Tech firms turn to social media to reach consumers

SAN FRANCISCO Tue Nov 18, 2008 4:19pm EST

A Facebook profile is seen in a handout photo. REUTERS/Handout

A Facebook profile is seen in a handout photo.

Credit: Reuters/Handout

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SAN FRANCISCO (Reuters) - Recognizing the limits of traditional advertising, established technology companies are diving headlong into the sometimes chaotic landscape of social media to promote their products.

Companies ranging from PC maker Dell Inc to storage equipment maker NetApp Inc are increasingly turning to outside blogs, viral videos and websites such as FaceBook, Twitter, FriendFeed and Digg -- and their tens of millions of users -- to reach consumers.

These social networking sites harness the age-old power of the word-of-mouth recommendation and can be potent marketing tools. If nothing else, they demand a higher level of consumer engagement than conventional ads.

"This is 180 degrees from that sort of advertising," said Debra Aho Williamson, a senior analyst at eMarketer. "Having a conversation with them (consumers) is a very new skill."

For tech companies with big marketing budgets, the shift to social media is an implicit acknowledgment that television and print are not necessarily the most effective ways to reach buyers, particularly younger ones.

In addition, with a recession looming, corporate budgets are being slashed. UBS has forecast global ad spending will fall 3.9 percent in 2009. In such an environment, social media could prove to be a cost-effective way to sell to consumers.

But the strategy is not without some risk. While every company wants to generate buzz, online backlash can be brutal.

Consumer healthcare giant Johnson & Johnson learned that the hard way with a recent Web video ad for its Motrin painkiller. While apparently trying to be irreverent about the pain of wearing a baby in a sling, the ad offended many mothers who savaged it on Twitter, the wildly popular "micro-blogging" site where users communicate with short "tweets" of 140 characters or less. J&J was forced to apologize on Monday.

Brian Keeler, a vice president at media consultancy VShift, said the key to social media is credibility and enlisting consumers in the act of marketing itself. But if you upset your audience, it can mean trouble.

"With the online media, things can go viral and spin out of control really fast," he said.

ONLINE CREDIBILITY

Dell has a dedicated team of around 40 people that interacts with consumers through its blogs, community forums and third-party sites. The company began its social media push last year as it moved to repair its public image.

"There's been a realization over the last several years that your customers are going to talk about you online and you have a choice to join that conversation," spokeswoman Caroline Dietz said.

Dell said it has used Twitter to sell $500,000 worth of refurbished PCs. The company also took ideas solicited from its IdeaStorm site to make changes to its Latitude laptop.

NetApp sells data storage equipment only to enterprises, so its strategy is more limited. Its employees are encouraged to blog on third-party sites about its products and the company focuses on keeping a unified message.

Still, NetApp said that, for the first time, it is dedicating 20 percent of its PR budget to social media.

One of the most effective social media advertising strategies, said author and blogger Dave Taylor, is to simply hand a new product over to a blogger for a test-drive.

A bad review can hurt, but an endorsement from an established name "makes for some powerful marketing," he said.

In a similar vein, hard-drive maker Seagate Technology sponsored prominent blogger Robert Scoble, who wrote about the company's products and took part in promotions.

Seagate news now goes up on Facebook, pictures of products go on photo-sharing site Flickr, along with Twitter tweets. The company has even built a studio to film Web videos.

Although some companies may balk at the idea of relinquishing control of their message, they may have no choice.

"Historically, companies have been really focused on controlling the information they disseminate ... and the fact is that's dying, because accessibility and communication have so dramatically increased and improved," Taylor added.

(Editing by Andre Grenon )

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