Getting business out of social connections
Social networking can be used in a number of ways by companies to bring their relationships with consumers to the next level
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.
"Part of our approach to social networking is to create a layer of transparency and not look at it as just PR or another way to advertise our products, but to really expose the power of our direct model, which we think is a differentiator in the market."
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 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 US$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.
The social network allows users to customise different profiles for social and business use and features a combination of Moli-branded, user-generated and third-party multimedia content.
"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.
Hair-styling company GHD launched a campaign on MySpace last year in tandem with a TV advertising campaign. The company's MySpace profile provided hair-styling tips and videos, product information and an interactive blog.
The result was that to date the profile has over 15,200 friends, been viewed 95,800 times and received over 530 user comments.
"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, 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 central 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.
"If you're perceived as knowing a lot about the area you're in, then your products and services in that area will have a higher value."
Raftery has raised his own profile through active participation in social media, earning him speaking engagements and more business.
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 their platforms 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.
Irish company JustRoutes.com has adapted its online applications UseAMap and JustRoutes for Facebook and Bebo. UseAMap has 220,000 users and allows anyone 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 Dave Rooney (pictured), co-founder, JustRoutes.com. "People use it over their status feeds and forward it to friends. We don't have that many people downloading it off Facebook but people click through to our site.
"A lot of second-level students planning on going to college are cottoning on to it through Bebo. They're planning what houses they're going to get in college based on bus routes and so on."
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 turnaround.
"We see these sites as another arm of our grassroots publicity campaign."
White-label web firm does business 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, for example classifieds sites, dating sites and photo merchandising sites.
"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 anywhere 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, even though Sxoop doesn't actively promote Pixenate to Facebook members.
"We don't make money from the Facebook application directly. What we do is use it in our marketing material. It's a very good illustration of how Pixenate can be embedded into any website.
"We need to be able to showcase how Pixenate works within an existing website and Facebook provides a very simple mechanism for doing that."
As many of Sxoop's customers are up-and-coming social networks, the Facebook application provides the ideal demo. The company isn't interested in making Pixenate a viral phenomenon on Facebook; instead it is looking where the money is.
"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 we're 'white labelling' the product. It's been very successful in that regard."
By Niall Byrne
Pictured: David Rooney and Vincent Glennon of JustRoutes.com