Getting business out of social connections
Social networking can be used by companies to bring their relationships with consumers to the next level
Last year Dell started selling PCs with the Linux operating system Ubuntu pre-installed. The move was not a calculated gamble decided upon in a boardroom or marketing department: the powers that be at the computer manufacturer knew for certain there was widespread public demand for including the open source operating system.
How? Social networking, Dell-style. The company launched a social network called Ideastorm in July 2006 to connect with its customers and potential customers, and over 20,000 people voiced support for pre-installing Ubuntu.
Ideastorm is a website where users can post suggestions on what they would like to see Dell doing, rate other suggestions and share comments and ideas with other members of the site. It also includes blogs, videos and discussion forums, helping Dell get information out and, more importantly, receiving vital feedback.
“Ideastorm is a hybrid of social networking tools. It leverages a model like Digg.com, for example, where the most important news is not what the media decides but what users rate,” says Bruno Sarda, head of European e-business for the SMB sector, Dell.
“The idea was to open up to the public at large and let them tell Dell what matters to them. The other users can then rate this input.”
Over 10,000 ideas have been submitted to Ideastorm so far. Input on the site has resulted in Dell launching its Vostro brand of desktops and laptops without any pre-installed trialware, unless customers specified they wanted it.
“For us, it’s a fantastic source of direct, real input,” says Sarda. “The scoring by the community gives it weight.”
A multinational like Dell could feasibly conduct focus groups and surveys across multiple cities and countries but it gets better results through online social networking. It’s something with obvious resonance for smaller businesses without vast resources for on-the-ground research.
Leveraging the scale of the online community for market research is just one way businesses can capitalise on social networking. Businesses can also form partnerships with other businesses through specialist sites.
LinkedIn is the most famous professional networking site but newcomers like Moli.com also aim to bring professional networking to the next level.
Moli.com incorporates both business-to-business and business-to-consumer social networking. Launched in the US in January and in beta stage in Ireland, the UK and Germany, it has over 207,000 members and has generated over $300,000 in advertising revenue in Q108.
“We’re targeting two groups: the creative class of individuals – many of whom are entrepreneurs – and small businesses,” says Judy Balint, president and CEO, Moli.com.
At present, 90pc of the members are individuals and 10pc are businesses. Moli enables entrepreneurs to set up a homepage within the site and avail of rich features they may not be able to host on their own website.
“For a small business, the challenge is not to get a website up on the internet, it is to maintain that website and build an audience for it. If you put a small business within a community or social media model where you’re building audience for everyone, there’s tremendous value for the business. It can prospect within that community.”
Moli members can set up stores within the network and add shopping carts and e-payment facilities, as well as receiving demographic statistics about their viewers.
These are the types of added-value features that Moli is banking on to drive businesses to social networking. However, established social sites like Facebook, Bebo and MySpace can still be a happy hunting ground for companies.
“MySpace has 110 million users worldwide in the 18-34 age bracket. They use the site to engage with each other, look at video, upload pictures, blog and so on. You don’t need to take them away: it’s their place. Companies need to understand how to communicate with people within that environment,” says Nick Reid (pictured), head of sales, MySpace.
MySpace works with companies to maximise how they can appeal to the users of the social network. Businesses can exploit MySpace in three ways, says Reid.
“We’re very much a display platform, so simple display advertising is clearly prevalent on our site. Our real point of difference is how we facilitate brands to have a two-way conversation with our audience. We’ve worked with 80 of the top 100 advertisers globally around leveraging our communities.
“The third way is through creating content environments for brands. For Fiat 500, we actually created a TV channel within MySpace TV where it could distribute its TV content.”
Adding value is key to winning over users of social networking sites, says Tom Raftery, social media consultant.
“It is a conversational medium. If you go to any of these sites and give out a lot of marketing speak, people won’t listen; they will just go somewhere else. You need to speak in the first person and demonstrate expertise.”
While it’s obvious the hard sell won’t work with users of social networking sites, there have been suggestions that too much business intrusion of any sort will deter people from using what are, after all, sites for socialising and enjoyment.
Reid doesn’t think this will happen: “This audience has been brought up online and they’ve always seen advertising online. There’s an expectation that as it’s a free service you’re going to have advertising.”
The other major mechanism for making money from social networking is developing applications for the sites. MySpace and Bebo have opened up to developers but the daddy of them all is Facebook.
More than 200,000 Facebook applications have been built since the site opened up to developers last May, and 95pc of Facebook users have used at least one application.
JustRoutes.com is an Irish company that has adapted its online applications UseAMap and JustRoutes for Facebook and Bebo. UseAMap has 220,000 users and allows anyone to create a tiny URL for maps, while JustRoutes plots the most effective public transport between two points.
“For us, it’s about maximising our online presence. We use Facebook to get at the third-level market,” says co-founder of JustRoutes.com, Dave Rooney. “We don’t have that many people downloading it off Facebook but people click through to our site.”
Adapting existing online applications for these sites is a simple procedure, says Rooney. “We had them done in less than two days. They’re very quick to turn around.
“We see these sites as another arm of our grassroots publicity campaign.”
White-label web firm does business precisely by the ‘book’
When Walter Higgins was looking for ways to promote his online photo editing application Pixenate, developing it for Facebook seemed an obvious choice.
Higgins’ company Sxoop sells its software to other publishers, who integrate it into their websites.
“Our clients are web publishers with a lot of photo content. As it turns out, Facebook is the web service with the largest collection of photos in the world.”
Higgins made Pixenate available for Facebook in early September and it currently has 2,600 users on the site. Adapting it was just a few hours’ work but the pay-off has been big.
“We don’t make money from the Facebook application directly. What we do is use it in our marketing material to showcase how Pixenate works within an existing website.”
The firm isn’t interested in making Pixenate a viral phenomenon on Facebook.
“We’re a small company and we can’t be focusing on being business-to-business and business-to-consumer at the same time. We’re looking at where the money is now and ‘white labelling’ the product. It’s been very successful in that regard.”
© Silicon Republic Ltd 2008
All content copyright 2008, Silicon Republic Ltd — all rights reserved
© Silicon Republic Ltd 2008