Social Media and Business

Topics: Web 2.0, Facebook, Social network service Pages: 21 (7542 words) Published: March 24, 2013
Business Horizons (2010) 53, 59—68

Users of the world, unite! The challenges and opportunities of Social Media Andreas M. Kaplan *, Michael Haenlein
´ ESCP Europe, 79 Avenue de la Republique, F-75011 Paris, France

Social Media; User Generated Content; Web 2.0; Social networking sites; Virtual worlds

Abstract The concept of Social Media is top of the agenda for many business executives today. Decision makers, as well as consultants, try to identify ways in which firms can make profitable use of applications such as Wikipedia, YouTube, Facebook, Second Life, and Twitter. Yet despite this interest, there seems to be very limited understanding of what the term ‘‘Social Media’’ exactly means; this article intends to provide some clarification. We begin by describing the concept of Social Media, and discuss how it differs from related concepts such as Web 2.0 and User Generated Content. Based on this definition, we then provide a classification of Social Media which groups applications currently subsumed under the generalized term into more specific categories by characteristic: collaborative projects, blogs, content communities, social networking sites, virtual game worlds, and virtual social worlds. Finally, we present 10 pieces of advice for companies which decide to utilize Social Media. # 2009 Kelley School of Business, Indiana University. All rights reserved.

1. The specter of Social Media
As of January 2009, the online social networking application Facebook registered more than 175 million active users. To put that number in perspective, this is only slightly less than the population of Brazil (190 million) and over twice the population of Germany (80 million)! At the same time, every minute, 10 hours of content were uploaded to the video sharing platform YouTube. And, the image hosting site Flickr provided access to over 3 billion photographs, making the world-famous Louvre * Corresponding author. E-mail addresses: (A.M. Kaplan), (M. Haenlein).

Museum’s collection of 300,000 objects seem tiny in comparison. According to Forrester Research, 75% of Internet surfers used ‘‘Social Media’’ in the second quarter of 2008 by joining social networks, reading blogs, or contributing reviews to shopping sites; this represents a significant rise from 56% in 2007. The growth is not limited to teenagers, either; members of Generation X, now 35—44 years old, increasingly populate the ranks of joiners, spectators, and critics. It is therefore reasonable to say that Social Media represent a revolutionary new trend that should be of interest to companies operating in online space–—or any space, for that matter. Yet, not overly many firms seem to act comfortably in a world where consumers can speak so freely

0007-6813/$ — see front matter # 2009 Kelley School of Business, Indiana University. All rights reserved. doi:10.1016/j.bushor.2009.09.003

60 with each other and businesses have increasingly less control over the information available about them in cyberspace. Today, if an Internet user types the name of any leading brand into the Google search, what comes up among the top five results typically includes not only the corporate webpage, but also the corresponding entry in the online encyclopedia Wikipedia. Here, for example, customers can read that the 2007 model of Hasbro’s Easy-Bake Oven may lead to serious burns on children’s hands and fingers due to a poorly-designed oven door, and that the Firestone Tire and Rubber Company has been accused of using child labor in its Liberian rubber factory. Historically, companies were able to control the information available about them through strategically placed press announcements and good public relations managers. Today, however, firms have been increasingly relegated to the sidelines as mere observers, having neither the knowledge nor the chance–—or, sometimes, even the right–—to alter...
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