I recently sat in on an interview for a new sales person for a full service, internet software house. As we had the poor interviewee up against the wall firing questions at him, one of the directors asked “What will be the next big thing in the world of the Internet?”. I can’t say I remember the somewhat babbled answer the candidate gave but always eager to learn more, as soon as the interview finished, I asked the director himself how he would answer the question. “The use of social networking sites for effective marketing” came back the answer with such clarity and conviction I went scurrying off to find out more.
Most of us have now heard of, if not used,the likes of MySpace and Facebook. The user numbers of these are so vast it’s difficult to avoid converts. Put simply they are websites that facilitate the building of virtual communities of friends and colleagues, by posting pictures and blogs and by sending messages between users. They also offer a range of groups that are free to set up and to which anyone can join. These can be on any topic from the trivial, “do you like High School Musical 2” to “anyone want a cheap mortgage”.
MySpace now has over 70 million users world-wide of which 6.4 million are in the UK alone. Amazingly My space has been forced into 2nd place in the UK by Facebook who have 6.5 million users over here. The impressive stats don’t stop there Facebook has grown 541% since only last December! It performs 600 million searches and has 30 billion page views every month! With a target audience like that, no wonder the interviewer saw this as a marketing man’s dream.
Of course not everything is suitable to being marketed via such sites. Many dismiss the sites as for youngsters who are there for a laugh not to conduct business. Indeed in a recent Mortgage Strategy poll 57% of respondents said they would not use a social networking site for marketing financial products. While there is some truth in this, businesses would be foolish to dismiss these sites out of hand. HSBC found out to their own cost how effective a tool these sites can be when angry students used Facebook to campaign against their interest free overdrafts being removed – being forced into a public climb down on their policy. The truth is these mediums can be used to work for or against businesses so you can’t ignore them.
However if financial institutions do use them to market their products and services they must do responsibly and within the constraints of the FSA regulation. Specifically any promotions on these sites must comply with the FSA’s financial promotions regulations. For example Broker Morgan Sterling set up a group on Facebook which offers a 0.5% discount on fees to customers who quote ‘morganfacebooksterling’. However the group’s page did not display a warning concerning the risk of repossession as required by the FSA until contacted by a journalist when of course it updated its page rather quickly.
This is not a one off mistake and there are several others that could be quoted. However this does not mean marketing via this mechanism is wrong but is more likely a symptom of the inexperienced enthusiasm of social networkers in the ways of the FSA. More controlled, disciplined and above all compliant approaches are likely to be successful in reaching a target audience often underserviced by the financial advice market place.
Of course such online marketing doesn’t need to stop with the trendy social networking sites. Many professional social networking sites have been establish such as LinkedIn, which this year signed up its 10 millionth professional, or indeed things may go even more virtual and marketing may occur in media such as virtual reality games such as Second Life. The potential is there for social networking sites but it is, today at least, a marketing medium and not a channel, it needs to be integrated into distributors existing business models feeding through to existing advice channels. In doing so it will come under the compliance systems and checks in place and become an effective lead generation tool. Left as a toy for a few young advisers to dabble with and it becomes a compliance nightmare.
