Using Social Media for

Business
Miriam Verghese
8/2/2010
Executive Summary

The need to communicate is one of the fundamental characteristics of the human species.

While the desire to reach out and communicate remains largely the same across human

beings, the nature of communication has rapidly changed over the course of human

evolution. At the forefront of this change is the Internet. The Internet, possibly the biggest

technological breakthrough in human history, has dramatically changed the landscape of

human communication since its inception in the 1960s. Subsequent to the birth of the

Internet, important tools such as email, instant messaging, blogs and social networking

websites began proliferating across the ever-expanding World Wide Web, ultimately

leading to the current state of globalization. While many argue that Internet-based trends

are fickle, one that has rapidly grown and remained fairly consistent is the concept of online

social media. Online social media, which primarily consists of social networking websites

and blogs, witnessed widespread adoption and popularity among Internet users over the last

decade.

This paper on “Using Social Media for Business” highlights the importance of using online

social media tools in today’s business practices and also identifies the best practices by

which organizations can reach out to their target customers via social networking websites,

blogs and other social media tools. While the use of these websites holds tremendous

potential for business organizations, a single mistake in executing an organization’s digital

strategy could result in undesirable and costly, if not disastrous, results. This paper also
discusses the major pitfalls associated with online social media use and the principle fears

shared by executives in using this highly valuable tool.

 Table of Contents

Executive Summary...........................................................................................2

Table of Contents...............................................................................................4

Introduction........................................................................................................1

Generation Y – Leading Change from the Back................................................3

Social Media – Business Uses...........................................................................4

Advertising..........................................................................................................................4

Case study.................................................................................................... 6

Marketing with a Personal Touch.......................................................................................8

Case study.................................................................................................... 9

Breaking through the Obstacles.......................................................................11

Knowing your Legal Boundaries......................................................................................11

Aversion to Risk ...............................................................................................................12

Conclusion.......................................................................................................14

Bibliography.....................................................................................................16
Introduction

In order for us to fully understand the phenomenon of online social media, we must first

define it. Online social media constitute those websites that facilitate interaction and

communication between users and are used to refer to blogs and social networking

websites. Online social networks can be defined as a group of web-based services through

which an individual can create a semi-public or public profile within an enclosed online

environment, create a list of online friends with whom he/she can share common interests

and view the friend networks of other users within the online environment. A blog (or web

log) is an online diary maintained by a user to describe habitual events through written

commentary or videos and photos. The blog serves as an online journal documenting the

various stages in the user’s life.

One of the main reasons behind the popularity of these websites is its ability to offer users a

platform to meet and interact with like-minded people while also giving them a public

platform to express their views, beliefs and interests. As a result, online social networks

along with blogging websites attract two-thirds of the Internet population in countries such

as France, Spain, Italy, United States, Germany, Australia, Switzerland, United Kingdom

and Brazil with users spending 10% of all Internet time solely on these two segments.

The growth in the popularity of online social media websites has also led to the emergence

of a number of usage-based trends. Social networking websites and blogs, in addition to

being one of the biggest contributors to the increase in time spent by users on the Internet

over the last decade, have also changed the way people interact and communicate with one

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another in their day-to-day lives. The staggering growth of these websites has also forced

executives in the corporate world to question the conventional wisdom of business

communication. As a result, a large number of organizations are increasingly creating an

online presence on these websites in order to reach out and connect with consumers in a

way that was previously not considered possible.

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Generation Y – Leading Change from the Back

Generation Y or Gen Y - those born between the years 1980 and 2000 - is considered to be

the main catalyst to the growth of the online social media phenomenon over the last decade.

Commonly referred to as the generation “born into the digital revolution,” its preference for

informal modes of communication such as short messaging service (SMS) and instant

messaging (IM) naturally lent this segment of the population to embrace the use of social

networking websites and blogs both in their personal and professional lives. Since the

inception of social media tools in the 1980s, Gen Ys have gradually incorporated the use of

social networking websites such as LinkedIn and Facebook to communicate with

colleagues and network with other professionals in a more open and informal manner.

According to industry estimates, the Gen Y segment accounts for 64% of social networking

website users and its share is predicted to increase in the coming years.

While social networking websites are predominantly used by teenagers and young adults,

there is a growing population of older adults also using these websites. Baby boomers (born

between 1946 and 1964) currently account for only 20% of the total social networking

website user base. However, this scenario is swiftly changing. With the Baby Boomer

population currently accounting for nearly 50% of the global workforce in organizations

across the world, a large portion of a company’s business and marketing decisions are

controlled by this segment. Therefore, it has become imperative for the Baby Boomer

population to embrace the use of social media websites extensively in order to effectively

harness the potential of these websites in an increasingly digital world.

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Social Media – Business Uses

With social networking websites and blogs witnessing widespread adoption by users across

the globe, many executives are beginning to realize the potential of online social media

tools in communicating with present and future customers. The following section highlights

the methods by which organizations can exploit online social media websites to their best

advantage and consequently increase revenues and improve the overall brand image of the

company.

Advertising

With the Internet progressively penetrating the various facets of the personal and

professional lives of users, traditional advertising practices are giving way to more robust

digital advertising strategies. In addition, online advertising is said to facilitate stronger

recall rates among viewers when compared to other forms of advertising such as print and

television. Social networking websites, in particular, present a lucrative avenue for

organizations and advertisers to reach out to present and potential customers. With users

spending more time on social networking websites and blogs than any other Internet

website, many organizations have begun to use these websites to target customers.

According to industry estimates, time spent solely on social networking websites increased

by 82% in December 2009 when compared to the same month in 2008. A chart illustrating

the global spending (in millions) on advertising through social networking websites during

the period from 2008 to 2011 is given below:

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 2011 $4,136

2010 $3,559

2009 $2,883

2008 $2,145

Source: eMarketer

Online advertising has proved to be the most effective when displayed in conjunction with

the search results of Internet users as this provides advertisers with the ability to tailor an

advertisement to fit a user’s search results. This form of advertising is beneficial to both the

customer and the advertiser as it allows the former to obtain information about the right

products or services and the latter to reach and target the right customers. This form of

customizable search-based advertising is increasingly being incorporated into social

networking websites due to the high user reach rates of these websites. As a result, many

organizations have begun using social networking websites as an advertising medium. By

incorporating this form of advertising on social networking websites, advertisers are able to

provide customers with high-value and time-sensitive information on a specific product or

service.

With advertising on social media websites increasing significantly, organizations will look

for more ways to derive higher value from advertising on these websites. As a result,

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experts predict that the time may soon come when users of social networking websites will

be able to receive real-time, peer reviewed feedback about a product or service during an

online search. For example, while searching for details about a product X on Facebook, a

user is likely to receive a message on the search result page saying “20% of the friends on

your network used and liked product X.” These types of customized messages will

significantly help an advertiser to influence the purchasing decisions of a customer solely

based on favorable peer-reviewed feedback.

Organizations can also extend their social media marketing strategies to include customers

to help boost the company’s brand image. In an era that is heavily dependent on the

Internet, adopting a more open and collaborative approach to marketing is becoming an

integral part of a company’s business strategy. As a result, many companies have begun to

include customers in their advertising campaigns to act as the ambassadors for their product

or service. By using this approach, customers are able to identify with a company at a more

personal and real level and as a result their perception about the company’s credibility

increases substantially.

Case study

Perceived as outdated and unexciting, Ford sought to reposition its brand as a car maker

that manufactured products appealing to the younger masses with the launch of the Fiesta in

the US. While the Fiesta witnessed tremendous success in both European and Asian

markets in the sub-compact car segment, Ford failed to produce a successful sub-compact

car for the US market since the Ford Aspire was discontinued in 1997. However, with the

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launch of the Fiesta in the US, Ford had managed to change its brand image from that of a

boring car manufacturer to one that was astutely in touch with the pulse of the younger

generation, more precisely the Gen Y segment.

In April 2009, Ford rolled out an ambitious advertising campaign ahead of its US launch of

the Ford Fiesta in order to attract the interest of younger customers. By partnering with

Undercurrent, a digital strategy company, Ford conceptualized an advertising campaign that

would be placed solely in the hands of the customers. The company selected 100 people or

agents (as it called them) and gave each of them a Ford Fiesta to use for six months in

exchange for them completing six different missions every month. The agents would then

share their experiences on those “missions” by posting their video journals on accounts

created by Ford on social media websites such as Facebook, Twitter, Flickr and YouTube.

The outcome of the advertising campaign was sensational. The video journals posted by the

agents garnered 6.5 million hits on YouTube and 50,000 requests came from potential

customers for information about the Fiesta. The campaign also resulted in Ford selling

10,000 Fiestas within the first week of launch in the US.

On all accounts, the social media advertising campaign was a success. Ford managed to

reposition itself as a car manufacturer relatable by the Gen Y segment and also generated a

large amount of buzz and excitement around the product among US consumers, all at a

fraction of the cost normally spent on pricey television ad campaigns.

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Marketing with a Personal Touch

One of the biggest mistakes made by organizations when using social media tools is

regarding the websites as an isolated marketing medium rather than as an interactive

platform to reach out to consumers in a meaningful way. Organizations fail to realize that a

big contributor to the success of blogs and social networking websites is its informal nature.

These websites give users a platform to express their opinions freely about religion,

personal interests and even about the products and services of a company with peers.

Therefore companies must learn how to leverage the informality of these websites to

communicate with customers more effectively in order to gain a significant edge over the

competition.

While many organizations have begun creating company profiles on popular social media

websites such as Facebook, Twitter and MySpace, they do so blindly and without

understanding how to harness its true potential. This is mainly due to the lack of expertise

in organizations and a shortage of social media talent in the general market as to how these

tools can be best utilized. As a result, the profiles or pages created by such organizations

serve only as a medium to impart basic information about the company to the customer

rather than as a platform to facilitate communication between the two parties.

In order to remedy the current situation, organizations should begin empowering those

employees who are passionate about improving the operations and services of the company,

ultimately acting as the company’s change agents. These change agents, in turn, can

actively engage customers through social media websites such as Facebook, Twitter, etc. to

connect with them on a more personal level in order to gain useful insights about the true

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brand image of the company and its products and/or services. The feedback and insights

received as a result of these interactions can help an organization modify its corporate

strategy to make it more aligned with the pulse of customers.

This marketing strategy is already witnessing widespread adoption among organizations

especially among those in the service industry. Some organizations have begun proactively

connecting with customers who have expressed negative reviews of the company’s product

or service on an online consumer forum, social networking website or blog, as well as

inviting responses and comments on their experiences in using the product/service. As a

result, consumers begin perceiving the company as one that is genuinely interested in what

they have to say and this consequently increases the level of positive association between

the company and the consumer.

Case study

Using his personal Twitter account, a customer service manager at Comcast Corporation

began helping customers with their various queries on Comcast’s products and services.

When the company finally learnt about the initiative and the positive impact it had on the

brand image of the company, rather than curbing the customer service manager’s efforts,

the management chose to recognize and reward the initiative. While changing a company’s

strategy can prove to be an overwhelming task, the leadership is expected to recognize that

in cases such as this, revamping a company’s strategy to include a more open and

collaborative approach to customer service could go a long way in strengthening the

company’s brand image in the minds of customers. Companies must also learn to embrace

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the mavericks and change agents of their organization, who are focused on delivering

products and services that offer more value to the consumer.

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Breaking through the Obstacles

Although social media tools offer organizations a lucrative and cost-effective method to

communicate with customers, companies still remain largely apprehensive of their use, due

to the risks and lack of privacy associated with social media websites. With the World

Wide Web making the world increasingly connected, many worry about the implications of

posting personal or business information on online public tools such as blogs and social

networking websites. The following section highlights the fears faced by organizations and

executives in using social media tools and also discusses the solutions to overcome them.

Knowing your Legal Boundaries

When implemented properly, the benefits of social media strategies are numerous, however

achieving these benefits continue to elude many organizations. While many organizations

attribute this elusiveness to the overall ineffectiveness of social media websites as a

marketing tool, they fail to realize that the problem lies within the basic structure of the

strategy itself. Employees placed in charge of implementing the company’s social media

strategy do so with great hesitation as they remain largely ignorant of the kind of

information they can share with customers as well as how they should behave when

interacting with customers via these websites.

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In order to overcome this obstacle, companies can institute a set of legal guidelines and

policies that give an employee a comprehensive overview of the dos and don’ts of the

company’s social media strategy. However it is important to remember that these legal

guidelines should not serve as a deterrent to the implementation of the company’s social

media strategy, which sadly, is the case for many organizations. Therefore a good way to

safeguard the company and ensure that the goals of the social media strategy are fulfilled is

by ensuring that there is a high level of transparency and collaboration between the

marketing and the legal departments of the company. These efforts can be further

strengthened by getting the senior management on board from the start with the necessary

approval. With support from the leadership of the company in place, the legal department

will find it easier to establish a framework that allows the company’s change agents to

more freely implement the social media strategy while also giving them the freedom to take

certain liberties within the company’s legal premise.

Aversion to Risk

Due to the current slump in the global economy, many companies are adopting more

protectionist strategies in order to minimize their losses. While this strategy is useful in the

short term, it eventually leads to stagnation of a company’s growth. The trend is especially

true for large organizations where employees are rewarded for being risk averse and

playing by the rules. Although, understandably, the use of social media tools represents a

considerable risk for many organizations, these tools when implemented properly bring

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significant rewards and help companies develop more agility in light of a changing business

environment.

A good way for companies to manage the risks associated with the use of social media tools

is by leading small pilot projects within the organizations to evaluate the outcome. By

implementing small initiatives, a company can learn and gather information on what is the

best way to implement a social media strategy on a large scale. These initiatives also help a

company fine tune any gaps or issues in its social media strategy before launching the

project on a larger scale.

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Conclusion

The use of social media tools has witnessed widespread adoption over the last decade, with

it now extending into the business arena. While opinions regarding the effectiveness of

using these tools in business remain largely mixed, many organizations are beginning to

incorporate social media in their overall company strategy. As social media strategies are

still in their early stages of development and refinement, organizations meet with a number

of roadblocks and visualize potential pitfalls in implementing these strategies. However,

many companies are beginning to realize that a well executed digital strategy reaps

significant rewards at a fraction of the cost as seen in the Ford Fiesta case study. The

Comcast case study, on the other hand, illustrates how engaging customers at a more

personal and intimate level produces far better results in brand building when compared to

a conventional marketing strategy. These two instances clearly exemplify the need for

organizations to become more customer-centric and utilize the social media platform to

demonstrate that they regard their customers’ needs as their first priority.

While the use of these social networking tools may seem intimidating to many

organizations, companies can work towards overcoming apprehensions by clearly defining

the policies for social networking use and implementation of digital strategies within their

organizations. The execution of pilot initiatives and establishment of a well-rounded legal

framework governing the use of these tools in an organization will also go a long way in

stymieing the risks faced by the company. While there remain fervent detractors against the

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use of social media tools in organizations, these tools when properly implemented, could

help a company engage and communicate with customers more personally.

Although the current level of technological advancement limits a company’s ability to

adopt social media tools on a wider scale, many predict that with the growth of the online

social media market in the future, a new market mainly focused on providing enterprise

social media solutions will emerge. This will consequently allow organizations to

customize their social media tools to fit specific needs and allow them to reach out to a

wider group of customers more effectively and increase awareness about their brands,

create online communities to promote viral discussions about their products and services,

increase online traffic to their websites, and keep track of public perception of a

competitor’s products or services, amongst others.

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