Podcast: Social media opportunities, risks and marketing

Social media, including blogs, discussion boards and networking sites like Facebook have changed the laws of nature for communications and marketing. Kevin Dooley, a professor of supply chain management at the W. P. CareySchool of Business, has been observing the behavior of this new medium using a text analysis tool he developed at ASU with communications professor Steven Corman.

Using examples from his website, Wonkosphere, which tracks activity on the political blogs, Dooley shows how bloggers have accelerated the flow of information, and because they are early adopters of things new, have become a valuable source of feedback for politicians and marketers alike.

Transcript:

Knowledge: Social media such as Facebook, MySpace and blogs are having a significant impact on the world of business and politics. In business, social media lets companies know what consumers are thinking and saying about products or services. In politics, social media has helped build buzz on candidates.

Kevin Dooley, Professor of Supply Chain Management at the W. P. Carey School of Business is tracking the effect of social media on politics and business through a novel form of network text analysis. Here he discusses his current findings and the work being done by his political site "Wonkosphere". What is social media and why are businesses so interested in it?

Kevin Dooley: Well, social media is a new form of publishing. It's really publishing by the customers themselves. It also can be considered really a new form of conversation because it represents interactions by people in the on-line medium instead of face-to-face.

So this greatly increases the potential essentially for markets: now instead of just face-to-face interactions defining what markets are, virtual interactions define what markets are. So, it makes both the opportunities and threats much larger than have been in the past.

Typically in today's technology social media includes blogs, discussion boards and chat rooms and then social networking sites like Facebook or MySpace. Through these different medium people interact and basically listen to one another.

Knowledge: So, what role do social media play in the diffusion of information and opinion about a product or service?

Dooley: Well, if we go back to two examples I think it demonstrates the role that social media can potentially play when we talk about a company's products or services. So, one very well known example is with the Intel Pentium chip. This particular product had a design flaw that for all practical purposes did not affect the typical customer but nevertheless was a real flaw that did not get fixed before the product went out into the market.

Some scientist picked up on this flaw and started discussing it in a rather isolated, highly technical discussion board. Relatively early on Intel became aware that people were discussing this problem and decided that it really didn't affect their typical customer and so decided not to do anything about it and eventually this story got hold of some journalists in some specialized magazines and they began to cover the story.

Of course, the story took on a life of its own because, of course, the public tends to like to bring down a giant, like an Intel or a Microsoft. So, eventually, the publicity about this flaw got so bad that IBM — a major customer of Intel's — threatened not to put the chip in their computers that they were making and so Intel was finally forced to go through a product recall and fix the flaw.

I think that is perhaps the most famous but certainly not the only example where bad news about a product or service has really diffused quite quickly through public opinion because of social media. Another example where a company in fact took advantage of social media as an opportunity was with Microsoft. Microsoft was having difficulty with computer hackers breaking into their videogame system and really doing things with the games and whatnot that were not part of Microsoft's design.

In fact allowed users to share games instead of buying them, etc., and so Microsoft listened to the discussion boards where people were talking about how to do this and in fact learned from the user base how they were breaking into their videogame system and then fixed it so that upon the next release it was impossible to break into the system.

In this case customers basically told them how to make the system more fault proof. So, I think you can maybe see two different roles that social media play in those two examples. First of all they're accelerators of information.

tend to take information that's either been broken in the mainstream media or perhaps been broken on a blog or in a discussion blog and they pass it around to the larger community and they do that in a much more rapid way then mainstream media could.

So, in that sense, social media are accelerators of news and opinion. The other thing that social media are, are early adopters. So, people who write blogs or are active on discussion boards, etc., tend to be the type of people who try out products, who try out services rather early on.

They're interested in things that are new and are interested in sharing that news and their opinion about those new products or services with others. So, in a sense, their opinion matters more than other consumers' opinions because they influence what the majority of the population things about a new product or service and therefore whether it will consider adopting it themselves or not.

Knowledge: It seems that Hollywood has really picked up on this. They seem to always be trying to sell movies or television shows through this medium. They seem to be the first ones to have caught on.

Dooley: That's right and I think it's in part because creative industries have been a very popular medium for bloggers and discussion boards to talk about — as is true also with electronics, especially consumer electronics, and video games.

So, those tend to be the areas where there is kind of the most buzz out there about new products and services and those companies and those industries — you're right — have picked up on that very quickly.

Knowledge: And they've also, I guess, found out that it doesn't always work. You could have a great Internet viral campaign and the movie or the show washes out.

Dooley: Sure, and it reflects perhaps a little bit the risk of social media. Some things can in fact diffuse so quickly that they have a short shelf life and burn out very quickly. I think an example of that that we see in the current political cycle is that I actually think the length of time that particular stories are lasting within the media is significantly shorter that it has been historically.

Primarily because it comes out so rapidly and broadly, because of the Internet, that essentially it gets processed, it gets absorbed, much more rapidly and so there's many fewer stories that hang on for a week or two weeks. This was not true ten years ago.

Knowledge: An example was the McCain story that the New York Times put out.

Dooley: Very short shelf life. Really that particular story, looking at the data that we were collecting from the political blogosphere, didn't appear that that story had more than two or three days worth of buzz about it and it very quickly dissipated.

In fact, really the biggest effect was that conservative bloggers came to the rescue of John McCain and, really, their tone about him became much more positive. So, in effect that acted as a rallying point for the conservative blogosphere.

Knowledge: So what other roles have blogs played in this year's presidential campaigns?

Dooley: We run a website called Wonkosphere, which tracks over 800 conservative, liberal and independent blogs, and measures the candidates by share and sentiment amongst those bloggers. We saw a couple of very interesting stories this year.

Of course, the media made a big deal of Ron Paul and how big his Internet following was. Certainly that was very true and we saw a lot of overall buzz allocated to Paul's campaign, especially around October and November.

I think the biggest effect that Ron Paul's Internet strength gave him was fundraising capability. And I think we've seen the same thing with Obama and Clinton, being able to use their grassroots networks and social media together to drive fundraising. But as big as Pauls' Internet story was, I think the penultimate story in this campaign season of how the Internet is going to affect politics is absolutely Mike Huckabee.

The conservative blogosphere fell in love with Huckabee very early on, around August, a full four months before he started gaining any traction in public polls. It fell in love with his personality, his debate performances, and then when the public actually started coming around and paying attention to him in December through his performance in Iowa, actually the conservative blogosphere turned extremely negative on him, kind of passing by his personality and starting to vet his policies.

And so the blogosphere, which is responsible for building Huckabee up as well as bringing him down and enabling McCain to pull ahead. Another story that was very big that we saw this season was that the conservative blogs were absolutely obsesses with Hillary Clinton.

If you looked at liberal bloggers, they tended to be about equally split in terms of their attention to Clinton, Obama and Edwards. And amongst the second-tier runners, they tended to favor Joe Biden by a large margin. In the conservative blogosphere, Rudy Giuliani got most of the attention early on, but conservatives mostly talked about Hillary Clinton, and I believe this allowed the Republican race to go on with so many players for so long.

Because, essentially, the Republican field had not been vetted by the conservative blogosphere, and so the candidates went into Iowa and New Hampshire a still relatively unknown quantities to a large extent. In October, out data showed that one out of every two conservative blogs were talking about Hillary Clinton. We've only very recently seen conservative bloggers turn their attention towards Obama.

But in general, the conservative bloggers have paid a lot more attention to the Democrats than the liberals have paid to the Republicans. And I think in the long run, that kind of ideological strength is going to play against the Democrats strength using social media to fundraise.

Knowledge: That, despite the fact that you have people like Ann Coulter saying that they'd rather vote for Hillary than John McCain.

Kevin: Well, they'll all show up at the poll and they'll pull the lever that they always do. I think that this race, like many others, is going to be determined in large part by what independents do. The size of Republican and Democratic bases are relatively equal. I think that, given the state of things and the fact that we have two new candidates, I don't think turnout will be an issue.

I think it will come down to where the independents swing, and in terms of social media, that's a very interesting question, because we find it rather rare to find any blog or discussion board that we would truly label as independent. The level of partisanship in the blogosphere is intense beyond belief. Our website is actually one of the only websites that carries links to both conservative and liberal stories.

And so I don't know where independents will — well, my guess is that independents will be focusing their attention or will be getting it not so much from the hardcore blogs in either domain, but more from the mainstream media. So they'll be looking to Fox and to MSNBC and to CNN for kind of news and opinion, I believe.

Knowledge: So going back to the business world, what are companies doing to adapt to this new consumer-driven world?

Kevin: One thing is that they're listening to it. They're using people, they're using technology, to listen to the conversations that are going on the Internet. Beyond listening, they're getting into driving the conversation. One way that they're doing that is many companies have set up basically corporate blogs that allow users to engage in a conversation with people from the company. Many of these blogs have a particular focus, these days, on sustainability or other type of corporate responsibility issues.

These, I think, have marginal success. But certainly one of the most interesting I've seen is Ford Motors, which has some truly amazing sort of self-retrospective videos that it's put on its blog that shows some of the difficulties they've been having business-wise and managers trying to work through these very big challenges. The other way that they're driving it is that they're actually constructing conversation opportunities for consumers. Again, some companies are putting discussion boards and whatnot on their own corporate sites.

Other companies are basically constructing a virtual environment where they invite, oh, it might be three dozen all the way to 300 all the way to 3,000 people to interact online for a period of weeks or even months, and actually talk about a particular set of issues or products over an extended period of time. So basically kind of hiring people to engage in social media for an extended period of time in order to get very intense feedback.

Knowledge: Is there anything else you'd like to add?

Kevin: I think that social media are part of a broader trend that we have moving to one-to-one marketing. So blogs and discussion boards allow companies to better understand the particular needs of individual consumers.

And then see how those individual needs and opinions in fact aggregate up into broader patterns. The other things is that it broadens the dimension of one-to-one marketing. So I think one-to-one marketing is important in that it emphasized diversity amongst people. The other component of diversity is across time.

And so social media enable companies to both launch products and get new product ideas in a very dynamic fashion. And so the clock time of an advertising campaign or whatnot can now be measured in days and weeks versus months. So social media can kind of accelerate the potential for high-impact products and services that in fact don't necessarily have to have a life cycle that's in terms of years.