The Challenges of Social Media

All of the blog posts I have written so far have been about explaining different uses for digital marketing, although I have not yet touched on and challenges that digital marketing has.  Therefore I feel it is appropriate to do so today.  As digital marketing is a fairly new concept to some people it is hard for them to understand the differences between implementing traditional marketing and digital marketing let alone understand the challenges it holds.

The most popular ways for users to access brands on the internet are, the company’s home page, social media and email. The biggest growth tipped for the next 2 years are the use of Smartphone applications alongside rapid growth of social media usage.  Smartphone usage is thought to be the driver of a second internet revolution as it is so popular and growing so rapidly (Husson, et al, 2013).

In 2011, over 50% of users on social media follow brands on the platforms meaning that even more companies have realised the importance of investing in social media (Williamson, 2011).  In my opinion social media is one of the most challenging parts of digital marking.  In this blog i will discuss the difficulty of social media marketing and how brands can manage positive and negative feedback.  In a study created by Leeflang it identified social media as the second most common challenge that marketing executives around the world identified (Leeflang, et al, 2014)

Social Media & Word-of-Mouth 

A definition of social media in a marketing concept is “a group of internet-based applications that allow the creation and exchange of user-generated content” (Kaplan & Haenlein, 2010).  User generated content is created when users in these social networks influence each other to create content. They like, post and comment their opinion for every user to see.  One of the challenges for brands is to constantly monitor negative comments and to facilitate positive dialogue between the consumer and the brand.  Social media provides a platform for users to publicise their personal experiences and evaluations which will in turn facilitate word-of-mouth (WOM) communications (Chen, Fay & Wang, 2011).

This brings up the notion of word-of-mouth (WOM).  WOM is such an important component of marketing, although one of the most complex as its hard to control nature.  Simply if a person has a bad experience with a brand, they will spread their negative experience with the people around them.  The only way for a brand to stop negative word of mouth is to encourage consumers to leave feedback directly with them in order for PR functions to solve to issue and reduce negative WOM.  WOM is relevant in digital marketing as social media and other online platform facilitates WOM through online user-generated content.  As mentioned earlier, normally a bad experience will be spread through a persons close network.  With the internet, the negative comment is there 24/7 and can reach anyone around the world.

For example Westpac posted on their Facebook website that they were changing their standard variable home loan rate, this post followed many people commenting negatively about the brand.  As seen below.

On the other hand social media provides an opportunity for brands to facilitate positive WOM.  This is one of theist kinds of online marketing, its known as social proof.  Social proof occurs when people post positive evaluations of a brand, other users are more likely to believe them over any communications made by the brand.  Creating social proof should be at the top of every brand list.

A great example of how the brand Woolworths was able to turn a negative Facebook post into a positive.  A customer posted the below photo of some avocados gone bad.  As Woolworths are “the fresh food people” the customer was very upset and so were many other people who commented on the post.   The photo posted is below.

Woolworths then promptly commented a funny reply saying that they will “hook a brother up”.  People applauded Woolworths for the reply that was both light-hearted and to the point.  They received 8.8 thousand likes on the reply, proving that people were so accepting of the witty reply.

The post even went so far to of sparked the creation of memes about Woolworths “hooking brothers up”.  Woolworths were able to turn a potentially very bad brand damaging event into a humorous comment that customers liked and accepted.

 

Social media creates less control

Consumers prefer brands to be on social media as it allows brands to listen to a consumers preferences in a realtime aspect.  But the positives are not without negatives.  Marketing Managers are struggling to find ways to take control of their reputation of social media.  How do brands measure the actual impact that social media has on their reputation.  It is believed that because of this struggle to measure impacts 74% of brands are either using social media minimally or not at all for marketing communications.  Many brands might plan to communicate on social media but never do as they find it too difficult (Leeflang, et al, 2014).

Big brands feel the lack of control a lot heavier than smaller brands.  Bigger brands have a bigger following and therefore if something negative happens in regards to a brand on social media there is a higher risk for it to go viral.  The is always a risk that consumers will use the opportunity of open dialogue to attempt to tarnish a brand to other users.  People   may even deliberately try to egg other users on to fuel negative comments.  This is why it is so important for brands to ensure any social media communications are cautiously managed by brand managers (Leeflang, et al, 2014).

To conclude, as the use of smart phones will rise so will users of social media.  Brands need to ensure they are everywhere that their target market is in order to stay relevant.  Social media is a very challenging aspect of digital marketing mainly because the lack of control that brands have on the communication.  Although it is challenging, brands have to find a way to manage WOM in order to stay successful.

References

Chen, Y., Fay, S., & Wang, Q. (2011). The Role of Marketing in Social Media: How Online     Consumer Reviews Evolve. Journal Of Interactive Marketing, 25(2), 85-94. http://dx.doi.org/10.1016/j.intmar.2011.01.003

Husson, T., Ask, J. A., Overby, C. S., Parrish, M., Mullen, A., McCarthy, J. C., … & Kwan, E.   (2013). Mobile trends for marketers. Cambridge, MA.

Kaplan, A. M., & Haenlein, M. (2010). Users of the world, unite! The challenges and opportunities of Social Media. Business horizons, 53(1), P. 59-68.

Leeflang, P. S. H., Verhoef, P. C., Dahlström, P., & Freundt, T. (2014). Challenges and solutions for marketing in a digital era. European Management Journal, 32(1), 1. doi:10.1016/j.emj.2013.12.001

Williamson, D. A. (2011). Worldwide social network ad spending: a rising tide.

 

 

The Importance of Business Model Innovation

How do company’s which are swamped in fierce competition prevail ?  Innovating their online business model is a great place to start.  To define what a business model is, is simple.  A business model is an explanation of how a company plans on delivering value to consumers while at the same time keeping costs down to maximise revenue.  Business model innovation is the key word of this blog post.  Innovating an online company business model is such an important way to differentiate a brand from their competitors.

Dell is a great example of how business model innovation provides the ability to trump the competition.  Dell had achieved early-mover advantage when they were the first computer company to sell PC’s online.   By changing their online business model from a services-orientated relationship-building website (the same model their competition uses) to a transactional e-commerce site they were able to reach new consumers and sell their products 24/7 (Chaffey & Ellis-Chadwick, 2016).  Dell was performing well with their business model although they knew in order to stay in top they had to consider new models that could provide even more products to their consumers.

To achieve this they looked into business-to-business models in order to sell more products.  They started to supply information consulting services to business that consumed their products through a website called PermierPages.  They launched a B-2-B marketplace were business could purchase discounted goods online, this business model was not profitable in the long run, although innovative ideas will always either succeed or fail.  The fact that Dell was trying new things to enhance their online presence and promote sales just shows their commitment to finding new successful business models.

Finally Dell implemented a two-way communication model website called Ideastorm.  This website allowed consumers to participate in suggesting new ideas and products and allowing other users to vote on the best ideas.  It is found that one of the ways to take the most advantage of the internet when creating a business model is by creating a network that encourages an “architecture of participation” (O’reilly, 2007). Participate models are needed in todays webspace to keep competitive.  “Ideastorm can help take your idea and turn it into reality.”  A tagline placed on the ideastorm website (Dell, 2016).   This online presence is known as a brand building site as it proves an experience to consumers where they feel involved in the brand.  They feel like they have a say, they feel important and this ultimately promotes brand loyalty.

No other computer brand have done the same, therefore creating a major advantage.  This innovative business model is creating an experience for their consumers, making them feel like they are apart of the brand and they are contributing to Dell’s success. Plantes believes that business model implementation should focus on creating a culture that creates value promises that are hard for competition to duplicate (Plantes, 2016).  In my opinion by creating the ideastorm website they have created a culture were as mentioned earlier consumers feel involved an important that they get a say in the brand.

Dell has shown that through their innovative business models they are able to stay competitive, but as we know the competition will always catch up.  They will still need to change their business models as we move into the new era of the internet, web 4.0.

Chaffey, D. & Ellis-Chadwick, F. (2016). Digital marketing. Harlow: Pearson.

Dell,. (2016). Idea Storm. Ideastorm.com. Retrieved 5 September 2016, from http://www.ideastorm.com

O’reilly, T. (2007). What is Web 2.0: Design patterns and business models for the next generation of software. Communications & strategies, (1), 17.

Plantes, K. (2016). Why Business Model Innovation is Critically Important Today. Innovation Management. Retrieved 5 September 2016, from http://www.innovationmanagement.se/imtool-articles/why-business-model-innovation-is-critically-important-today/ †