The world over, social media is being utilised by the business world as an effective marketing tool for connecting with their customers. Social networking websites such as Twitter, Facebook and YouTube have rapidly grown in popularity creating online communities made up of people with shared interests. The trend has been supported by development in smart phones and mobile enabled websites.

From a commercial stand point companies are embracing social media, with many operating online marketing strategies. Although most agree that businesses should utilise social media for marketing purposes, there is little agreement on what this should involve and how it can be made to work successfully, illustrated by a selection of industry quotes…

• “We look at social media as a conversation with the customers, and therefore it needs editorial control to ensure you get the balance right” – Dominic Burch, head of corporate communications, Asda
• “Social media is a living, breathing marketing tool that forms a vital part of a healthy integrated marketing strategy” – spokesperson for Beam Global Spirits & Wine
• “Facebook is central to our social media strategy” – Robin Auld, marketing director of Domino’s Pizza UK & Ireland
• “We use Facebook, You Tube and Twitter channels to broadcast our corporate news on top of our traditional methods” – spokesperson for SABMiller
• “Social media has become necessary for advertisers to engage their users” – spokesperson for a leading internet company
• “Using social media is a key way of engaging with target consumers, especially in the younger age groups” – spokesperson for PepsiCo UK & Ireland

Many of the strategies undertaken to date have placed a strong emphasis on connecting with customers, such as through posting updates regarding corporate activities, sharing information and resources and product marketing via competitions. Advertising via social media (e.g. via apps or photos) is also increasing.

Some of the social media pioneers within the food and drinks industry have included PepsiCo, McDonalds, and Starbucks, which encourages consumers to submit new product or marketing ideas.

The major social networking websites

Facebook

With around 650m active users, Facebook is the world’s largest social networking site. It enjoys market leadership in many leading countries, although access is blocked in China. The popularity of Facebook has grown rapidly. In December 2010, it attracted 153.9m unique users, up by 38% from December 2009. The total number of pages viewed rose by over 70% to over 76.8m, while the site’s average number of daily visitors experienced a similar rise. Furthermore, 30% of all internet sessions in the US are now thought to include a visit to the Facebook site. The US accounted for 65% of Facebook’s advertising revenue in 2010, although this figure is forecast to drop to 60% in 2011 as international growth continues. During the first quarter of 2011, Facebook accounted for 31% of all adverts served to US internet users, up from 23% for the corresponding period in 2010. Smaller companies account for around 60% of advertising revenue at present, with the remainder coming from major multinationals such as Coca-Cola and Procter & Gamble.

Twitter

Launched in July 2006, Twitter was developed by members of the US-based podcasting company Odeo. Twitter was spun off to form its own company in 2007. It is now used by people in almost every country worldwide, and a stock market listing for the company is expected to occur within the next few years.As of May 2011, it is estimated that more than 155m tweets are sent every day, up from around 50m at the start of 2010. Twitter now has more than 200m registered users, with 460,000 new users signing up per day. Businesses are increasingly using Twitter for reasons such as gathering real-time market intelligence and building closer relationships with their customers.

LinkedIn

LinkedIn was founded in 2003, primarily as a way of connecting business people worldwide. The site now boasts more than one billion members spread across 200 countries worldwide, while over 2m companies currently have LinkedIn pages. LinkedIn has been expanding recently, with revenue for 2010 reaching US$243m, twice as high as in 2009. According to LinkedIn, a new member joins its site every second. More than half of its members are located outside the US. In 2008, LinkedIn launched a self-service pay-per-click text advertising service called LinkedIn Direct Ads. This was upgraded in 2011 and the service now targets adverts according to job title, company name or LinkedIn Group. The upgrade aims to provide advertisers with improved access to a high-quality and increasingly relevant audience of professionals, therefore leading to a greater return on investment. Although LinkedIn Ads (as the service is now called) is available internationally, it is only in English and with US dollars at present.

YouTube/Google

Based in California, YouTube was formed by three former employees of PayPal in 2005. The site now serves around 3bn videos per day, up from 100m in 2006. Since 2006, YouTube has been a subsidiary of Google Inc., which acquired the business in a deal worth $1.65bn. As far as future strategy is concerned, Google is thought to be working on a major overhaul of YouTube at the time of writing. YouTube is increasingly seeking to compete against broadcast and cable television, given the emergence of TVs enabling people to watch online video in their living rooms. In June 2011, Google launched a new social networking site called Google+. It claimed the site would “bring the nuance and richness of real-life sharing to software”.

MySpace

MySpace which was launched in 2004, was acquired by News Corp. for $580m in 2005. In 2008, it was usurped by Facebook as the world’s leading social network provider. In June 2011, News Corp. sold MySpace to a digital media company called Specific Media for a reported $35m. Musician Justin Timberlake will take a stake in the business.

Flickr

Flickr is one of the world’s leading online photo-sharing websites that is widely used by bloggers to host images embedded into blogs and other forms of social media. Developed and launched by Ludicorp of Vancouver, Flickr was acquired by Yahoo! during March 2005, in a $35m deal.

Renren

Another company that can be expected to assume increasing importance in the future is Renren, which was set up as a Chinese equivalent of Facebook. It is the most popular social network amongst the country’s students and urban-based youths. Renren has approximately 117m registered users, although its number of active monthly users falls to somewhere between 20 and 30m.

Renren made its trading debut on the New York Stock Exchange in May 2011. Its initial public offering (IPO) represented the largest by a Chinese technology company to date, with the value of the company’s shares rising by 29% on its trading debut. In total, the IPO raised $855m, with over 53m US-listed shares having been sold. As a result, Renren’s post-IPO value was put at $7.5bn.