Virtual Socialization Services : Cyber Currency of the Future

E-MARKETING

-- K P Naachimuthu
Lecturer,
Sona School of Management,
Salem.
The author can be reached at
kpnaachimuthu@gmail.com

In the current digital era, most of us are members of at least one online community for sharing information and common interests. This article talks about the exponential growth and business prospects of virtual social networking sites, the constructive uses of these virtual communities in various aspects of our life, and also the possible threats. Further, it tries to bring in various viewpoints about different forms of digital socialization and membership life cycle of virtual communities.

People have always come to-gether through membership of formal organizations and informal groups, whether for mutual support to provide a service or to campaign for change. It is this `coming together' that is the lifeblood of civil society. The rapid growth of the Internet has spawned a new set of online forums and groups.

"Social web" is a new genre of interactive websites that has entered into our lives in recent years. The term "social networking" describes a situation where individuals and organizations are linked by one or more specific types of interdependency, i.e., values, vision, friendship, business, ideas, religion, etc. Networking is the key to growth in the current business scenario. The main purpose of networking is to make oneself and one's work known to others.

The explosive growth of the Internet since the second half of the 1990s has led to increased popularity of virtual communities. Virtual communities are groups of people usually dispersed geographically, who come together online to communicate, share common interests and activities. There are many service providers for such virtual social networking. These services may be web-based (such as e-mail, chatting) and may also be based on instant messaging services.

Earlier, social networking websites like Classmates.com focused on bringing together former school mates and friends. But later, by around 2005, due to growing competition, business organizations began to use social networking as a component of their Internet marketing strategy. Social networks operate under an autonomous business model, where members are both suppliers and consumers of information/knowledge. Revenue generation is usually through advertisements; but when membership and content levels are exclusive and of a high order, subscription-based revenue is also feasible.

Virtual social networking is generally referred to as a `teenage phenomenon', but it is not exclusively confined to teenagers. It now appears that social networking is increasingly becoming an essential element of our lives. Electronic Information Exchange Service (EIES) providers are competing to connect people (either trust-based or friendship-based) across the world, with MySpace and Facebook being the most widely used in North America; Nexopia (mostly in Canada); Bebo, Facebook, Hi5, MySpace, Tagged, Xing and Skyrock in parts of Europe; Orkut and Hi5 in South America and Central America; and Friendster, Orkut, Xiaonei and Cyworld in Asia and the Pacific Islands. Exhibit 1 provides a list of some well-known and widely-used social networking sites.

Several online Social Networking Sites (SNSs) are now among the most visited websites globally. ENISA (European Network and Information Security Agency, 2007) sees SNSs as informal and all-embracing identity management tools, which define access to user-created content through socializing. Success of any commercial site depends on the number of users. So, there is pressure on SNS providers to encourage behavior that increases the number of users and their connections.

Belongingness and need to affiliate are some of the basic human motivations. Technological advancement now makes it possible to connect with people in any part of the world and this also makes users less discriminating in accepting `friend requests'. Earlier, many SNS users did not know how to conceal their personal details and were not aware of the nature of viewers accessing them. However, an increase in intimacy among digital `friends' often led to disclosures, which may not have been appropriate in such a forum. Due to growing commercial and social pressures, regulatory counter measures have to be taken to protect the privacy and security of the SNS users.

Community of Practice

Since knowledge creates the competitive edge for an organization, online social networking would be beneficial primarily in building a wider network of contacts, collaboration, learning, sharing, and content creation. Thus, online social networking has a link to the knowledge management process of organizations. This enables online social network service providers to do good business.

One best-known example of a Community of Practice (CoP) was formed by the copy machine repair technicians at Xerox Corporation. Through networking and experience sharing (in devising solutions to problems), the repair technicians improved the efficiency and effectiveness in diagnosing and repairing the copiers belonging to Xerox's customer. The subsequent impact on business value and customer satisfaction to Xerox was invaluable. Yet, this is not a corporate program, but mostly a voluntary and informal networking to share expertise. Having realized the value of the knowledge being created by this CoP, the company is putting in efforts to support and enhance the efforts of this group.

In any such community, any discussion or information sharing, ranging from a small chat to difficult problem solving is bound by informality and the members share what they have learned through mutual engagement in these activities. Thus, a CoP is different from a community of interest or any other community, neither of which implies a shared practice.

Virtual or online social networking is all about leveraging community capabilities. To train CoP activists, the Unilever Knowledge Management Group (KMG) has formulated several guidelines. Its training courses provide knowledge and hands-on experience in tools and techniques for establishing and sustaining a community. Acting as a profit centre within Unilever, the KMG also works outside the company. Providing training to companies of repute like ABN Amro and other multinationals is an evidence for the quality of functioning of CoPs established through Unilever's KMG.

Need for networking and development of knowledge are identified by a champion, as a part of the business. Following this, the objectives are defined, clarified and cross-checked as to whether the setting up of a CoP would be an efficient way of realizing the objectives. Hence, KMG associates itself with the CoP activists and champions those who are involved in establishing a proactive community.

Better communication and ability to get along with others and understanding of various modes of data collection are important. The ability to disseminate knowledge/information through networking or other group processes may be a focal point for knowledge management analysts. The analyst may work onsite at the research facility or may work off-site with link up through the Internet. Even when the knowledge management analysts work in a different location they normally have regular contact with the facility.

Learning and Business Applications

Since businesses operate globally, SNS makes it easier to be connected around the world. Business organizations use these frequently to market and advertise themselves, since they provide a low-cost solution to connecting with people. Many businesses and professional forums help their members share and have the right information to use, while on the go.

There are lot many forums and groups acting as functional and/or subject specific bodies of knowledge, helping thousands and millions of subscribers. When a query or request for some information is put into the platform of the forum, the members enthusiastically come forward to share (Example: Wikipedia, yahoo groups, etc.). This develops in them a sense of efficacy and mutual sharing, leading to a sense of psychological well-being.

Socio-Medical Applications

With emerging technological sophistication, social networks are used in helping patients deal with their problems. Recently, a professor launched a mobile-based psycho-therapy and counseling service, wherein, the counseling is done by interacting with the clients through messaging service. For people suffering from life altering diseases like AIDS, sites like PatientsLikeMe help their members to get in touch with others having similar problems and conditions. Just as we have Alcoholics Anonymous (AA), Alanon/Alateen and many such groups for people afflicted by heavy alcoholic usage and drugs, SoberCircle is yet another site which offers people in the recovery mode the facility of communicating with others who can relate to their situation. This also helps to hasten their recovery process.

Marketing Applications

Social networking sites are used by marketers to approach the target group, create/increase brand awareness, drive direct/indirect traffic, drive online and offline sales, influence purchasing process, intentionally create a buzz, support a product launch, etc.

A study by Microsoft Digital Advertising Solutions concluded that there is huge advertising potential for social networking. It was revealed from this study that 70% of social network users are ready to have sponsored content on their private page. In the study, 68% of the respondents said they had visited another website after seeing something on a friend's social network page. Just less than 50% had used a search engine to learn more, and 35% had forwarded an advertisement or link to a friend.

Reports show that shopping and classified sites now account for the most visited social networking sites as compared to earlier years. The shopping and classifieds sites that benefited the most from this type of visits were eBay, Amazon, Gateway, Wal-Mart and Craiglist. With the growth of social networks, there is a lot of focus on SNSs from online retailers as a source of added traffic.

Marketers state that they place content on social networking websites to drive traffic, create brand awareness, sell directly and influence purchasing. A recent study asked whether people had used the search function on SNSs. The response was that 77% of MySpace users and 78% of Facebook users had. According to latest studies, the biggest goal of viral marketers was to increase brand awareness (71%). Half of viral marketers also expected to drive online sales, and 44% hoped to drive offline sales. According to a study by Competitrack, more than 60% of viral ads initiated by advertisers are videos. Consumers often learn about videos from their friends. According to a 2007 survey by the Online Publishers Association, 43% of US online video viewers get videos by clicking links in e-mail messages from people they know. More than 83% of video uploaders recommended things they liked.

Going by a recent web usage data, social networks may have more growth ahead. All the top six social network sites saw increased attention, and the top 20 social networks received over 15% of all attention. About a fifth of adults have visited a social networking website, according to a survey by Ipsos Insight. For marketers, this matters in part because many social networks are willing to host or pass along sponsored content.

Membership Life Stages in Virtual Communities

A membership life cycle for online communities was proposed by Amy Jo Kim (2000), an internationally renowned expert on online communities. According to this (refer Exhibit 2), the members of virtual communities begin their life in a community as lurkers or visitors. They later become novices or learners and continue participating in community life. After contributing for a sustained period, they become fully committed regulars and if they break through a certain level, they become leaders. Once they have contributed for an extended time to the community, they become elders and they may look out for outbound relationships and new positions.

Cyber Currency of the Future

Jupiter Research's "Worldwide Online Population Forecast, 2006 to 2011: Emerging Economies Catalyze Future Growth" report predicts that the worldwide online population will grow to 1.5 billion in 2011, from 1.1 billion in 2006. The growth will put 22% of the world's population online in 2011. Brazil, Russia, India and China are expected to account for most of the growth since other online populations like the US, Japan, Canada and Western Europe are already in the maturity stage. Overall, social network ad spending had tripled during 2006-07 and was expected to rise by approximately $500 mn every year. Social networking ad spending outside the US is expected to increase from $335 mn in 2006 to approximately $1.1 bn by 2011.

According to a BusinessToday—Synovate survey (2008), over 94% of corporate executives in India are aware of virtual social networking and 79% are actually members of one or more such networking sites. It was found that over 17 million Indians visit or use these socialization sites and Rs. 450 cr was spent (through Internet and mobile) on these in 2007; and this was expected to reach Rs. 850 cr during 2008.

In many cases, the people visiting social networking sites would least bother about the advertising banners posted on the sites. But how then do the advertising companies make money? This can be done by sowing the community network with stories and issues (mails, creative ads, etc.) about the brands or companies. Being the cyber currency of the future, every company would be keen to start its own community portal, such as www.sunsilkgangofgirls.com by Hindustan Unilever Ltd.

End Note

With increased access to technology, several social networking sites in Asian countries such as India, China, Japan and Korea have not only reached high usage, but also a high level of profitability. In India, it is expected that social networking related advertising would rake in Rs. 1300 cr per year very soon. But in spite of all business advantages that it provides, including providing real time and on-the-fly responses, privacy issues and spamming may pose threat to the members. Also, the impersonal nature of virtual socialization may have a negative impact on interpersonal contacts leading to many psychological/sociological problems.