Tuesday, 27 October 2009

Social media for small and big businesses

The idea of businesses using social media for marketing has bubbled up to the BBC, which I guess means it is now mainstream.

The article talks about some relatively low-key applications: market research, networking with potential suppliers and local promotions. Not sure about this quote:
Companies that have jumped on the Twitter and Facebook bandwagon are reporting a surge in customers while others struggle.
But of course social networking - just like traditional networking - is a good channel for businesses to talk to customers, create relationships and get introduced to new prospects via their existing clients - always a good way to build a quick reservoir of trust.

The question for the economy as a whole - and especially for larger companies - is whether and how social marketing can be used for a mass market. One of the commercial benefits of large companies - and equivalently, the economic benefits of a liquid market - is that they reduce the transaction costs associated with small-scale relationship building and exchange.

Social media, potentially, have a role in enabling this. Chris Dillow asks whether the Trafigura viral marketing campaign of last week vindicates Marx by showing that technology has created new social relations.

He queries whether it has actually changed "power relations" in the sense that Marx intended, but I think that misses the point. Even if the formal political structure is broadly the same as twenty years ago, huge changes in the way society transfers and consumes information have transformed our world's real power dynamics. Political power is only one aspect of how influence is exerted on people, and the boundaries of politicians' ability to affect behaviour are certainly changing as technology evolves. More importantly, other types of power - commercial, social, educational, media, family, religious, community and employment-related influences - have all been thoroughly disrupted by the Internet, mobile technology and ongoing changes in the media landscape.

Now (as you'll see from the last paragraph) it's very easy to be glibly journalistic about "revolutions". To understand this properly, we have to do some hard modelling work. These models will be closely linked with the kind of effects Henry Farrell talks about here.

But in the meantime, it doesn't seem too far a leap to suggest that social media will enable an important new channel for mass marketing; but only if we develop technology to actively mediate or catalyse the social effects [plug: my own company's attempt is here]. Individual conversations between entrepreneur and customer, which is the model promoted by Thomas Power (no relation to Marxist Power Relations), can never scale up enough.

No comments: