Network Effects of Social MediaSocial media networks have become a dominant force of almost every aspect of a person’s communication strategy. Businesses are remaining competitive by reaching their customers through social media networking. With effective management practices and low cost social media marketing, businesses have been able to use inexpensive ways to increase their visibility online. The extreme growth of social media has also assisted businesses in tapping into previously unknown markets.
The New York Times Customer Insight Group released a study on “The Psychology of Sharing,” which provided information on what drives people to share their information online. The purpose was also to understand factors related to how valuable the sharing of content online is to online marketing for businesses. Creating a personal connection between business customers has allowed them to retain first time customers.
Sharing of Information
Although the sharing of information is something that has been happening for quite awhile, technology has provided a way for people and businesses to share quickly, to more people with more detailed information than ever before. There are different reasons people share online according to the study, which include the concept of providing valuable and entertaining content to their networking community. The idea behind sharing is so that businesses can connect and grow relationships and possibly bringing more visibility to their brand.
The viral marketing can also increase the network effect a business has on their market in relation to developing a bigger customer base. Viral marketing tends to happen when a product or service has experienced an increase in popularity due to word of mouth and sharing of information online between people. Because of the network effect of communicative technological advances with the use of social media networks such as Facebook, Twitter and LinkedIn it increases the potential effectiveness or negative impact that can happen due to of viral marketing.
An effective way to create content that will more than likely be shared online is by keeping it simple, having a sense of humor and creating some sense of urgency. Picture quotes and questions are other ways to create interaction and garner feedback on social networks. Customers want to feel as if they are connected to businesses without the unnecessary spam. These are effective tools to streamline customer interaction while building lasting online business relationships. The main purpose to remember is that social media networking is not effective if it is lacking interaction. Therefore, evaluate different techniques to discover what works for your business.
The network effect business model may also include instances when a company can increase their income by raising advertising. Businesses are able to raise their rates due to the amount of visitors that view their website or social media profiles. Social networking sites have given businesses alternative ways to communicate with your audience. Blogging is another effective method because of the ability to share articles about the business, products, services or industry news.
Social Media Negative Impact
One negative effect of social media networking is the time commitment and its ability to lead to an online addiction. It easy to get caught up with responding, answering questions and posting; thereby, losing time that could be spent elsewhere. Another negative is the over-sharing of information that could produce reverse effects and threaten the validity of a business.
The Network Effect
Businesses that rely solely on social networks for their business have experienced reverse effects and have lost money quickly after their IPO. Groupon has experienced a decline in over 75 percent since their initial offering. Their shares effectively fell from a high of $26.11 per share to $4.75. Facebook, which is one of the most well-known social media networks, IPO opened at $38 per share and has sustained a low of only $19.05 per share since their launch. These are only examples of two big players in social media that have since declined following their IPO.
Although the networking effect has provided a quick way to garner fans, followers and connections, it is not easily sustainable. The fallout can happen just as quickly as the growth spurt. Regular online research is needed to stay current with trends and catch any negative social media data that about your business.
Take the time to understand the trends that drive public opinion. Because trends change rapidly, you should develop effective marketing strategies that aid businesses, in staying current with trends. Time management and scheduling are essential to streamlining a business and creating a viable social media presence.
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