Business value elusive in social networks

FOUR years into the rise of online social networking, its business value to most of the corporate sector, and the most effective way to tap into that value, remain elusive.

The music industry, for once, is an exception, although the success many bands and performers have enjoyed using MySpace to connect with audiences has had far more to do with the artists themselves than the Luddite major labels, which stand behind most acts.

To a lesser extent, other parts of the entertainment business and a handful of consumer goods firms have also tried to interact directly with users, and broaden their approach beyond simply viewing social networks as another set of web pages to advertise on.

Political organisations have also taken to the new platforms with gusto, using them as both a channel to connect with (and raise money from) supporters and a distribution path for ads and messages.

For most firms, networking sites and the large audiences they aggregate remain a marketing challenge.

This is especially so for services using Web 2.0 approaches such as real-time micro-blogging (the likes of Twitter and Friendfeed), in which communication is even more fragmented and informal than in blogs, email or chat forums - but, just like these other types of information, instantly becomes part of an indelible digital record.

That is why Twitter users were so surprised a few weeks ago when a representative of ExxonMobil, the world's most valuable company, appeared to be tweeting away on the company's behalf about issues as diverse as proposed changes to US oil regulations and past environmental disasters.

It swiftly emerged that "Janet", the "community evengilist (sic) at ExxonMobil Corp", had nothing whatsoever to do with the firm, despite her vigorous tweets in its defence ("@1WineDude, did you know that the Valdez spill wasn't even one of the top 10 worst spills in history").

Alas, Janet's unmasking was too late to save crack Forrester Research operative Jeremiah Owyang, who had already issued a typically thorough analyst report congratulating ExxonMobil for "directly and actively engaging with others" on Twitter.

Unrepentant, Owyang subsequently declared the incident was proof of the necessity for ExxonMobil (and other companies) to monitor their social graphs.

It hardly excuses his failure to bother picking up the telephone before issuing a research note, but Owyang has a point. Social networking has greatly increased the difficulty of monitoring what is being said about, or on behalf of, a company on the internet.

It has also greatly increased the opportunities for two-way interaction with the external world. It is easy to see the potential business value of conversing directly with existing or prospective customers, or intervening in ongoing discussions to correct inaccuracies or respond to unfair criticism.

So far, however, most firms have concluded there's as much, or more, downside in this than upside, for a number of reasons.

One impediment is the difficulty of striking an appropriate voice and tone - not seeming heavy-handed, sneaky or stilted, especially in give-and-take settings in which discussion is informal, spontaneous and often takes the form of sentence fragments or single words rather than complete thoughts.

Maintaining consistency and coherence is also a hurdle, particularly if it unclear exactly which members of an organisation have authority to speak on its behalf.

Deciding who has this responsibility is complicated by the reality that social networks could involve interactions relevant to multiple parts of an organisation: marketing, sales, public relations, investor relations, and not least customer support (the one place where most firms have been successful using interactive approaches, so far).

Finally, there are obviously additional regulatory and compliance constraints for firms in the finance sector and publicly listed companies communicating material information.

Having spent the past decade scrambling to get on top of the interaction between rules such as US Securities and Exchange Commission Regulation FD and applications such as email and instant messaging, IT and compliance groups now have to deal with these issues across a whole new range of platforms.

Add up these difficulties and the scope for missteps, and it is easy to see why so many firms are reluctant to open the floodgates, and prefer a largely reactive, monitoring focused approach to protecting their brand and reputation on these platforms.

That will change over time, but for now most companies are probably right to assume less is more.