Running Head: Social Media and Its Effect on Business

Social Media and Its Effect on Business

Jennifer Hood
Student ID: 5076418
Thomas Nelson Community College
Business 100 D01, Spring 2015
Professor Robertson
April 16, 2015

Running Head: Social Media and Its Effect on Business

Social Media and Its Effect on Business

Introduction
In a world where Facebook and Twitter are pre-loaded on new cell phones and even the
local mom-and-pop shop has a website, social media is everywhere you turn. According to Carr,
most Americans spend at least eight and a half hours a day looking at a television, a computer
monitor, or the screen of their mobile phone. (Carr, 2010) No one can deny the need Americans
have developed to update, text, tweet, gram, and surf. Businesses in the 21st century must keep
up with their customers in order to keep up with their competitors.
What is Social Media?
Before we can discuss its impact, we must first discuss what social media really is. Most
people use the term social media without understanding exactly what it means. Any website
that interacts with you while giving you information is a social media site. (Nations, 2015)
The local news channel that gives you an opportunity to comment on stories at the bottom of the
page is just as much of a social media site as YouTube and Facebook.
Social media comes in many different forms from many different places. The standard
categories associated with social media include social networking, picture-sharing, podcasts, and
weblogs. Other classes include internet forums, web magazines, microblogs, search engine
optimization and social bookmarking. Before exploring their impact on business, a clear
understanding of some of these groups is needed.
Social Networking
Perhaps the most common example of social media is social networking. A social network
is a group of people who interact through online networks, blogs, comments, sharing, checking
in, reviews, and who use text, audio, photographs, and video for social, professional, and

Running Head: Social Media and Its Effect on Business

educational purposes. (Safko, 2012, p. 28) The Big Three social networks are Facebook,
Twitter, and LinkedIn. Originally, many thought that Facebook would go out of popularity as
quickly as MySpace did, however The Washington Post reported in October of 2014 that
Facebooks Q3 report showed its monthly active users cleared 1.35 billion- roughly equal [to]
the population of China. (Dewey, 2014) Twitter has an estimated 284 million users, and
LinkedIn has approximately 332 million users. (Smith, 2015)
Social Bookmarking
Social bookmarking sites are those that let users store, categorize and tag, and search
bookmarks. (Go, 2015) Delicious is a service that allows for the sharing of these bookmarks
and recommending them to others. Using algorithms based on search history and other pages
bookmarked by a user, Delicious makes recommendations for new sites that users may enjoy.
Pinterest is a similar site, used for pinning websites to virtual bulletin boards that can be shared
and searched.
Social Reviews
Perhaps the most well-known social review site is Yelp!, whose mission is to connect
people with great local businesses. (Yelp!, 2015) They also estimate 139 million unique visitors
each month of Q3 in 2014. Yelp! allows business owners to set up accounts to show pictures and
post messages to customers, but they are never allowed to alter the reviews posted by their
customers. This helps to ensure that users get a fair and unbiased view of the businesses being
reviewed. Other examples include the user reviews seen on Amazon and eBay.
How is Social Media Important to Businesses?
One of the best ways to express the impact of social media on business is the story of Dave
Carroll and his fight with United Airlines. In 2008, Mr. Carroll, the country-western singer and

Running Head: Social Media and Its Effect on Business

songwriter, observed three baggage handlers throwing his $3,500 guitar around on the tarmac.
Despite informing flight attendants and waging war against customer service representatives for
several months, United Airlines refused to compensate him for repairs in cash or even travel
vouchers. He decided to take his plight to the public, producing a four and a half minute music
video that he then released to YouTube. When the video reached 150,000 views, United
attempted to compensate Carroll in hopes of getting the video removed, at which point he not
only refused, he made a follow- up video. As of January, 2015, the initial video had been viewed
over 14.5 million times, the second had been viewed 1.8 million times, and the third had over
750,000 views, for a total of over 17 million views. (Maxwell, 2015) The BBC reported that
Uniteds stock fell ten percent within four weeks of the initial posting, a loss of approximately
$180 million dollars. (Wilson, 2011)
On the other hand, Taylor Guitars saw an opportunity- they not only replaced the damaged
guitar, they created a short video which they talked about their repair services and suggestions
for safe travel with guitars. Taylor Guitars came out the obvious winner here.
Free Advertising
In 2015, Facebook is a place where people live their lives, talking about what is happening,
including shopping, spending, asking for advice, complaining, complimenting, and
recommending, and there is not any business in the world that would turn down the
opportunity to be exposed to and potentially talked about by 1.35 billion people. (Safko, 2012,
p. 33) Businesses can share information with their customers as well as engage new customers.
They can also do customer service, marketing, promotions, and even sales! New updates to
Facebook allow businesses to create their own online shop. Especially for small businesses,
small promotions through social media can drive customers to the online store or even the brick-

Running Head: Social Media and Its Effect on Business

and-mortar store. With Twitter, it can be even easier to build a community; when you have a
big announcement, sale, or product for sale, the community that you have built will respond to
you with purchases, retweeting, and coming into you establishment. (Safko, 2012, p. 41)
Whether through Twitter or Facebook posts offering a percentage off, or interfacing with
customers to answer questions about products, social networking is an amazing opportunity for
businesses.
Free Networking
Networking is a key part of business; from experts to other businesses to suppliers, no one
business can stand alone. LinkedIn, which is a professional social network, has a very clear
mission: connect the world's professionals to make them more productive and successful.
(LinkedIn, 2015) Professionals representing small businesses or start-ups, or entrepreneurs who
run businesses with extremely limited staff [use] LinkedIn in search for influential business
partners who can help them get to the next level. (Schaffer, 2011, p. xviii) It is interesting to
note that LinkedIns members include an executive from every Fortune 500 Company.
(Schaffer, 2011, p. 9) Twitter also allows for businesses to follow other leading experts to learn
from them and share their information, while also allowing users to have relationships with
people and businesses that they never could have before. (Safko, 2012, pp. 40-41) This amazing
networking opportunity was unheard of before.
Free Information
Sometimes called social listening, certain applications for cell phones and internet
browsers allow users to see what is being said about competitors. It can also be as simple as
watching their Facebook pages and Twitter feeds. The most important thing is that it allows for
instant information about competition as well as how your own brand stands up by comparison.

Running Head: Social Media and Its Effect on Business

It can also show what works and what doesnt, especially for a business that is just opening the
door to social media. For example, if a competitor is constantly using images to keep their
products fresh in customers mind, or they have a large number of Likes on their businesss
Facebook but almost none on Twitter, then a business owner can use that to gauge how best to
spend their time setting up their online brand.
Another important part of social listening is monitoring what is being said about your
own brand. Monitoring sites like Yelp!, as well as users Tweets to your company and comments
on a Facebook page can help to nip problems with customer service in the bud. For example, if a
customer complains on Yelp! about what they felt was an unnecessarily long wait to be seated, a
business may invest in call ahead seating, such as the program used at Texas Roadhouse
Restaurants. It also helps to give the business owner an incredible insight as to what the customer
thinks and feels when they enter the business.
Conclusion
Business must realize that social media is not just a marketing tacticits a social
phenomenon that is here to stay. (Berkley & Walter, 2013, p. 1) Ultimately, the concept of
doing business in a virtual world is still new however, there is a tremendous opportunity for
enterprises to participate in a huge trusted network of like-minded participants- in which many
may be prospects. (Safko, 2012, p. 367)

Running Head: Social Media and Its Effect on Business

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