Is Facebook the new company website? - Views on News from Equitymaster

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Is Facebook the new company website?

Apr 11, 2011

Last week, our entire nation united in favour of Mr. Anna Hazare. He received support from millions of Indians. What is more important is that this time around, the youth of the country too were actively involved. The news channels covering Anna Hazare’s campaign got more eye balls than the immensely popular IPL cricket competition. The reason for the huge participation from the youth lies in innumerous tweets/ Facebook status updates. It was also supported by the online invitations to attend the candle light vigils.

Could you have imagined such enormous support especially from the younger generation in the absence of social networking? Well, such is the power of social media. And now the Indian companies too have awakened to this fact.

So what exactly is social media? A social media website may refer to any website that doesn’t just give information, but interacts while giving you that information. These include blogging sites like Twitter, Blogger, social networking sites like Hi5, Facebook, Orkut, Linkedin and also sites where you can share photos and videos like Flickr and YouTube.

Companies all over the world are utilizing social media for gaining visibility and maintaining their brand value. Starbucks, the international coffee chain has stated that it boosted its UK sales of Christmas drinks by 15% last year as a result of inviting its Facebook fans to choose seasonal flavors. In India too, social media is slowly but surely making a place in the advertising budgets of corporate. From media companies to airlines to telecom companies, everybody is hopping on to this bandwagon.

HUL was the first company which adopted social media in 2005 to promote their Sunsilk shampoo. The company created an online community "Sunsilk Gang of Girls" who could relate to this brand. More recently, PepsiCo India arranged live chats on Facebook with Ranbir Kapoor when it launched an online game.

Opportunities

Companies have to keep pace with changing consumer needs and preferences. These days we are spending more time interacting on these social networking websites. Thus, it would make sense for the companies to advertise and publicize where the target customer is. Also, social media is much cheaper than other mediums. The best part is that the companies do not have to invest much to maintain their facebook profiles and twitter accounts.

India has more than 500 million mobile users. More and more people are accessing internet through mobiles. This along with the existing internet user base of 81 million provides a huge scope for growth in this segment.

Social media help in building brand images and encouraging brand loyalty. The companies can target a larger audience and also the specific audience that they need for their product segments. We may read reviews and analyses but would still prefer to go for the products that have been recommended by our peers. Networking websites facilitate this word of mouth publicity.

Facebook is the new company website and much more than that. The networking websites provide numerous ways of engaging the customers. Customers can post their feedbacks on the walls, participate in online surveys, play interactive games and suggest new ideas.

Challenges

Although social media provides a direct medium of interacting with customers, what matters is how companies use it to maximum advantage. Merely having a fan list would not suffice. They will need innovative ideas to engage the customers. Otherwise they would lose interest and move on to a ‘page’ that is more interesting.

Another problem is that it is very difficult to calculate the return on investment made in such activities. We cannot even define the value of a facebook fan or the increase in sales as a result of "likes" on a company’s profile.

In India, we have the right to freely express ourselves. The customers will freely write their opinions about brands and products on company pages. At times these derogatory comments may cause more harm than expected to brand image.

Conclusion

From traditional platform of print media (newspapers and magazines) we moved to electronic media (movies, radio, out of home advertising and television). When internet gained immense popularity, online advertising became the preferred medium of advertising. Nowadays, we are spending a substantial time on facebook, orkut and twitter. In fact, 50% of Indian web traffic is now social. Thus, social websites are the place to be for companies especially those with brands that target the youth. Whether they reap benefits out of this new trend will be evident in times to come. But, they certainly cannot afford to ignore it.

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