Is social media vital for businesses?

Online social media is not only the key to small business success, in my opinion it is the key to any sized company business success. Why is that? People do reach each other much easier than it happened to be five or ten years ago. Cold calling approaches (calling a person that has not been consulted by the company before, in order to make business out of this call, i.e. sell a product) are not very necessary anymore, because thousands of people are reached through the advertisement that facebook and other social platforms post on the consumer sites.

Please have a look at one of the most wealthiest entrepreneurs Eric Lefkofsky, who invested heavily in new businesses and mostly relied on social media. His newest invention is a company called Groupon many people have probably heard about before. This firm is entitled to be the fastest growing company ever. As stated in the article by the New York Times, Mr. Lefkofsky's companies all used social media very heavily and all of them were very successful so far. In my opinion social networking gives even more opportunities to the customer as well as to the marketer.
 
Location-based social networking and marketing

Let us talk about location-based social networking and marketing. This is one step further ahead of plain social media platforms what companies can use in order to show their ads on websites and profiles. The discussion is always about the target customer. The target customer needs to be reached. How do I reach my target customer in the best way? That is the question. Would it not be great if I knew who my target customers are? If I knew where someone is in order to post a certain ad? That's what location-based social networking and marketing is about.

Social networking has become a great and significant player in the business industry during the past years. Marketers during these days do not only try to find out what we like in order to send the perfect ad to our e-mail and web 2.0 accounts, no they also want to know where we are. Location, location, location becomes important in another sense in the 21st century.

Our computers and nowadays even phones are able to unveil our current location. Programs and special applications are implemented so the user is able to check-in to those applications and unveil his or her status. By doing this special rewards such as coupons from retailers are given to the user (see Groupon). Facebook for example just recently introduced his new service Places. Further the company has decided to give retailers the ability to offer rewards through this service.

The general idea behind this concept is genius, but is the customer keeping pace with the technology and that change? As of August 2010, a current article of the New York Times states that only four percent of American adults used location based services. This number decreases by three percentage points when filtering the people out who do not use that service on a daily basis.

In terms of expenditure marketers are ready to spend about $1.8 billion on marketing that is based on the location-based services in 2015. Consequently people lying at the beach will only see beach-related advertisement.

Why is this all possible? On the one hand it is definitely the technology that makes these wonderful marketing approaches happen, but on the other hand marketers have understood, that they can get personal data from consumers when they are willing to pay either with a tangible product (such as a coupon with a discount) or an intangible product (such as meeting a friend). Therefore, the before mentioned NYT article uses "personal data" as currency, which pretty much describes what it became in our electronic world.

So the next time you are spending on the internet, make sure you spend the right currency!

Clearly it is not easy to decide whether one should take that chance of using social media in its extreme or not. And I do understand that. But as discussed it is vital to be in touch with the companies customers and probably as much important the companies prospective customers, the ones that bring extra revenue and increase the profit. Consequently no entrepreneur in todays world should doubt or even contemplate to miss out on taking part in a social network, even if that means keeping customers updated during their vacation.

Check out the video to look at some impressive data:

Video-Source: http://www.youtube.com/watch?v=QLd9q88ohUs&feature=player_embedded

Souces:
http://www.groupon.com/miami/
http://www.nytimes.com/2010/11/18/business/18sbiz.html?_r=1&ref=technology
http://www.facebook.com/places/ 
http://www.nytimes.com/2010/11/07/weekinreview/07brustein.html?_r=2&scp=1&sq=Marketing&st=cse