Tuesday, May 13, 2008

Should SME Companies Use Web 2.0?

Web 2.0 is the name given to the latest internet technologies which enable interactivity and networking between users. There has been a lot of hype about new networking sites like MySpace, Facebook and Bebo and the result has been that many clients have asked me how they should react.

I have been very sceptical of the value of Web 2.0 to small businesses due to the cost of getting involved and the difficulty of measuring results. So I went to a marketing conference last week to learn a bit more and came away much more positive.

The growth of Web 2.0 has been the result of the new technology and the positive reaction of many initial users - mostly young and low-spenders. Major brands have become involved due to their increasing difficulties in achieving adequate return on investment through advertising in traditional media. They have seen where more and more people are spending their time on the internet and it is easy for them to divert a small part of their budget to test new promotional channels.

SME companies start with an inherent advantage over their big corporate competition. The bigger the company the more difficult it is to be flexible. Yet the key to success in this new environment is the quality of interaction with individual customers.

The problem for the small business is the time required for someone to participate in blogs, forums and networks. The person most likely to achieve desired results is the Chief Executive himself because he has the knowledge and is best able to speak for the company. Yet he is also likely to be caught in the classic trap of being unable to delegate to others and so lacking the time to spend on interaction that has no immediate priority in results.

So the first companies likely to make use of Web 2.0 are those run by people with the motivation to spend time on online networking.

The next strategy for success requires a Web 2.0 PR strategy. The standard PR promotion involves the company in sending out official news and promotions mainly to journalists or media owners for republication. In the new internet world such obvious direct promotion is unlikely to work. What does work is 'word of mouth' or referrals from sources not identified directly with the company concerned.

To achieve such referrals you must first identify a core of key 'influencers' or 'advocates' who specialise in your particular market niche and are recognised by potential customers. Then you need to find a mechanism to involve them in your strategy development so that they are aware of what you are doing and approve of it.

This process of seeding the internet with suitable information means you must also accept that its use is outside your direct control. It is therefore vital not to make promises you cannot keep and to ensure existing customers are happy. If not, you can find you generate as much negative noise as positive. That, though, comes back to the advantage of small companies who are much closer to their customers than big ones. I would not encourage a major bank, for example, to pursue active Web 2.0 promotion in the current climate.


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