Social Media, The Next Big Revolution in Enterprise

Rishi Taparia

Analyst,
Scale Venture Partners

Social media in the enterprise: With more people spending more time consuming and creating social media content, companies have begun to adjust their advertising and marketing strategies to capitalize on the trend. Advertising and marketing budgets for social media will continue to cannibalize those for traditional channels such as print, radio and television. Social media has given companies and brands the opportunity to create online identities that customers can directly interact with, pushing business-to-consumer relationships to a depth simply not possible with conventional media.

Successful companies with an eye to the future will turn their customers into assets, bringing them into the fold and empowering them with tools to evangelize their products. Through messaging, advertising and deals tailored to the individual ‘fan’ based on demographic data, companies can now incentivize, motivate and encourage customers to be brand advocates and share their enthusiasm with their friends. Customers can now ‘Like’ products on Facebook, ‘tweet’ out the latest deals and publicly announce they are a ‘fan’ of a brand—and be rewarded for doing so. Through its Facebook page, a company like McDonalds can now offer Green Bay Packers fans a free burger to congratulate them on the team’s Super Bowl victory. Unlike a television commercial, where a missed or fast-forwarded ad equals a lost opportunity to engage the customer, this offer can be shared on Facebook walls and Twitter feeds and then spread virally, improving the odds that it will be seen and acted upon. This rich and more engaging experience is a powerful tool, and mainline businesses are slowly waking to realize its potential.

As companies continue to adopt this relatively new and ever-evolving technology, calculating the return on the investment in social media—the value of a ‘fan’—becomes essential. But, companies will need to ensure they don’t try to over-extract value from the social media channel. Inundating users’ social networks with messaging, similar to blasting inboxes with spam, will lead to a lower engagement rate and thus a lost opportunity to connect with customers. By squandering the ‘Like’, companies risk alienating the social graph, one that is highly collaborative, influential and now extremely mobile.

Layering in the mobile world: In the fourth quarter of 2010, for the first time ever, more smartphones and tablets were shipped than PCs (including netbooks). Smartphones and tablets give users the ability to be connected at all times and are rapidly changing the way people consume and create content. This constant stream of content is a key driver of the social media revolution, and mobile devices have given users greater access to the social graph resulting in more frequent and regular interactions. It is now possible to access data any time, provide real-time updates on an event to friends, and, perhaps most importantly, broadcast current location.

The location layer is unique to mobile devices and extremely powerful. By enabling consumers to share where they are, mobile devices provide them access to even more targeted and relevant content, specific and convenient to their current coordinates. They also give businesses the opportunity to offer location-based content such as deals and incentives aimed at enticing consumers to visit their locations, potentially changing a consumer’s behavior well before any purchases have been made. A search for ‘coffee shop’ from a smartphone indicates different intentions than the same search from a computer. The mobile search likely precedes a more immediate, actionable task—looking for a coffee shop to go to in the near future—since the search is taking place while on the move. The ability to influence the search results, and potentially manipulate a consumer’s footprints, is increasingly relevant for businesses as they continue to try and differentiate themselves in the social world.

This is only the beginning of the impact that smart mobile devices can have on society. Moving forward, mobile devices will be a horizontal enabler for technology, serving as a platform for advanced technology. As innovation continues, they will potentially be used for everything from making payments at a cash register to monitoring one’s health. The pace of innovation is accelerating and the boundaries of technology are being constantly tested.
The intersection of social media and mobile technology represents a unique opportunity for entrepreneurs to shape the way users consume, create and disseminate content. In this extraordinarily dynamic landscape, tools that help make sense of the social graph and optimize around the complex layers it reveals will be in high demand. With the cost of building technology business at an all-time low, entrepreneurs should seize these myriad opportunities to disrupt the status quo. Those who can capitalize on these trends and continually stay ahead of the curve will be leading the pack.

The author is an Analyst, Scale Venture Partners

Back 1 2

Opportunity for Entrepreneur( 1-5 of 10 )

Trends for investment

Think Like a VC

New Venture Opportunities In Social...

Venture Capital Today A Perspective

We Are Biased For Technology

Write your comment now

Reader's comments(1)

1: It's amazing the power social media has. Different types of business require completely different strategies for marketing individuals on social media. I saw something today about Pinterest for the enterprise, but so far that seems like it would really just be useful to retailers who sell consumer goods. Different types of customers require different types of strategies on social media.

Sarah
Mosaic Technology
http://www.mosaictec.com

Posted by:Sarah M - 25 Jan, 2012