Unlocking the Elusive Potential of Social Networks
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Transcript of Unlocking the Elusive Potential of Social Networks
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8/9/2019 Unlocking the Elusive Potential of Social Networks
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There is much hype about social
networks and their potential impact on
marketing, so many companies are
diligently establishing presences on
Facebook, Twitter, and other plat-
orms. Yet the true value o social net-
works remains unclear, and while
common wisdom suggests that they
should be tremendous enablers
and amplifers o word o mouth, ew
consumer companies have unlocked
this potential. At Liberty Interac-
tive, which comprises many specialtye-commerce companies, we wres-
tle daily with the question o how to
realize the promise o social networks.
We do have pages on Facebook and
active eeds on Twitter, but we
never thought those steps alone would
make a big di erence to the per-
ormance o our companies. More
recently, we have adopted a new
mind-set: we think o word o mouth
generated on social networks as
a distinct orm o media. This idea is
more than a semantic detail. When
you think o word o mouth as media,
it becomes a orm o content, and
businesses can apply tried-and-true
content-management practices
and metrics to it. In addition, word o
mouth generated by social networks
is a orm o marketing that must be
earnedunlike traditional advertising,
which can be purchased. We there-
ore concluded that we could succeed
only by being genuinely useul to
the individuals who initiate or sustain
virtual world-o-mouth conversations.
So what does it mean to be use-
ul in a world o virtual conversations
enabled by social networks?
Obviously, there are no generic solu-tions, and each company will
need to invent and discover what
makes sense or its unique situ-
ation. We have, however, learned a
ew lessons that can be encap-
sulated in two primary insights. First,
a powerul way or a brand to be
useul in the virtual world is to coner
social importance on its users.
Second, virtual items are critical
to stimulating social interactions
that may in turn generate word
o mouth.
The power of importance
An eective way or a brand to be
useul in the context o social
networks is to make people who
originate a word-o-mouth con-
Michael Zeisser, an
alumnus o Mckinseys
New York ofce, is a
senior vice president at
Liberty Media.
Unlocking the elusive
potential of social networks
Michael Zeisser
To realize the marketing potential of virtual activities, you have
to make them truly useful for consumers.
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2Unlocking the elusive potential of social networks
versation seem important within
their own social environment. Recogni-tion by peers is a powerul moti-
vator, and brands that allow users to
gain it deliver real perceived value.
When users publicize that recognition,
it translates into word o mouth.
Companies can coner this kind o
importanceor example, by issu-
ing achievement badges that users
can post to their Facebook pro-fles or by deploying leader boards or
achievement scores o all types.
As Web sites evolve to become increas-
ingly dynamic experiences that let
people interact in real time, the value
to core users o being recognized
or their prominence in a community
will only increase.
Weve also learned never to under-
estimate the value consumers place
on opportunities to brag online
about their achievements. Thats made
signifcantly easier through the
clever integration o a Web site with
Facebook and Twitter. We see this
phenomenon dailyor example, on
the orums o our Bodybuilding
.com site. When members boast oreaching their target weight or other
goals with help rom Bodybuilding
.com workouts, we receive authentic
and credible word-o-mouth endorse-
ments at almost no cost. In act,i recent behavioral research is accu-
rate, these experiences can create
contagions in which the behavior o
users is mirrored by their networks
o riends, ampliying the word-o-
mouth eect and reecting well on
the underlying brands.
The allure of virtual itemsIts our strong intuition that virtual
items play an important role in acil-
itating virtual word o mouth. This
belie, at its core, is based on observ-
ing user behavior. While the notion
o virtual goodsnonphysical objects
used in online communities and
gamesstill puzzles many executives,
its quite apparent that consumers
love them. People acquire or compete
or virtual items obsessively on
Foursquare, Zynga, and many other
sites. It is estimated that virtual
goods have become a very real $5 bil-
lion industry worldwide.
So why do consumers pay real money
or online objects that dont actu-
ally exist? Their motives reinorce ournotion that users seek online impor-
tance: they purchase virtual goods pri-
marily or sel-expression (such as
As Web sites evolve to become
increasingly dynamic experiences thatlet people interact in real time, the
value to core users of being recognized for
their prominence in a community
will only increase.
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3 June 2010
virtual houses or virtual gi ts) and
or recognition (such as virtual badgesor becoming, say, the mayor o a
bar on Foursquare). These behaviors
are too widespread and intense to
be ads, and marketers need to recog-
nize them as meaningul. Brands
should actively experiment with ways
to use virtual goods as catalysts
o word-o-mouth media.
Virtual giting is becoming an impor-
tant consumer activity among
Facebook members. Today, much
o this activity is ree, but Face-
book is introducing a virtual-currency
credit system that will allow sellers
to get real dollars or their gits and
other items. In the context o a
social network, it is not a stretch to
conceive o virtual gi ts as impor-
tant objects, especially as their avail-
ability can be strictly limited. Just
think about the ervor consumers
accord collectibles o all kinds,
rom baseball cards to dolls to coins.
I virtual items prove similarly desir-
able, they are likely to be a big deal
or consumers and marketers, as
well as a great tool to create useulword-o-mouth media.
Weve also ound that basic laws o
consumer behavior still apply: con-
sumers love a bargain, and compa-
nies should take ull advantage
o social networks as powerul notif-
cation tools. Users can be alerted
to sales or to the expiration o a pro-
motion, but companies must be
mindul that these eeds and tweets
are designed as catalysts to gen-
erate virtual word-o-mouth media.
They are not social-media junk
mail, but legitimate content objects
actual pieces o media that wewant the initial recipients to distribute
to their riends.
One fnal recommendation: no gim-
micks. Forget dancing monkeys,
artifcial contests, or stupid tricks; they
add no value and waste peoples
time. A commitment to being useul
in social-media activities meansa commitment to creating only high-
quality interactions. Again, regard-
ing word o mouth as a media prod-
uct makes it easier to defne what
quality means or your particular activ-
ities. There are clearly many ways
or brands to make themselves useul
to consumers, so managing virtual
word o mouth goes well beyond main-
taining a Facebook page or a Twitter
account. Exactly how ar remains to
be seen, and companies should
apply an experimental mind-set, while
being careul not to overinvest.
Word-o-mouth marketing through
social networks could emerge as an
important tool in the marketers
arsenal. That will depend on whethermarketers can tame the unda-
mentally unpredictable and serendip-
itous nature o word o mouth with-
out losing what makes it so valuable in
the frst placeits authenticity.
Copyright 2010
McKinsey & Company.
All rights reserved.
We welcome your
comments on
this article. Please
send them to
quarterly_comments@
mckinsey.com.