1. Using Social Media for Business
Miriam Verghese
8/2/2010

2. 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

3. discusses the major pitfalls associated with online social media use and the principle fears
shared by executives in using this highly valuable tool.

4. Table of Contents
Chapter Page number
Introduction ……………………………..……………… 1
Generation Y – Leading Change from the Back ...………. 3
Social Media – Business Uses …..…. …………………. 4
Breaking Through the Obstacles …... …………………. 13
Conclusion ……………………………..………………. 16

5. 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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6. 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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7. 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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8. 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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9. $2,145
$2,883
$3,559
$4,136
2008
2009
2010
2011
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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10. 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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11. 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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12. 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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13. 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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14. 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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15. 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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16. 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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17. 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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18. 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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19. 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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