The Press, August 2007

A trendy Auckland restaurant last week found out about the power of the internet as a communication tool. A disgruntled customer criticised the establishment for ‘reycling’ wine and her comments quickly found wide circulation throughout the region. The restaurant owner said it was ‘devastating.”

The marketing world is getting increasingly excited about the potential of communicating with customers using the internet – the vaguely named phenomenon of ‘social media’. Its effect on marketing is predicted to be anywhere from profound to mild, depending on who you listen to.

What is this social media thing and how closely should the average company look at it?

Incarnations of this new phenomenon are many and varied, but they are basically variations on being able to share stuff with other people using your computer and the internet. For example, the Stuff website that this column appears on has a number of blogs. These are daily website logs that readers can review and then publish their own comments on.

Social media comes in many other forms. Social networking websites, podcasts, video sharing, viral media, wikis, online gaming. Brands like YouTube, MySpace, Facebook, Bebo, Flickr and Wikipedia have become globally recognised very quickly. Even local firms are getting in on the action with Christchurch-based Eurekster gaining worldwide acclaim for its technology that applies social networking concepts to searching the internet.

MySpace, a website that enables people to form groups around common interests, has enjoyed phenomenal growth. A recent Hollywood Reporter article put the MySpace's regular audience at 61.3 million people, up 33% on the previous year. It’s viability as a mainstream channel like radio, TV or newspapers was underscored when purchased by Rupert Murdoch’s News Corporation in 2006.

Social media is going through a classic ‘hype cycle’. There is huge interest and discussion in it as a way of marketing products, but the vast majority of companies aren’t really using it seriously i.e. spending serious marketing budgets on social media channels.

Whether it is becoming mainstream or not, there are some important differences to consider with social media. Companies struggle to ‘control’ the message with social media, in the same way they can with an advertisement in a magazine.

With something like blogs companies have to truly communicate i.e. try to achieve a shared understanding between them and their audience. That’s because everything is two-way, instead of simply sending messages out to your audience, social media allows people to see your message, comment on it and send it to other potential customers with criticism or endorsement.

That makes it a very powerful method of communication. Cheap, instant and persuasive. Which can either boost or blast your brand.

Transparency becomes really important with social media – it is hard to ‘spin’ things. You can’t just simply promise to customers and then not deliver. That’s because people are out there watching and talking and can share much more effectively than ever before.

As Clive Thompson wrote in a recent Wired Magazine article, “Secrecy is dying. It's probably already dead . . . Radical forms of transparency are now the norm at start-ups - and even some Fortune 500 companies.”

A key for companies in the world of social media is understanding what your story really is. What do you want to communicate, what is special about you? It has to be based on something fundamentally true and real, not something clever an advertising agency has dreamed up.

While this need for greater transparency is one real difference with social media, it is not changing the marketing game. Social media needs to be treated as another channel for persuading customers to buy your product. The fundamental rules of marketing still apply – probably even more so than ever before.

Who is your ideal target customer, what is it that you do for them, why do customers choose your product over competitive options. Only when you are crystal clear about these marketing basics will you be clear about if and when to use social media.

An example is local company SLI Systems who sell their software services mainly to US e-commerce companies. They use things like CEO Shaun Ryan’s regular blog to communicate with potential customers. It makes sense – their customers live online and the blog enables them to raise business issues relevant to their customers and generate discussion and awareness of their brand.

Social media can be either powerful threat or opportunity for promoting your company. Just ask the Auckland restaurant owner. Using it effectively is only possible if you really know your market – who are they are, where are they are, how they use various communications channels to guide their purchase decisions. Then you just need to have the confidence to open yourself to an interactive discussion that could spread around the world in an instant.

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