The Business Impacts of Social Media & Social Networking

Essay, 2010

7 Pages, Grade: A



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.


Early social networking websites started in the form of generalized online communities such as The WELL (1985), (1994), Geocities (1994) and (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 (1995), focusing on ties with former school mates, and (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 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.

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.

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.


[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". 2009-10-30. that.html. Retrieved 2010-02-10.

[4] "Twitter Lists!". 2009-11-09. “ Retrieved 2010-02-10.

[5] “Amazon criticized for deranking 'adult' books”. April 12, 2009. 1023_3-10217715-93.html. Retrieved 2010-02-10.

[6] “Rumor Response: Misinformation About Starbucks and the United States Military”. April 2009. Retrieved 2010-02-10

[7] Clare Baldwin, “Twitter helps Dell rake in sales”. June 12, 2009.

[8] Erick Schonfeld, “Dell Starts Offering Exclusive Discounts Through Twitter”. Feb 3, 2009.

[9] “Twitter to Move into Business Mainstream”. June 2009. into-business-mainstream-044217

[10] “Nestle Puts Tweets Inside Ad Units”. June 2009. inside-ad-units-044341

Excerpt out of 7 pages


The Business Impacts of Social Media & Social Networking
James Cook University
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ISBN (eBook)
ISBN (Book)
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social media, business impacts, social networking
Quote paper
Kabilen Sornum (Author)Nagrasha Jagpal (Author)Vivien Miranda (Author), 2010, The Business Impacts of Social Media & Social Networking, Munich, GRIN Verlag,


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