8/9/2019 Unlocking the Elusive Potential of Social Networks

1/3

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.

8/9/2019 Unlocking the Elusive Potential of Social Networks

2/3

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.

8/9/2019 Unlocking the Elusive Potential of Social Networks

3/3

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.