Growing Popularity of Social Media and Business Strategy

Transcription

1 Departments Korean Consumer & Society Growing Popularity of Social Media and Business Strategy LEE Dong-Hun Social Media Becomes a Hit What s happening? or What s on your mind? are questions people frequently ask their close friends during a conversation or a phone call. However, in social media, they present a new opportunity for businesses. Increasingly, diverse social media have begun to emerge. Firstly, there are blogs such as Facebook and YouTube, which provide a space where Internet users can produce and share images, and Twitter, which leverages mobile devices. Such forms of media have gained popularity, innovating communication methods which were previously centered on the mass media. Simply put, social media is an open media for interactive communication led by normal people. Unlike the one-way production and transfer of news, information, and entertainment from main media outlets via the mass media, social media allows anybody to become a producer of such content, and deliver it through interactive communication in the form of a pyramid, based on relationships. Showing explosive growth in just 4 5 years since its birth, social media is establishing itself as the media of choice all across the world. In Western countries especially, a wide range of age groups, from children to the middle-aged use social media. According to Google s Ad Planner, 15 percent of those aged 17 or below, 9 percent of those aged 18 to 24, 18 percent of those aged 25 to 34, 25 percent 112

2 of those aged 35 to 44, 19 percent of those aged 45 to 54, and 14 percent of those aged 55 or older are using one form of social media or another. There are four reasons that can explain the wide popularity of social media. First, social media provides a window that satisfies users desire to express themselves. It is a useful outlet for their desire to standout and draw attention. Social network services such as personal blogs, Facebook, and Twitter are appropriate tools to reveal oneself and be recognized. The popularity of the show Britain s Got Talent in the mass media can be explained in the same manner. Second, users can obtain the latest news on anything they want to know. Information based on a timeline offered on Twitter has more meaning to them because it is not from a newspaper or from the Internet, but from someone they know. News from those they are interested in is more relevant than random news from the mass media. There is a fundamental trust that important news will certainly be delivered; the news being a recommendation or an opinion on a topic of interest from their friends, which is more valuable than a stranger s tip when making a purchase. Third, users can see how the people they are interested in are doing, satisfying their desire to peep. Using the RSS Feed on a blog, riding waves (visiting personal blogs by clicking on the names of those who have added a remark or photo) on Cyworld, following on Twitter, and adding friends on Facebook, users are able to find out what other people want to say and what they are doing. Lastly, people can escape from their daily routines. Daily life is repetitive for most people, which is why so many strive to bring change to their lives. Such wishes are reflected through social media, where users use other people s lives to escape from their own. Four Key Values of Social Media for Businesses Then, what has got the business world focusing on social media? Social media in Korea has not yet spread to the general public, and most of the issues are limited to corporate, celebrity and news bulletins. There is a problem of credibility in regards to social media, because the provider of the information tends to release the content without verification, unlike in the mass media. Therefore, social media is not yet capable of replacing traditional media. However, it still has value in four aspects: time, audience, cost, and relations. Time: Speed and Durability 1 In social media, information is distributed rapidly (Speed) and has a long-lasting impact (Durability) compared to that in the mass media. Users can easily create content with short text messages and post them on microblogs such as Twitter (a post can include up to 140 characters) Table 1 Key Characteristics of Mass Media and Social Media Media Mass Media (Media 1.0) Social Media (Media 2.0) Key Characteristics News, information and entertainment were produced mostly by media outlet (monopolized by a few players) Content was transferred in public, one-way, and indirect channels to the public Anybody can produce content based on the spirit of Web 2.0 which is openness, sharing and participation (competition takes place between multiple players) Interactive communication based on relationships and content is delivered in the form of a pyramid October 2010 SERI Quarterly 113

3 Growing Popularity of Social Media and Business Strategy and me2day (up to 150 characters). Unlike the mass media, bloggers and YouTube users can disseminate content right away without having to be concerned with meeting editorial deadlines or broadcasting schedules. Social media also offers faster distribution than the mass media because it is done through the relationships of the users. According to a study 1, most social media users retransmit content they have received within the hour. In Twitter, 35 percent of users redistribute content within 10 minutes and 55 percent of them within an hour. In addition, the impact of content is continuous once it has been released, another characteristic which is different from the mass media. While broadcast news is exposed once and then disappears, social media content is often saved as files and uploaded again, even though the source content has been deleted. Also, parodies can be made and uploaded, reminding the viewer of the original content and its implications. 2 Audience: Plurality and Diversity Social media transfers content to a more diverse range of people compared to the mass media. It creates a small-world network 2 where content is easily distributed to a large number of people, as the network is formed through voluntary connection and requires fewer steps for sharing information. As for Twitter, content tweeted to an average of four people can end up reaching any user in the world 3. Content is transmitted to a broader public when they are introduced to another form of media. For example, blog content is linked onto Twitter, which is then reported through mass media. Moreover, social media transcends both nationality and class. Word of mouth can only go so far, but social media can deliver a message to anybody in the world. Former CEO of Sun Microsystems, Jonathan Schwartz, continued to communicate with the public through social media and even tweeted his last goodbye, a case in point that the world is entering a new era of World of Mouth (global) from Word of Mouth (local). Cost: Feasibility and Effectiveness 3 Costs can be reduced with social media as the distribution phase necessary in mass media, is eliminated. Most social media outlets are accessed free of charge. For banner ads, 1,000 clicks cost a mere $20 (YouTube, in 2007). A company can create content without using a celebrity or an advertising agency. In addition, the development of target groups and issue-by-issue advertising and promotion are possible at a lower cost. YouTube offers free statistical data on time of access, access regions, age and gender, which provides an understanding of various lifestyles, demographics, and consumption patterns. By leveraging this, companies can send out content, targeting homogeneous user networks. The Italian luxury fashion brand, Dolce and Gabbana, invited famous bloggers to attend its show and post their opinions on its blog and Twitter page in real-time. This attracted feedback from tens of thousands of fashionists across the world, resulting in the company enjoying a promotional effect at a much lower cost. 4 Relations: Friendliness and Credibility In contrast to the traditional method of one-way communication, relationships in social media are established based on adding each other as friends and through interactions. Therefore, heart-to- 1 Kwak, H. et al.(2010) What is Twitter, a Social Network or a News Media? The 19th International World Wide Web Conference. 2 (Newman, M. (2003). The structure and function of complex networks. SIAM Review, (45), ) 3 Kwak, H. et al.(2010). What is Twitter, a Social Network or a News Media? The 19th International World Wide Web Conference

4 LEE Dong-Hun Now, social media is broadly used by 79 percent of the Fortune 100 Best Companies. heart, sincere communication and trust-building are possible. By openly sharing daily events, companies are able to show the unique traits and friendly image of their brands. Also, by encouraging customer participation in various events on hot issues and in innovative campaigns, they can make their brands more recognizable. Levi s was able to become closer to its customers by launching the ispylevi s campaign in Australia. Levi s offered clues as to the current location of its agents wearing Levi s jeans on Twitter, and gave the jeans to those who found the agents. 4 This campaign was highly successful, and was seen in Australia as an event that only the stylish Levi s could devise. Furthermore, interactive communication can eliminate misunderstandings which can occur during unilateral communication, and build corporate trust. Interaction also nurtures support groups while improving corporate reputation. When a company has trustworthy supporters, it prevents a small problem from transpiring into a crisis. Use of Social Media for Marketing Advanced companies use social media in diverse sectors, mostly for marketing, and then for research and development, knowledge management, and communication among employees. Now, social media is broadly used by 79 percent of the Fortune 100 Best Companies. One of the largest public relation agencies in the world, Burson-Marsteller, surveyed the world s top 100 companies from November 2009 to February 2010 and found that 68 percent used YouTube, and uploaded 10 postings a month; 54 percent used Facebook and uploaded 3.8 postings a week; Twitter users uploaded 25 to 30 postings a week. The study also found that 65 percent of the 100 largest international companies had active accounts on Twitter, 54 percent had a Facebook fan page, 50 percent had a YouTube channel, and 33 percent had corporate blogs. CNBC, a US news channel, even announced the top 10 companies on Twitter (April 12, 2010). Dell came first, followed by Whole Foods Market, Zappos, JetBlue, Comcast, New York Times, Southwest Airlines, Starbucks, Kodak and Home Depot. An increasing number of companies in Korea are also employing social media for business, following the popularity of Twitter among the public. For example, KT transformed its image through social media. Among Korea s top businessmen, Lee Chan-Jin, Park Yong-Man, and Chung Yong-Jin were cited to be the top three power Twitterians. How Social Media Can Be Used for Marketing Social media can be used for marketing in four ways. First, as a direct sales channel: Companies 4 October 2010 SERI Quarterly 115

5 Growing Popularity of Social Media and Business Strategy can harness the main characteristic of social media, relationship building, to increase sales. For example, Dell sells its surplus computers at an affordable price through Dell Outlet, pursuing mutual benefits for both the company and consumers. Dell created the first account for direct sales on in July Since then, the company tweets information on major discounts of recycled computers, inventory clearance, and coupon campaigns. Social media distributes information much faster than traditional word-ofmouth. Second, as a tool for customer contact and services, to replace the call center: Traditionally, call centers have interacted with customers, answering questions on products and about repair. However, customers are not always able to receive a direct answer via call centers or the company website. Based on its fast speed, social media provides an improved version of the call center, offering instant response. Third, as an amplifier of word-of-mouth: Social media distributes information much faster than traditional word-of-mouth. A study by Forrester Research in 2010 found that social network users tend to ask others opinions more than ordinary Internet users. Among them, 30 percent said they follow others recommendations when buying a product while 50 percent shared their opinion on products or services that caught their interest to their friends. They shared their feelings mostly on restaurants (69 percent), followed by movies (57 percent), technologies (56 percent), television programs (55 percent), home appliances (54 percent), travel (51 percent), music (43 percent), and cars (39 percent). In an attempt to create a social shopping experience, Levi s employed Facebook s Social Plugin through which customers are able to see their friends preferred items 5. ebay is attracting acquaintances and friends of its existing customers using social network data 6. The idea is based on the assumption that friends share similar tastes. ebay plans to get information on existing customers who have already bought certain items on its site and gather their conversations with their friends on social media in order to appeal to them. Lastly, as a space for social commerce. Groupon of the US and Ticketmonster of Korea offer discount coupons valid in local areas. They select new services in diverse fields which include those of famous restaurants, theaters and travel agencies and promote certain products at a discounted rate of around 50 percent for 24 hours in its Today s Deal category. Customers can enjoy the service at half the price while the companies

6 LEE Dong-Hun benefit from exclusive promotions on the website. Groupon is reported to have recorded annual sales of $350 million in just one year after establishment. For Successful Social Marketing Thus far, this paper has covered the characteristics of social media and how it can be harnessed in the business world. Just as the world witnessed the emergence of the Internet, now it is experiencing a growth in socialnomics 7. Therefore, companies should consider how to harness social media with the following three points in mind: First, they should not regard social media as a simple marketing channel. Companies can best benefit from relationship building when they use social media. Therefore, they need to emphasize the positive issues while suppressing the negative in the course of building rapport, by respecting the voluntarism of social media users. They should provide interesting issues to encourage users to create and spread relevant content voluntarily, playing the role of stimulant in communication. Pepsi succeeded in projecting its image as caring, humane company by running the Pepsi Refresh Project to make the world a better place. The project was designed to reward good ideas on improving issues related to culture, education, food, health, and community. about themselves, even if they previously had a good impression. Developing a unique tone and manner will also be a good tactic, as companies need a special and witty way of communicating to effectively deliver their message. Lastly, they need to implement a cross media strategy. Social media is not an alternative but a supplement to mass media. Therefore, companies should take an integrated approach. To smooth out the communication process, portfolios should be formed in line with business traits, audiences, and individual media characteristics, and be coordinated with communications materials. Intel has taken a multi-faceted approach to blogs, Twitter (20,000 followers), Facebook (125,000 friends), and YouTube to maximize the effects of communications. A variety of expert knowledge, the daily lives of the employees, and major company issues are shared with customers in diverse forms. In this manner, Intel has successfully maintained close communication with its customers even though it is a B2B company. Translation: YI Chiwon Keywords social media, YouTube, Facebook, Twitter, bussiness strategy, social marketing, customer relations Second, companies need to be careful of their tone and manner in delivering content. The three basic keywords are fun, sincerity, and quick response. They must also avoid self-praising. People are not impressed by and are disappointed with companies or individuals who boast 7 Qualman, Erik (2009), Socialnomics: How Social Media Transforms the Way We Live and Do Business JohnWiley&Sons LEE Dong-Hun is research fellow at SERI. He was a visiting scholar at Columbia University. His areas of expertise include marketing strategy and consumer trends. He holds a PhD in Business Administration from Sogang University. Contact: seridhl@seri.org. October 2010 SERI Quarterly 117