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The Business Impacts of Social Media &
Social Networking
Kabilen K. Sornum
Nagrasha Jagpal
Vivien Miranda
James Cook University
Abstract
Social media and social networking has grown exponentially in the recent years.
They have influenced many sectors of the world. Business is one of the affected
sectors. Organizations have taken to recent adaptations of mostly online social
networks to promote and grow their business. In this report, we present the
impacts those social networks have on businesses in general. Four most popular
social networks, namely Facebook, Twitter, MySpace and YouTube are taken
into depth for their impact on business operations.
Introduction
Early social networking websites started in the form of generalized online communities such as The
WELL (1985), Theglobe.com (1994), Geocities (1994) and Tripod.com (1995). These early
communities focused on bringing people together to interact with each other through chat rooms,
and share personal information and ideas around any topics via personal homepage publishing tools
which were a precursor to the blogging phenomenon. Some communities took a different approach
by simply having people link to each other via email addresses. These sites included Classmates.com
(1995), focusing on ties with former school mates, and SixDegrees.com (1997), focusing on indirect
ties. User profiles could be created, messages sent to users held on a "friends list" and other
members could be sought out who had similar interests to yours in their profiles [1]. Whilst these
features had existed in some form before SixDegrees.com came about, this would be the first time
these functions were available in one package. Innovations included not only showing who is
"friends" with whom, but giving users more control over content and connectivity. Between 2002
and 2004, three social networking sites emerged as the most popular form of these sites in the world,
causing such sites to become part of mainstream users globally. First there was Friendster in 2002,
then MySpace and LinkedIn a year later, and finally, Bebo. By 2005, MySpace, emergent as the
biggest of them all, was reportedly getting more page views than Google. 2004 saw the emergence of
Facebook, a competitor, also rapidly growing in size. In 2005, Facebook opened up to the non US
college community, and together with allowing externally-developed add-on applications, and some
applications enabled the graphing of a user's own social network - thus linking social networks and
social networking, became the largest and fastest growing site in the world, not limited by particular
geographical followings.
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Social Media Revolution within Businesses
The Web 2.02 revolution is changing our lives; it is a ground swell that touches both our personal
and professional environments. Social Networking is a concept that federates all of these changes
and is at the center of this transformation. Tools and behaviors which sprang
from the consumer area are now making the transition to the corporate world; with diverse
implications for businesses of how it may change the way they work.
Corporations Will Change the Way They Communicate
Social Networking is bringing a broad new range of technology innovations to communications:
multimedia, presence, interactivity, etc... Now, customers are not only looking for the value of the
products, but for corporate values that make sense. Being visible and personalizing communication
are the silver bullets, even for B2B businesses, as well as the need to let go of some of their image
control [2].
Corporations Will Change Their Vision
As businesses become more transparent thanks to the increasing volume of information available
online, employees will rely more on the enterprise culture, and search for it if it is not explicit
enough. In parallel, stakeholders will seek proof of corporate social responsibility
awareness, made inevitable by the growing transparency. Eventually, corporations will define their
"unified collaboration and communication" strategy at the highest level the vision [2].
Networking Will Be Key to Employee Excellence
People think more globally as their contacts become increasingly international; they pay attention to
what their online contacts mention, and use social network features to gain greater depth of
knowledge in their areas of interest. In this way, they have access to multiple
advisors and mentors, in addition to the raw information; hence Social Networking is a true self
development tool that can be used at anytime, including from a mobile terminal like a BlackBerry or
iPhone [2].
Case Studies
In this section, we will take four popular social networking services and explore their impacts on
organizations and how successful they have been. The four services taken into consideration are
namely Twitter, MySpace, Facebook and YouTube.
Case Study 1: Twitter
Twitter is a free social networking and microblogging service that enables its users to send and read
messages known as tweets. Tweets are text-based posts of up to 140 characters displayed on the
author's profile page and delivered to the author's subscribers who are known as followers. Senders
can restrict delivery to those in their circle of friends or, by default, allow open access. Ever since late
2009, users can follow lists of authors instead of following individual authors [3] [4]. All users can
send and receive tweets via the Twitter website, Short Message Service (SMS) or external
applications.
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How can Twitter be used as a tool for business?
Used systematically, Twitter can be a powerful tool to generate targeted leads and also be used as a
means to communicate with a loyal customer base.
By sending out tweets about product launches, special offers and forthcoming events, businesses can
use Twitter to get the attention of their prospects and clients, thereby extending their reach. In this
way, they could cut down their advertising expenses and improve profitability.
Besides sending out messages, a subscriber can follow their own followers. This is helpful as private
messages can be sent and received between two subscribers. Also Twitter is a great tool for finding
the pulse of the market. By sending out a Tweet asking a question about a product or service that a
business wishes to introduce, the business owner can get responses in quick time and could make the
necessary changes to the product or service before launching it in the market.
Building mutually beneficial relationships is the cornerstone of any business, and using Twitter to
post helpful Tweets is an excellent way of doing this. Although Tweets are limited to 140 characters,
by using links in the Tweet, the reader can be directed to another page or website to read or
download detailed content.
Twitter Success Stories
So far, Twitter's most productive use has been for businesses that want customers' immediate
reactions to a product:
·
Amazon quickly responded to a tweeted outcry [5] about their censoring of so-called adult
books.
·
Starbucks did some reputation damage management after it was rumored [6] that the
company would stop serving the troops in Iran as a protest against the war.
·
Dell noticed customers complaining on Twitter that the apostrophe and return keys were
too close together on the Dell Mini 9 laptop - they fixed the problem on the Dell Mini 10.
Recently, Dell claimed Twitter helped make it some millions of dollars in sales [7]. With 600,000
followers, it is one of the Top 100 most-followed accounts on Twitter.
Dell posted 6 to 10 times a week to its Twitter-based DellOutlet account for the last two years, and
tracked the sales with proprietary software. Every post includes a coupon or a link to a sale and half
of the posts are Twitter-exclusive deals [8].
It reportedly chalked up more than $1 million in sales over the past 6 months. And on Thursday,
Dell said it made over $3 million in total from Twitter followers that clicked through its posts to its
websites to make purchases.
Three million in sales over two years may not be impressive for the world's second-largest PC maker
in the first quarter of 2009 (Dell posted $12.3 billion of revenue in the first quarter of this year,
alone), but the PC maker has become one of the first public examples of how companies might
profit from Twitter.
Twitter does not charge companies for such benefits, but does not rule out doing so in the future.
Twitter had approximately 17 million unique U.S.-based visitors in April, and about 24 million
worldwide, according to Nielsen. Its number of users has grown by more than a thousand percent
over the last year.
A recent study indicates that more than eight in 10 Twitter users, most of which represent small
businesses, expect their company's use of the popular microblogging tool to increase in the next six
months. [9]
Food mogul Nestle recently turned to Twitter for an ad campaign [10] to promote JuicyJuice by
creating an ad that features real-time tweets within its borders.
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Case Study 2: MySpace
MySpace is a social networking website. Its headquarters are in Beverly Hills, California, US,[11]
where it shares an office building with its immediate owner, Fox Interactive Media, owned by News
Corporation. MySpace became the most popular social networking site in the United States in June
2006.[12] According to comScore, MySpace was overtaken internationally by its main competitor,
Facebook, in April 2008, based on monthly unique visitors.[13][14] MySpace employs 1,000
employees, after laying off 30% of its workforce in June 2009;[15] the company does not disclose
revenues or profits separately from News Corporation. The 100 millionth account was created on
August 9, 2006,[16] in the Netherlands.[17] MySpace has similar functions as Facebook. Additional
features include Bulletins, Groups, MySpaceIM, MySpaceTV, MySpace News and classifieds.
Using MySpace to promote online presence
Using MySpace in conjunction with your existing website can serve to aid in your promotional
efforts, whether you are selling your latest book or music CD, advertising web design services, or
offering consulting on a variety of topics. There are quite a few advantages to using MySpace. It is
free. It reinforces branding by allowing an entity to have a personalized URL. It broadens your reach
with a large amount of people who spend their time online and MySpace having over a 100 million
of registered accounts [18]. It is possible to create a unique space. Users are able to "pimp" their own
spaces to define their target areas and audience.
MySpace Success Stories
First, consider the various flavors of Apple's iPod that are on MySpace, such as the Pink Nano,
which is enjoying a meteoric rise in Friendship status. Apple is promoting its entertainment products
on a social network which is dominated by entertainment related members.
Boosted by a significant ad buy on MySpace to support the May 2006 movie release, X-Men 3 [19]
garnered 3.2 million friends on its profile.
Shortly after MySpace was sold to Rupert Murdoch, the owner of Fox news and 20th Century Fox,
in 2005 they launched their own record label, MySpace Records, in an effort to discover unknown
talent currently on MySpace Music.[20] Regardless of the artist already being famous or still looking
for a break into the industry, artists can upload their songs onto MySpace and have access to millions
of people on a daily basis. Some well known singers such as Lily Allen and Sean Kingston gained
fame through MySpace. The availability of music on this website continues to develop, largely driven
by young talent. Over eight million artists have been discovered by MySpace and many more
continue to be discovered daily.[21]
On the other hand, MySpace has not only made entertainment related organizations to have a
successful online success. We also have non-entertainment brands like Jack in the Box, Nike Soccer,
Honda Element, Cingular Sounds and Aquafina which have made their mark on MySpace. [22]
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Case Study 3: Facebook
Facebook is a social networking website that connects family, friends and business associates.
Founded in February 2004 by a Harvard Student, Mark Zuckerberg, as a closed community for
college students, this social networking website has expanded beyond that, making it one of the
largest and fastest growing social networks globally.
Facebook in Business
Several businesses utilize Facebook as their primary advertising and marketing medium. Fundamental
features on Facebook facilitate this task immensely. A profile page can be composed, thus bracketing
the company and potential customers under a common umbrella. The chat, email and wall
applications allow more connection and engagement with current and potential customers. Status
updates give consumers the latest happenings related to the business.
Impact of Facebook on Business
Facebook has both positive and negative impacts on a business. Looking first at the positive impact,
Facebook affords an outlet for companies to present their core values and business profile. This
allows for an affordable alternative whilst still enabling the company to attract target customers.
Facebook has rendered it extremely easy to start and launch a business. We can not only locate
potential collaborators and employees through interest-focused Facebook groups, but also give
people who have time, but little money for advertising, the chance to engage with others and
promote their business.
Facebook has exponentially increased the ability to influence public opinion. This has displaced
colossal media moguls like Oprah and The New York Times accrediting its success with the simple
fact that the common individual satiates his thirst for knowledge with Facebook first before focusing
on television or the newspaper. Consumers start feeling like participants who have a voice instead of
passive bystanders. The engagement and connection with a brand allows a two way flow which in
turn allows a business owner to create a set of key metrics which would allow them to measure
marketing responses towards their brand. These metrics may follow Facebook fan numbers or visitor
numbers as a point figure.
By this time next year, social media will no longer be "social media" -- it will be an integrated,
unquestionable component of your online and offline experience. Last year we spoke of cross-
platform integration across media sites. Users will access content from any device or platform, co-
create and mash-up their photos, videos and text with traditional content while interacting with each
other. As the technological barriers come down, people will increasingly use their phones on-the-go
to access social networks, search, read content and find location-based information. Our phones will
be used as a central hub and beacon -- enabling a slew of new capabilities and experiences. The
accessibility quotient in accessing Facebook will increase tremendously, thus augmenting networking
capabilities. [23]
Case Study 4: YouTube
YouTube is gaining rapid acceptance as an inexpensive, easy-to- use tool for creating, sharing and
discovering information and social connections. Many companies use it inform, demonstrate and
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educate their target audience of their products and services. Some even use it as a brand building
exercise to raise awareness of their brand values or CSR initiatives. The rise of YouTube heralds the
advent of a new communications paradigm. YouTube offers fundamentally new ways for creating,
sharing and discovering information and social connections. You Tube creates different audience
expectations for users who demand different communications channels and in heralded the advent of
a new communications platform for business to entertain, create, share and discover.
Impacts of YouTube on Business
You Tube can be used to influence conversations by reaching out to multiple target audiences and
getting them to buzz about a product or service. This creates social awareness and participation in
the business portfolio of the company.
You tube respondents end up mocking your brand and there have been cases where respondents
have placed parody videos of brands which have made brands laughing stock of the industry.
With the depth and vastness of Videos, respondents will become confused with the clutter. Together
with the mocking videos, the actual videos, the mashed up videos, it could lead the brand confusion
and loss of brand equity. The challenge will be for brands to rise above the clutter and stand out. [24]
The Future of Social Networks and Businesses
Social networks, especially online social networks are growing at a very face pace. We have seen in
earlier sections how businesses have successfully adopted social media to advance and promote their
organizations. But the question is what is the future of this trend and what are the long term effects
of using social networks in business operations. The application of social networks like MySpace and
Facebook in a business context has been an issue of late. Many corporations are turning off access to
social networks as productivity wasters. But from the above test cases, we can say that if
organizations adopt the proper social networks and use it in an "effective" manner, then surely this is
a great tool and media for the growth of the organization in the future. Social networks will allow
seamless traffic in all communication channels.
References:
[1]
Boyd, Danah; Ellison, Nicole (2007). "Social Network Sites: Definition, History, and Scholarship".
Journal of Computer-Mediated Communication 13 (1).
[2]
AT&T Inc., "The Business Impacts of Social Networking"(2008). A whitepaper in corperation with
Early Strategies Consulting.
[3]
"There's a List for That". blog.twitter.com. 2009-10-30. http://blog.twitter.com/2009/10/theres-list-
for-that.html. Retrieved 2010-02-10.
[4]
"Twitter Lists!". help.twitter.com. 2009-11-09.
"http://help.twitter.com/forums/10711/entries/76460. Retrieved 2010-02-10.
[5]
"Amazon criticized for deranking 'adult' books". April 12, 2009. http://news.cnet.com/8301-
1023_3-10217715-93.html. Retrieved 2010-02-10.
[6]
"Rumor Response: Misinformation About Starbucks and the United States Military". April 2009.
http://www.starbucks.com/aboutus/pressdesc.asp?id=684. Retrieved 2010-02-10
[7]
Clare Baldwin, "Twitter helps Dell rake in sales". June 12, 2009.
http://www.reuters.com/article/idUSTRE55B0NU20090612.
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[8]
Erick Schonfeld, "Dell Starts Offering Exclusive Discounts Through Twitter". Feb 3, 2009.
http://techcrunch.com/2009/02/03/dell-starts-offering-exclusive-discounts-through-twitter/
[9]
"Twitter to Move into Business Mainstream". June 2009. http://www.marketingvox.com/twitter-to-
move-into-business-mainstream-044217
[10]
"Nestle Puts Tweets Inside Ad Units". June 2009. http://www.marketingvox.com/nestle-puts-
tweets-inside-ad-units-044341
[11]
My Space is not their space anymore Article on the move to Beverly Hills.
http://www.laobserved.com/biz/2006/08/my_space_is_not_thei.php Retrieved March 16, 2007.
[12]
"MySpace, America's Number One". http://mashable.com/2006/07/11/myspace-americas-number-
one/
[13]
Techtree News Staff (2008-08-13). "Facebook: Largest, Fastest Growing Social Network".
Techtree.com. ITNation.
http://www.techtree.com/India/News/Facebook_Largest_Fastest_Growing_Social_Network/551-
92134-643.html. Retrieved 2008-08-14.
[14] http://siteanalytics.compete.com/facebook.com+myspace.com+TWITTER.com/?metric=uv
[15]
"MySpace to Cut 30% of Workforce". TIME Magazine. 2009-06-16.
[16] "100,000,000th
Account". MySpace. 2007-02-25.
http://profile.myspace.com/index.cfm?fuseaction=user.viewprofile&friendID=100000000. Retrieved
2007-02-21.
[17] Murdoch,
Rupert
(2006-08-09). "Rupert Murdoch Comments on Fox Interactive's Growth".
SeekingAlpha. http://internet.seekingalpha.com/article/15237. Retrieved 2006-09-12.
[18]
"MySpace Hits 100 Million Accounts". 2006. http://mashable.com/2006/08/09/myspace-hits-100-
million-accounts/
[19] http://www.myspace.com/x-menorigins
[20] "MySpace
cowboys". August 2009.
http://money.cnn.com/magazines/fortune/fortune_archive/2006/09/04/8384727/index.htm
[21] "Facebook,Myspace
Statistics". Jan 2008.
http://techradar1.wordpress.com/2008/01/11/facebookmyspace-statistics/
[22]
"5 Brands Make Their Mark on MySpace". August 2006.
http://www.imediaconnection.com/content/11010.asp
[23]
Forrester, The Growth Of Social Technology Adoption, 2008 Social Media Usage is Exploding
[24]
"Using YouTube to Promote Your Business". Sept 2007.
http://www.informit.com/articles/article.aspx?p=1016107
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