunities come risks. Employees who are encouraged to tap into social networking sites can fritter away hours or give away company secrets. Even worse, with one misstep or poorly written comment, a business can quickly find themselves victims of the forces they were trying to master. Thousands of bloggers attacked Johnson & Johnson’s Motrin last year because of an ad they found demeaning to mothers. Recently, Nestle found themselves on the defense for something they said on Facebook.

Toyota Backfires

Toyota had a disastrous social media promotion for their Matrix vehicle last year. Their social media team created a campaign based on the pranks of the MTV show Punk’d. The idea: a prospective buyer of a Matrix would single out a friend to be the target of a prank. The promise: a bit of fear, lots of laughs, and maybe a groundswell of free social media marketing.

Amber Duick, one of the targets of the campaign, received a series of emails from a fictitious British soccer ruffian named Sebastian Bowler. He said he was coming to visit her along with his pit bull. He had a MySpace page where he bragged about “drinking alcohol to excess” and participating in riots. One email Duick received was a fake bill for damage to a hotel room wrecked by Bowler. Duick filed a $10 million lawsuit in October and said she slept with a machete by her bed to protect herself from the hooligan.

Social Media Snake Oil Salesmen

Have you been offered some social media snake oil yet? Over the past five years, an entire industry of consultants has grown to help companies navigate the world of social media. Hordes of marketing “experts” are promoting the value of social networks. Many of these self-proclaimed gurus are refugees from the real estate bust. They produce best-selling books and give out advice for thousands of dollars a day. These consultants preach the power of social media and cast themselves as triumphant case studies of successful networking and self-branding.

The problem is that many of these would-be experts are leading clients astray. Consultants often use “buzz” as their dominant currency and success is defined more often by numbers of followers, fans or YouTube hits rather than traditional measures like return on investment. This approach could sour companies on social media and the opportunities it represents. Critics complain that many of the new experts have adopted an orthodoxy that provides little flexibility for differing situations—or outcomes. They follow a rigid gospel: be transparent, engage with your customers, break down silos. But these inflexible guidelines don’t always make business sense.

How Do You Measure Results?

“There is this default assumption that return on investment is the correct measure for everything,” says Susan Etlinger, senior vice-president at Horn Group, a San Francisco consultancy. “Everything needs to monetize within 12 weeks, so we can understand that we’re successful. But frequently the thing they’re measuring is misleading.”

Think back to the dot-com boom a decade ago. Soaring valuations were based initially on promise and hype. In early 2000, when investors started focusing on scarce profits, the market collapsed. But many companies came to the wrong conclusions. Believing the fall of a hyped market was a sign of the failed promise of the Internet, they drew back on their investments. This happened just as the technology was on the verge of living up to much of its promise, dominating global communications, transforming entire industries—and spawning social media.

As with any new form of communication, there are going to be mistakes and missteps. Be wary of snake oil salesmen. Be transparent but don’t give away company secrets. Don’t ignore the harder-to-quantify dividends of social media like trust and commitment. And don’t back away from social media just because you can’t see results in the first 12 weeks. This is a brand new frontier where the saying “patience is a virtue” is more important than ever.

You can read all of Stephen Baker’s excellent article by going here.


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