Matthew Yorke/excerpt in CMSwire
Unless you are extremely reclusive, refuse to watch TV, read a newspaper or listen to the radio, or have no Internet access, you have heard of Facebook,Twitter, and LinkedIn and in all likelihood are active on at least one of these social platforms.
These three social platforms, notice I did not say websites, are new communication platforms that earn most of the media attention when the word “social” is used. It is no real surprise when Facebook leads with almost 750 million unique users, a reported $4 billion in revenues and $2 billion in profits; Twitter approaches 150 million uniques and an estimated few hundred million in revenue; and, LinkedIn has its 120 million members and projected full year revenues of $475 million.
They have surging growth numbers reported officially or via rumor every month. These three social behemoths are the clearest manifestation of a much bigger paradigm shift. What we are witnessing is a shift in how we communicate, how we find products and services, how we make purchases, and on some level how we live. But look beyond the headlines in the consumer space, and you see dramatic changes which are giving rise to the term social business.
There are two sides to the term “social business” so let us review both. The not as well known nor headline grabbing version is how businesses are becoming more social internally. Organizations large and small are adopting social technologies that allow them to leverage the benefits of social platforms: real-time communication, mobile updates, sense of personality, and of course, real time insights or analysis. Look to companies such as Jive, Salesforce.com, INGage, Lithium,Telligent, or Yammer that are all offering internal platforms for organizations. In the case of Jive, it started as a social platform for companies to build their own communities, but now like the Chatter solution from Salesforce.com, Jive is leading the attack in an enormous market opportunity for socializing business.
The basic premise is that we now live in a real-time world with data overload and decisions need to be made quickly and with more insight than monthly executive reports. These platforms enable employees to work together all the time, help unlock the creativity in people and teams, and encourage collaboration that can be a strong motivator for employees.
In a social world, brands lose some control to the voices of their customers. Businesses that are socially optimized need to be prepared to lose some of the hierarchical structure to better harness the talent, passion, and ideas within their organizations. This is akin to crowd-sourcing (there are award-winning creative ad agencies that crowd-source many their ideas). Social networking products are a growing market that IDC (an IDG subsidiary) forecasts will grow 41.8% (CAGR) to $2.9 billion in 2015. It is a big enough market opportunity that major tech players such as IBM, Oracle, and Microsoft are all likely to make acquisitions to increase their social business offerings. IBM has already significantly grown its marketing analytics portfolio in recent years.
Outside of organizational walls the opportunity is even more compelling. Historically, the web has represented challenges for smaller organizations due to the need to create and update a website. Today, small-medium businesses (SMBs) can leverage Facebook and Twitter platforms to create a social presence, which is far easier to do than a website and access to the social platforms is free. This improves the SMBs’ ability to find and engage with prospects and customers in a dialogue with them and their friends rather than a one way monologue on websites of old. This offers enormous opportunity to retain customers and use the power of social networks to acquire new ones 7×24 at little to no cost. That is why IDC reports that more than 40% of SMBs are using social networks for business purposes and forecasts exceptional growth rates in the developing markets around the world.
The second aspect of social business is best exemplified with the rise of companies such as Groupon, LivingSocial, and dozens of clones competitors. This is a seemingly simple business but has profound impact on our lives. Before social became a household term, if we wanted to find a restaurant or product we would go to the web and search. That “gateway” has allowed Google to become tremendously powerful and profitable. However, today products and services are finding us by way of our social network connections.
The way Groupon works is it convinces a local business to give a discount of up to 50% on a product or service but only if perhaps 1,000 people sign up. Groupon then uses email and social channels to encourage people to sign up. But here is the clever part. I sign up for a discounted tapas meal. It is then seen in real-time by all my social connections, some of whom know that I like good tapas, and as a result, my social friends will sign-up for the discount, and in turn broadcast the offer to their social connections. This is an enormous market opportunity, big enough for Google to have offered a reported $6 billion to acquire Groupon earlier this year but it was turned down!
Beyond this example is a major shift in human behavior. What if I am not searching for tapas but the offer finds me through my social connections? Many analysts believe the next phase of social commerce will be where companies are developing products and services in a crowd-sourced environment.
Another example comes from TV with its gigantic advertising budgets and expensive hit and miss approach to TV programming. A company called Networked Insights (I am an unpaid, advisory board member) is mining social insights to help TV networks assess which shows will be hits and which will bomb. These insights will also assist marketers to understand the real value in certain show audiences to improve TV buying. It all comes from insights gleaned from social chatter. For the longest time, executives on Madison Avenue have been trying to improve the efficiency of their TV buying. It turns out that stay-at-home moms and school teachers in Madison, Wisconsin can do it for them with the help of some smart technology.
Whichever way you look at it, social media has become media. Social business is happening today inside and outside the walls of your organization. It is a major change in our culture, thinking, organization, and communication. Social business will fundamentally impact how we operate a business and how we find and deal with customers. It may be a factor in the success of your company. Look beyond big social platforms, spend some time thinking about how you can take advantage of social, and experiment for your organization’s next round of growth.