Business Week looks at the value of Social Networking sites to SME businesses.

Their conclusion? I suppose it has to be ‘could be’.

The sub-headline of the article says it all: 

“….To get the most out of social networking sites, small companies should look past the hype, set concrete business goals, then start experimenting…”

Our experience with a larger client (Poundland) was that using Facebook as a community information point worked well. We posted updates on new store openings, new stock lines and special offers. The customers used it as a way of asking questions of the company and sharing information with the company and among themselves. It also became a place for ex-employees to communicate amongst themselves and catch up with old friends and workmates. It was not used as an advertising platform but as a community where the customers shaped the ongoing conversations. The company already had established communication tools with customers but this opened up a new method and one to a previously difficult to reach group of younger consumers.

Another company (not a client) puts most of her success in building a £2.5m+ business down to the power of social media. Check out the Facebook pages of Wiggly Wigglers, their web site and podcasts. Almost 800 members on Facebook and a monthly audience of over 50k for the podcasts is a great ROI for something that takes them little time and money to update. Heather Gorringe, the MD talks about what she has done and the results. 

It is always interesting to see how companies are using social networks. A very topical one with an Olympics theme has just been announced by Sun.

Facebook have announced a German version of the product with be available immediately.

They used 2000 volunteers from Germany to complete the task in a few weeks. A voting system was used to decide on the accuracy of the translation. This is a very Web 2 approach to product design and development and of course all the participants will tell their friends and family about their work on the project so providing a massive word-of-mouth campaign.

MySpace does it the traditional way by hiring local people to manage the translation.

It will be interesting to see if Facebook can take Germany by storm. There is already a very strong well established local competitor so it faces a tough task.

VentureBeat have analysed what is happening in the USA with the top 10 social networking sites.

Facebook is growing faster than MySpace but MySpace is still 4 times larger in terms of share of visitors. These top 2 have 88% of the total numbers of visitors between them. the next 8 are not even half of Facebook visitor total.

The picture in Europe will not be exactly the same but companies planning a social networking campaign can rest assured by focussing on Facebook and MySapce they will have covered a large segment of the market.

Check out the interview 23 year old Mark Zuckerberg, founder and CEO of Facebook gave to the 60 minutes news programme in the US.

The real power of Facebook is when you link Permission Marketing to profiles of interest. Using a Facebook application like Socialistics you can see who's profile most matches yours in interests, education, hobbies, musical tastes etc. Now apply that to the concept that we trust personal recommendations more than any other form of advice and you can start to see the potential power of Facebook for individuals and businesses.

We already have 'recommendation sites'. I personally use TripAdvisor but I have no idea about the person making the comments. We may or may not have many (or any!) similar interests so how can I really trust what they say? With TripAdvisor I apply the concept of the Wisdom of the Crowds. If enough people rate it highly then it is bound to be OK. But in reality I would trust a 'reliable source' more. In Facebooks case it would be those friends and friends of friends who most match me.

ABC News and Facebook have just signed an agreement to co-operate in future around politics as a subject area. (Thanks to New York Times for source of story)

This is a smart move for both parties. Facebook gets some serious news content and ABC News gets an 'in' with a major social network platform. For those users of Facebook interesting in following politics it provides a direct feed.

Just incase you are not reading the Facebook blog hers is a copy of their posting about their announcement yesterday from Leah Pearlman.....

A sample Social Ad.

This is the notification you'll see whenever another site wants to send a story to Facebook.

Facebook has launched a new service for advertisers using profiles and 'social recommendations'. 

Later today Facebook will make announcements on how members can use its social networking links to help advertise and promote products (thanks to Advertising Age for the article)

This is unleashing the power of 'soft touch' social networking connections. If you are a member of Facebook you will know what I mean. People in your circle of friends keep in touch by posting details of what they are doing. You can join groups and from there cross connect to others outside your immediate network.

This is where personal recommendation added to a rebate coupon has real marketing possibilities.

For us consumers it means relevant and targeted recommendations. For advertisers it means the sort of targeting normally associated with the direct marketing industry and then some more. If I was Experian of similar data profilers and list suppliers I would be starting to get concerned.

Another view on the valuation of social media platform - Facebook - from Jeff Jarvis.

As reported in Management Today Microsoft buys a small stake in Facebook for $245m or so. This values Facebook at $15 billion. So what do they see to get to that valuation? They don't. Consider this a 'licence' fee to allow MS access to a huge database for its ad deleivery programmes. This is another way to compete in the online ad market against Google. What do MS get?

• They get access to a company with 50m very active users
• They get access to a social media community that is prepared to divulge freely profiling data normally hard to get
• They get access to a communication platform that can have profile sensative ads delivered
• They get to learn about the whole area of social media

Social media a fad? Maybe but that is exactly what they said about mobile phones and PCs. Overvalued? Maybe? But how many billions do advertisers pump into traditional media in the hope someone is listening?

Smart move.

Great roundup of Facebook business applications extending its power and usefulness.

An interesting interview by Jennifer Jones with Jeremiah Owyang on his thoughts about Facebook and where it will go in the future.

Thanks to Marc Schiller for the heads up on this one. Reebok are using social media (Facebook) to engage with communities of runners. No single group as you can see but multiples with over 14,000 members. Powerful and cost effective.

A lot has been written about the negative aspects of Facebook so it is good to look at the other side where it is being used for social awareness and organisation of action. Whatever your personal feelings about the situation in Burma the groups on Facebook are giving a global voice to people who may otherwise have no way of being heard.

Latest statistics from the Facebook site (as at 7.15am - it will be at 250,000 by the end of total)

**GROUP NEWS** Look how we have grown!
30/09/2007 214,000 members
29/09/2007 160,000 Members (100,000 in 1 day! That's over 1 a second!)
28/09/2007 60,000 Members
27/09/2007 30,000 Members
26/09/2007 12,000 Members
25/09/2007 6000 Members
24/09/2007 3,500 Members

Great post by Forrester Research on the rumoured value of Facebook. A silly amount? At first sight maybe but not if you look at how transactional data underpins that valuation it starts to make sense.

Great post by Brian Solis on Facebook and its powerful use in as a personal brand.

I got an invitation to join from a friend so did and now find it has become an integral part of my business day. So what have I achieved in the last 2 months.

• Two old school chums have found me and got in touch. One is in the same line of business as myself so it is brilliant to have a fellow traveller to talk to.
• Five old work mates have got in touch and one we are starting a collaberative project with. The others are within organisations we would one day love to work with so aprt from the socialising element there is business networking
• Three prospective clients have contact me. We already have a costed proposal in with one and the other two we are to meet. 
• I have joined a number of special interest groups on social media and podcasting and attended some meetings which has been good socially but also professionally
• I have been bitten twice by vampires but obviously not so bad that I felt the urge to become one myself and bite people
• A relative found me and it is really nice to see what she is upto with her new born son. We exchange FaceBook messages but I would never have thought of phoning her or writing.
• I have had a sheep thrown at me, been hugged and had drinks bought for me and was once 'bitch slapped'. I am still trying to understand if this is the online equivalent of office banter and ribbing.
• I have had three instances of people seeing where I am have suggested meeting for coffee as they are local to me and in one case we found we were actually both on courses at the same place. Without Facebook how would I have known.

The whole process of keeping track with people means I will never have the send them the Christmas card with the note - 'we must meet up soon' standard message. They can see what I am upto and where I am (businesswise) and contact me or comment as relevant.

I have personal information on my profile. No harm in people knowing what music, books and films I like. Who knows what similar interests some of my new and old 'business friends' will find we have and vice versa? A case of Alan Partridge - 'Knowing me. Knowing you' but in a business context.

So far I have found Facebook a great business and business socialising tool. I love it.

Thanks to Richard Sambrook (head of BBC News) for his blog post with this link on news about Facebooks privacy statement. Does make you think....

HSBC recently announced they were 'listening to customers' when they decided to reverse a decision to start charging almost 10% on student overdrafts. (Hat tip New Media Age).

Within a few weeks the Facebook protest group had reached almost 5k.

I personally knew a student who had been caught up in all of this. They said they had received a letter at almost the same time as they got their statement showing the charges being levied. There was no period of grace just an automatic deduction. They had carefully researched the best deals available before opening an account with HSBC a few years earlier and felt really upset at the banks behaviour. When they talked to their local branch they were basically told it was 'head office policy' and that they could either like it or lump it in effect.

As can be seen - when a mass protest starts companies have to make a decision how to react. Some will hang on and hope it blows away soon but of course with social media tools the 'snowball' effect is so much faster. Faced with students being encouraged as a group to protest and take their business elsewhere HSBC reacted quickly. Whether this is enough to stop defections of graduate accounts to rivals remains to be seen. This would be a disaster as students do not make a bank and real profit. It's when people are earning a regular salary. So having a graduate move on would be a real issue.

Shel Israel, co-author with Robert Scoble of the best selling book 'Naked Conversations:How blogs are changing the way business talks with customers' has just become a fan of Facebook.

Robert is too!

Not sure about you but I have been on LinkedIn for a number of years now and always found it a useful tool for finding old work collegues. I have invited people to join and get invites to. To be fair I never used it in 'anger' to seek business. I did get a flurry of invites a few months ago but I do not proactively contact many people in my network.

About six weeks ago I got another Facebook invite and too the plunge. I am hooked. I love some of the neat applications but most of all I like the way it helps me keep in touch and know a bit more about friends - their interests, tastes and hobbies. Nothing too heavy but enough to know what interests them. I have already used it to seek advice about a book to read and a film to see. I also found out someone was at the same University this week as me also attending a summer residential course. They saw my 'what am I doing' and they posted that they were also here. Without it we would either have never have known or found out months later. I have also started talking to some people in a similar line of business as ourselves and with similar interests.

For me it works. Nothing too resource intensive. Not intrusive but with enough info to help start the conversation.

For another opinion check out Paul Walsh's blog. Also read some of the comments. (Thanks to Hugh McLeod)

In a marketing newsletter I subscribe to from Marketing Improvement I read an article on Web 2 that I found interesting as it goes to the heart of the opportunities and risks companies have with Social Media Marketing. For completeness here is the article:

Here's a salutary tale for you. Right now I'm writing this while ensconced on a balcony overlooking the north end of Lake Garda. Blue-green lake meets sheer cliffs to my right, towering 500 metres to grey-gold summits flecked with outposts of foliage from trees foolhardy enough to experiment with growth on the fractionally less vertiginous slopes. Below me is the Piazza, surrounding the harbour, tables lie in gay abandon in front of a plethora of cafes and restaurants, all waiting expectantly for the lunchtime crowd. Tourists amble by in an amazing variety of clothes and body shapes, occasionally stepping aside to avoid another vividly lycra-garbed cyclist. It is, quite simply, a little bit of heaven on earth. But I nearly didn't get here - thanks to Web 2.0. Why? Because I Googled the hotel (Hotel Sole, Riva Del Garda) and Google found a bit of Web 2.0 content - a review on TripAdvisor.com that said it was a rubbish hotel, with awful food. And the review was posted just five days before I was due to arrive. But, I re-read the review and concluded that the reviewer was miffed by a 200m walk to the hotel in the rain and was not being as fair as he might. Suffice it to say, Hotel Sole is in a superb location, the rooms are great, the food is good and the service far better than most five star hotels (it is only 60euros a night!).

The point, however, is the Hotel had no idea (I asked them) that there was such a hugely negative comment about them on TripAdvisor and that Google was highlighting it for all to see! This is the danger of Web 2.0. It encourages us all to comment and, allied to Google, our comments are then given a prominence they perhaps do not merit. Reputational management is something major organisations have long been used to. But for smaller organisations it can now be just as critical. This hotel is currently half empty (it would usually be full) - the reason, one bad review!

For some reason it would seem we take critiques by complete strangers with no creds more seriously than we do those from "professional critics". So what can you do? Simple, search for YOUR company or your product or service every day on Google and see what is being said about you. Then at least you can do something about any injustices you may find. In the case of the Hotel Sole, I have written an alternative review - you can find both here. Enjoy!

I think I know the writer and admire them immensely both personally and professionally and so trust their opinion but I will try to be objective in my comments. To see the above review and all the others go to TripAdvisor.

Leaving aside the rather catchy articles title (showing the reviewers copy writing skills and knowledge of using a good title to pull the punters in) here are some comments on the interesting points the reviewer raises especially about the power of Web 2 and Social Media.

Firstly a legal warning.

From the end of this year it will be illegal under European Directive 2005/29/EC for a company to write or have commissioned to write or communicate a glowing reference by pretending to be a consumer without disclosing that fact. This has serious implications for ‘buzz’ and ‘word-of-mouth’ marketing, where marketing agencies are paid to promote products and services. They must disclose their contractual and financial arrangements. A number of big PR agencies have been exposed as being behind ‘we love x’ campaigns. Under the new Directive this will be illegal. A disclosure of the relationship is necessary. 

A great example is the blog by David Brain, CEO of Edelman Europe. When mentioning clients in blog posts he always discloses current and past relationships. 

Back to the newsletter. The artcle author raises a number of good points:

• The internet with Web 2 allows all consumers to have a voice. This can be used to praise and criticise. Think of it as Citizen Watchdog. Being a multi-billion organisation does not allow you to ignore people as Dell found (see my earlier post about Dell Hell) to their costs. The ‘little people’ now have a voice and are getting more confident to use it. We can now have online ‘fan’ groups and ‘rant’ groups forming around issues and companies. With ever increasing internet connections and improved speed this is a global reach. Within 15 minutes a consumer can create a blog and be posting globally using free software and an interface just as easy as a word processor. For less that the cost of a stamp you can share your feelings – good or bad!
• Online PR and Reputation Management is important. As the reviewer mentioned they ‘Goggled’ the Hotel before booking. As they said the ‘hotel had no idea’ about the negative review or maybe even the existence of TripAdvisor. Most people will check multiple sources of information, including reviews before buying something. You may ask a friend or work colleague for advice or use a social media site like TripAdvisor. You may read magazine reviews. Companies that ignore the online ‘chat’ about itself are missing an important and rapidly growing source of information for consumers.
• Synthesising the data. The Reviewer mentioned that they thought the negative reviewer ‘..was not being as fair as he might...’. There are many reviews at TripAdvisor on the hotel and by reading them all you will get a balanced view. Certainly more objective than you would expect the company web site or brochures to portray. Multiple reviews are in effect what is called ‘The Wisdom of the Crowd’. If one person says something it has influence. When multiple people say the same thing it increases our confidence in the information. Research has shown (common sense?) when we use one review as a source of advice proximity, authority and depth of knowledge is important. We trust close friends judgements more than strangers unless they are in a uniform or are ‘authorised’ in some way. But if a room full of strangers says to do something or not do something we will usually follow their advice. This is where I disagree with the reviewers statement that Google maybe give the comments prominence they do not merit. At a philosophical level all comment has merit and everyone should have a chance to have their say. Secondly companies have always had more power than a citizen customer. When we complain about something how often do we feel ‘fobbed off’ or given the run around. We are often made to feel our issues are unique, unimportant and trivial. That the company has better things to do than sort us out. What can a single person do? They can now see if others feel the same way and create a blog or comment on review or similar site.
• Web 2 is out to get you! Nice title. How about - Web 2 is a great tool to help ensure you (the company) maximises customer service and gets repeat businesses. Uum...not as sexy I know....A company can use social media/web 2 tools to get immediate 356/24 customer satisfaction reports from customers. Now what is that worth to a company?  Where mistakes have been made (and you will - you are only human after all) you can address the issue by commenting on that persons blog or posting and take action to address it and tell people what you have done. Maybe if everyone is writing negative comments about the food you should acknowledge it, fix it and tell people what you have done. The next person to post may says the changes are working and this will help drive business. The reviewer says to check everyday. 100% agree. You should and you can. Do it automatically using tools like GoogleAlert.
• Why do we trust ‘wisdom of the crowds’ and not professionals? Well quite simply because the professionals have sometimes been shown to be anything but. Even the venerable BBC has been shown not to be above a little ‘spin’ or maybe more accurately ‘allowing spin to happen’ through independent producers rather than BBC employees. As I said I think I know the reviewer. They have no financial incentive to write anything positive as far as I know. It is personal so has more impact.
• Facebook/MySpace and Web 2 tools. This is a very interesting development. TripAdvisor is great. I use it all the time but sometimes I would like to know a bit more about the reviewer so I can weigh-up the value of their comments but they hide behind a name without any personal data. So you have to use judgement and ‘safety in numbers’ where you look for patterns and threads. What if I knew more about that person? Food and musical tastes? Similar family circumstances and life styles, hobbies and interests? Similar opinions on a range of subjects? It is strange but we often have friends we like even if we do not know lots about them. We may have friends through social media tools that we have never met but we know so much about them – maybe more than maybe our physical friends. Now armed with our online matching profiles am I happy to follow their advice? Yes. What I will do is see what they say about a movie or a restaurant. Try it myself and if I agree with what they thought I would have even more confidence in their opinion when I come to decide on a bigger value purchase.

 Finally. Notice the date the reviewer joined TripAdvisor by checking their personal profile. They joined just to make the comment. They had such a good experience that they wanted to ensure the other negative review had a counter balance. That is the real power of social media that companies can leverage. Customers can become evangelists just as easily as critics. With no payment the reviewer took time out while on holiday to write the review and post a photograph.

Well maybe just not yet according to the latest data from research outfit Hitwise Intelligence 

At last weeks Unicom Conference on Social Media tools the question was asked (by show of hands) 'How many of you are using Facebook'. I would say we had 80% of the 40 attendees hands up saying they did. When asked if they were using Facebook 3 months ago only two people put their hands up.

That is an amazing level of take up in a short period of time.

It remains to be seen if the momentum of signing up will continue but people really like its ease of use, ability to keep in touch with the wall feature and groups that can be easily formed. I have already in only a few weeks been invited to a number of events and parties. It is this blend of work (networking) and pleasure that makes it nice to use. I have added a neat gadget that allows me to play tracks from my favorite music while at my desktop. Someone pointed me at it and now people can see what type of music I like. This is from a potential business client.

Heather Gorringe was recently featured in The Sunday Times being interviewed on How She Made It. Taking an initial £15,000 investment she has turned it into a £3m annual turnover business. Check out her mail-order site at Wiggly-Wigglers.

I interviewed Heather for a video podcast while we were both speaking at the recent European Podcasting Summit in London. 

If you want an additional insight into how Heather made it then watch here. You will hear how she has used audio podcasts as a way to help her become a global brand.

Wiggly has embraced social media and now has its own Facebook group.

A recent report in AdAge (sorry - here is the link to the article) highlighted that almost 3/4's of teenagers use a social media site once a week.

This certainly matches our research. In our focus groups what was striking was just how much social media has replaced mobile phone texting and e-mail as a way of communicating and organising social lives. Analysis of activities being reduced to 'fund' time on social media sites was TV and texting. The ability to 'meet' in special interest groups (and make new friends) was mentioned a number of times. Facebook was mentioned more positively than MySpace.

What was also interesting was their reaction to advertising. They uniformily hated irrelevant intrusive adverts but for things they expressed an interest in or considered relevant they were happy to receive.

I found out in my second job that my new employer was equally interested in my network of contacts as they were in my work experience. When I moved into sales and marketing this was even more so.

I read with interest a post (thanks for link to Steve Rubel) that at a recent conference presenters were saying just how the new generation of workers will expect employers to be embracing social media and having it as a tool.

That got me thinking about me when I first started work versus my son and daughter and the value of our respective networks to our employers.

My ‘network’ was primarily made up of school and sports clubs people. All my own age linked by school or membership of the clubs. I had their addresses and phone numbers but found when I moved to London for my first job over the a year or two most of the contacts dried up.

Fast forward to today. My son (20) and daughter (21) have been on the internet and using mobile phones for a few years now. (When I was young I remember my parents getting a phone in the house. It was like a sacred instrument. The BT engineer showed us how to use it. Probably my imagination but it felt like we all slept and ate near the phone until someone actually rang us. For weeks the phone ringing would send a shiver of excitement through us all. I remember my parents booking a call via the operator to our relations in the USA in 1963 when my cousin got married! We were given a time slot and the operator had to make the call and connect us. I told everyone at the village school and gained a lot of popularity telling and retelling the story.)

So back to my kids. They are not exceptional. Most of their peer group will enter employment with an amazing network of social contacts. People they text and speak to on mobiles and now facebook, MySpace and their other social media sites. Their network of contacts is vast. Far in excess of mine at their age. They are also much more active. Technology lets them be.

Now when will the first job vacancy advert appear that has a job requirements specification item that says?

·         Active social media user wanted

Will graduates and others be able to charge a salary premium for large networks of friends just as experience does?

A report by ClickZ Features may give some indication of why in the last few weeks so many people seem to be joining and inviting others to join facebook.

Research we did amongst younger people showed frustration with MySpace (intrusive ads and music was quoted by many) and a move to facebook. MySpace still has 5 to 6 times the subscriber base of facebook but maybe that gap will narrow fast over the next few months.