Why social media is the next big thing

Business Times 20 Jan 10;

Panellists from NTU's Nanyang Business School:

• Dr Vijay Sethi, Professor, Division of Information Technology and Operations & Director, International Business Competitions, Nanyang Business School (NBS)
• Dr Kanapaty Pelly Periasamy, Assistant Dean (Business) & Associate Professor, Division of Information Technology and Operations, NBS
• Dr Damien Joseph, Assistant Professor, Division of Information Technology and Operations, NBS
• Dr Goh Kim Huat, Assistant Professor, Division of Information Technology and Operations, NBS

Moderator and writer: Narendra Aggarwal, Director, Public Affairs, NBS

OVERVIEW

SOCIAL media is the new buzzword as we enter the new decade. Already it is making huge inroads into the space previously occupied by the mass media and things more traditional. As information technology becomes even more pervasive, social media initially embraced by the youth is spreading rapidly into various sectors of business and society.

In an ongoing Nanyang Business School-Business Times Roundtable discussion series, information technology professors at Nanyang Technological University's Nanyang Business School (NBS) examine the rapid spread of social media and its implications for businesses, and try to find out if it is the next big thing.

Narendra Aggarwal: Can we start by defining what is meant by the new phenomenon that has been termed as social media which is exciting businesses and people of all ages?

Professor Vijay Sethi: Social media is a broad term but its key elements are easy-to-use tools that are readily available, in fact pervasive, and a culture of user participation and contribution to content. It is also about user-to-user connectivity and a growing emphasis on networks.

These aspects have combined together to create an environment in which much of what is happening online is being governed by users as opposed to institutions.

Associate Professor Kanapaty Pelly Periasamy: From another perspective, social media is the new exciting media where the end user or the consumer is in control, rather than what happens in the older media where the providers are in control.

An aspect of social media is that democracy becomes real in that everyone is able to have a say. In the older media, the mass media, it is the powerful which is in control and decides. In social media even the weak have the opportunity. It gives them an opportunity to share information, speak out and work together collectively to influence decisions and outcomes in society as well as in business and politics.

Assistant Professor Damien Joseph: Social media is no longer just a hype as these technologies have become the primary means of communication for the young as well as older folks. Interestingly, the 55 to 65-year-olds are the fastest-growing age group on Facebook in the US. Anecdotal evidence suggests that it may be similar in Singapore.

In Singapore, there are over 1.7 million Facebook users. Apparently more women (920,720) here are on Facebook than men (860,840). And Facebook itself would be the third largest country in the world considering that it has over 350 million users as of December 2009, behind China and India.

Assistant Professor Goh Kim Huat: The idea of social media moves away from the central plan kind of economy to a market-based system where each individual contributes information with the assumption that the market is sort of most efficient most of the time.

But the problem with social media is that how does one verify the information is true. For example, when it was wrongly reported on CNN's iReport that Steve Jobs had died from a heart attack, Apple's stock price dropped 10 per cent before the information could be corrected.

The marginal guy who comes in with so-called news can cause havoc as we know that individuals are susceptible to herd behaviour. You tend to follow the crowd resulting in the blind leading the blind which could be dangerous. Some form of regulation should be in place.

Narendra Aggarwal: Social media is reported to have overtaken pornography as the number one activity on the Internet last year. What are some of the reasons for the rapid growth of social media?

Dr Sethi: The whole phenomenon of social media has led to the inter-mixing and inter-mingling of roles. Earlier, the roles were defined in that there were the institutions producing information for the consumers. Today, all these particular roles are getting intertwined with each other and we have new terms like produ-user, which is a producer plus a user. Another interesting term is Market-ocracy. It's the rule of the free market where anyone can contribute but the influence they have is based on their merit.

Irrespective, social media is all about conversations which are happening online. It's the users who are dictating all aspect of these conversations - what is talked about, rules of engagement, who gets heard, whose voices pervade, and so on. The implication of this conversations metaphor is that companies cannot control social media but merely participate in it and influence it through fact and merit.

Dr Goh: Mass media is no longer the main source of information that it traditionally used to be where consumers paid to get information. I think the regular media should recognise that in this modern world who attracts attention matters as that yields money through advertising. With the dramatic rise of social media, many of the news agencies and traditional media are in bad shape financially and shedding staff.

Dr Joseph: Social media is changing the nature of reporting with the aid of technologies like the handphone and webcam. Who is generating the photographs now? Not necessarily the professional news photographer. It could be anyone with a camera or handphone and the photo could be in The Straits Times.

A good example is the recent incident where a lady jumped over the fence to grab the Pope. When that news came out, there were no video clips about the incident. But a tourist managed to capture the incident and the video clip was picked up by CNN and BBC. That is happening in Singapore as well when you look at the photo credits.

Dr Periasamy: It is important to recognise that in social media, people are sharing information and ideas that could be useful to other people for the sheer joy of it. Compensation is not a motivator as they are not expecting anything in return. It has emerged as a convenient avenue for people to fulfil their socialisation needs, one of the top five critical needs of the human race, and has given this need new perspectives and opportunities.

Dr Sethi: That is what makes it difficult to understand for traditional media because everything is changed about this model. The motivations are totally different. You cannot control it because people are driven by passion, or as someone called it they are 'scratching an itch'. It is a 'groundswell' - another popular term - where people rise to take up causes, air grievances, discuss products and services, and voice their opinions in a collective manner.

Dr Periasamy: The traditional media have often been controlled by powerful corporations, governments or political parties and in many cases continue to publish stories favourable to them. The social media including blogs and others have really given an alternative to the consumers and have had a big impact. It is so serious that the credibility of the traditional media is being questioned in some countries and people seem to be placing greater trust in the social media because they think 'it is coming from us, it is news from us'.

Dr Sethi: You can never eliminate any piece of content from the alternative or social media because everything gets posted or referred to in thousands of forums, in direct proportion to the significance of the content. So the more one tries to erase something, the more it shows up in comments and commentaries on the Web.

Dr Periasamy: Among the reasons for the growth of social media is that the middle class is growing, a lot more people are educated and a lot more people know about technology.

When people see something is wrong or lacking, more now feel that they can do something about it through social media, which gives people new ways to express themselves. You are in a position to challenge things. Through social media you can say it the way you like it. People are empowered to collectively challenge the powerful. Now everyone can do something when he or she sees a wrong - they can deploy the social media to try and right the wrong. But, of course, this is a double-edged sword which can also be deployed for wrong things by the unscrupulous.

Dr Sethi: Social media is about connecting people with each other. There was never a platform like it before. The new technologies like blogs, wikis, forums, reviews, user-generated videos - in their current form, they are a lot more pervasive and user-friendly.

Then of course sites like Facebook have given further impetus to people-to-people connectivity. It's the combination of a large number of new technologies which have together created the social media phenomenon as a perfect example of what is called 'combinatorial innovation'.

Dr Periasamy: Added to that is the ability to be able to post content at practically no cost. All you need is a computer, or just a cell phone to do so. And you can do it anytime, anywhere at your convenience.

Dr Joseph: Let us look back to the advent of the email in the 1990s which enhanced connectivity and exchange of information even if it was just to fix a lunch. That was an early form of social media, though limited by the technology available at that time. But once things like handphones got enhanced through technological advances social media's spread speeded up.

The tools are different today as technology has become a great enabler. But the key factor in social media is still content. There must be interesting and useful content to sustain social media. But the content must also be understandable to the user. Initially, users on sites such as Facebook and Friendster were restricted to postings in English, now you can post in most languages from Arabic to Vietnamese.

Dr Goh: Now all the attention of individuals is focused on a handful of social media sites such as Facebook, Wikipedia and Twitter which have become the new focal points of meetings and you participate because the rest of the world is there and you want to be there too to get the attention you seek.

Dr Sethi: Talking about value, social media sites are highly valued. YouTube was sold for US$1.65 billion. Facebook was valued at approximately US$10 billion before the economic crisis, and it is about a two years old company!

So there are economic incentives for people to create these kinds of platforms which were never there for the earlier forms of social media. Now these new platforms are continuing to grow and attract more and more users. Networks of users create value on these sites, but the wealth goes to the platform founders!

Narendra Aggarwal: What does social theory tell us about the immense popularity of social media and can we also examine the impact of the new phenomena from business and economics perspectives?

Dr Goh: As we shift to a people and market-based transmission and distribution of information through social media, I think some form of regulation assumes great importance as the market for social media may not be perfectly efficient. Multiple parties, including governments, are beginning to feel that if you do not regulate market behaviour, herd instincts which lead to less than ideal actions by individuals could result in undesirable social effects.

For example, the posting of President Obama's off-the-record comments on Twitter by ABS News staff led to a relentless spread of the story within the cyberspace. So, in asking for some form of regulation to govern social media, I am not against free speech. For instance, we have the SEC to regulate stock-market activities and prevent acts like insider trading. This may be a weak analogy, but I feel that some form of regulation is needed for social media.

Dr Joseph: Companies are beginning to see the role social technologies can play in the way they interact with others. Accordingly, organisations are putting in place codes of conduct, principles and guidelines on how employees engage in social media. At Intel, for example, staff are advised to be transparent but judicious in their interactions online. At Intel and other organisations, these social media guidelines extend to contractors and any who have access and contribute to their social media.

Narendra Aggarwal: Businesses like the hospitality industry are already beginning to engage and employ social media to spread their messages and thus take advantage of it. What are some of the benefits of doing so?

Dr Periasamy: Social media is another good avenue for businesses to reach out to their targeted consumers because they can see who are the people interested in their products.

For instance, the hospitality industry's marketing and customer service is being reshaped by social media. I cannot think of anyone now buying a hotel room on the Net without consulting TripAdvisor or other similar sites. There is no question that these online customer comments influence choice and decision in the hospitality industry.

Social media is one of the major innovations currently happening in hospitality e-commerce - e.g., dopplr.com, entrip.com, twitter.com. It is forcing the players in the industry like the hotels and the airlines to be more sensitive to their customers and engage them for marketing and quality improvement. If there is a negative review or posting, they cannot ignore it - they have to address it. All the major hotel chains are now into social media and are actively 'twittering'.

Social media is becoming so significant for business that information generated from them have become a critical component of executive information. Tools (e.g. 'Brand Karma' by circos.com) have emerged to help businesses to harness and consolidate relevant executive information from the social media.

Dr Sethi: Whether companies like it or not, customers are already talking about their brands. It is just that they are not talking to institutions but among themselves. What the customers are listening to now are actual experiences and not what companies want them to hear. The bigger the brand, the greater is the threat if the brand fails to deliver. That is because dissatisfied customers are liable to share their frustrations with many more people compared to those who have had a positive experience.

It is thus critical that companies be out there to defend their brand and to provide explanations. Otherwise their brand equity is getting diluted despite having spent so much money in the mainstream media. To shape people's opinion, you have to be where your customers are, in that particular town hall meeting, as that is what social media is all about.

Dr Periasamy: Another impact of social media on business is that if you compare the blogs and some of the social media sites before and now, there is growth of advertisements on these sites. Some of these have now become self-sustaining with good revenue - a viable business venture for the person who started it as a goody good project to share ideas and information and to provide a means for others to participate and contribute.

Dr Sethi: One of the greatest things companies should be aware about social media is transparency and disclosure. There is no room for deception. You cannot afford not to disclose who you are because when you are found out, the damage would be enormous. Your brand equity and integrity would be questioned in the marketplace. Eventually you will be found out because you cannot escape the masses. In social media, there are millions of eyeballs, and as it is said 'given enough eyeballs, all bugs are shallow'.

A perfect example on the positive side is Wikipedia. If there are errors, somebody will find them, perhaps in 10 minutes or within a day, because it is an ongoing cycle. Disclosure, being upfront and honest is critical in social media as people appreciate honesty in conversations.

Narendra Aggarwal: How should companies craft a social media strategy? And what goals is social media best leveraged for - marketing, influence, learning, knowledge?

Dr Sethi: The first part of the strategy has to be listening to learn what the game is all about and to know what social media is saying about your company, your products, brands and services, and your plans.

So companies have to get engaged with social media and then see how they may want to channelise it in a certain way. Do you want to create other platforms where people who are more supportive of you can talk good things about you? If somebody types your brand name on YouTube, you need to know what video comes up on it. Is it a fair representation? Is it what you want to be known about you? All this affects your brand image and you have to be out there on social media projecting the right image about you.

Moving on, you could be like Dell. If somebody posts something critical when his computer breaks down, you could be there to offer him an alternative, thereby turning criticism into an opportunity to promote your products.

Dr Joseph: We are beginning to see organisations hiring managers to monitor and manage the social media. For instance, IDA put out an ad for a senior manager whose role is to develop, monitor and manage opportunities for local businesses in the social media space. Similarly, other organisations like marketing and public relations agencies now have social media executives to help clients devise strategies for the social media.

In the social media space, most of the tweets or posts are spontaneous or knee-jerk responses, but organisations cannot respond in this manner. Organisations have to respond in a considered and measured way, taking into account branding, objectives and market strategies to use social media to promote their business.

Dr Sethi: You must have top management support. In fact in most of the successful cases senior management has taken the lead to go out and respond on social media. In Dell's case it was Michael Dell himself who told the marketing manager to respond to a particular criticism - there is a celebrated case study on this.

Dr Periasamy: Social media is not just transforming business, society and politics today but it will also be the competitive arena, if not the battle field, in the future. The winners will be those who exploit the social media and act. The losers will be the victims of this technological tsunami in progress.