Two More Reasons Companies Need to Pay Attention to Social Media

If companies needed any more reasons to get off the sidelines and start thinking about social media…

Reason #1: Staying Ahead of New FTC Regulations

The recently announced FTC guidelines on testimonials in advertising provide the first specific guidance from government on endorsements and disclosure in social media. Bob Pearson from the WeissComm Group suggests companies will be held more accountable for the behavior of their employees, so they should familiarize themselves with the regulations and ensure they take steps to limit their liability. In effect, companies will no longer be able to skirt (or flaunt) informal Web etiquette and will be held responsible for their online communication activities. Bob suggests all companies – big or small – follow this short checklist:

1. Require truthfulness and disclosure in all social media outreach

2. Monitor the conversation and correct misstatements

3. Create social media policies (with clear transparency and disclosure rules) and training programs

[Full disclosure: Bob is a friend and my former boss at Dell.]

Reason #2: Getting Ready for Real-Time Search

In recent weeks, there’s been plenty of online discussion about the emergence (and importance) of real-time search, which captures live updates on networks like Twitter and Facebook. A recent New York Times article posits that announcements by Google and Microsoft that their search platforms will include Twitter is just the latest evidence of this trend. (FYI: Facebook public updates will soon be available on Microsoft’s Bing.) Though the NYT article focuses on the potential revenue implications of real-time search, companies would do well to also study the PR impact of this trend on their own search results.  BusinessWeek recently posted a good summary on this topic.

What I thought was the most insightful take on this issue came from Charlene Li at Altimeter, who in her post on the topic writes: This trend towards micro media requires companies to pay attention to the real-time and social web for marketing, support, and competitive strategies. Here’s why. First, Google and Bing will filter search results based partly on timing and authority (as well as location.) Li argues this means consumers will more easily be able to influence search results through Twitter content, links and re-tweets. Conversely, companies will no longer be able to rely on their traditional page ranking, fueled by their SEO strategies. So even for companies not active on Twitter, their customers (or critics) can more easily influence search results related to the company in question. Li suggests a recipe to address this shift in search strategy:

• Develop a nimble, comprehensive listening strategy that includes social networks and incorporates internal processes, roles as well as robust analytical tools
• Change the marketing mindset that says generating more positive (self-serving) content will tilt the search balance, since the search filters will leave out irrelevant messages with no authority or following
• Marketers must focus on building relationships with people who have influence and authority on networks like Twitter – which means fostering relevant discussions with consumers and followers/friends

Even for companies with a defensive mindset who hesitate to jump into social media, these and other developments suggest their time as spectators is coming to an end.

Customer Reviews Becoming The Killer App

It’s become accepted dogma that in the booming internet economy customer rankings and comments heavily influence brand reputation and purchase decisions. (Check out one recent study here and another by Forrester here, as well as an article on the phenomena in the New York Times .) A story last week in BusinessWeek suggests that for Amazon.com – the pioneer in customer reviews – the consumer ratings have become a key reason for the site’s popularity, and the company’s enviable reputation. Over the years, the online retailer has expanded its community feedback features to include personal “wish lists” (that can be shared) and various discussion hubs to facilitate consumer conversations on broad or specific topics. (Check out the variety of review options using the example of the new Microsoft 7 OS here.)

The BusinessWeek article argues that this trove of consumer generated content (in this case reviews) has become a main attraction for viewers – and an important competitive advantage for Amazon.com. With one of the world’s largest collections of consumer reviews, the site is a magnet for users intent on getting information or browsing for products. The article describes the new breed of “information-based shoppers” as a major shift in the retail environment, reflecting a stronger focus on due diligence (largely through the internet) and increased cynicism about traditional advertising or marketing. The focus on finding impartial information and value fits it perfectly with the emergence of a new consumer frugality.

There are numerous lessons here for retailers – and communication professionals – but perhaps the most important is to remember the outcry when Amazon.com originally decided to post the consumer reviews – both good and bad. This was seen as heresy to some marketers intent on presenting their products under the best light and stifling any negative feedback. While there is still debate whether a product can survive negative reviews, there is little discussion about the importance of allowing consumer comments and rankings.

Internet Trends: Going (More) Mobile

Very interesting presentation by Morgan Stanley analyst Mary Meeker (yes, that Mary Meeker) at the recent Web 2.0 Conference in San Francisco. Check out this article and the actual presentation here. Besides a fairly healthy prognosis for internet (and related business) growth, the salient theme is that the mobile internet is big…and booming – led in part by “explosive” growth in iPhone and iTouch devices. Indeed, a major fuel to this growth is the sheer increase in cloud-based mobile devices using platforms like GPS, 3G, wi-fi and Bluetooth. According to Meeker (who backs her arguments with mountains of statistics), mobile internet growth is far out-pacing historic desktop internet adoption.

Some of the stats in the report are pretty overwhelming, notably those on the size and growth of major Web platforms:

• YouTube – 445 million users, 35% Y/Y growth, #2 global search engine
• Facebook – 390 million users, 153% Y/Y growth, #1 site in time spent (6 billion minutes spent each day)
• Twitter – 55 million users, 1,171% Y/Y growth, 5 thousand tweets per second during peak times
• demandMedia – 55 million users, 46% Y/Y growth

According to Meeker, the “secret sauce” to mobile internet growth is the ability to localize data in real-time. The combination of this instant localization with a multi-media, mobile device (like the iPhone) and platforms like Facebook – which allow for integrated, multi-purpose content and applications — creates a highly attractive combination.

And if we needed any more confirmation of the obvious, Meeker argues that next generation platforms (social networks and mobile applications) are driving unprecedented changes in communication and commerce. She writes:

Improvements in social networking and mobile computing platforms (led by Facebook + Apple ecosystems) are fundamentally changing ways people communicate with each other and ways developers / advertisers / vendors reach consumers.

Mobile devices will evolve as remote controls for ever expanding types of real-time cloud-based services, including emerging category of location-based services, creating opportunities + dislocations, empowering consumers in unprecedented + transformative ways.

Improvements in social networking and mobile computing platforms (led by Facebook + Apple ecosystems) are fundamentally changing ways people communicate with each other and ways developers / advertisers / vendors reach consumers. Mobile devices will evolve as remote controls for ever expanding types of real-time cloud-based services, including emerging category of location-based services, creating opportunities + dislocations, empowering consumers in unprecedented + transformative ways.

Plenty of other good information in the presentation on the implications of these changes on broadband providers and device manufacturers; the message is there will be big winners and losers as a result of these seismic shifts.

Thanks to my friend – and University of Texas alum – Paul Walker for the tip on this report.

Technorati: Blogosphere Vibrant, Getting More Influential

Technorati’s annual “State of the Blogosphere” is full of interesting findings, but the headline is that the influence of the blogosphere on everything from politics to marketing continues to grow. [Note: the survey is limited to bloggers and data from the U.S.] Here are select findings:

• The blogosphere (in the U.S.) is doubling in size every 230 days
• Hobbyists (who blog for fun) make up 72% of bloggers
• Though Pros (who blog full-time for a company/organization) make up only 4% of bloggers, they are becoming more prolific and influential
• Twitter has had a big impact on the blogosphere, fueling the dramatic rise of micro-blogging…up to 74% of bloggers now use Twitter
• The blogosphere continues to take over turf historically owned by traditional media sources and journalists
• Self-expression and sharing expertise continue to be the primary motivations for bloggers, and 70% of all respondents say that personal satisfaction is how they measure the success of their blog
• For pros, the key measure of success is traffic – or unique visitors
• Blogs cover a wide and diverse range of topics – including many niche subjects
• Most bloggers describe themselves as “sincere”
• Reasons for blogging range from sharing opinions and expertise (popular with hobbyists) to attracting new clients or business opportunities (more important for the pros)
• 30% of respondents say it’s important they conceal their real identity – most for fear or harassment
• Most bloggers are positive about the impact of their blogging on their personal and/or business lives

No real surprises for me in these findings, though the relatively small number of core professional bloggers seems disproportionate to their profile and influence. Then again, this tendency mirrors the trend of the small minority of people who contribute or comment on blogs. The one finding that seemed dissonant is the plurality of bloggers who feel compelled to conceal their identity. I’m not sure how this fits with the ethos of transparency, but they clearly feel compelled to separate their blogger persona from their personal identity.

FYI: Technorati is posting additional comments and articles, so look for updates in the days ahead. A couple of third-party comments on the report are here and here.

Most U.S. Employers Shutout Social Networks

In a recent post, noted communication blogger Shel Holtz highlights the findings of a recent survey of U.S.-based CIOs that found 54% of companies do not allow their employees any access to external social networks, and 19% do so only for limited “business purposes”. Check out a summary of the original research by Robert Half here.

Holtz argues this stance is fueled more by irrational fear than logic, and furthermore that it undercuts the external social media strategy – since in many cases employees are the best ambassadors or advocates for an organization. One of Holtz’s key points is “the presumption of most companies blocking access is that employees are being unproductive, wasting time. In fact, the lines have blurred so much that even an employee spending a few minutes online to take a break from work could wind up having an interaction that benefits the company“.

I would add that a fundamental flaw in the logic of these restrictions is that they focus on the channel, rather than the underlying rules on communications and disclosure – which should theoretically apply to any communication platform. The issue is not Facebook or Twitter – though the immediacy and reach of those platforms is certainly relevant – but rather ensuring employees understand what they can/can’t communicate externally and the policies on online conduct – whether as employees or outside of work.

Add this survey to the pile of empirical data suggesting organizations have decidedly mixed feelings about social media. In this case, the dichotomy is that while more companies are increasingly keen to engage in dialog with external audiences (notably customers) they are still reluctant to allow their own employees to participate in these same conversations. And based on my experience many companies are even hesitant to allow networking and conversation within their organizations. Many employees probably see this as lack of confidence in their ability to do the right (and smart) thing, and a not-so-subtle message from management that they can’t be trusted. Not exactly the message you want to send while simultaneously asking for more productivity and loyalty.

Lessons from Companies in the Social Media Trenches

Two recent surveys of leading companies point to the progress and potential – but also the challenges – of engaging in social media. Great context for those wondering  what everybody else is doing.

First up…a new survey of 400 global companies by Deloitte, which focused on the perceived benefits and potential of online communities – or “tribalization of business”. The headline of this study is: good progress and plenty of promise…but it’s tough to find the right formula for maximum success.  As the survey puts it: “While enterprises are effectively using online tools to engage with customers, partners, and employees for brand discussion and idea generation, organizations are continuing to struggle with harnessing social media’s full potential.”

Key takeaways include:

• There are signs that company use of social media is maturing,  with the notable example of a shift to consider online “lurkers” (or observers) rather than just active users in online communities
• Companies still struggle with the main obstacles of building online communities – getting users to join, stay engaged and return – and use participation as the main metric for success (the study suggests there are more useful analytics, such as search engine rank and links/citations on other sites)
• The  top business objectives for online communities are (in order): increasing word-of-mouth, customer loyalty and brand awareness

The Deloitte authors provide an interesting prescription to companies engaged in social media that reflects the need for a new perspective and approach:

• Think tribe – not market segment
• Think network – not channel
• Think customer-centricity – not company-centricity

The folks at McKinsey have also spent a considerable amount of their grey matter studying the implementation and impact of social media. One of their most interesting products is an interactive report on Web 2.0 featuring results from their annual survey of 1,700 business executives. (FYI – You may need to register to access the full report.) The survey provides a great snapshot of where companies are investing, what they’re trying to achieve and what technology they are deploying.

Too many findings to show here, but here are some highlights (I’m sticking to Top 3 for each):

• Most important technologies and tools: Blogs, social networking, wikis
• Technology/tools being used internally for developing products & services: wikis, blogs, social networks
• Technology/tools being used internally for managing knowledge: wikis, blogs, RSS
• Technology/tools being used internally for enhancing company culture: blogs, social networking, podcasts
• Technology/tools being used internally for fostering  collaboration: blogs, social networking, wikis
• Technology/tools being used internally for training: videos, wikis, podcasts
• Technology/tools being used internally for finding and recruiting  talent: social networks, blogs, videos

Not surprisingly, the mix of tools used to interact with partners and customers differs from the internal recipe…as do the objectives. In fact, it’s interesting to look at what McKinsey has categorized as main objectives for each audience:

• Partners: achieving better integration, lowering purchase costs, developing  products, solving problems
• Customers: acquiring new customers, improving customer service, developing products, helping customers interact, marketing
• (Employee objectives are noted above.)

There were a couple of surprises for me in the findings. One is the relatively low ranking for micro-blogging…which belies the hype for Twitter and similar internal applications (e.g. Yammer). The other is the low profile of “prediction markets” – which I take to include crowd-sourcing platforms popularized by Dell and Starbucks. Perhaps the most disappointing  (though not surprising) finding is that senior executives are the lowest users of Web 2.0 technology. Therein lies one of the biggest challenges for communication and marketing professionals – it’s hard to sell Web 2.0 strategies to executives who don’t use or understand the technology.

University Making Good Use of Social Web

Universities are typically on the cutting edge of progress and many have embraced new digital technologies and social media platforms, but I’m impressed how my Alma Mater Northwestern University is reaching out to its alumni. For example, I recently got an email inviting me to watch a live webcast of the inauguration of the new president – complete with optional viewing of several discussion panels, a chat room for alumni, a 360-degree tour of the campus and various online, interactive games and  activities. Nothing revolutionary, but combine this with the fact the email serves as a de-facto portal to other relevant platforms – such as the NU Facebook page, LinkedIn group, YouTube channel, student podcasts and various websites – and you have a user-friendly digital entry to all things Northwestern.

By coincidence, I received a fundraising letter last week which pointed me to these same platforms. Similarly, direct outreach to me via email (notably asking me to serve as mentor for new graduate students) is integrated with these platforms. I just joined the local NU chapter, but I suspect it will also be seamlessly connected to these other efforts. If I have one quibble with all this, it’s that there is no obvious place to engage in online conversation with peers or university officials on these platforms (excluding Facebook…which is more about students talking to each other.) A leadership blog would be a good mechanism to address this shortcoming (if it exists…I can’t find it.)

This serves as a good example that a social media strategy does not need to be complex or full of dazzling applications – pulling together relevant tools and applications in a relevant, convenient package is a worthy enough objective. Now if we could only beat Michigan the world would be a better place….

FTC Adds Muscle to Web Ethos of Authenticity

The Federal Trade Commission (FTC) has introduced new rules that add muscle to the prevailing etiquette of social media that frowns on questionable endorsements or testimonies. For reports and commentary, check this article in AdAge and this post in Mashable. Going  forward, bloggers and others using social media platforms will have to clearly disclose any “material connection” to an advertiser – including payments or free products. Fines will run up to $11,000 per incident. [Clarification: This claim was apparently incorrect. See explanation from FTC here.] This issue has been a heated discussion on the Web in recent years, as marketers have stretched the limits of acceptable practice while trying to present individual testimonies, reviews or comments as authentic. (For one example, see the recent tussle on the bloggers driving Ford Fiesta cars.)

Most of the comments on this move are positive, welcoming  the new clarity and expecting the rules to make it harder for unscrupulous marketers pushing fake “word of mouth” to ignore the previously informal rules. Although the regulations focus on blogging, celebrity endorsements and advertising, social networks like Twitter will be impacted by the new rules.

Though transparency and authenticity ultimately drive credibility on the Web, these rules should reduce egregious abuses and help users make informed judgments on content. Another step in the evolution of social media.

Mixed Signals on Evolution of Social Media

A few news items from the past week or so confirm that the growth and evolution of social media is not  a linear or neat process. Take a look:

• A global study by Nielsen found that average users spent 17% of their time on the internet visiting social networks and blogs, up from 6% a year ago. The study also found that year-over-year online advertising spending on the top social network and blogging sites increased 119 percent since August 2008.
• This week the coach of Texas Tech football team Mike Leach banned the use of Twitter by his players – at any time – calling  Twitter and Facebook “stupid distractions” for narcissists. He added the Facebook pages of his players would now be closely monitored. The reason for the  ban appears to be recent Twitter posts by two players – including one that suggested coach Leach was late for a meeting.
• The U.S. Government launched a new internal site making a range of social media tools and applications available for download and use. The online storefront will allow government agencies to browse and purchase cloud-based IT services – including Slideshare, Flickr,  Facebook and FriendFeed.
• The venerable BBC in the UK has announced it is relaunching its websites with a strong focus on social media applications, notably adding capability for real-time comment on current news and embedding videos.
• Google announced a new application – the Sidewiki – that allows users to add comments along websites, with one of Google’s mysterious algorithms ranking the comments by relevance and quality.

I draw a few conclusions from these updates:

• Innovation continues to fuel a steady wave of new social media applications and ideas…and keeping track – let alone figuring out which ones will survive – is a daunting task;
• While some are on the frontier and fully embracing social media, others continue to fight a rear-guard action that seems geared to protecting a “command and control” communication model;
• The audience for the Web and social media tools alike continues to grow at a rapid clip;
• There is still no magic formula for making money with/on social media platforms, but there are still plenty of investors that see huge financial potential in the technology.

Using Social Media to Find (and Keep) Talent

I’ve been pleased to find increasing examples of organizations using social media tools to recruit talent – and in some cases to find and engage alumni. This is a new twist that goes beyond using  social media to engage employees already within the company. Many companies have used LinkedIn to post jobs, check references, engage alumni and find potential recruits. (In fact, I found my previous corporate job entirely through LinkedIn. ) But some companies are going beyond this strategy, including this one using  Twitter to throw its recruiting net.

What’s next in this trend? One strategy that seems to (finally) be getting traction is leveraging corporate groups on networks like Facebook. Many companies start out with monitoring the informal/rogue company groups, while others take a more proactive approach by adding an official voice to these networks or even creating their own virtual gathering place. The hope is that the folks on these networks help spread the word about job openings and/or recommend potential recruits through the on-line grapevine. Other companies try to leverage their presence in Second Life (or other virtual worlds) much like a virtual recruiting booth in colleges and job fairs. There are also plenty of recruiting videos posted on YouTube – like this one from Cisco – which range from very original to utterly predictable. And of course, companies have tried to influence – if not steer – relevant content on sites like Wikipedia and Vault, with mixed results.  Still, companies are clearly making an effort to join  the conversations and provide information that will feed into search results on the company.

Whatever the approach, it’s good to see more companies embracing new approaches to recruit talent.