When some people on Facebook objected to the use of this image in a Chapstick ad, Chapstick started madly deleting the negative comments, making people even angrier.

PART TWO: MEASURING INFLUENCE

Social media: a two-way street

The Globe and Mail

A lot of small and medium-sized businesses have come around to the value of using Web services such as Twitter to not only build a loyal customer base, but to establish some influence in the conversations that customers are having about the business on-line.

The shift to social media isn't just significant, it is, in many ways, a complete departure from traditional ways that businesses used to communicate with their customers, which were almost entirely one-way streets: TV, print and (some) Web advertising.

Now, however, businesses are coming to terms with the fact that, when they talk to their customers, those customers now have a way to talk back.

In this series, we're looking at various ways that businesses can expand their influence through social media. To get a sense of how powerful an influencing tool social media can be, consider these three phenomena that illustrate the reach and value of a social media voice:

1: A social media following has real value

As amorphous as the concept of a social media presence may be, businesses are increasingly willing to invest serious money in building one.

Recently, a social media firm called Virtue estimated the value of an average Facebook fan to be about $3.60. The estimate comes with plenty of caveats, and is based on the amount of money a firm would likely have to spend to get the same customer attention through other forms of advertising.

Still, the amount of money businesses are willing to spend to build an army of Facebook fans and Twitter followers is growing quickly.

The value of social media influence is also evident in an entirely different part of the small business cycle.

According to a new study by the Ontario Cross-border Technology Innovation Ecosystem, there's a direct correlation between the size of a startup company's social networks – measured by the networks of the company's key players – and the amount of startup funding that company receives. The bigger the social network, the more funding.

2: Anything social has a ripple effect

Most small and medium-sized businesses are probably never going to amass as many followers as Coca-Cola (400,000) or Google (3.8-million).

Still, plenty of companies have quickly discovered the advantages and disadvantages of having a small but vocal social media circle. On the positive side, businesses such as the restaurant chain Freshii have built a loyal Twitter following by frequently responding to individual customer complaints and comments on the micro-blogging site.

Even though the individual complaints may be unique and minor in many cases, some customers tend to mention Freshii positively to their own followers after getting a response from the company.

On the flip side, the makers of Chapstick recently discovered the negative power of social media influence. The company debuted a new ad campaign featuring a photo of a woman cantilevered over the back of a couch, presumably in search of an AWOL Chapstick, which some women found offensives, writes Globe marketing reporter Simon Houpt in Chapstick takes heat over Facebook campaign.

However, the outcry was fairly limited until the employees who run Chapstick's Facebook page started deleting posts from users who complained about the ad.

It was only then that users began flooding the Chapstick Facebook page with negative comments, and the story hit dozens of blogs. Eventually, Chapstick was forced to issue a (sort of) apology and can the original ad campaign.

In both cases, the real impact of social media influence on a business wasn't the initial message, but the resulting ripple effect.

3: Social media is mostly real-time

Last month, Research In Motion Ltd. suffered an embarrassing setback when about half of its 70 million BlackBerry users worldwide lost the ability to download e-mail on the devices for up to three days.

Although service outages happen to all telecom and smartphone companies, and RIM managed to fix the problem fairly quickly, the company was nonetheless criticized for being far too slow to communicate details of the issue to its customers through its various on-line channels.

Whereas in past years, a company could face that criticism if it stayed silence for a day or two during a crisis, RIM was slammed for waiting a few hours between updates to its Web page and Twitter accounts.

The lesson to small businesses taking their first steps into the social media world is clear: Services such as Twitter offer perhaps the best free means of finding out exactly what your customers are thinking in almost real-time.

The downside is, your customers will come to expect the same real-time response from you.

This series continues next Thursday.

Other stories can be found on the Web Strategy section of the Report on Small Business website .

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