Social networks trump traditional marketing efforts


Book Review

Socialnomics: how social media transforms the way we live and do business.
By Erik Qualman
Wiley Books, 2009, 2011. Revised edition. 296 p.

What’s the best Italian restaurant in Manhattan?  Fewer people care what Google thinks. They are going to social networks to see what their friends and peers think.

More than half the world’s population is under 30 years old. 96 percent of this group have joined a social network. Facebook tops Google for weekly traffic in the U.S.

Erik Qualman argues that social media has become the world’s largest focus group on steroids. Qualman is a consultant, global vice president of Online Marketing for EF Education, and an MBA professor at the Hult International Business School. He blogs at

He says that a small business owner who is only now just starting to practice social media can still succeed. First, define what success will look like. Then take these steps: (1) listen (2) interact (3) react (4) soft sell. If you only do step one, you will at least have a much better understanding about your business and also your customer. That is invaluable.

In this revised and updated edition of the 2009 edition Qualman shows how social media are changing consumer behavior and how businesses will benefit from understanding the phenomenon.

Did you know that more than half of the 50 million people who viewed Tina Fey’s Sarah Palin skits on SNL didn’t see them on television? They watched the skits on YouTube or within their social media network. Where is your advertising budget?

Through social networks consumers are getting more information, faster, and at no expense to them. As one example Qualman points to Zillow allows users and realtors to investigate the estimated values of various real estate properties. It aggregates various public data (most recent sales price, up-to-date selling prices of the surrounding houses, asking prices, quality of schools, etc.) into an algorithm to obtain the estimated property value. To augment this third-party data, Zillow allows its user base to update various aspects.

Consumers pay less attention to traditional advertising while they use social media to decide purchases. A parent in the market for a lightweight, safe, child car seat is likely to enter the query “buying a baby seat” into his social network. There he may discover that 23 of his 181 friends have purchased a baby seat in the last 2 years. Fourteen purchased the same make and model; the average price for the most popular model was $124.99; and 3 friends want to sell their used baby seats. Could traditional advertising match that depth of information?

The travel company TripAdvisor was an early company to embrace social commerce. Then in June 2010 it added the ability for a visitor to their site to view hotel ratings and to also see who in their Facebook network had stayed at that hotel. That is a game changer, Qualman says. This is what Socialnomics is all about:  The ability for me to see what my friends and peers think about anything and everything. Social networks provide insight into a user’s demographic (age, geography, occupation, etc.) and psychographic information (hobbies, clubs, networks, desires). In the past, advertisers often had to guess at this type of data. With social media, the user tells marketers what they have been trying to determine for years.

Qualman says brand budgets that historically went to television, magazine ads, and outdoor boards are moving to digital channels for three reasons: (1) the audience has moved there, (2) it’s more cost effective, and (3) it’s easier to track.  Qualman predicts that broadcast television will eventually be pushed through the Internet and a majority of content will be viewed on tablets and iPads.

But many executives ask: How do I measure the ROI of social media?  Qualman says some companies and marketers paralyze themselves by attempting to determine the ROI of social media. They use inappropriate tools and measurements. Qualman offers 34 quick statistics that point to ways social media can be measured:

Lenovo reduced expenses with a  20 percent reduction in call center activity as customers go to community websites for answers.

Dell sold $3 million dollars worth of computers on Twitter.

Software company reports that 24 percent of its social media leads convert to sales opportunities.

Qualman then offers 42 statistics that social media isn’t a fad: it’s a fundamental shift in the way we communicate, and provides answers to some of the more common that he has received from reporters and readers over the years.


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