Social Media – the impact on businesses

On a crisp morning on 24th April 2013 an eight story building which housed roughly 5,000 workers collapsed. The bodies of at least 200 employees were found among the ruins. Nike, one of the biggest consumer brands worldwide, was largely associated with the factory collapse and publicly shamed for its abusive labour practices. Since then it has managed to make a turnaround, including a shift towards collaborative communities. To do that, Nikeplus, a non-media social hub and in many ways a cultural commons where online interactions are complemented by offline meetings, was co-created with Apple.

Business use of social media is growing speedily. Marketing and corporate communications in particular are becoming democratised and are largely considering it a common practice nowadays. Through its use they can now benefit from “creative” consumer-generated content, while better understanding the concerns, desires and wants of their current and prospective consumers.

The rate at which social media is penetrating businesses is unprecedented. Based on a Social Media Survey by McKinsey among 3,500 executives, the majority of companies (83%) are using one or more than one social media technology. Among those with more than one above 40% of the companies state that they use video conferencing (60%), social networks (53%), blogs (43%) and video sharing (41%). Another study conducted among Fortune 500 companies has established that Twitter accounts, Facebook community pages and YouTube accounts were present at 73%, 66% and 62% of the companies respectively with 28% supporting an online blog as well.

What makes social media so impactful? Below are six unique social media characteristics:

  • Social Media is providing companies with authentic, reality-based consumer perceptions which can be used to make future business predictions;
  • Word of Mouth (WOM), a typical characteristic of social media, is heavily influencing both the perception and acceptance of certain services, products or systems. In 2013 a 5 year old kid with leukemia named Miles Scott asked to be a Batkid. What followed, initiated by the not for profit Make-a-Wish Foundation with the help of 12,000 volunteers, was the kid’s Batkid journey through San Francisco. The campaign resulted in close to 1.9 mln impressions, 555,000 batkid hashtags, enormous press coverage and unprecedented donations to the Make-a-Wish Foundation which provides unique experiences to children suffering from terminal illnesses.

  • Analysis of blogging platforms and user groups provide valuable feedback on user experiences;
  • Social Media provides the means to create a strong viral campaign for products or services. Consider Chipotle‘s “Food With Integrity” sustainable farming campaign. The marketing campaign which aimed to increase awareness of animal confinement conditions, growth hormones and toxic chemicals used in industrial food production created a dystopian world video and a PC game. Through its short movie it  amassed 6.5 mln views on YouTube for less than 2 weeks and 500,000 downloads in six weeks.s for the free game it distributed.

  • Dominated by early-adopters it can considerably influence companies and their products or service offerings;
  • It offers the chance for direct customer contact and feedback.

In the late 1990s The Cluetrain Manifesto predicted the evolution of social business by stating that “markets will become conversations”. The term social business has come to also represents companies that are transparent, open and taking part in conversations – the biggest impact to be left by social media is in the social contract that businesses will establish with customers and employees. The impact of social media on businesses is more than evident – Netflix suffered substantial losses when it announced that it’s changing its pricing structure. Burberry is creating Burberry World, digital end-to-end solution in an attempt to connect customers, suppliers and vendors to the brand, KLM, one of the world’s largest airlines, is effectively using Twitter to generate customer loyalty.

What social media is doing is providing society with “new lenses”, with transparency in a time of increasing global uncertainty. Creating open communities which provide an alternative to individualism and anonymity.  And as any medium which is successfully satisfying our  need for communication it is likely to keep growing and impacting both our personal and corporate lives.

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The blog is part two of a series on the changing media landscape. Read part 1 or part 3.

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