Resisting the pressure to blindly board the social networking bandwagon

Marketing professionals at software and hardware vendors, whether experienced VPs or 20-somethings fresh on the job, are quick to extol the value of social networking services for their businesses. Technology pundits and consultants echo this sentiment, reinforcing the perception that not having company-sponsored Twitter or Facebook accounts will doom an organization. But despite all this enthusiasm – all this pressure to get with the social networking program – should companies selling databases and server appliances devote scarce marketing resources to activities that in many cases have shown little or no ability to generate increased revenue or profits? At the very least, it is a question that should be – but often is not – asked before resources are committed and brands and other PR efforts are impacted.

The goal of this article is to explore the motivations for jumping on the social networking bandwagon and discuss if dedicating significant marketing staff and budget makes sense for many companies. But before we examine the question posed above, some key points about the context and parameters of this discussion should be highlighted:

• There are many forms of social networking. Just as with most tech terms, such as Web 2.0, there is no single, accepted definition of what social networking is and what it is not. For the purposes of this discussion, we are going to limit the breadth of the topic to services that enable networks of people and organizations (e.g., LinkedIn, Facebook, MySpace, etc.) and those that enable concise, syndicated content creation and publishing (e.g., Twitter). Blogs may be part of social networking, and other technologies like instant messaging and anything with an RRS feed could also be considered, but not in this discussion.
  
• Social networking is not free. There is no free lunch, even on Facebook. Due to the almost non-existent or minuscule cost of setting up social networking services, there is a general perception that leveraging the “free” services for marketing entails very little cost. However, social networking only works when there is significant time invested by salaried employees or paid consultants. For example, at many companies I have worked with, high-priced PR agencies are in charge of managing a company’s Twitter account, making each Tweet relatively expensive.
  
• Let’s not argue about personal rewards. For many people, social networking offers an unquestionable personal return. Many who use Twitter, LinkedIn, Facebook, and other prominent as well as obscure services enjoy the experience. With the overall user base dramatically increasing – Facebook alone reports over 200 million users – and with many of these users extremely attached to the services, social networking dissenters are often digitally pilloried. But personal enjoyment and satisfaction is not what businesses are about, so non-work related affinity for a service should not play a part in terms of this discussion.
  
• The topic is relevant to for-profit, product-centric companies. It is obvious and reasonably well documented that social networking services can be excellent PR vehicles. But not all exposure is welcome, and PR does not generate significant dollars except for certain types of companies. Therefore, this discussion will ignore organizations that don’t care about profit (e.g., government agencies, non-profits, many startups, etc.) and those that derive significant revenue from advertising (e.g., media sites, blogging communities, etc.). Instead, the aim is to focus on companies – specifically technology software and hardware vendors – that desire, are designed, or are compelled to generate revenue and profit year after year. While the focus is tech-centric, parts of the discussion will apply to companies in other industries.

Motivations: Why go social?
As a business – or an employee of a business acting as a representative of that organization – why even sign up for a free Twitter account or some other social networking service in the first place? The motivations fall into some broad categories:

• To spread the word. Social networking can be a great vehicle for enhancing communication, assuming a couple of “rights”: The message is the right one and the target audience is the right one. This PR aspect of social networking is the most commonly espoused by its proponents, who argue that the various services are excellent for conducting all types of activities to “get the word out” and generate marketing buzz. Beyond basic PR, social networking can be used, among other things, to promote service and product launches or updates, publicize events, and announce company activities. From these examples, it is obvious that this aspect of social networking is active and outward facing and requires coordinated messages and company sanction to be most effective (rogue employees twittering may gain attention, but it may be the wrong kind of attention).
  
• To get smarter. A common argument for being involved in social networking is that being a participant in the various networks enables employees to learn about all sorts of important things – and learn about them more quickly than they would though alternative channels, such as news and community Web sites. Examples include being alerted to competitive product releases (perhaps a new beta of a service) and industry news that may impact the business; finding out answers to questions, such as support problems or best practices; gathering feedback from customers and prospects; and staying in touch with other influential, smart, and interesting industry people.
  
• To look like you “get it.” While the first two categories are positive, this social networking catalyst is negative but all too common. You may be surprised by how many marketing executives, with zero data on the business return, are touting and rapidly embracing social networking because either it is the “in thing” (peers, friends, or so-called experts say so!) or because the fear of not doing is too intense (a real or perceived backlash from prospects, customers, analysts, peers, investors, and C-level executives). This adoption driver is reminiscent of the old image of everybody rushing to the same side of the boat for no other reason than everyone else seems to be going there.

It is interesting to note that this discussion almost exactly mirrors the arguments for and against a slightly older form of two-way communication: blogs. And not surprisingly, the same issues that are still unanswered with corporate blogs (the business return, the role in marketing, etc.) come up when discussing the value of Twitter and other social networking services.

Reasons to temper social media desires
Given that many marketing professional will still think is makes sense to invest in social networking even without hard ROI evidence or believable projections, it is time to look at some of reasons not to embrace these services. We’ve already touched on the some “pros” (the motivation section above), so let’s examine some “cons”:

• At its best, social networking is personal. Social networking, by definition, is about people communicating with each other. Blog post by faceless authors are usually received with as much interest as press releases. Injecting personality and opinion is what drives readership. However, by making communication personal, a company risks having followers relate to the individual, not the organization. That can mean that if the person leaves the company, the audience that was gained goes with him or her (Robert Scoble leaving Microsoft is an example of this). There is little long-term institutional gain or knowledge transfer from the social networking efforts of these non-state actors, except short-term exposure. The investment in the successful corporate Twitter user is lost to the company when he or she walks out the door.
  
• Messaging and interaction is hard too manage. While many people yearn for complete freedom of expression, the reality is that companies need to have unified, at least somewhat sanctioned communications. In this age of high-profile financial gaffes and disasters, delivering “material” information to the market can have dire consequences. While a great Tweet, like an interesting blog post, may be read by tens of thousands of people, the result can cause nightmares to a company trying to manage its brand and control information flow for good reasons (for example, Apple limiting news of a new iPhone model to create a market splash).
  
  The most common reason I have seen corporate blogs die is that a single interesting post caused pain within the executive team, usually because of negative comments by readers (on the site and by other sites that pick up the discussion). Even after explaining that commenters that offer feedback are a tiny subset of readers, a single negative comment can create executive-level heartburn and kill a blog (usually by turning it into a boring, sanitized PR outlet). Now, imagine all the semi- or uncontrolled Tweets and other posts going out in the wild in the name of the organization (we are not talking about stealth posts or astroturfing efforts). Very, very few executives are willing to foster that type of free-for-all communication environment, and company boards, investors, stock analysts, and regulators will likely weigh in negatively on an open-posting policy. For those claiming information yearns to be free and that only dinosaurs horde content, don’t be surprised at layoffs and the ends of products as revenue and profits dry up when expert marketing takes a backseat to a Wild West show of Tweets and Wall postings.
  
• The competition gets easy intel. While similar to the previous point about uncontrolled information flow, it is important to point out that publishing even more company information with little control gives a much clearer public picture of your companies activities and plans – and it is all archived and searchable! You can be sure that just as you take advantage of all this new and easily accessible information on your competition, your competition will monitor the social networking activities of your employees and cull it for ways to improve their products, steal your customers, and tweak their sales pitches to lure prospects to their offerings. While many may feel that their company already guards too much information, it is clear that a robust social networking program can make it simple for a marketing peer working at your competition to build a SWOT analysis of your company and its products in just a few hours.
  
  In addition to the free intel issue, there’s also a danger related to staffing. Public exposure of your best employees means that the competition gets an easy way to perform basic targeting and analysis on individuals that are important to your company, facilitating the work of their HR department if they plan on poaching any of your top people.
  
• As a service succeeds, the noise increases. When any communication form is new, the value of the information created and disseminated usually exceeds the noise generated. But as a medium or specific service grows in popularity, the worthwhile content is diluted (real content takes the backset to funny or irrelevant posts) as the audience expands (your target market is no longer clearly defined). To be sure, there is still plenty of value to be found in even the most popular community sites, such as Slashdot, but users often have to manually sift through a huge pile of junk or rely on automated filters to uncover the few nuggets of wisdom. The biggest social networking services, as they increase in popularity, will likely become too large to deliver on what they initially enabled: A relatively small, targeted community of people who have common interests. Anything that gets too big simply results in the age-old problem that faces marketers: How to deliver an effective and actionable message to the masses? At that point, the returns of Tweeting will likely begin to mimic that of typical direct marketing efforts.
  
• Service popularity changes over time. In many ways, the use of a social networking service is like sitting at the popular table at high school or going to a hot club in your early 20s. When the table or club becomes known and accessible to the unwashed masses, the cool kids move on. For example, MySpace used to be the place to be for personal networking, but now Facebook has blown by its “ancient” competitor and dominates the personal social networking scene. Even business-centric sites like LinkedIn struggle in the face of newcomers who want or expect to do more than just business. With Twitter all the rage, other services and sites are adding Tweet-like capabilities. As core technology – such as short messages that can be easily syndicated – are enabled by all services, the individual advantages of now popular sites will decline. Sure, there is a network effect that makes being a member of a certain service increasingly rewarding, but there is also a negative network effect that will drive people away from these services, either because they are too crowded, are trying to please too broad an audience, or because the cool people just want to be unique again.
  
  For example, AOL used to be the king of providing the best online experience, but over time, alternatives were seen as more compelling, and AOL users eventually became seen as the hillbillies of the Net. Today, Facebook is attracting many older users. Will kids really want to hang out on a site that their mom loves? I would expect Facebook to suffer a loss of its original core users – those in college and high school – as it expands, with that group moving on to sites that cater to only them (until those sites need to expand, too, and the cycle repeats itself).

Don’t give in to simple, emotional criticismsIf you are unsure of whether to proceed – whether the effort expended is worth the expected return – then you should at least be prepared for the storm that will arise with your decision. The choice to avoid or limit social activities will generate criticism from within and possibly outside the business. The two most common responses received by those delivering anything negative in regards to fully embracing business-centric social networking are:

1. Those who fight the social network wave are marketing dinosaurs. This is the “he/she just doesn’t get it” argument. If you are a director or VP of marketing, the critics are essentially saying, “If you can’t lead, get out of the way.”
   
2. A rapid, free exchange of information is here to stay, so give in. This argument says that the information control genie is out of the bottle and that social networking opponents are fighting a losing battle anyway.

Neither of these reasons should overturn a rational decision to avoid or limit social networking activities and services (although they can be used in situations where social networking does make sense but is being ignored, as stated in the beginning of this article).

Pragmatism: Not just for dinosaurs
The reality is that those involved in marketing can’t do everything that they may want to do, whether investing in a large direct sales force, renting prospect databases, or dedicating resources to a company Twitter account. They have to make choices based on the resources they have – time, money, staff ability, etc. – and balance that with the expected impact of doing or not doing a certain activity. As a marketing VP at a software and services company recently said to me:

“Marketing distractions are plentiful. You need to start each day asking what your business needs to be successful – not how to stay ‘hip.’ Even after you identify a gap between what your organization needs and what it stands to gain by participating in new media channels, you still should proceed with caution.”

Now, some readers might say the caution espoused in that quote demonstrates that the executive is one of those marketing dinosaurs that will be run off by those that “get it.” But it’s important to think about the consequences of unwisely embracing social media:

• Spending money on the wrong activity. A dollar spent on an effective, well-managed business Facebook presence means that dollar is not being spent on another marketing initiative. Do you think that the return on assigning a staffer to actively manage and exploit that presence is worth it, given that you could have assigned that employee to another endeavor, such as maintaining an internal, up-to-date Salesapedia (a Wikipedia for your sales folks)?
  
• Looking foolish on a global scale. As an individual, you can probably afford to do stupid personal things on Facebook, but a business can’t afford a major gaffe when it comes to social media. The same mechanism that gets the “good word” out has the ability to get the “bad word” out. And there is always more interest in things that go wrong, in news of a company screwing up, so that negative information and all the commentary associated with it can create a much larger PR problem. And, as the Internet never forgets – thanks to Google caches, thousands of blogs, international media sites, etc. – screw-ups will be forever enshrined and available for future perusal by prospects and customers.

A checklist for moving forward
So, given the challenges with exploiting social media – due to the nature of the services as well as due to your own issues – it makes sense for businesses to be diligent and figure out specifically what they can do and what they hope to get in return for their social media investment. At the very least, you should be able to answer a variety of questions, such as:

• What is the specific goal of each social networking activity?
• Are there employees that can be effective at it? Do they have the time to do it?
• Is there a way to manage or at least audit activities?
• Is there a disaster plan for managing negative responses to posts, Tweets, etc.?
• Are there any metrics to tie the activities to hard returns (Web site visits, white paper downloads, prospect calls, etc.)?
• What is the contingency plan for when a popular social media author/poster leaves the company?
• What are the legal, regulatory, and other ramifications of this new form of communication?
• Who is your target market?

The wrap up: Don’t ignore, but don’t blindly march off the cliff
In the end, a key takeaway is that for software and hardware businesses, adopting social networking services has benefits, but so far it has not been proven that it will generate new sales. Yes, if you don't embrace it today, you may feel a bit like a dinosaur and be called something far worse, but that failed or stagnant blog project should be a warning. Some companies and company cultures are not good fits for Web 2.0 and other social networking services, and the yearnings and loud protests of proponents won't change that fact.

So, the answer to the initial questions is: Don’t ignore social media but don’t believe or fall for the hype. Outside of certain areas, such as PR and limited product feedback, it has not proven its value. Remember those press events in Second Life? They never did catch on. Social networking on a personal level is here to stay, but for businesses, the overall path is much less clear. Startups will milk these services for all they are worth to gain exposure, while established companies or those needing to grow their revenue will re-learn that not all exposure is a good thing or leads to orders.

If you make the case in your own organization, and the case is business-oriented and still compelling, than confidently go forth and Tweet and friend with confidence. Otherwise, experiment, watch, absorb your competitors’ content, and revisit the question next quarter and the one after that. You might find you were right, you might find you were wrong, but your business won’t be closing up shop either way. Jumping on the social networking bandwagon can be a positive and rewarding in some ways, but for most revenue-seeking companies, it is not currently about profit.