Social networking for business – time-waster or money-maker?

Entrepreneur Len Rosen was a sceptic about using social networks to boost his marketing business until his 23-year-old daughter introduced him to Facebook – and now he’s totally converted.

The sole proprietor of Toronto-based Len Rosen Marketing Inc. soon joined other social networking sites like LinkedIn and Xing.

Running his marketing consultant business from home using contract employees, he finds the expertise he can easily access through these sites invaluable to the way he does business.

“I’ll put up a problem [in an area] where I don’t have a lot of expertise and in a short amount of time, I’ll get a response,” Rosen says. “That person becomes a virtual extension of my company, and suddenly I have an associate.”

Rosen’s Web site is now host to a growing list of associates he has never met in person. The relationships he manages online pay off in a big way for his small business.

This is one example of the cusp of a trend – businesses looking at social networking sites to offer them a competitive edge.

More than one-third of U.S. adults and more than two-thirds of teens engage in the sites each month, according to New York-based online magazine eMarketer Inc. That is projected to grow to half of all adults and 84 per cent of teens by 2011.

Already, if the population of the Web’s social networking sites were a country it would be the third-most populous nation on the planet.

Does this tremendous reach and scope of Web 2.0 sites provide any  business value to companies?

John Reid, president of the Canadian Advanced Technology Alliance (CATA) thinks it does.
He sought to convince his audience of the same during his keynote address at the IT360 conference in Toronto.

“If you don’t see value in using social networking to embrace your customers, then you’re missing out on a huge opportunity,” Reid says.

CATA had its own successes making money off social networking, the president told the audience.

It has branched out globally by migrating content across different networks and have also been able to draw on expert opinions from the online community.

“Three months ago, we knew nothing about RFID tags,” Reid recalls.
“We had a customer question about them and went into three social networks and received 50 thought-leader opinions. To this day, the customer doesn’t know how we were able to get such expert opinions in a short amount of time.”

But not everyone in the crowd was convinced social sites could deliver on business value.

Sceptics pointed out that using the networks can be time consuming and it’s often difficult to sort through the sheer amount of information available.

“The only people I know who are really plugged in to Facebook put about eight to 10 hours a week on their profile, I don’t know where they find the time for it,” says Ed Daugavietis, senior research analyst with London, Ont.-based consulting firm Info-Tech Research Group.

“The amount of information is so gargantuan that no one could go through even one per cent of it in a reasonable amount of time.”

Time-wasting is a risk that Reid acknowledges, pointing out that many companies ban their employees from using the sites entirely for fear they will be distracted from getting work done.

There is also a concern that employees could too easily share confidential information.

“As you get into social networks, be very cognizant of the risks involved, but do not overreact,” Reid says. If you can manage your online communities properly, you can cash in on the value offered.
Entrepreneur Rosen cautions that if your approach to doing business on social networking sites is to throw as much information as possible at your profile page, it will quickly become an exercise in time-wasting.

“What I’ve found is that it’s absolutely essential to have a plan going into social networks,” he says. “I don’t think people realize there is not that big a leap to go from e-mail to a social network in which the communication is also accompanied by a profile. A wall in Facebook or My Space is a great place to put information you want to disseminate to a lot of people.”

Marketers like Rosen are expanding their experiment with social network advertising. Spending worldwide is expected to grow by 81 per cent this year to $2.2 billion from $1.2 billion last year. By 2012, spending on social media is expected to outpace traditional marketing, according to eMarketer.

“Some types of business are going to take to this very quickly,” Info-Tech’s Daugavietis says. “For marketing, it’s very important as to how you’re connecting with your audience.”
Social networks are often trusted by their users, and blogs are seen as a more authentic way to tell stories from inside your corporation to a wide audience, according to Reid. But he concedes that not every company will see immediate business value in creating a Facebook or LinkedIn presence.

“If you can’t relate any of these networks to productivity, then it’s probably a good reason not to do it,” he says. “Social networking is about social productivity.”

For Rosen, productivity and social networking are synonymous. He writes a blog about free business tools for PCs, and just added another social network site to his long list of online personas.
That Web site has already paid off, he says.

A keyword search connected him to someone who’d read the same book he had about process management. When he asked them how they used the book’s information for their business, he was soon connected with the president.

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