With the phenomenal rise in social media over the last 10 years, Charlotte Kan considers how the medium is changing the way companies do business
Facebook, Twitter, LinkedIn…all well-established household names - yet all were created less than 10 years ago. Fuelled by the use of mobile phones and tablets, the rise in social media over the last decade has been incredibly fast. New means of communicating instantaneously with millions of people around the world have changed the way we socialise, talk, exchange – and consume.
Erik Qualman, author of international best-selling title Socialnomics: How Social Media Transforms The Way We Live and Do Business, one of the world’s most respected authorities on the topic, has coined the social media revolution phrase. In his Youtube video, watched by more than one million people online, Qualman highlights mind-boggling facts about social media: if Facebook was a country it would be the world’s third largest, one person joins LinkedIn every second, one in five couples meet online – though, sadly, one in five divorces in the world are now blamed on Facebook. There are more than 1.5 billion social networking users across the globe, and 95 per cent of Generation Y has signed up for social networks.
Getting it right
So “Is social media a fad or the biggest shift since the industrial revolution?” asks Erik Qualman. Companies who believe the former will learn it at their expense. “We don’t have a choice on whether we do social media, but the question is how well we do it,” he says.
The success of recent social media campaigns from Ford or Volkswagen (above) speaks for itself. The Ford Explorer launch on Facebook generated more traffic than a Superbowl ad, and over 37 million people watched the German carmaker’s Darth Vadar Super Bowl ad on YouTube. Such large scale and relatively cheap advertising methods are a real panacea for businesses of all sizes.
"The benefits of social media can be huge. The access directly to a businesses audience or even a prospective audience allows for whole new ways that businesses can learn and improve. For large businesses it provides new data and insights about real customers and what they really think. And small business and start-ups can use services like Kick-Starter to raise finance and get their ideas off the ground," says Justin Peyton, Director of Strategy for MENA at LBi, a global marketing and technology agency.
Most of the potential of social media seems yet to be explored. In a McKinsey Global Institute (MGI) report issued in June, entitled The social economy: Unlocking value and productivity through social technologies, the consulting firm notes that 70 per cent of businesses use social media and 90 per cent report some business benefit from them – including a 50 per cent increase in customer satisfaction, 48 per cent increase in business leads, and 24 per cent increase in revenue. McKinsey adds that better use of social technologies could potentially contribute US$900bn to US$1.3tn to businesses yearly.
In the UAE, consumers also increasingly rely on social media to make purchasing choices. A joint study by Zarca Interactive and GolinHarris showed that 25.7 per cent of the people looking to purchase a car in the Emirates based their decision from opinions and reviews appearing on social media, blogs and forums. Not surprising when 90 per cent of customers globally trust peer recommendations, and only 14 per cent advertising.
“Advertisers, marketers and communicators need to veer to the fast lane where actual consumer decisions are swayed away from traditional media. Look at mobile advertising figures in America, which is estimated to exceed the US$5bn mark by 2015. Information consumption habits constantly change due to technological innovations and markets and sectors need to move with the times,” said George Kotsolios, Joint Managing Director of GolinHarris in Dubai.
However, for businesses, social media is a double-edged sword. On the one hand, it can considerably help develop a brand – and quickly. But on the other hand, it can destroy it as fast as it helped create. There are many examples of companies and brands damaged by badly executed use of social media.
"Getting the balance right, and focusing efforts and attention in the right place are vital to succeeding in social media. It's not about making noise just because you can. Just like every other part of your business, it's about looking at what resources you have at your disposal, understanding your objectives and goals, and actioning a plan to get there. And of course making sure that you measure your progress and learn every step of the way. There is an added challenge to this in that you have to structure the business to take advantage of the growing social opportunity – so removing internal silos and facilitating collaboration - is a crucial starting point," Justin Peyton concludes.