"The Internet is a tidal wave.
It will wash over nearly all industries drowning those who don't learn to swim in its waves."
Bill Gates CEO Microsoft
Abstract
Transforming of social networks from a simple means of communication to a powerful marketing tool has become a widely discussed topic in today’s business world. The article elucidates why and how businesses can benefit from this phenomenon and what so-called socialnomics is. Based on statistical data and expert opinions the study discusses the way the Internet has influenced marketers worldwide, describes how social media has changed marketing world’s rules and explains how companies can benefit from use of social networks for marketing purposes.
Key words: Internet, marketing, social media, socialnomics, social networks
1. Introduction
The telephone took four decades to reach 50 million people. The Internet has managed this within four years as digital technologies provide such efficient channels for business and consumer interactions [1].
Being originally intended just as a demonstration project linking up four university campuses in the USA, the Internet has already reached 1.9 billion users across the world [9]. This figure amounts to 28.7 % of the world population. The global network has come a long way in a very short time as a mainstream business tool. By changing the worldwide communication system the Internet has created a completely new integrated space for business transactions and trade.
 Fig. 1. World Internet penetration rates by geographic regions 2010 [9]
More than hundreds million web-sites are launched every year and this number continues to grow [8]. In December 2009 the average number of email messages per day was estimated at 247 billion worldwide (90 trillion per year) [8]. From these figures and the Internet penetration rate (see fig.1 above), we suggest the Internet being one of the most influential tools of today’s business arena.
2. Internet impact
Being an interactive global communication medium, the Internet, permanently influences both consumers and companies all over the world.
First of all the global network significantly changes consumer lifestyle and the way they perceive traditional advertising medium. Due to a number of new sources of information that can be easily found in the Internet, consumers have become much better informed and independent. Hence, the integration of technology and multichannels increases the complexity of the business arena. The Internet has created a completely new set of rules in many ways with greater transparency, cost efficiencies, more consumer power and choice, changing strategic alliances and new partnerships. Companies are encouraged to be more creative, entrepreneurial and visionary.
3. Social media for marketing purposes
The newly connected and rapidly changing world has made so-called social media one of the most interesting and influential tools to build customer relationships. Social media may be defined as a primarily Internetand mobile-based tools for sharing and discussing information among human beings [2]. The term often refers to activities that integrate technology, telecommunications and social interactions.
What is important is that social media has already significantly changed the way marketers should think and act. Erik Qualman, who is an author of a famous bestseller on this topic, has given a special name to the social media phenomenon – so-called socialnomics. In his book «Socialnomics: How Social Media Transforms the Way We Live and Do Business» he defines socialnomics as an ability of social media to generate exponential returns for individuals and businesses [4]. The idea is that in the future we will no longer search for products and services, rather they will find us via social media.
One of many classification schemes for different social media types was developed by Kaplan and Haenlein [3]. By applying a set of theories in the field of media research (social presence, media richness) and social processes (self-presentation, self-disclosure), they distinguished between six different types of social media (fig 2).
 Fig.2. Classification of Social media by Social presence and self-presentation
From the marketing prospective, Social networks are becoming, probably, the most interesting category. The fact that businesses can benefit from using Facebook, Twitter or other networks is an object of many studies today. Social networks give a number of opportunities to marketers and one of the main questions to be answered is why these web sites have become such a powerful marketing tool.
4. Social networks penetration
The scale of social networks is growing and becoming more impressive every year. By registering themselves, users become a part of a big community, as if it were a country. However, hardly anyone realizes that if e.g. Facebook were really a country it would be the world’s 3rd largest after China and India (1). In 2010 Facebook announced 500 million users [6].
Other most popular platforms today are:
- Twitter
- Vkontakte
- MySpace
- YouTube
- LinkedIn
The survey conducted among students of Technical University Munich from 13 countries proves the growth in social networks users number throughout the last 5 years. Being number one network worldwide, facebook is used by 124 out of 150 respondents. Interestingly, more than 80% of the respondents spend their time using Social networks and perceive it as an inevitable part of their life.
 Fig.3. Social networks usage growth (Source: the survey conducted by the author)
Audience of social networks has been growing rapidly, therefore they became a very powerful marketing area. Being a fundamental shift in the way we communicate, it could help to improve the business by using it as a customer service tool. Sooner or later, the competition is going to force almost every business to start using social media. By using all the opportunities of social networks in the right way, businesses can target customers, generate exposure and a higher level of visibility effectively and cheaper than ever before. However, marketers should bear in mind that any social media could also cause a disaster.
5. Social networks benefits
There are some distinct advantages of social networks that make it a vital tool to any marketing campaign.
First of all businesses can benefit from better targeting. If carried out properly, social networks can draw a highly targeted segment of Internet users to visit your business or Website. This can be done by using the various parameters. Every network is a giant database where everyone freely gives segmentation-relevant information: age, sex, location, interests, etc. These parameters are easily assessable, hence, every network may be regarded as a giant focus group. It allows not only to target right customers and inform them effectively, but to conclude relevant tendencies. Marketers can simply search websites like Twitter for people talking about their company. By this way they can find out what people think of the brand, what customers especially like or dislike about the product and what attributes can be improved. Customers themselves are likely to share information about their needs and wants. In other words, social platforms are ideal data sources for marketers worldwide.
The next point is that networks provide a high ROI, which is, obviously, one of the most important criteria of most marketing campaigns. Moreover, it is extremely important for small businesses with low budgets. Social marketing is one of the cheapest ways of marketing currently available. Practically all the social media can be used to market a business cost either nothing or a very small amount. The low investments needed mean low further risks and publicity almost for free.
If you think social media is where your target consumers are, a small investment is enough to get you started. It would not hurt much if you realize that it does not work for you, but if it works, the returns can be amazing.
To surf in the Internet one does not require any specialization or vast technical skills. Simplicity and accessibility from everywhere make social networks highly attractive for both parties (marketers and customers). Most social networking sites are visually oriented and pretty straightforward, which means that practically anyone who understands how to use the Internet can use social networking tools.
Social marketing efforts generate exposure for businesses. It increases awareness and visibility for brands. Social marketing, like blogging, can help to spread information. This information can then be correlated to the needed site, increasing its popularity. By creating a new content that people really need it is easy to draw people to the needed webpage.
The high relevance of social platform can be also concluded from the fact that today 78% of consumers trust peer recommendations [2] and only 14% trust advertisements [5].
Hence, social networks marketing has a bigger impact on the target audience than traditional ad campaigns. Customers are bombarded with ads every day. Researches tell us that the average American consumer is exposed to more tha 600 advertising messages a day in one form or another [5]. Society has already got used to them and has become better-informed and not easily-persuasive. Traditional media are losing their charm by reason of the lack of customers’ trust. In this respect, social networks provide a human touch that really helps to attract potential customers.
Finally, social marketing is longevous. Whatever that is said on the web, be it good or bad, is indexed and searchable on the web. A good comment never dies unless it is deleted by the user. Traditional media on the other hand has an expiry date. Though, some comments are outdated they still may have an impact on other users’ decisions.
6. Conclusion
The growth of social media has impacted the way organizations communicate with their customers. The Internet provides a set of tools that allow people to build social and business connections, share information and collaborate on projects online. This socialnomics phenomenon can be regarded as an online version of word of mouth.
Social marketing can be a great asset if used properly. The beneficial effects of social marketing for a business can be tremendous, but one must remember that it must be used in the most efficient way possible. Social marketing allows businesses and websites to gain popularity over the Internet by using the different types of social media available, such as blogs, video and photo sharing sites, social networking sites and social bookmarking websites.
Social networks are a platform that is easily accessible to anyone, opening doors for organizations to increase their brand awareness and facilitate conversations with the customer. Additionally, it is a relatively inexpensive way for organizations to implement marketing campaigns. Organizations can receive direct feedback from their customers and targeted markets.
(1) The population of China – 1,338,612,968; the population of India - 1,186,791,000 (estimated in 2010). Facebook users – around 500,000,000 (September 2010)
Reference:
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