Britt Technology Impact Series

The Business of Social Overview

September 18, 2011

The Business of Social Overview PhotoThe Business of Social Overview

Britt Technology Impact Series

September 18, 2011


The Britt Technology Impact Series is made possible by a generous donation from Tuck and Dartmouth alumnus Glenn Britt, CEO and Chairman of Time Warner Cable. In giving the gift, Glenn stated: “The role of business people is to understand the possibilities created by new technologies, recognize unmet consumer or business needs they could fulfill, and determine if the new technology and the customer needs can be put together in a business model that makes sense.” The Center for Digital Strategies structures the Britt Series so it highlights relevant aspects of a set of technologies, examines business models and illustrates how consumer and corporate needs are being met.

Social networking technology is one of the most important communication conduits to arise since the mobile phone. This new means of communication is redefining how consumers reveal the details of their lives and what it means to connect with others. The instant sharing of news and information with these always-on networks is shifting culture: The chatter through platforms like Facebook and Twitter boosts the prominence of personal narratives and makes users’ lives more open for others to see. These digital personal networks are in many ways like having a group of friends, relatives and others in the next room waiting to react to both the profound and the trivial aspects of someone’s life. Enterprises, too, are crowding into the room. They are carving out footholds in social networks as they construct new ways of communicating. Workers are using wikis, corporations are blogging and global brands are looking for Facebook “likes.” While social is pervasive in the lives of consumers, the answers as to how enterprises can succeed in this new world are still emerging. There are big questions about how to
best incorporate social tools and how to profit from them.

The power of social technology to upend how enterprises operate is evident. The Britt Technology Impact Series (BTIS) has brought together leaders in business to ask how top companies are mastering social tools. The discussions reveal key insights on shaping strategy, establishing trust with consumers, collaborating in the workplace and measuring success. The prescriptions for success have varied but many center on a similar approach: Prepare to make mistakes but don’t make the biggest one by remaining silent.

Enterprises must react. Looking at social technology as a trend to be endured and later forgotten is a mistake. No one given the power to “like” something on Facebook or to announce something to followers on Twitter will be satisfied to return to commenting on moderated blog pages. The popularity of Facebook or so-called
microblogs like Tumblr and Twitter is sustained because each fulfills a need. The same is true for everything from professional-networking sites like LinkedIn to popular games like FarmVille and Foursquare. The “social” aspect of the interaction these platforms provide is what is sustaining demand. In this world, people anywhere find it possible to be heard everywhere. For this reason, social is not a fad. This idea has been a recurring theme of the BTIS discussions.

The marquee names will change as new business models take hold. Some will erupt: Groupon, the group-discount site, has become the fastest-growing Internet company, according to Forbes. Facebook, which went live on Feb. 4, 2004, shot past the top three U.S. web properties in 2010 to reach No. 1 for the amount of time spent online, comScore Inc. reports. Some social properties, such as Friendster, have lost momentum in big markets like the United States. The favorites will continue to shift but what won’t change is a desire for people to interact online with friends, family, coworkers and even strangers in new and collaborative ways. The more than half billion Facebook users make this clear.

In the U.S., 90% of active users of social networks have a profile on Facebook, data from Invoke Solutions show. About one-third—31%—have active accounts on Twitter and 26% have profiles on LinkedIn. Also, 41% have an active account on other platforms. For businesses and other enterprises, this shift to social platforms presents profound challenges and enormous opportunities. Social technology is blowing apart the normal circuits of corporate communication. CEOs and PR departments are no longer the sole voice of a company or brand. Nearly every person in an enterprise becomes a potential sounding board. This is making for a sometimes messy transition. In his book “Here Comes Everybody,” Clay Shirky notes that the challenges brought by the arrival of social technology aren’t surprising: “The comparison with the printing press doesn’t suggest that we are entering a bright new future—for a hundred years after it started the printing press broke more things than it fixed.”

New tools reshape communication and introduce challenges
Despite the obstacles, the benefits of social technology to many consumers and enterprises are too compelling to ignore. By 2010, nearly half of the U.S. population over age 12 had a profile on a social network, Edison Research reports. This adoption of social tools is generating mountains of content and creating hurdles for consumers and enterprises trying to stay current.

Kyle Keogh, Director of Sales Strategy and Planning at Google, notes that the interconnected world had produced more data in a recent three-day span than in the first thousand years after humans began writing. “The more that gets created, the more the change accelerates,” he says. “The changes in the next five years will be even more significant and unforeseen than in the last five.”

Keogh isn’t alone in pointing to a shift so profound it can be hard to grasp. Collin Douma, VP of Social Media at advertising agency Proximity BBDO, believes the diminished ability to control communications is one of the biggest changes that enterprises face. Indeed, an outsider armed with little more than a Twitter account can reshape opinions about an enterprise in only 140 characters. Examples abound: Botched customer-service jobs at an airline and an appliance maker have ricocheted across the Internet in ways that would have been difficult to envision even a few years ago.

“From my point of view, the thing that’s happened in the last five years is probably bigger than the Industrial Revolution. It’s a cultural revolution,” Douma says. “The shift of control is the thing that resonates with me the most. The institutions are all very afraid. Universities should be afraid, churches should be afraid, governments
should be afraid because they’re losing control.” This changing landscape demands that enterprises rely on new strategies. Douma notes that many online tools long favored by enterprises are falling flat. “Five years ago, I was doing banner ads, microsites and emails,” he says. “Now, I don’t touch those things because they’re just not effective.”

The potency of social media is at times palpable: “Social media is like gasoline. When used properly [it is] very useful,” states Alex Dudley, VP of Public Relations at Time Warner Cable Inc. “Put [it] near a fire and it’s out of control very quickly.” The reallocation of power is occurring well beyond business. Protestors have been using social technology to fan the insurrections roiling the Middle East. Experts debate the role that social tools are playing but it is clear that these platforms make it easier for disparate groups to unite and communicate, even under the muscle of authoritarian governments.

For business, the power of social presents big challenges for enterprises that can no longer rely on pumping out slogans and marketing materials. “We don’t even really talk about messaging anymore because it feels forced, it feels fabricated,” Dudley says. He notes that social tools make it easier for customers to better evaluate what services to buy. Customers instead want enterprises that are willing to take part in a conversation.

Sam Howe, Chief Marketing Officer at Time Warner Cable, believes that to get started enterprises must be clear about their intentions but do not have to jettison their business goals. “You don’t have to become something else or you don’t have to become hip,” he explains. “You just have to say what you’re about, what you’re trying to achieve.”

Proper engagement with consumers and others outside the enterprise requires honesty. People following friends, coworkers and others through networks like Facebook or Twitter have already evaluated the credibility of most of these voices. In social networking environments, users grow accustomed to seeing personal, authentic messages. An enterprise that wades into social spaces and makes flimsy attempts at persuasion can look out of place.

There are attendant risks to any use of social technology but communicating in an open way gives enterprises a better chance to improve their standing with customers. “We’ve gotten to a place where we look at every engagement, good or bad, as an opportunity,” says David Godsman, VP of Global Web Strategy for Starwood Hotels.

Listening to customersand taking action
For enterprises, social networks can serve as powerful listening posts. Consumers are paying attention to what enterprises say online, so companies must do the same. Nearly one in four active social media users read blogs sponsored by a product or a company, according to Invoke Solutions. Some users are even more involved: 31% of social technology users follow companies on Twitter and 30% take part in an online community developed by a brand or a company.

John Bell, Global Managing Director at Ogilvy & Mather, notes that taking simple steps like setting up a calendar of the content that a company will introduce through social channels can help feed a steady conversation between enterprises and social network users. At the same time, teams must be prepared to react as social networks dictate. “We’ve become kind of a hybrid team of real-time responders and engagers,” he says. More enterprises will be adopting this model. A survey in early 2011 by research firm Gartner Inc. found that 30% of large companies would use social media as a customer-service tool within two years, up from 5% in 2010. By paying attention to the conversations, enterprises can resolve problems and perhaps even identify systemic flaws. This is important in part because some unhappy customers turn to social tools to complain.

Bell warns that enterprises could struggle to meet customers’ rising expectations. “We have taught our fellow consumers that if you have a problem with a service you go on and you Tweet it out to your friends. And then you’ll be noticed by the company you’re having the problem with and they will reach in and do some triage,” Bell notes. “You can’t unring the bell.” The word-of-mouth nature of social technology makes it easier to damage the reputation of an enterprise. Social media users are, of course, consumers. About one-third of people who use social platforms “frequently” share information or reviews about new products, Invoke Solutions reports. (Group-discount platforms suchas Groupon, LivingSocial and Facebook’s Deals allow users to share coupons and promotions for products and services.)

All the sharing can sting an enterprise. “Ninety-nine percent of the time, there are real issues that they’re trying to talk to the company about, but they felt for whatever reason that the internal channels were closed,” explains Gary Grates, President and Global Managing Director of Edelman Change and Employee Engagement at the independent public relations firm Edelman. “When you go in there and you start listening to the issues, you bring those issues back into the organization and you begin to address them. Then you’d go back online and say, ‘Hey, we heard you about this.’”

Paul Dickard, VP of External Communications at AECOM, believes enterprises must be able to act on the information they are harvesting from social networks, not just collect data. “If the institutional mechanisms aren’t there to support it, then your brand is going to go downhill faster than somebody otherwise would experience,”
he says.

When a problem is resolved consumers can feel more empowered and enterprises can win loyalty. Praise, just like complaints, can spread through consumers’ personal networks. A survey by AdweekMedia/Harris Poll found that 45% of adults who use social networking tools have become a “fan” of a brand or a company. Another 14% often become fans while 41% have not ever become fans.

Users who are younger are more likely to endorse a brand. About two-thirds of adults under age 34 have become fans at least “occasionally,” while only one-third of people over 55 have become fans of a brand or company.

“Any basic social strategy has to have that level of communication in place between a brand and its users,” contends Lou Aversano, Worldwide Managing Director at Ogilvy. “That’s always been true. It’s now more true given the acceleration of opinion that social allows.” Aversano believes enterprises that can improve service
through social will pull ahead. “You’re seeing with digital, especially with social, people understanding how to service their customers better. And that’s where brand differentiation is going to happen because the experience is just as important as the product itself.”

Time Warner Cable’s Howe notes that the company has set up a team of customer service workers who monitor Twitter and other social networks for complaints. One challenge for major companies with large numbers of customers is the scale of the job. Time Warner Cable has about 14 million customers and receives about 9 million calls per month. In roughly the first six months of operation, the team combing social networks had about 50,000 interactions with consumers and solved about 10,000 problems. This is notable, in part, because the average Facebook user has 130 “friends.” Social technology can turn critics into fans and amplify the resulting Ablog post, a YouTube video or even a simple Tweet can bring serious damage and legal risks for enterprises. Many companies, including United Airlines, Mars Inc. and Chrysler Group LLC, have watched bad news echo through social channels. With this great shift in power and increased transparency, enterprises
need to consider integrating social technology into their customer-service toolkit.

It is not enough for customer service in social spaces to focus on redirecting unsatisfied clients toward offline conversations. At the same time, it also is not sufficient to simply own up to mistakes or correct false information. Instead, service in a social world needs to center on rectifying problems and taking steps so that the
same troubles do not befall other customers. While this has always been a hallmark of good customer service, it is now more important because social tools can magnify the fallout from missteps. Enterprises should respond to complaints in a timely manner within the same medium as the customer. The response should provide an answer to a question or address a criticism, not focus on selling a product or papering over mistakes. Trying to skirt or silence complaints will only exacerbate the problem.

Nestlé S.A., for example, drew fire last year for deleting unflattering comments from the company’s Facebook page. There are a number of approaches to using social technology as a tool for customer service but a central theme is to aim for a two-way interaction rather than a one sided message. For example, PitneyBowes Inc. hosts community discussions, while Comcast Corp., Ford Motor Co. and BestBuy Corp. rely on Twitter to reach customers and address problems.

Dell Inc. makes room for customer wikis so that users can share product information. Customers can even answer questions of fellow consumers. Leveraging crowdsourcing can not only reduce costs but also can provide a powerful and versatile tool for discovering ways to improve products. Starbucks Corp. solicits ideas from
consumers and lets customers vote for their favorite proposals.

With these types of tools customers are able to show their passion for a brand and increase personal engagement with an enterprise. For this reason, it is important to deploy resources that customers can use to help themselves and learn more about an enterprise.

Ultimately, enterprises need to mindful that a one-platform or one-channel strategy will not be sufficient and that addressing the needs of customers requires not only fixing problems but taking part in conversations.

Other companies find that it pays to look for trouble. Ray Kerins, VP of External Affairs and Worldwide Communications at Pfizer Inc., believes the company has benefited by using social technology to gather data on its medicines. Pfizer has added links on its social platforms that let consumers report problems with medications. “It makes us a better company. It makes us understand how our products are doing in the marketplace,” he says.

Ignoring social tools poses risks but so does marching in without a plan. Funneling every press release onto a Twitter feed doesn’t allow for a dialogue with customers or other outsiders and can alienate followers. Enterprises need to craft more than a strategy for a single network. “You start saying … ‘What’s your Facebook strategy?’ or ‘What’s your Google strategy?’ That’s very tactical—you’re already dead in the water. You’ve got to start thinking bigger,” says BBDO’s Douma. “We need to be creating social ideas that move across all those platforms. And then you’ll be successful.”

To think bigger, Douma encourages those engaging in social on behalf of an enterprise to consider how ideas spread. Something that is unique, useful or interesting carries much more potential to rocket around social spheres than self serving corporate sound bites, for example. “It’s making marketers anthropologists in
a weird way and making us have to understand the human condition, not necessarily the demographic condition,” he notes.

Weaving social tools into the culture of an enterprise will make it easier to produce useful content. Experts in one area can share what they know to be relevant and interesting. This is more likely to create meaningful conversations with those outside the enterprise.

Ogilvy’s Bell believes that enterprises can cultivate consumer loyalty by giving access to new information or insights that supporters of an enterprise would find interesting. He said there are risks when enterprises only dangle rewards in front of customers to win attention. The loyalty can be toward the promotion, not the brand.

That can make it harder to convert first-time users to repeat customers. Instead, useful information might simply be something that is not yet available to the public, such as a glimpse of a new product. That level of trust can breed loyalty. “They treat people like insiders,” Bell explains. “It’s not all about coupons.” Starwood’s Godsman says it is important that enterprises—particularly those with multiple entities—hit the right tone. “We have nine brands and they behave very differently and they have individual personalities. I think it’s taking the time to understand ‘How do you want to match social against those various brands and then where do you really want to put your resources?’”

Godsman notes that guests at the company’s W Hotel chain often rely on social technology tools and look to the hotels for a two-way dialogue. At the company’s highend St. Regis Hotels, however, the typically older guests don’t as often look to social technology as way to connect with the brand. It is clear that enterprises hoping to build successful social strategies need to identify goals and determine what social channels are best for communicating with customers. It then becomes possible to assign responsibility for executing the plan.

Establishing best-practices within the enterprise
There are different approaches to sowing a culture of social networking with an enterprise. Many participants in the BTIS discussions believe that folding these tools into day-to-day operations is important. Kerins notes Pfizer doesn’t have one person overseeing all social media so that the responsibility instead becomes shared. Other enterprises tap someone to focus on the best use of social tools. PepsiCo, for example, has a director of social media.

Edelman’s Grates notes that giving workers better insights into the enterprise can help create an army of people who feel responsible for safeguarding a brand or product, rather than just a few people charged with overseeing marketing and communications. “Corporations are a lot of time saying ‘We have brand
ambassadors.’ I’ve never met one,” Grates says.

Jumping into the world of social networking can be challenging, regardless of how an enterprise delegates responsibility for the task. Still, some suggest charging ahead. “Make no small plans with it,” Howe says. “Don’t edge in on it a little bit. We might not have taken that advice ourselves, but I think we’ve learned that … you just can’t dissolve it into your meal.” Howe says enterprises need to consider with each communication whether social tools will lead the outreach or only support it. Grates believes learning to navigate social spaces comes in part from experience. “It’s not a technology, it’s not a platform,” he says. “It’s something that you’re going to jump in the pool and then you’re going to basically learn to swim as you go.”

One reason social platforms draw such interest from enterprises is because many see an important marketplace emerging. A report from Booz & Company has found that goods sold on social platforms could jump sixfold from an estimated $5 billion in 2011 to $30 billion globally in 2015. Ogilvy’s Aversano says social technology requires increased leadership and management. Enterprises need to give workers a chance to understand how to use social tools and what role employees play in supporting a business or brand. “Training is critical.”

At adidas Group, leaders brought together different parts of the business to get started in social. “You do need the business input from marketing and you do need the technical skills from IT,” says Jan Brecht, Chief Information Officer.

“As a company which sells consumer products you need to be where the people are,” he says. Brecht contends that embracing social tools has been a logical progression because the company’s young work force is inclined to turn to this technology. “Cultural change comes automatically with the people we hire so we do not need to enforce a special program to do this.”

In addition, adidas has begun pilot programs to enhance communication within the company. Brecht predicts that such efforts could eventually extend to using social technology to work with suppliers.

Linda Abraham, Chief Marketing Officer and EVP, Global Development at comScore, says that the nature of a brand helps determine whether it succeeds in social. “Some brands lend themselves to changes in technology,” she notes. A company that sells tires might not have the same resonance on a regular basis with consumers as a high-end grocery chain like Whole Foods Market, which has the largest number of Gary Grates, President and Global Managing Director of Edelman Change and Employee Engagement Facebook fans of any commercial operation.

Building trust with consumers
A consistent voice can demystify an enterprise, give it personality and help build consumer loyalty. Enterprises must remain at least somewhat transparent to maintain the affinity they earn. This involves a willingness to discuss perceived flaws. A poll of social media users by Invoke Live has found the most critical factor in the believability of posts on social channels is whether an enterprise is open to criticism and not solely to positive comments. Sixty-four percent rate this as important. The quality of comments that others make about a brand or enterprise also affects trust.

Likewise, it is important for enterprises to be responsive to posts and comments. The number of people who are fans or followers was the least notable consideration, with 38% ranking this as important.

Dickard believes the ability of social tools to pull back the proverbial curtain on the inner workings of an enterprise can force management to have important conversations about issues like business practices and governance. “There are certain things that are just now understood to be the right thing to do,” he says. “Internally,
we’ve got to make sure we’ve calibrated all of our activities to be oriented toward behaving properly as a corporate citizen.”

Enterprises that aren’t willing to confront their own shortcomings should avoid social media, according to Godsman. “Expect the transparency,” he warns. “Stepping into social media, whether you’re doing it internally, within the company, or externally, requires honesty and transparency. And if you’re not willing to engage in that … stay away from it.”

“That, to me, has been the biggest learning and the biggest hurdle that we have faced internally,” Godsman notes. “This is going to be a relationship. You’re engaging in a dialogue and you have to get to nurture it and, you know, be held accountable for it.”

Aversano says social tools are making it easier for consumers to learn about the corporate structure of well-known brands. He notes that years ago the corporate makeup of renowned brands didn’t draw as much attention. That is changing.

“Companies are now finding themselves looking at how they think about not only the product brands but the corporation brand.” Ogilvy’s Bell says companies are under more pressure because consumers with smartphones can scan a product’s barcode to learn about the pedigree of the organization. “That corporation now has to have some meaning and purpose for people,” Bell says. “They care about what P&G or what Unilever stands for.”

Rod Thorn, Director of Communications at PepsiCo, Inc., notes social networks heightened criticism that the company was creating too many plastic bottles and other waste that wasn’t biodegradable. While there was an existing desire within the company to increase recycling, social networks added pressure. “Social media forced us to take a harder look at that,” he says. “It pushes us. It’s like an accelerant or a force-multiplier.” The result of the stepped-up effort was a vending machine that also accepts bottles for recycling. The Dream Machine, as it is called, is part of the company’s effort to boost the recycling rate of its bottles to 50% (from 34%) by 2018.

Time Warner Cable’s Dudley says the way that an enterprise acknowledges difficulties can help build trust. “We have to have a voice—and people have to believe that voice. It has to be authentic,” he contends. “It means we have to kind of lift the veil on how our business works because it’s complex. But we have to acknowledge that our reputation—it is what it is. We have to poke a little fun at ourselves … It has to be clear that we’re in this for more than just passing messages through to people. And our management team understands that. Not that they’ve run out and fixed every ill, but those conversations are happening as a result of social media. And I think it’s been to the company’s great benefit.”

Coaching employees once social engagements begin
Enterprises need to consider that honesty and transparency begin with communication to employees. Workers must be clear about what enterprises expect of them. To start, employees need to understand that their activities online and in social networks can reflect on the enterprise.

Edelman’s Grates says that enterprises must make clear that some information within the organization is proprietary. He says the fast-pace of social technology and business in general only adds to the risks that important data might be disclosed inadvertently. There are other ways that worker missteps can hurt a brand or enterprise. Starwood’s Godsman says the company recognizes that there often is an overlap between employees’ personal lives in the social world and their work lives. “The important thing is to remind employees that if they are going to reference where they work … there is some accountability that goes with that,” Godsman says. Sometimes employees need reminders that anyone can see it when they post a complaint about a boss or the company. “If you don’t remind people … it can get quickly out of hand.”

Godsman believes it helps to extend some latitude for the employee as people navigate how to combine their personal social sphere with that of their work. Ben Edwards, VP of Digital Strategy and Development at IBM Corp., notes that employees are taking risks if they do not examine their social activities from every angle, including the perspective of employers. “If you’re not looking at yourself 360 [degrees] then you’re doing yourself a disservice,” he says.

Social users need to disclose any relationship that could draw the ire of critics. Bloggers, for example, should state if they work for an enterprise or if they could benefit by praising it.

Pepsi’s Thorn believes it is important to strive for a quick recovery from missteps, particularly those that attract criticism. “That’s when we have to back up and say ‘Look, sometimes we’re going to make mistakes. And we’re going to go fast. And we’re going to have to have the freedom to build relationships with people,’” he
says. Thorn contends that even with the risks, it is important for those inside an organization to be empowered to use social tools for communicating in and out of the enterprise. “You have to give people the freedom to use the tools you’re giving them,” he says.

Enterprises need to remain nimble so they can address mistakes and misinformation. “Bad news travels fast. It’s really painful if the bad news is true. It’s less painful if the bad news is false,” says BBDO’s Douma. Establishing policies for how employees use social networks requires involvement of not only the IT department but human resources, corporate communications and potentially the legal team to help examine risks.

IBM has encouraged workers for years to be active on social networks. Edwards contends that enterprises should reiterate social media policies just as people go access these tools so that busy employees will be more likely to learn. “The guidelines and the prompts and the education need to be when employees are doing this,” he says.

Chipmaker Intel Corp. advises its employees and contractors to “pause and think” before posting to social channels. The company notes that operating in social networks on behalf of Intel is “not a right but an opportunity.” Intel social media guidelines:

  • Stick to your area of expertise and provide unique, individual perspectives on what’s going on at Intel and in the world. Post meaningful, respectful comments—in other words, no spam and no remarks that are off-topic or offensive.
  • Always pause and think before posting. That said, reply to comments in a timely manner, when a response is appropriate.
  • Respect proprietary information and content, and confidentiality.
  • When disagreeing with others’ opinions, keep it appropriate and polite.
  • Know and follow the Intel Code of Conduct and the Intel Privacy Policy.
    Source: Intel Corp.

Time Warner Cable’s Dudley warns mistakes will still occur even with training and well outlined procedures. “There is no risk-free way to participate in social media,” he says. One risk is that behind-the-scenes collaborations can be made public through
social channels.

Treating internal communications with some expectation that they will be seen by an unintended audience can encourage self-policing among employees who might otherwise take less care in how they communicate.

Don Tapscott, author and Chairman of Moxie Insight, says that enterprises should expect to have their operations examined because social tools provide further inroads into an organization. “Companies are being scrutinized like never before,” Tapscott states. “People have at their fingertips the most powerful tools ever for finding out what’s going on, informing others and even organizing collective responses.” “We all have to get used to it,” he says. “As institutions, we’re going to be naked.”

Tapscott believes this “age of transparency” and the anticipation of private information becoming public could keep some enterprises from taking undue risks or even prevent wrongdoing. “Over all, this is a good thing. Over all, sunlight is the best disinfectant.”

Collaborating and innovating within the enterprise
Social tools are not only reshaping external communications, but also how workers collaborate within the enterprise. This technology is arming employees with faster and easier ways to tap the best resources inside an enterprise. It is now possible for workers to share in an instant the kind of back-of-the-napkin calculations
that can lead to innovation. Clay Shirky notes in his book that this digital water-cooler effect can lead to the rapid identification of those employees most qualified to answer questions.

Ogilvy’s Bell is seeing large enterprises move beyond experimentation with social tools and fold them into operations. This is part of an evolution from a simple social media strategy to a social business strategy, Bell notes. This shift brings a focus on ways that social technology can bring value across the enterprise. Bell contends that it is challenging how brands are staffed and organized. At Ogilvy, social technology is remaking the way the agency conducts training and is pushing the company to adopt new models for planning.

Workers at IBM have been using social technology to collaborate with fellow IBMers for more than a decade. With more than 400,000 employees in 190 countries, the company has a deep pool of experts. Workers construct wikis, for example, to share information and build on ideas. The company’s internal wiki has about 200,000 registered users who together produce about 1 million web pages in a year. IBM’s social tools can add bookmarks to Web pages. This allows workers to share the way they are marking up the company’s internal sites as well as the Internet.

Edwards notes that the 17,000 people who use IBM’s blogging tool, for example, help foster a widespread culture of idea-sharing. “A lot of this stuff is sort of showing up in our external products.” He believes the ability to more easily collaborate is critical because the company has workers spread around the world. Social tools are reshaping how the company develops software, for example. IBM employees can collaborate with experts outside the company to build software based on public web technologies that aren’t proprietary. “The actual means of production gets totally re-engineered through social media,” Edwards says. The result might be 200,000 experts from outside IBM and 100,000 from within the company collaborating to produce software.

IBM invites collaboration with those in and outside the company through events like its Social Business Jam. These discussions act like structured online forums and have involved millions of people. People can share ideas on topics and discuss specific challenges. Edwards notes the Jams can help a CEO, for example, align a group of people or a company around shifts in strategy. “These technologies I think actually … are incredibly powerful for mobilizing people around the direction, around the change,” he says. The Jams have been used to discuss the future of NATO and to marshal 150 companies in forming a strategy for the U.S. auto-supplier industry. “How else are you going to do that?” Edwards asks.

Workers already rely on social technology to communicate in their personal lives so injecting social technology into the workplace is logical. Pepsi’s Thorn notes employees often forgo email and turn instead to what is known as the Pepsi Collaboration Project to share ideas, best-practices and to direct resources to where they’re needed. It acts as a sort of internal Facebook community for Pepsi. “You see profiles of people and people will say what they’re working on so that we can tap into the expertise of anyone in the world in real-time,” he says. “It’s hugely important for us.”

Social tools not only allow workers to share insights with each other but also with management. It might not always be by design but the exchange of ideas can provide an unvarnished look at the inner workings of the company. “The CEO knows more about what’s going on inside of the company today than when it was a 10-person startup in a single room,” says Mark Dickey, SVP at Foundation.

The insights can be jarring: “It’s a little shocking for management to be able to hear what employees are saying about the company and about management,” Edwards says. “That has not really happened in the past.” Workers need to feel empowered to communicate effectively and with a reasonable degree of candor. “If you provide the channels and you make it consistent and transparent … people will automatically navigate to that,” Edelman’s Grates says.

He contends that social media tools can break down hierarchical barriers within enterprises. This can allow for a more free-flowing exchange of ideas. Workers can sound off on areas like strategy and product-development. In essence, it gives people inside the organization a better way to be engaged.

Grates believes companies that encourage these conversations, such as Starbucks Corp., benefit because they give workers the tools to be successful. “They built the channels that allow people to actually … participate in those discussions,” Grates says of the coffee chain. “And then they treat people with respect, in terms of
providing information about strategy, about competition, about what’s happening in the marketplace.”

Measuring for success
Social technology provides a less-expensive way to reach people outside and within an organization compared with traditional communication tools. Posting a Tweet or a Facebook entry is likely far less costly than producing a TV commercial, for example. The cost of social tools comes in part from the time it takes to tend to various social platforms. Some enterprise leaders are asking what they get for the time and money but others are not posting the questions. One-third of companies in a survey by SmartBrief Inc. had not been measuring the return on investment in social technology, while nearly 31% were doing so only “somewhat.” Only about 15% said they measured ROI and another 21% weren’t sure.

Even enterprises that might not have hard numbers are willing to pay for access to social platforms, however. There were 1 trillion display ads on Facebook in 2010. That was nearly double the number of Yahoo! Inc., the No. 2 platform for display ads, according to comScore. A year earlier, Yahoo! had been ahead of Facebook. Some enterprises are taking measurements. Eventbrite, which manages registration for events, has found in an examination of its sales figures that a “like” on Facebook is more valuable than a Tweet. A review of sales from a six-month period concludes that a “like” produced $1.34 in sales compared with 80 cents for a Tweet.

As more enterprises push into social networks it can become difficult to draw attention. Enterprises need to exercise frequent creativity to keep people interested in social content because there are “so many shiny pennies” out there, notes comScore’s Abraham.  One way to engage consumers and create a solid return on an investment is to provide valuable content that is tied in with a brand or product. BBDO’s Douma believes social platforms can give companies tremendous insight into consumers.

“I’m trying more and more to shift our agency away from the idea of persuasion and into the idea of influence. And get our clients to stop thinking about how we can change peoples’ minds and actually trying to understand what people are thinking. And that’s the biggest shift,” he says. Douma notes that one campaign to boost sales of men’s razors at Gillette involved producing a series of how-to videos for shaving areas other than the face. The videos drew 8 million views tied to searches for shaving instructions. “They were found by organic searches by people actually looking for information,” he notes. Then, the videos gained more
attention and people began to link to them on Twitter. “The Twitter effect is word of-mouth. It’s word of-mouth on steroids. It’s actually infinite scalability of word of-mouth. And that’s where we need to tap into to be relevant,” Douma says.

He notes that something like a video would not draw attention even if it were among the top search results. The content has to be meaningful to resonate. “Understanding what people are looking for and answering those search results will not make a video go viral but will make a video be found.” Even for the most interesting and engaging brands, finding success in social most often requires money to support content. Douma points to a video the company produced. At first, the video attracted a paltry 6,000 views in about a month. The production company then recalibrated the video to contain improved metadata, the information that Internet search engines use to catalog contents of the posting. Theenhanced metadata allowed the video to appear in more search results. The company also took steps to make the video better relate to those that were rising in popularity.

The reposted video took off even though for viewers the content was identical to what it had been. The video on the second posting drew about 300,000 views in only a few days. Douma says the changes weren’t designed to “game” the system but to give the video a chance to be seen. Posting a video and hoping it will turn viral and skip across the Internet isn’t sufficient. “Social media is content, it’s not platform,” he says. “It’s about putting out great ideas and getting them to move around. If you’re not actually sparking that somehow with some media dollars … whenever we don’t do that it fails.” Douma contends even $20,000 in spending to place an ad relevant to Google search results, for example, could be enough to draw attention to a posting.

Google’s Keogh says enterprises can use social tools as a fast way to test and evaluate ideas. The instant insights can help an enterprise shovel resources toward what is working and kill what is not. “It’s better to sort of feed the winners and starve the losers,” he states. A proper dose of funding gives products showing early success a better chance of gaining acceptance. “You spend a lot more money behind them and really push those. You shift the budgets much more rapidly.” “You couldn’t test a big TV creative and run a Super Bowl ad beforehand,” he says. Now, companies can post their ads online in advance. “You can know if it’s going to be huge or if it’s going to be a dud, and that is a total difference.” “You have to think about ‘What is the objective you’re trying ccomplish?’ and mask  the message in the medium,” Keogh says. ”If you know what you want to accomplish, and you can measure it, and you have a plan, and you can test it and you can isolate it—you can do amazing things.”

One important part of finding success in social spaces is understanding context. Abraham recommends that enterprises examine the conversations that people are having in social channels and look at the words and phrases that appear online alongside a brand’s name. These steps can help determine how an enterprise or its products are perceived.

Abraham contends that enterprises often invest too little in social technology because the organizations don’t attempt to measure effectiveness. Using what comScore refers to as “social voice segments” can render a better picture of how consumers and others view an enterprise in social spaces. She notes “fans and friends” are those who might follow the developments of an enterprise directly through Facebook, for example. The second group, called “associates,” is made of those who are exposed to an enterprise or brand through a relationship with someone who is a fan. Together, Abraham says, these two groups represent a more accurate picture of how an enterprise or brand reaches people on social platforms.

Abraham says enterprises should determine what kind of social tools their audiencesare using. This can help organizations direct spending toward social media tools that would be most effective. She says it is important for enterprises to have a clear objective. Goals might include building awareness, fostering loyalty, delivering news, highlighting competitive differences, gathering feedback and seeking engagement with content.

Ogilvy’s Aversano recommends enterprises avoid expending too many resources on outsiders who often are vocal but who might not represent major customers. “I don’t know if social media has allowed the most loyal users to come forward as opposed to allowing the loudest users to come forward,” he says. “As any brand goes into this, it has to separate volume of conversation for actual purchase.”

“I worry the most about brands that listen to people and what they want without having that compass of who they are and what they stand for because it could take you into some bad places,” Aversano says.

Doug Neil, SVP of Digital Media at Universal Pictures, emphasizes that there are risks from the crush of information that social technology can deliver. “One thing that you have to be careful of is listening to the chatter too intently,” he warns. Neil points to the example of a film that generated a big amount of buzz online. The movie developed 200,000 fans on Facebook within 24 hours of when Universal posted the first trailer. It became a rising discussion point on Twitter—a so-called trending topic—within two hours. “The reactions we were getting online just were through the roof for every piece of material,” he says. “We were thinking ‘This is just going to be huge.’ The movie opens and it was one of our lowest openers for the summer.” What went wrong? “We never got the conversation beyond that group online that was so rabid and really excited and engaged,” Neil says. “That’s not necessarily reflective of what the whole conversation is. And so I think it’s a word of caution that you really have to make sure you’re looking at all data points as you’re kind of predicting how things are going to do.”

There also are risks that juggling the responsibilities of social tools could become a distraction for employees. Understanding objectives can make it easier to carve out time for social media. AECOM’s Dickard notes that time spent on Twitter or Facebook might mean workers are not necessarily or completing other tasks. That can make it hard for some employees to understand whether they should incorporate social technology into their workdays. Dickard says some individuals might be bettersuited to balancing the responsibilities than others. “If you have a passion for it and it is a natural extension of the work that you do then you’re going to be a candidate for this type of work.”

Emerging spaces include gaming, virtual reality
Even with the challenges, many enterprises are unearthing big opportunities with social tools. One of the strongest areas of growth is social gaming. Demand is exploding. About 53 million people— one quarter of U.S. Internet users—played social games at least once a month in 2010, according to research firm eMarketer. The number of social gamers is expected to increase nearly 30% by 2012. At the same time, revenue from social games is expected to climb to $1.32 billion in 2012 from $856 million in 2010.

What is perhaps most remarkable is that some players pay for virtual goods and services that do not hold value outside the games themselves. Players might pay for a new set of clothes for a character or to rent a virtual crop duster for their online farm. The numbers are stunning: Sulake’s Habbo Hotel, an online community for teenagers, has sold more furniture—in virtual form—than the retailer Ikea. Players of Electronic Arts’ Pet Society have purchased 1.7 billion virtual apples to feed their virtual animals since July 2008. That is approximately the combined population of China and the U.S..

With Habbo Hotel, teenagers can pay to customize their virtual spaces and to create games for friends. Habbo Hotel has more than 200 million registered users. Teemu Huuhtanen, EVP, Business Development and Communications for North America at Habbo creator Sulake Inc., contends the ability to customize the experience keeps teens interested and makes them willing to pay. “We’re kind of the Legoland in the modern age,” he says. “We’re giving them the tools to create all these events and games.”

Adoption of more powerful mobile phones is giving social tools important new platforms. From the end of 2009 to the end of 2010, social networking was the
fastest-growing category of mobile content. The gain of 56% outpaced growth in mainstays such as weather forecasts, personal email and restaurant information, comScore data show.

Smartphones and other portable devices allow social technology to move with consumers. Social tools often are better-suited to mobile technology than pursuits like blogging and email, which can be cumbersome with small screens and keyboards.

The quick-hit nature of many interactions on social technology makes it easier for consumers to carry on conversations from anywhere. This is important because more people own mobile phones than computers, according to Euromonitor International. In the U.S., one in four mobile phones is a smartphone, comScore reports. “You can do a lot on your desktop, but you can do even that much more when you’re mobile-oriented,” Google’s Keogh notes. “Think about the social implications of a lot of those things happening. We think it opens tremendous opportunity.” He cited forecasts that predict the number of people carrying smartphones will jump to at least 80% within four to five years.

The more powerful devices are creating opportunities in location-based social networking. The game Foursquare logged 3,400% growth in 2010. Players use smartphones or tablet devices like Apple’s iPad to broadcast their locations to other players. Users “check in” at places such as restaurants, schools, bars, office buildings and airports to win points for how frequently they appear in the same place.

Social games draw in people who might not hold an interest in a traditional video game. This is in part because of their novelty, ease of use and low cost. “Casual social gaming is not about deep engagement in terms of the game content. It is about social engagement,” says Chris Mahl, SVP and Chief Brand Alchemist at SCVNGR, a social gaming platform that uses a person’s location to offer games at nearby points of interest. “The nature of social engagement, particularly location-based reality, is people are moving through their lives.”

With SCVNGR (pronounced “scavenger”) players complete “challenges” at participating businesses, for example, to win points and compete with friends. A player might go to a coffee shop, complete a task such as snapping a picture with a friend and, in time, earn a free drink. “These folks are creating very unique sort of
interactions,” Mahl notes.

The uniqueness of the games can make a heavy marketing push unnecessary. “One thing we don’t do is advertising because we’re actually reinventing it,” Mahl says. “We’re changing that in terms of ‘How is it consumers interact with places?’” Mahl notes SCVNGR users often are engaging with a brand in a fun way so many players are more receptive to marketing efforts. “That speaks to the advertising dollars and how could they move into a different sort of era of consumer-connecting.”

Steve Cassavant, VP of Strategy and Business Development at IGN Entertainment, says research into the company’s audience of 45 to 50 million people indicates that there is a wide range of players. Social games are popular in part because they can be played in a few spare minutes and are free or inexpensive. “The benefit that mobile and social games have is they can fit in the little cracks of your day.”

Even beyond games, people will find more ways to incorporate social technology into their daily lives, at home and at work. John Lester, Director of Community Development at ReactionGrid, a developer of 3D virtual reality technology, contends that social tools will improve as they better resemble face-to-face interactions. He says social technology needs to include more of the cues that people use in person. This might mean replacing the keyboard-generated smiley face with a real-time virtual image of a person as she starts to smile.

Lester believes virtual technology creates environments that people instinctively understand. “The overall power of them as a platform is that they really leverage and augment some of our most fundamental biological tendencies,” he says. “If a place is just interesting, what happens in that place is recorded at a higher resolution in your mind.”

Enterprises can use virtual reality to simulate situations as part of worker training. People are able to interact with colleagues through their avatars—computer-generated representations of themselves. A meeting about a company’s manufacturing difficulties might take place on virtual mockup of the factory floor. Lester says increased use of 3D worlds would foster trust and collaboration because it is easier to build understanding in an environment that is more immersive. “We forget about the importance of social cues that build empathy, which is a component of trust,” Lester says. He notes lack of trust is a big problem for large enterprises, in particular, because employees often are spread over wide geographic areas. “That’s a real challenge in business,” he says. “Once you have a lack of trust between, not just individuals, but groups of individuals, it’s a huge issue.”

Virtual reality and social games fulfill different needs but both seek to harness social connections to draw interest. Other areas of growth in social spaces will no doubt do the same.

Learning to evolve with a growing communications channel
The scale of the social universe is so big and so quick to change that there are few absolutes. What is almost certain, however, is that the numbers of users will continue to expand. “It’s the democratization of information,” says Pepsi’s Thorn. Already, on an average day, Twitter users send 155 million Tweets and 460,000 people establish accounts. Facebook accounts for one in eight minutes spent online, comScore reports. Time Warner Cable’s Dudley sees social networks as new fixtures of the landscape. “I would not hire someone in my shop today who didn’t get that this is not a fad,” he says. “Simply pretending that it’s going to go away is a sure path to disaster.”

The permanence of social technology is guaranteed because consumers will seek new ways to share content and experiences. Research firm GigaOM Pro forecasts an increase in services that allow consumers to create music and share it instantly to gather opinions of others. This real-time back-and-forth mimics what might happen when a band gathers to write songs. The example also signals how social technology will evolve to give users more ways to leverage their social connections and customize their experiences. Recent moves signal that enterprises see a future in giving consumers a greater hand in shaping social worlds. Among them:

  •  Facebook Groups, introduced in October 2010, helps users limit what they share to certain people rather than an entire catalog of friends. Someone might choose to post something for family members and close friends but not coworkers. In the first six months, users created more than 50 million Groups on Facebook.
  • Google Social Search gives priority to search results that draw praise by others in someone’s social network. It also highlights content that friends create or share.
  • Mobile group-messaging companies such as Beluga, which Facebook acquired in 2011, and Path are designed to help people contact others in their networks while on the go.
  •  Services like Klout are emerging to help social network users manage their online profile and percieved level of influence on various platforms.

The rise of these types of services indicates that other enterprises will seek ways to improve existing platforms. Instead of trying to draw market share from Facebook, for example, many startups and other enterprises will introduce services that work with it.

Like consumers, enterprises will look for ways to further customize the experience for their employees and to help manage the expanding flow of information. Enhanced products and services will emerge as enterprises take further steps to incorporate social tools into the workplace. Many business leaders see good reason for bringing social tools into the enterprise: engagement, innovation and collaboration. Ogilvy’s Bell notes that the changes will reshape how enterprises function, “Five years from now will we be talking about social as a separate kind of discipline? Probably not.”

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