ESSENTIAL LEARNING
Taking care of business through
social media
Martin Gibbs
Siena Collage
With the ever-changing economic and social environment, it is important
that businesses keep up-to-date with changing technology, such as social
media. Social networking services such as Twitter, Facebook and MySpace,
video-sharing websites such as YouTube and photo-sharing websites such as
Flickr are increasingly being used by organisations to advance their goals and
build business relationships. The use of social media is becoming an
everyday part of the business environment and for many organisations it is
regarded as an essential business tool.
This resource provides students with the opportunity to examine the role of
social media in business. The resource addresses elements of the Level 5
standards of the Economics domain of the Victorian Essential Learning
Standards (VELS). Refer to the teacher notes for further information.
The emergence of social media
The Internet has provided businesses with the potential to access overseas markets. Technology
enables them to communicate, advertise and transact with consumers and suppliers in any country
around the world, thereby giving them access to a much bigger market than was possible prior to the
advent of the Internet. Sellers can potentially increase their sales and even market share, promote
brand awareness, gain a competitive advantage, and reduce their costs relative to sales. Potential
customers can access detailed information about products and services on business websites at any
time and purchase goods online.
The advent of social networking technology has broadened the use and power of the Internet. It has
revolutionised marketing and introduced the products and services of organisations to a broad
audience.
What is social media?
Social media is the technology that enables Web-based social networking and interconnected
communities. It is the use of Internet-enabled and mobile technologies to facilitate interactive
communication, compared with traditional media, which delivers content but doesn’t allow users to
interact with it or develop it.
Social networking is the practice of expanding personal and business relationships by making
connections through individuals.
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ESSENTIAL LEARNING
Social media consists of Web-based and
mobile technologies that facilitate
interactive communication, compared with
traditional media that doesn’t allow users
to interact with it or develop it.
Reasons for the growth in social media
Part of the reason the use of social media has grown, is because consumers prefer to rely on their
friends’ recommendations rather than TV or magazine advertisements. For example, bookseller
Abebooks receives a quarter of all its UK Internet traffic from social networks, which is more than it
gets from search engines.
Social networking is an important generator of traffic for companies, because a company’s brand or
brands is participating as a trusted friend in an interconnected community, such as Twitter, and
develops a personality rather than a slogan. For example, Twitter provides companies like Myer
(http://twitter.com/myer_mystore) and Virgin Blue (http://twitter.com/virginblue) with an inexpensive
means of promoting their brand through conversations with customers, announcements, promotions
and updates. Twitter is used quite effectively by Qantas, Jetstar and Virgin Blue to provide updates
about flight changes or cancellations. For example, following the earthquake in Christchurch on 22
February, these companies made announcements about flights to and from New Zealand, and about
the closure of Christchurch Airport.
The Internet has become a powerful selling tool. It has radically changed the way businesses trade
and provide goods and has given them the capability of reaching a much broader audience than
would otherwise be possible. In the past, a website was little more than a brochure for a company, but
today websites and, more recently, social networking sites, such as Facebook and Twitter, can offer
richer content and enable the user to view, order, purchase and pay for products. This means that
almost any business can reach a very large market—directly, quickly and economically—whatever the
size or location of that business. Never before has it been easier for a new business to access a
market with millions of potential customers, and without the need for expensive infrastructure and
other set-up costs.
Types of social media
Social media can take many different forms, including Internet forums, weblogs, social blogs,
microblogging, wikis, podcasts and social bookmarking. With the emergence of Web 2.0, the Internet
provides a set of tools that allow people to build social and business communication, share
information and collaborate on projects online.
Social media marketing programs usually centre on efforts to create content that attracts attention and
encourages readers to share it with their social networks. A corporate message spreads from user to
user and presumably resonates because it is coming from a trusted source, as opposed to the brand
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ESSENTIAL LEARNING
or company itself. Key factors that ensure its success are its relevance to the customer and the value
it provides them with. The most popular platforms include Facebook, YouTube, Twitter, My Space,
Flickr and Delicious. Facebook and Twitter provide space for businesses to place an advertisement
on their page.
YouTube is an easy place to post and promote videos. Many businesses post videos, such as
advertisements, because they are an excellent communication tool, don’t cost a lot to create, or are
already available. YouTube is the third-most used search engine after Google and Yahoo.
Twitter is suitable for posting short messages on the Internet. Its main advantages are that it not only
provides ease of access to people that organisations or individuals want to communicate with, it is
also a two-way communication tool. Social media services like Twitter can be used by businesses
and individuals to communicate with employees, customers, supporters or constituents. For example,
Collingwood Football Club has a Twitter account, and has over 11 000 followers. Prime Minister Julia
Gillard has a Twitter account and has nearly 82 000 followers, while federal Opposition Leader Tony
Abbot, who also has a Twitter account, has 28 000 followers.
Women and young people are the most
active users of social media today, and
women in their thirties make up more than
half of active contributors.
Impact on businesses
Social media has had both positive and negative consequences on businesses. The NielsenCommunity Engine 2010 Social Media Business Benchmarking Study found that 70 per cent of
Australian businesses intend to use some form of social media for their business, a significant
increase from the 40 per cent engaged in social media in 2008. The number of consumers engaging
with companies via social media is up from 23 per cent in 2008 to 38 per cent in 2009.
The website of social media software company Community Engine states: ‘Social media has
revolutionised the way people interact with each other. In the same way that social technologies have
changed our personal lives, social business is fundamentally changing how organisations engage
with their employees, customers and communities’.
Community Engine director, Piers Hogarth-Scott, believes that ‘corporate Australia has seized on it as
a vitally important addition to their marketing and business toolbox’. For example, Costa Anastasiadis
founded the gourmet pizza company Crust Pizza in 2001, and by 2008 he had opened another 50
outlets, with the helping hand of social media. You can converse with Crust Pizza through its
Facebook page and every Friday, Crust runs a ‘Free Pizza Friday’ competition via Twitter. By getting
fans to tweet ‘I’m entering@Crust_Pizza#CrustFreePizzaFriday’, customers stand a chance to win
five free pizzas for the night!
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ESSENTIAL LEARNING
Despite the obvious success of Crust Pizza, and the widespread adoption of social media by large
companies in Australia, many small to medium-sized businesses have not adopted the new social
media platforms. It appears that online marketing is just emerging in Australia. According to one
report, 40 per cent of Australia’s top 20 brands had a Twitter account, but 44 per cent of those were
dormant or rarely used.
According to the latest MYOB Business Monitor Survey:
… only 35 per cent of Australian businesses have a website and only 18 per cent of business owners
surveyed use social media like Facebook, YouTube, MySpace or Twitter to promote their business.
And fewer still (13 per cent) write online newsletters or blogs to promote their business.
The most likely users of social media at present are business owners in South Australia (27 per cent),
business owners who are 18–39 years of age (24 per cent), and business owners in retail and
hospitality (22 per cent) …
Tim Reed, MYOB CEO, said, ‘Despite the current low adoption rates of social media and websites,
it’s inevitable that the use of online platforms will increase rapidly in Australia as business owners see
global competitors using these forums to lure local sales offshore …’
‘As many US and European case studies have proven, the intelligent use of social media can make
business life easier for Australian business owners looking to raise the profile of their business online.
Online forums are perfect for developing a community of loyal customers that can be contacted at a
moment’s notice.’
Source: MYOB website, http://myob.com.au/myob/news-1258090872838?articleId=1257828849917&year=2010
When you consider that Facebook has nearly 6 million active Australian members—which is almost
one-third of the entire population—the above figures are surprisingly low.
Business case studies
Organisations such as Myer, Holden, Billabong and ANZ’s Smarty Pig have successfully used social
media to promote their businesses. Myer uses YouTube, Facebook and Twitter to target customers.
The company says that the Internet, mobile phones and tablet computers will play an increasingly
significant role in its offerings. Myer iPad application has had more than 30 000 downloads. The
marketing tactics used include advertisements and online videos, such as ‘How to dress for the races’
on YouTube.
The marketing campaign for the Holden’s Barina Spark features people being able to design their own
car online and share this with friends via Facebook or Twitter. People can then vote on which cars
they like best, with prizes awarded fortnightly. The grand prize is a Barina Spark.
In late 2010, ING Direct launched a social media campaign that included the introduction of a talking
orangutan, called Charles, as the face of the bank. According to ING’s head of Branding and
Communications, Christian Bohlke, Charles’ role is to ‘to show Australians there is a better way to
bank. He is an independent thinker who doesn’t want to deal with the practices of the mainstream
banks’. The marketing team at ING have utilised social media. Customers can access Charles’
Facebook page via the bank’s home page or at http://www.facebook.com/charles, or chat with him on
Twitter at http://twitter.com/charles_writes.
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ING Direct launched a social media
campaign featuring Charles, a talking
orangutan, as the face of the bank. Charles’
has a Facebook page and customers can
chat with him on Twitter.
Fashion label Talulah uses Facebook and Flickr to build relationships with its young female audience.
Taluhah designs are now sold in over 100 boutiques around Australia. Talulah uses Facebook
(http://www.facebook.com/talulahlabel) and photo-sharing site Flickr
(http://www.flickr.com/photos/talulahthelabel) to connect and build relationships with its predominantly
18- to 30-year-old female target audience. Talulah’s company director states that ‘the most effective
platform for us is Facebook. We use it to announce new ranges and collections. It allows us to easily
keep our customers updated if we’re involved in an event or even if we’re having a clearance sale. It’s
good for us because our customers want to be involved. With fashion it’s important to know what’s
happening’.
Brands such as Telstra and Billabong had proven to be skilled at weaving social media into their
marketing and communications strategy. Best-practice examples include using social media to
deepen relationships, personalise brands and provide customer service. Telstra uses multiple
channels, such as Twitter (http://twitter.com/telstra) for customer service as well as blogs and
Facebook (http://www.facebook.com/Telstra). Billabong facilitates conversations on issues related to
products, such as surfing, but not the products themselves. As a result, Billabong has more than
19 000 Twitter followers (http://twitter.com/billabong1973).
Social media and the finance industry
Customers wanting to borrow or lend money are also using social media. A concept known as ‘social
lending’ or ‘peer-to-peer lending’ helps borrowers source funds outside traditional lenders, letting
individuals borrow or lend money to each other through a social-lending platform. Organisations in
Australia offering this type of service include Lending Hub and iGrin. Borrowers can tap into their
network of friends, family or colleagues to access an online personal loan at the best possible rates.
ANZ’s SmartyPig (http://www.smartypig.com.au) is a new-style bank, based on Web 2.0 technology,
which offers a different way of saving. Customers are encouraged to list their ‘wants’, then make a
savings plan, and stick to it. Through an online account, customers can watch their virtual piggy banks
fill up, and once they’ve reached their goal they can buy what they were aiming for in the knowledge
they’ve saved for it in a smart way, and without using a credit card. Customers make their savings
goals public, so that friends and family can help them out by contributing money or support via the
website, Facebook (http://www.facebook.com/SmartyPig) or MySpace. As SmartyPig customers
reach their savings goals, they can receive what ANZ calls ‘value boosts’ of between 4 and 8 per cent
of their savings to use as extra cash when shopping at retailers such as David Jones, Myer, Harvey
Norman, Virgin Blue Holidays, Rebel Sport, Target and JB Hi Fi. For example, if you save $2000 and
want to purchase something from Myer, you will receive an additional 8% ($160) to spend at Myer.
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ESSENTIAL LEARNING
UBank, an online bank backed by NAB, has a Facebook page that reads: ‘We’re making banking a bit
more about you and a lot less about us. In a nutshell, we’re here to make life easier’. UBank has real
people to reply to customers (existing or potential), making them appear to be much more
approachable than other banks. UBank has a Twitter account with over 2500 followers; its Facebook
page has over 5300 fans; and it also has a dedicated YouTube channel called ‘UBank Money Box’.
Customers can pose questions on Twitter and receive a quick response by a UBank employee.
UBank can also monitor comments posted on Facebook and be proactive about any issues that are
being discussed.
Business implications of social media
When new technologies provide new ways of doing things, it can mean the end to traditional methods.
For example, Australia Post has begun closing post offices as the 200-year-old service grapples with
the threat of email, Facebook and other online forms of communication. Last financial year, the
organisation, which boasts 4400 outlets—the largest retail network in the country—lost money on
postage for the first time, as email and social networks asserted their dominance over written
communication. The organisation with 34 000 employees, boasted $500 million in profits only a few
years ago, but experienced a drop to $100 million last year. And letter volumes fell by 5.5 per cent,
though 100 000 new delivery addresses were added.
As well as the advantages, social media also brings with it a number of challenges. Regardless of
which platform is used, social media has to be managed. Social media operates 24/7, so when an
organisation closes for the day, someone needs to monitor the social media service(s) it uses, for
example to manage public relations issues. An analysis of recent online chatter about Qantas, for
example, has found a wave of negative opinion about the airline on various social media sites and
blogs, with criticism focusing on service and safety. The key issues emerging on social media sites
were users questioning Qantas’s safety standards and stating that they would stop flying with Qantas
because its safety record and overall reliability had lost much of its previous integrity. The analysis
found that Qantas had suffered reputational damage, which could amount to tangible financial loss,
through commentary on social media sites.
Questions for your to consider
(you are not required to provide written responses BUT your consideration may help with your assignment)
1 Outline two advantages and two disadvantages of businesses using social media platforms,
such as Facebook, Twitter and YouTube.
2 According to a recent MYOB Business Monitor Survey, only 18 per cent of business owners
use social media to promote their business. Give two reasons to explain this statistic.
3 Suggest two reasons why some organisations have banned the use of social media websites,
such as Facebook and Twitter, by employees. How might this affect productivity?
4 Why do you think 40 per cent of Australia’s top 20 brands have a Twitter account, but 44 per of
those are dormant or rarely used?
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