Firms caught napping on social media

Companies tend to view social media as a free and easy platform for advertising. But it's a risky two-way street which, if left unsupervised, can cause more damage than profit.

Many publications – including this one – have been running pieces about why business needs to get into social media. One suspects it’s being spruiked for the wrong reasons.

Many businesses treat it purely as cheap and easy marketing for sending out quick press releases to the world and promoting their products and services at minimal cost. The recent ruling from the Advertising Standards Board about comments posted on the Facebook page of Smirnoff vodka put paid to that. Days later, the ACCC ruled that companies failing to remove false and misleading comments from their brands' Facebook pages within 24 hours face potential court action.

The ASB and ACCC rulings followed a complaint about comments made by the brand's Facebook 'fans'. Some of the comments were obscene, sexist, racist, and depicted irresponsible drinking. Quelle surprise!

There was a claim that Diageo, Smirnoff's parent company, has an obligation to police the activity of its fans on the Smirnoff Facebook page. No way, said Diageo, our Facebook page is just a networking tool that connects the company to customer. But the ASB found that a company's Facebook page is actually a marketing communication tool which draws the public’s attention to a product.

The ruling means that companies must manage comments as they would manage advertisements. The comments would need to comply with industry codes and community protection laws, specifically around racial slurs, discrimination, obscene language and misleading advertising. The ASB also found that Carlton & United Breweries’ VB Facebook page contained a number of offensive comments left by users that had breached sections of the Advertiser Code of Ethics.

The rulings have thrown the industry into a tizz. There are claims that constantly monitoring comments, controlling all those trolls, 24-7 every day of the year would be too costly and as a result, companies will question whether social media is worth it.

In its submission to the ASB, Foster’s said: "The only way for a producer to be certain that no inappropriate user comments appear on a Facebook page for its product would be either not to have that Facebook page at all (which is commercially unsustainable given the importance of social media in marketing in 2012 and its likely increased importance in future), or to review every user comment before allowing it to appear on the page. A requirement for pre-moderation of every user comment would be contrary to the spirit of social media and would cause users to become disengaged from the page.”

Oh really now? The offensive comments appear under an officially branded page. The companies have to take responsibility. It is after all designed to spruik their products.

Companies want to have their cake and eat it, they want to participate in social media but they don’t want to invest in managing it. When you think about it, if they really cared about what people say on their Facebook page, wouldn’t they be reading the posts anyway? They obviously don’t want to hear any of it because they are not looking at it. They just want users out there to do all the spruiking, providing the company with lots of free ads.

With the ASB ruling, business has now discovered that social media does not provide cheap advertising. More to the point, the Smirnoff debacle shows that social media by its very nature is out of the control of marketing departments because all that information is out there in the public domain.

Or take the case of Coles. A concerned consumer’s post on Coles’ Facebook page about the impact of its price cuts on dairy farmers gained more than 73,000 'likes' in just three days and triggered more than 4500 comments in support of that post. Not the sort of thing Coles’ management would expect.

James Griffin, from social media analysis company SR7, says monitoring comments would cost companies no more than $2000 a month ("And that’s for a really premium service, that’s not paying robots”). There are specialist companies now doing that and it’s likely to become a growth industry. Or they could have it done offshore. They could also shift money from advertising into social media management, and community engagement. "The money is being wasted in display ads, everyone knows that," Griffin says.

Of course, social media is useful for business. Companies need to know what’s being said about their services and products out there in the zeitgeist. The ones that don’t can run into trouble.

Lynas, for example, has been forced to put its rare earths plant in Malaysia on hold because of opposition from local activists. Concerned about possible contamination from the Pahang plant, 'Save Malaysia, Stop Lynas!' has gathered more than 40,000 followers on its Facebook page. It also spreads its message on Twitter and on a blog. It has held up the project and every month of delay is costing Lynas $10 million. In an interview with Bloomberg last month, Lynas chief executive officer Nicholas Curtis said: "We probably didn’t recognise the power of the social media to create an issue.”

Significantly, a survey by Deloitte and Forbes of executives last month found that 42 per cent nominated the global economic environment as their biggest source of risk and an astonishing 27 per cent nominated social media. In other words, social media is now being ranked as one of the top sources of risk, almost on a par with financial risk.

Another survey by the Altimeter Group in the US found two out of three companies saying that social media was a significant or critical risk to their brand reputation. The findings are all the more remarkable because Facebook didn’t exist before 2004, YouTube was only created in 2005 and Twitter in 2006.

The Diageo, Fosters and Lynas stories tell us that businesses are either ignoring it or treating it as cheap advertising. And many are struggling to find solutions. A Deloitte study found that while 58 per cent of executives said reputational risk associated with social media should be a board room issue, only 17 per cent had programs in place to monitor the data.

Still, some companies are showing the way. Qantas and National Australia Bank for example are making good use of Twitter to keep customers informed. In the US, Procter & Gamble has developed a dashboard to scan blogs, tweets and other social media to capture consumer sentiment about its products which include Duracell, Clairol, Old Spice and Vicks. The company’s chairman and chief executive, Robert McDonald, himself reviews the information.

These are examples showing that it can be done. So why don’t more do it?

I suspect it’s not because managers don’t understand social media. It’s more because they don’t value what it can do and are instead focused on their traditional marketing models to make social media 'work' for them.

It won’t. Marketing departments can’t control comments coming in. Social media is about relationship building, not marketing. That requires strategic thinking to become adaptive and community driven. It’s a completely different management model to just getting people to 'like' your Facebook page. It actually requires them to do some work.

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