Deloitte says Branded Social Networks are a Bomb
July 18, 2008 · Print This Article
Courtesy of ReadWriteWeb this afternoon, “Corporate Social Networks Are A Waste of Money, Study Finds“, original post at the WSJ here.
In summary, Ed Moran at Deloitte did a survey of 100 major brands that have online communities. They all suck. What does “suck” mean in this case?
Thirty-five percent of the online communities studied have less than 100 members; less than 25% have more than 1,000 members – despite the fact that close to 60% of these businesses have spent over $1 million on their community projects. “A disturbingly high number of these sites fail,” Moran tells us.
This tells me a few things. First, these companies have spent WAY too much money on their community software. Part of the magic of building a community network lies in using tool that are familiar and easy to use for the largest number of people. Since the vast majority of successful communities use similar forum and photo sharing tools that are largely open source, rolling your own makes less sense, particularly for a million bucks. That is to say, go where the people are.
Second, they don’t actually have anything worth talking about. That’s not to say that they don’t have great brands, or great products. But they might not have great brands or products that inspire conversation. For example, the Purina hard-to-classify-as-”network” network has only four paltry pages of user comments. It’s just hard to talk about odor control at any length.
In contrast, Mercedes-Benz has an incredibly successful community at BenzWorld.org, offering a place for user support and discussion on the cars — even premium membership for the high-dollar owners.
The Mercedes example gets to one of the key points in the survey: offer a community only when it provides a service to the community — not to you.
Third, the survey ignores companies making great use of existing tools. Back on my first point, if you are really going where the people are, then a network on Facebook or MySpace allows you to tap into known quantities, vast numbers of connected users, on an (arguably) stable platform.
The upshot is this: in spite of the doom and gloom from Deloitte, don’t shake down the social networks just yet. We’re entering an era of connectedness unlike any we’ve yet experienced. If you know your customers — if you truly understand them — a community might be your next best home run.
Great post Pete. It’s funny to see the volume of money these companies spend on creating web based communities with no real following when you consider how many web entrepreneurs have created social networks for a few hundred bucks using open source software and attracted hundreds if not thousands of followers.
-Brad
Hi Pete –
I was part of the study and can tell you that often times the dollars were not spent on technology but on agencies. Second of all , and in some cases, it makes sense for companies to spend appropriately in order for their communities to deliver results that will move their needle. I took one such case study apart as an example here (http://tinyurl.com/57odtk).
That being said, I agree with you that technology should not be the major driver for communities. In fact we learned that if your community would not exist in a discussion group it would not exist anywhere.
I also agree that companies who want to succeed with communities have the put the community member at the center of the effort and not themselves, their company or their product.
The study did include many companies who are using existing , off the shelf tools - I am not sure where you got the impression that it did not.
The study was not all about doom and gloom, but unfortunately that is how some people spinned it J
I have more about it at http://www.beelinelabs.com/tribalization.
Francois
Pete, I couldn’t agree more about the need to have something worth talking about. All companies need to look carefully at what the reason might be for customers to want to strike up a conversation. Not every brand has the cache and interest of Mercedes Benz. But, many companies do have one important on-ramp to community and that’s customer service.
I talk about this at greater length on our blog here:
http://corpblog.helpstream.biz/helpstream-blog/2008/7/18/building-customer-communities-has-to-start-with-customer-ser.html
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