The challenges and opportunities of Social Media

Andreas M. Kaplan, Michael Haenlein

ESCP Europe, 79 Avenue de la Rèpublique, F-75011 Paris, France

The top of the agenda for many business executives all over the world are Social media. They all try to find a way to use Social media and how to make a profit out of it. Such as Wikipedia, YouTube, Facebook, Twitter and Instagram are applications that business executives are interested in using to achieve profit. Despite the interest there seems to be limited understanding of what “Social media” means. This article will intend to clarify some of the questions around the term “Social media”. We are going to start by describing the concept of Social media and discuss the difference from related concepts like Web 2.0 and user generated Content. Then we are going categories the different applications of Social media into more specific groups, like: collaborative projects, blogs, content communities, social networking sites, virtual game worlds and virtual social worlds. At the end of this article we are going to provide 10 tips for companies that intend to use, or already are using social media.

  1. The specter of Social Media.

As of January 2009, the online social networking application Facebook registered more than 175 million active users. At the same time, every minute, 10 hours of content were uploaded to the video sharing platform YouTube. And, the image hosting site Flickr provided access to over 3 billion photographs. According to Forrester Research, 75% of internet surfers used “Social media” in the second quarter of 2008 by joining social networks, reading blogs, or contributing reviews to shopping sites. This is a significant rise from 56% in 2007. The growth is not limited to teenagers, but people in the age of 35-40 years old; increasingly populate the ranks of joiners, spectators, and critics. Based on this information it is reasonable to say that Social media is a revolutionary new trend that should be of interest to companies operating in online space – or any space at all. Many firms seem to be uncomfortable in a world where consumers can talk to each other; this is because the businesses have less control over the information available about them in cyberspace. Today, anyone that has internet access can Google the name of a leading brand, and what comes up on the top five results are not only the corporate webpage, but also the online encyclopedia Wikipedia. On Wikipedia you can in many cases read both positive and negative things about a brand or a company. Historically, companies had the power to control the information available about them by placing press announcements strategically and with good public relations managers. Today, the firms have been ejected more to the sidelines, and are often more of an observer over the information available about them. They don’t have the knowledge, nor the chance – and sometimes even the right – to alter publicly posted comments provided by their customers. Wikipedia forbids the participations of firms in its online community.

This evolution may not be surprising. After all, the internet started out as just giant Bulletin Board System (BBS) that allowed users to exchange software, data, messages and news with each other. In the late 1990s there seemed to be a popularity rush in homepages, where everyone could share information about their private life; today we would call this a weblog, or a blog. The era of corporate web pages and e-commerce started relatively recently with the launch of Amazon and eBay in 1995, and only 6 years later it really took off when the dot-com bubble burst in 2001. The current trend that is going on towards Social media can be related back to the internet’s beginning, because it is retransforming the World Wide Web to what it originally was created for: a platform where users can exchange information among themselves. The technical advances that have been made over the past 20 years now allow a form of virtual content sharing that is very different from, and more competent than, the BBS of the late 1970s. This article will discuss the challenges and the opportunities for firms using Social media, and it will create a structure to better understand the evolving field of Social media. We are going to provide a definition and classification of Social media by looking at the historical roots, technical specificities and differences from other material such as Web 2.0 and User Generated Content. We are going to focus on collaborative projects, blogs, content communities, social networking sites, virtual game worlds and virtual social worlds – and show the companies how to use Social media in an efficiently way. Then we will provide a set of 10 recommendations companies should follow when developing their Social media strategy.

IMG_6412[1] IMG_6415 IMG_6418[1] IMG_6421[1]

(Illustrations: Benedicte Pettersen)

What is Social media – And what is it not?

There seem to be confusion among managers and academic researchers to what should be included in the term “Social media” and how Social media different from the concept of Web 2.0 and User Generated Content. So to understand we are going to take a step back in time and provide insight to where Social media come from and what they include.

By 1979, Tom Truscott and Jim Ellis from Duke University had created the Usenet, a worldwide discussion system that allowed Internet users to post public messages. Yet, 20 years earlier the Social media era probably started. Bruce and Susan Abelson founded “Open Diary” that brought online diary writers together under one community. The term “weblog” was first used, and a year later it was shortened to “blog”. Because of the growing access to high-speed internet the concept got more popular which later lead to social network sites such as “Myspace” (in 2003) and “Facebook” (in 2004). This became the term “Social media” and contributed to how Social media appears today. “Virtual worlds” is the most recent addition to this grouping. Virtual worlds are computer-based simulated environments inhabited by three-dimensional avatars. Linde Lab’s Second Life is perhaps the best known Virtual world. A formal definition to the term “Social media” requires drawing a line between to related concepts; Web 2.0 and User Generated Content. Web 2.0 is a term first used in 2004 to describe a new way in which software developers and end-users started to utilize the World Wide Web, which is a platform where content and applications no longer are published by individuals, but constantly can be modified by all users. Personal web page, Encyclopedia Britannica Online and the idea of content publishing belong to the era of Web 1.0, but are replaced by blogs, wikis and collaborative projects in Web 2.0. There are a set of basic functionalities that is necessary for Web 2.0 functioning, such as Adobe Flash (for adding animation, interactivity and audio/video streams to web pages). RSS (Really Simple Syndication, a family of web feed formats used to publish frequently updated content, such as blog entries, or news headlines, in standardized format), and AJAX (Asynchronous Java Script, a technique to retrieve data from web servers asynchronously, allowing the update of web content without interfering with the display and behavior of the whole page). In this article we consider Web 2.0 as platform for the Social media evolution. When Web 2.0 represents the ideological and technological foundation, User Generated Content (UGC) can be seen as the sum of all ways in which people make use of Social media. The term achieved high popularity in 2005. It usually describes the various forms of media content that are publicly available and created by end-users. UGC need to fulfill three basic requirements:

  1. It needs to be published on a publicly accessible website or on a social networking site accessible to a selected group of people.
  • Excludes content exchanged in e-mails or instant messages.
  1. It needs to have a certain amount of creative effort.
  • Excludes mere replications of already existing sites content.
  1. It needs to have been created outside of professional routines and practices.
  • Excludes all content that has been created with a commercial market context in mind.

UGC has already been available prior to Web 2.0. The increased broadband availability and hardware capacity, the increased availability of tools for the creation of UGC, and the rise of a generation of “digital natives” and “screenagers”; younger groups with high technical knowledge and willingness to engage online make UGC nowadays completely different from what was observed in the early 1980s. When we now have clarified what Web 2.0 and UGC are, we can get into a more detailed definition of what we mean by Social media. Social media is a group of Internet-based applications that build on the foundations of Web 2.0, and that allow the creation and exchange of User Generated Content.

There is no systematic way to categorize the different types of Social media applications. New sites appear on cyberspace every day, so it is important that any classification scheme takes into account applications which may be forthcoming. To create a classification scheme in a systematic manner we rely on a set of theories of media research (social presence, media richness) and social process (self-presentation, self-disclosure), the two key elements of Social media. Media differs in the degree of “social presence” – defined as the acoustic, visual and physical contact that can be achieved – they allow to emerge between two communication partners. Social presence is influenced by the intimacy (interpersonal vs. mediated) and immediacy (asynchronous vs. synchronous) of the medium and can be expected to be lower for mediated (e.g. telephone conversation) than interpersonal (e.g. face-to-face discussion) and for asynchronous (e.g. e-mail) than synchronous (e.g. live chat) communications. The higher the social presence, the larger the social influence that the communications partners have on each other’s behavior. Media richness theory is based on supposition that the goal of any communication is the resolution of ambiguity and the reduction of uncertainty. Some media are more effective than others in resolving ambiguity and uncertainty because of the information they allow to be transmitted in a given time interval – that is the richness they possess. A first classification can possibly be made based on the richness of the medium and the degree of social presence it allows. People want to control the impressions other people form of them when using self-presentation in any type of social interaction. On one side this is done so others can gain reward. On the other side this is done so one can create an image with one’s personal identity. The main reason for people to create a personal webpage is so they can present themselves in cyberspace. The presentation is usually a self-disclosure, and the personal information usually contains feelings, thoughts, likes and dislikes that is the same image one would like to give. Self-disclosure is a critical step in the development of close relationships like dating, but it can also occur among total strangers; for example talking about personal problems with the person seated next to you on an airplane. Second classification can be made based on the degree of self-disclosure it requires and the type of self-presentation it allows. Combining both aspects leads to a classification of Social media.

Collaborative projects (e.g. Wikipedia) and blogs score the lowest. Because they often are text-based it is a relatively simple exchange. Next level is content communities (e.g. YouTube) and social networking sites (e.g. Facebook) where you in addition to text-based communication can share pictures, videos and other forms of media. The highest level are Virtual game and Social worlds (e.g. World of Warcraft, Second Life), where they try to copy all dimensions of face-to-face interactions in a virtual environment. Usually blogs score higher than collaborative projects as the latter tend to be focused on specific content domains. Social networking allows for more self-disclosure than content communities. Virtual Social worlds require a higher level of self-disclosure than Virtual game worlds, as the latter are ruled by strict guidelines that force users to behave a certain way (e.g. as warriors in an imaginary fantasy land).

  1. The challenges and opportunities of Social Media.

3.1. Collaborative projects.

Collaborative projects enable many end-users to create content, and that is why collaborative projects probably are the most democratic instance of UGC. Wikis – are websites that allow user to add, remove and change text-based information, for example the online encyclopedia Wikipedia a wiki that is available in over 230 languages. Social bookmarking – enables group-based collection and rating of internet links, or media content, for example Delicious which allow storage and sharing of web bookmarks. The idea behind collaborative projects is that the effort of many persons will lead to better information and results than any other person could accomplish by themselves. Firms need to be aware that collaborative projects are continuously growing to become the leading source of information for many consumers. Not everything that is written on Wikipedia is a fact, many of the internet users believe in what they read on Wikipedia among others. In regards to corporate crisis this type of information may harm companies. But collaborative projects also provide unique opportunities for firms. Nokia for example use wikis to update employees and to trade ideas. And Adobe Systems manage a list of bookmarks to company-related websites and conversations on Delicious.

3.2.Blogs

Blogs is the earliest form of Social media, and are special types of websites that display date-stamped posts in reversed chronological order. Blogs or personal web pages can come in very different variations from personal diaries to summaries of all relevant information in one concrete content area. Blogs are usually managed by only one person, but you can interact with others by using comments. Text based blogs are absolutely the most common. But San Francisco based Justin.tv allow users to make personalized televisions channels, they can broadcast images from their own webcam in real time to other users. Many companies use blogs to update employees, customers and shareholders on information they consider to be important. But blogs do not come without risks. First, costumers that are unsatisfied by a product or a favor may want to engage in virtual complaints, by using blogs or creating/joining a protest website. This can lead to damaging information in online spaces for the companies. Second, if firms encourage the employees to be active on blogs, they risk that staff members may write negatively about the firm and the firm may have to live with the consequences.

3.3. Content Communities

Content communities are sharing media content between users. Content communities exist for many different media contents, like texts, photos and PowerPoint presentations. The users of content communities do not need to create a personal profile, and if they do it’s just simple information like the date the user registered and how many videos are shared. From a corporate perspective, content communities carry the risk that copyright-protected materials can be uploaded on the sites. Even though the big content communities have rules so they can ban and remove this kind of content it is difficult to completely avoid, especially popular TV-series are uploaded to YouTube just hours after being sent on TV. The positive side is the popularity of these channels; it is a very good contact channel for firms. Cisco and Google rely on content communities to share recruiting videos, and addition to that – speeches and press announcement they can share with employees and investors.

3.4. Social networking sites.

Social networking sites are applications that allow users to create personal profiles that often contain a list of friends, co-workers and family so they have access to your profile and the other way around. The profile is also used to send e-mails, instant messages between users and to share other type of information like photos, videos, audio files and blogs. According to Wikipedia the U.S. based Facebook and MySpace are the largest social networking sites. Social networking sites are so popular among young users that the word “Facebook addict” has been included in the Urban Dictionary – a slang dictionary for the English language. Multiple companies already use Social networking sites to support the creation of bran communities or for marketing research in the context of netnography. Some companies use Social networking sites to promote products or brands, and some companies take it to the next level by using Facebook as a distribution channel.

3.5. Virtual game worlds.

Virtual worlds are platforms that replicate a three-dimensional environment where users can make personalized avatars and communicate with each other like they would in real life. Virtual worlds are probably the ultimate manifestation of Social media, because they serve the highest level of Social media and media richness of all applications. Virtual worlds come in two forms. First, Virtual game worlds, the users need act according to strict rules in context of massively multilayer online role-playing game (MMORPG). These applications get more and more popular because of standard game consoles like X-Box and PlayStation where users all over the world can play the game at the same time. Examples of these games are World of Warcraft and EverQuest. The rules of the games often limit the self-presentation and the self-disclosure, but people that spend a lot of time playing this game often get characters that can resemble their real life personality. The use of in-game advertising (comparable to product placement in blockbuster movies) and the high popularity of Virtual game worlds can also influence more traditional communication campaigns.

3.6. Virtual social worlds.

Virtual social worlds are the second group of Virtual worlds let the users create avatars more freely and let them live a life that could be more similar to their real lives. The users still interact in a three-dimensional virtual environment, but there are no specific rules to the extent of possible interactions except for the physical law, like gravity. This allow the users or “residents” a unlimited range of self-presentation strategies, and it has been shown that high use of the Virtual social worlds often can lead to behavior seen in real life environment. The application Second Life is the most remarkable example of Virtual social worlds, they can do everything one can do in real life (speaking to other avatars, taking a walk, enjoining virtual sunshine), in addition to that they allow the users to create content (design virtual clothing or furniture) and then sell the items to other avatars in exchange of Linden Dollars (Linden Dollars = virtual currency traded against the U.S. Dollar on the Second Life Exchange). Some of the users are so successful in this assignment that they make money out of it in real life. Virtual social worlds offer a lot of opportunities for companies in marketing, human resource and internal process management.

4.Ten pieces of advice for companies deciding to use Social Media.

The domain, Social media is very active and always moving forwards. The Social media applications that are popular and up-to-date today may have no popularity tomorrow. Because of that it is important for firms to have a type of direction guide that can be applied to any form of Social media. We will divide our advice into two groups: five points about using media, and five points about being social.

4.1.1. Choose carefully

There are a lot of Social media applications and new ones appear every day.

  • “Being active” on Social media is one key requirement to success.
  • Choosing the right medium depends on the target group and the message to be communicated.
  • Each Social media application attracts a certain group of people, and firms should be presence where the customers are.

There may be situations whereby certain features are necessary to ensure effective communication, these features are offered by one specific application. For example, when the U.S. Army tried to reach the Hispanic community, they decided to use the Social networking application; Univision, one of the reasons was because Univision is the Social networking application with the largest amount of Latin American audience. One of the other reasons to why Univision was chosen is because it offers a moderating service that will check comments from users for appropriateness before posting them on the site. Other applications like Facebook let the users post messages without any supervision.

4.1.2. Pick the application, or make your own.

In some cases the best thing is to just join an exciting Social media application and take advantage from its popularity and user base. Social media applications only get more attractive to join the more members it got. Sometimes the right application just isn’t available yet. Buy, make or both – whatever the decision is, it is crucial to understand the basic idea behind Social media. It is not strait forward selling or advertising, it is all about sharing, participation and collaboration.

4.1.3. Ensure activity alignment.

If one decides to use several Social media applications in order to have the largest possible reach it is very important that the Social media activities are all coordinated to each other. Using different contact channels can be rewarding and profitable. But it is important to remember that the goal of communication is the reduction of uncertainty. Nothing are more confusing than contradicting messages from several different channels.

4.1.4. Media plan integration.

Different types of Social media also hold for the relationship between Social Media and traditional media: integration is the vital. While you may think of these things as complete different channels, consumers do not. Both Social media and traditional media represent your corporate image. It is also important to remember that Social media has low cost media coverage if you compare to standard advertising in traditional media, and the high impact Social media have can lead to profitable results.

4.1.5. Access for all.

Once it is decided that the firm is using Social media applications it is worth checking that all employees may actually access them. Many firms usually block Facebook, YouTube and Second Life on corporate computers for fear that staff might spend a lot of time on Social media rather than working. This is a possibility, but it cannot imply that employees need special permission to enter the company blog. But you do need to avoid that every one of your employees are working on material to the blog at the same time. One possibility is to make one group in charge of the management of corporate Social media, and let the other employees be occasionally participations. The first group will then have the administrator rights – while the second group does not. Eventually there will be necessary to create guidelines for the Social media usage. For example it is very important that every employee needs to identify himself or herself when posting a comment on the corporate blog. Otherwise, end-consumers could get the wrong impression that anonymous accounts are used to enable employees to post fake messages and overly-positive feedback. This could seriously damage your whole Social media campaign.

4.2. Five points about being social.

4.2.1. Be active.

Social media are all about sharing and interaction, so make sure your content is always fresh and that you engage in the discussions with your customers. It is important to remember that your effort in Social media extend beyond answering to negative comments and defending product offerings. Social media is about engaging people in open and active conversations. Participants on Social media has the desire to become both producers and consumers by engage actively. Be considerate of this and act accordingly.

4.2.2. Be interesting.

If you would like your customers to engage with you, you need to provide a reason for them to do that. First, listen to your customers. Find out some basic things about your customers, what they would like to hear, talk about, what is interesting to them enjoyable and valuable. You need to develop content that meet those expectations, and to keep the customers interests in mind every time you post something.

4.2.3. Be humble.

Social media existed before you decided to engage in them. Do not expect that you know better how to use them than others that have spent hours and hours on Facebook and Second Life, for example. Before you start using or entering any application, first take some time to discover it and how to use it. Learn some basic rules and its history. Interaction and feedback are very important elements in any type of Social media, and blogs. The way to failure is by thinking that Social media is just about posting existing TV spots on YouTube or putting prefabricated press announcements on corporate blogs.

4.2.4. Be unprofessional.

Avoid overly-professional content offerings. Blend in with the other users and don’t be afraid to make mistakes. There is no need to spend a whole lot of money to design a perfect MySpace profile or to hire professional’s writers to manage the corporate blog. Maybe a work colleague can write about his or hers last vacation. Social media users are just like you, they know that everything doesn’t always go perfectly. By being nice to other Social media users you can go a long way.

4.2.5. Be honest.

Be honest and respect the rules of the game. Do not try to force your way into Social media where companies are not allowed to be involved. Other participants may in some cases find out who stands behind anonymous user accounts, because in Social media you are dealing with some really technologically people from all over the world.

5.Nothing to lose but their chains.

If you are not participating in Social media like Facebook, YouTube or Second Life some industry gurus claim you are not a part of cyberspace anymore. Social media allow firms to engage in direct end-consumer contact at relatively low cost. The efficiency is higher then on the more traditional communication and media tools. Social media is relevant for multinational firms as well as for small and medium sized companies, and nonprofit and government agencies. The potential gains of using Social media are huge, even though using it can be a challenge and demands new thinking. A new trend is coming, Mobile Social Media. Mobile Web 2.0 is very similar to Web 2.0. In contrast to its predecessor Mobile Web 1.0, which relied on proprietary protocols and use-based pricing, Mobile Web 2. 0 I characterized by open standards and flat-rate systems. Even the manual entry of web addresses using small and difficult –to-handle keyboards is becoming history. Soon, every item around you will be equipped with Radio Frequency Identification (RFID) tags that will be able to atomically connect to your mobile phone and send URLs to them, similar to today’s text messages. This technical evolution is moving Social media over to mobile phones and away from PCs and laptops. You can use Facebook, Twitter and watch YouTube movies on your iPhone! Mobile Social media applications are expected to be the main driver of this evolution, soon having 50% of the market. You can look at this as a step closer to Internet democratization and closing the digital divide between developed and emerging countries. In India for example, mobile phones outnumber PCs by 10 to 1. In Thailand only 13% owns a computer, versus 82% who have access to a mobile phone. Pew Research Center estimates that by 2020, a mobile device will be the primary Internet connection tool for most people all over the world. Mobile Social media applications are most likely to reach a so far unexploited ground of new users. Some people will argue Mobile Social media and say that while it enables you to stay in contact with friends and family far away, it can create a society where you don’t know the names of our neighbors. Either if you disapprove or approve of this evolution it seems to be inevitable that (Mobile) Social media will be the reason to how the World Wide Web evolves.

 

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