Social Networks and Business

Project Paper

Author: Aleksandar Drobnjak Route de Beaumont 5a 1700 Fribourg Matriculation number: 06-923-098 aleksandar.drobnjak@unifr.ch

Examiner Prof. Andreas Meier

Supervisor Luis Terán

Date 06. Mai. 2011

i

Executive Summary

Executive Summary

The time when Social Networks were doomed as pure pass-time activity is over. Companies around the globe have discovered the benefits of these digital networks. This paper focuses on giving the reader an insight into the Social Network market, discussing advantages and disadvantages and underlying important aspects with examples. In order to take a closer look at the market, a brief introduction into the history of Social Networks is being made. In a further step, the question: “Why do companies pick certain Social Networks?” is being raised. To give an adequate answer, fuzziness of needs and the process of choosing an adequate network, are being looked into. By using a mathematical formulation, the decision making process is being illustrated and possible solutions analyzed. In addition to choosing an existing Social Network, the option of creating an Enterprise Social Network is being reviewed, with the help of two different examples. Possible benefits are being analyzed and compared with those of joining an existing Social Network. In the last section of the paper, the possibility of using micro blogging networks, such as Twitter, to forecast stock prices and soccer results is being illustrated. Especially the S&P 500 stock price forecast platform TwitterTrader.net is being focused on, as it managed to yield an average 15 percent rate of return, in a performance test run for half a year.

ii

Table of Content

Table of Content

EXECUTIVE SUMMARY …………………………………………………………………………………………………………………………..I TABLE OF CONTENT ……..…………………………………………………………………………………………………………………..….. II LIST OF TABLES AND FIGURES ………………………………………………………………………………………………………………. IV LIST OF ABBREVIATIONS ………………………………………………………………………………………………………………………. V 1. Introduction …………………………………………………………………………………………………………………………………… 1

1.1. Background and Motivation of the Thesis ……………………………………………………………………………….. 1 1.2. Problem Statement …………………………………………………………………………………………………………………. 1 1.3. Research Questions ……………………………………………………………………………………………………………….… 1

1.3.1. Why are Social Networks such a powerful tool? …………………………………………………………..…. 1 1.3.2. Which threats exist, when using a Social Network? ………………………………………………………... 1 1.3.3. Which types of Social Networks are there? …………………………………………………………………….. 1 1.3.4. How does a company choose a Social Network? …………………………………………………………..… 2 1.3.5. How can Business profit from Social Networks? …………………………………………………………..... 2 1.3.6. Why creating a Social Network instead of joining an existing one? ……………………………...... 2 1.3.7. Is it possible to predict future trends based upon the evaluation of blogs? …………………….. 2

2. Social Networks ……………………………………………………………………………………………………………………………… 3

2.1. Definition ………………………………………………………………………………………………………………………………... 3 2.2. History …………………………………………………………………………………………………………………………………….. 3

2.2.1. Phase 1: Creating the Network ……………………………………………………………………………………….. 3 2.2.2. Phase 2: First Steps & Necessary Inventions ………………………………………………………………….… 3 2.2.3. Phase 3: The Social Network Boom …………………………………………………………………………………. 4

2.3. The Power of Social Networks …………………………………………………………………………………………………. 5 2.4. The Threats of Social Networks ……………………………………………………………………………………………….. 5

2.4.1. Viruses & Malware ………………………………………………………………………………………………………….. 5 2.4.2. Privacy ……………………………………………………………………………………………………………………………. 6 2.4.3. Cyber Bullying & Cyber Stalking …………………………………………………………………………………….… 6 2.4.4. Data Leakage ………………………………………………………………………………………………………………….. 6 2.4.5. Negative Publicity …………………………………………………………………………………………………………… 6

2.5. Corporate Security & Lost Productivity ……………………………………………………………………………………. 7

3. Fuzziness & Choosing the Right Social Network …………..………………………………………………………………… 8 3.1. Choosing a Social Network …………………………………………………………………………………………………….… 8

3.1.1. Metric Module 1: The Restricted Decision ………………………………………………………………………. 10 3.1.2. Metric Module 2: The Advanced Decision ………………………………………………………………………. 11 3.1.3. The δ-Effect …………………………………………………………………………………………………………………….. 12

3.2. The Network Effect …………………………………………………………………………………………………………………. 13 3.3. Social Network Landscape ………………………………………………………………………………………………………. 13

4. Social Networks & Business ………………………………………………….…………………………………………………………14

4.1. SWOT Analysis of Social Networks for Businesses ………………………………………………………………….… 14 4.2. Web 2.0 Maturity ……………………………………………………………………………………………………………………. 15

4.2.1. Web 2.0 Novice Company ………………………………………………………………………………………………. 15 4.2.2. Web 2.0 Advanced Company ………………………………………………………………………………………….. 15 4.2.3. Web 2.0 Expert Company ……………………………………………………………………………………………….. 15

iii

Table of Content

4.2.4. Forbes Top 100 Companies: Are they all Experts? ………………………………..……………………….… 15 4.3. Possibilities offered by Social Networks …………………………………………………………………………………… 16

4.3.1. Building the Business ………………………………………………………………………………………………………. 17 4.3.1.1. Business Idea, Innovation and New Markets ……………………………………………………. 17 4.3.1.2. Product Development ……………………………………………………………………………………... 17 4.3.1.3. Market Survey …………………………………………………………………………………………………. 17

4.3.2. Finding the Right Collaborators ………………………………………………………………………………………. 18 4.3.2.1. B2B & Social Networks …………………………………………………………………………………….. 18 4.3.2.2. Networking …………………………………………………………………………………………………….… 18

4.3.3. Hiring good People …………………………………………………………………………………………………………. 19 4.3.4. Advertise Products Globally ……………………………………………………………………………………………. 19 4.3.5. Branding …………………………………………………………………………………………………………………………. 20

4.4. Creating an Enterprise Social Network …………………………………………………………………………………….. 20 4.4.1. Example: Migipedia – Customer based Solution ……………………………………………………………… 20 4.4.2. Example: N-Square – Employee based Solution ………………………………………………………………. 21 4.4.3. Employee Social Networks ……………………………………………………………………………………………… 21

5. Predicting Future Trends with Twitter ……..………………………………….………………………………………………… 22

5.1. Predict Stock Prices – TwitterTrader.net ……………………………………………………………………………….… 22 5.2. Predict Soccer Results – FIFA World Cup 2010 ……………………………………………………………………….. 23

6. Conclusion ……………………………………………………………………………………………………………………………………… 24 LITERATUR …………………………………………………………………………………………………………………….……………………… 25 INTERNET SOURCES ……………………………………………………………………………………………………………….…………….. 26

iv

List of Tables and Figures

List of Tables and Figures Figure 1: Launch Dates of Major Social Network Sites …………………………………………………………………………... 4 Figure 2: Survey: Threat to Confidentiality …………………………………………………………………………………….……….7 Figure 3: Survey: Access Control to Social Networks ……………………………………………………………………………… 7 Figure 4: Top 5 Most Popular Social Networks in 2010 ………………………………………………………………………….. 8 Figure 5: User Needs & Social Network Satisfaction ………………………………………………………………………………. 9 Figure 6: Decision Making Process ………………………………………………………………………………………………………… 9 Figure 7: Positive- and Negative Effects ……………………………………………………………………………………………….…12 Figure 8: Need Classification …………………………………………………………………………………………………………………. 13 Figure 9: SWOT Analysis ………………………………………………………………………………………………………………………... 14 Figure 10: Companies Using Social Networks ………………………………………………………………………………………... 15 Figure 11: Most Used Social Networks by Business ……………………………………………………………………………..… 16 Figure 12: Activities on Twitter ……………………………………………………………………………………………………………… 16 Figure 13: Employee Social Networks ……………………………………………………………………………………………………. 21 Figure 14: Evaluation of Financial Tweets ……………………………………………………………………………………………… 22

Table 1: Decision Process – Metric Module 1 ……………………………………………………………………………………..…. 10 Table 2: Performed Calculation – Metric Module 1 ……………………………………………………………………..………… 10 Table 3: Decision Process – Metric Module 2 ………………………………………………………………………………………… 11 Table 4: Performed Calculation – Metric Module 2 …………………………………………………………………………….…. 12

v

List of Abbreviations

List of Abbreviations CRM Customer Relationship Management

CEO Chief Executive Officer

B2B Business to Business

CV Curriculum Vitae

IT Information Technology

1

Introduction

1. Introduction

1.1 Background and Motivation of the Thesis

The first Social Networks have been created in the early 1990s, but their potential remained hidden until the recent boom, starting in 2003. The reason behind this lies with the low density of internet coverage around the globe, slow internet bandwidth and the lacking internet awareness of users [Boyd & Ellison 2007]. Due to computerization of the workspace, the amount of internet aware users increased drastically. In addition, the amount of people purchasing a computer for home use, increased and the internet established itself as basic need. The bigger the online community grew and the more time users spent on the internet, the more were the framework requirements met for Social Networks to exist. In the beginning, companies around the world classified Social Networks as a pass time activity and thus ignored the potential which lies within. After 2003, companies discovered the potential of these networks and slowly evaluated the possibilities to profit from them. In order to skim potential customers, marketing departments around the globe have dedicated time and money to increase their presence on the internet and especially on social networks. 1.2 Problem Statement Currently several different Social Networks exist. Each platform has specialized itself in a specific area, which allows coexistence. Companies, willing to profit to profit from Social Networks, have to decide on how and where to be active, in order to satisfy their needs.

This paper will analyze the potential of Social Networks for a business, as well as the economy in general. In addition, four different Social Network platforms will be analyzed and evaluated. Based upon the evaluation of the networks, preferences regarding the use will be determined. 1.3 Research Questions The following questions will be answered in the following Thesis: 1.3.1 Why are Social Networks such a powerful tool?

Social Networks have become very popular since the boom in 2003. The big diversity of users with different backgrounds has created a small, digital world in the web. With a steadily growing user base, companies have discovered the potential of these digital communities and tried ever since to distribute and advertise their products and services over these platforms.

1.3.2 Which threats exist, when using a Social Network? Using Social Networks is not risk free. There are several threats which companies, as well as users have to keep in mind when publishing sensitive information. Some of the biggest threats are being named in this paper.

2

Introduction

1.3.3 Which types of Social Networks are there? Users have different expectations and demands when it comes to choosing a Social Network. Therefore different types of Networks have been created, with each focusing on a specific user base. Specialization has made coexistence possible but the market is being crowded with more and more providers, thus increasing the competition between the Networks.

1.3.4 How does a company choose a Social Network? The process of choosing an adequate Social Network is based upon two important aspects. Companies have to decide whether they are aiming at networks which have the highest user base or those which satisfy their need(s), such as advertising, communicating etc. the best. In order to better understand this process a mathematical formulation of the problem has been given in this thesis.

1.3.5 How can Business profit from Social Networks? This is the central question of this paper. In order to given an adequate answer, five different categories have been specified, upon which individual benefits for companies are reviewed.

1.3.6 Why creating a Social Network instead of joining an existing one? Creating an Enterprise Social Network, rather than joining an existing one, can offer many benefits to a company. This research question is being discussed with the help of two examples, which show different possibilities, on how a solution could look like.

1.3.7 Is it possible to predict future trends based upon the evaluation of blogs? In order to find an answer to this question, several studies have tried to analyze the correlation between Twitter posts and future events. With the help of specific algorithms, interesting results have been discovered. With the help of examples, provided by TwitterTrend.net and a case study of the FIFA Soccer World Cup 2010, the appeal of Twitter as forecasting instrument is shown.

3

Social Networks

2. Social Networks

Social Networks and Social Media have been omnipresent since 2003. There is hardly any company or internet user who hasn’t heard about Facebook, Twitter and other Web 2.0 networking platforms. People from all over the world with different jobs, hobbies, political views and education have joined and created therewith a digital, social community [Boyd & Ellison 2007]. Social Networks have become a basic need for many people. Slowly but steady, many community users shifted a certain percentage of their private life to the digital world. While experiencing the benefits of these platforms, mainly off work, users became aware that these same tools could be used to optimize certain processes at work as well. This was the key moment when Social Networks became interesting to companies and weren’t doomed as pass time activity any longer. 2.1 Definition In order to fully understand Social Networks, a brief explanation of the term has to be given. The core definition is a digital service, which allows users to create a profile and interact with other users over the particular platform. Depending on the platform, users are given the right to create and edit user groups and thus control whom they are communicating with. One of the reasons why these platforms are popular is because users with different social networks meet up and share information over a joint site. By doing so, individuals with similar backgrounds, thoughts, jobs or interests can be found easily, which leads to an expansion of the personal social network. A new digital friend is just a click away. 2.2 History Like every other invention in the history of mankind, Social Networks had to grow from a good idea, into the well established, digital networking tool of today. This process can be divided into three different phases. 2.2.1 Phase 1: Creating the Network The invention of the internet was the initial step and made everything possible. While this is certainly nothing new, the history does hold up some interesting aspects. The Internet was created by the United States Military in the 1960s, with the purpose of information distribution between military facilities. This information was classified and not to be shared with the rest of the world. Considering that certain Social Network Tools, such as Twitter, are nowadays at the frontline when it comes to promoting freedom of speech, shows the long way the Internet had to go, in order to provide adequate conditions, which allow the existence of such networks [Walthowe 2011]. 2.2.2 Phase 2: First Steps & Necessary Inventions In the early 1990s, Bulletin Board Systems (BBS) were created. These systems were similar to a file server, where people had to the possibility to download files and post messages. Due to the high costs of a Dial-Up Internet connection and the long distance calling rates, many BBS were based and used locally. These small local networks were the first steps into the Social Network age [Digital Trends 2009]. The next step was the done by CompuServe, which launched a similar file sharing system, with the possibility to chat with other users around the globe, by using forums. This was a very important step for the Internet. The last step in the path of necessary inventions was performed by America

4

Social Networks

Online (AOL). Members were given the possibility to create profiles, where personal information could be displayed and looked into by other members. A search function would allow members to browse and look for other members [Digital Trends 2009]. 2.2.3 Phase 3: The Social Network Boom The first website which fulfilled all the requirements of the given definition in chapter 2.1 was SixDegrees.com. Certain sources declare classmates.com as the first Social Network, released in 1995, which is not entirely correct. The possibility to create own profiles was not given in the beginning, but added much later. Therefore the core criterion was not met. The idea behind classmates.com was to offer users the possibility to affiliate with their high school or college and look for other class mates who had done the same [Digital Trends 2009]. SixDegrees.com on the other hand was created for the sole purpose of connecting people from around the world, by allowing members to send messages to each other, upon creating an account. This does not only fulfill the core criterion of the definition, but comes also very close to certain Social Networks which are still being used nowadays. Unfortunately SixDegrees was shutdown in 2000. The reason behind its failure, was the sheer fact, that only very little people around the globe had access to the internet. Therefore the possibility to find friends and create digital social networks was very limited. One could say that it was ahead of its time [Digital Trends 2009]. In the years after Six Degrees was shutdown, several new platforms were launched, trying to further develop the idea of such a platform. Figure 1 shows launch dates of major Social Networks.

5

Social Networks

2.3 The Power of Social Networks Considering that the amount of newly released Social Networks has increased year by year, is a good indication that these platforms attract a wide range of internet users and have gained steadly in popularity. One and probably the most important aspect, why joining a Social Network opens a wide range of possibilities, is that it has never been easier to meet new people. In a hectic world where time is money and a larger part of the day is spent in the office, socializing with friends is often not easy. This is where Social Networks come into play, as they can help maintain a decent level of social interaction with friends, without actually having to meet up. In addition Social Networks allow users to have all their friends on a digital platform, which allows them to interact easily with each other and share information with everybody within a few seconds. One could say that it is a big digital address book, with the feature of being able to contact everybody within seconds. Users with business orientated demands can profit as well. Instead of having to attend several networking events or exhibitions, in order to meet possible business partners, certain networks offer the possibility to acquire new contacts with just a few mouse clicks. Customer Relationship Management (CRM) is a key benefit of Social Networks and allows companies to be more efficient with less invested resources. The most important factor or highest value, delivers the amount of information provided by the users. Users posting all sorts of information on Social Networks are a blessing and a curse at the same time for marketing departments. Posting an advertisement on YouTube can generate a lot of feedback. Some of it good, some bad but this kind of information is what marketers seek for, in order to be able to improve marketing strategies and increase sales. Reading comments posted by customers is a good addition to regular survey methods. While surveys are still irreplaceable, information gathered from Social Networks can be used to compare results. An example would be the publication of an advertising video on YouTube, upon which viewers can directly post their comments underneath. This is a simple way to gather feedback, as it is concentrated and openly accessible. However posts on platforms such as Twitter and Facebook are harder to track and require special software applications. One more aspect which has been built up over the years is the amount of people using Web 2.0 platforms. Facebook alone has more than 500 million active users, which spend an average of over five hours per month on the network. Whether the goal is to promote a rock band, discuss academic topics or simply share thoughts with the rest of the world, one can be sure that at least somebody else will read it. Advertising has never been this easy and especially cheap [Nielsen Wire 2010]. 2.4 The Threats of Social Networks Even though Social Networks offer great opportunities to businesses and Internet users, possible threats need to be considered as well. Some of the biggest downsides are the following: 2.4.1 Viruses & Malware In recent history, several networks have been targeted by hackers, trying to gain access to user accounts. MySpace was invaded by a Trojan in 2006, Orkut by a worm in 2007 and Facebook in 2008 and 2010 with the help of widgets. The reason why Social Networks have been the main target for many hackers is the amount of user data, which can be acquired upon a successful breach of the security mechanisms. Especially for “bot-herders”, who get paid depending on the size of their botnets, Social Networks offer a major opportunity to increase their influence and size [M86 Security2009, p.2].

6

Social Networks

One of the few tricks being used is to hack accounts, is by sending harmful links through private messages, from already hacked accounts to users in their friend list. These will believe that the link from the message is safe, due to the message being sent directly from a friend and click on it. By using this method, many computers can be infiltrated within a short period of time. All it takes is one breach in the security of a Social Network or account [M86 Security 2009, p.2]. 2.4.2 Privacy Giving out too much sensitive information can lead to identity theft, phishing attacks and can help promote cybercrime. Even non-criminal activities, such as employers browsing through pictures of employees, can lead to negative consequences. Therefore it is important to not share every bit of information with the rest of the world, as it can easily be abused [M86 Security 2009, p.2]. Social Network users have to be aware that using these platforms is risky. Good examples are the scandals Facebook has been part of in the past history, ranging from handing out user data to big advertising companies, up to changing user agreements over night, not allowing members to react. Other platforms such as MySpace have had similar allegations and privacy officers around the globe are monitoring closely every change being made [M86 Security 2009, p.2]. 2.4.3 Cyber Bullying & Cyber Stalking Cyber bullying and stalking are possible threats each person or company is vulnerable to, upon stepping into the digital world. By joining a Social Network, the risk increases by a big margin. In the United Kingdom a survey was carried out by the Center of Enterprise Research and Innovation, which revealed that one fifth of the employees in the UK were being bullied electronically. Estimates predict that this has cost the UK economy over £2 billion per annum in sick pay, staff turnover and loss of productivity [CERI 2011]. Another good example is the highly controversial network IShareGossip.com, which allows every registered user to post gossip on other people. This platform is being used frequently by students and has led to the suicide of a 13 year old boy, who killed himself after being bullied on the network by his classmates [Grillen 2011]. 2.4.4 Data Leakage One of the highest priorities within a company is to secure confidential information. In some cases employees manage to share information with the outside world, even though tight security measures are in place, be it unwittingly or deliberately. Posting dates, which is part of a confidential road map, or handing out information about the current financial situation of the company, can cause major damage to the company. While certain threats can’t be eliminated easily, companies still need to be aware of them and try to inform and instruct their staff. As a last resort harsh punishments can and should be put in place [M86 Security 2009, p.2]. 2.4.5 Negative Publicity Being able to spread information fast into every corner of the world is a major benefit but can become a nightmare as well. Dell had to experience how powerful Social Networks are, after an unsatisfied customer made a blog on the internet with the title “Dell Sucks – Dell Lies”. Other Dell customers who were similar unsatisfied with the company, commented on the blog and linked it on other platforms. What happened was that the blog spread like a wildfire and got a higher ranking on Google then the regular Dell website, which means that every possible customer was informed

7

Social Networks

about the negative aspects of Dell, before even seeing the official website. The result was that Dells revenue and customer satisfaction dropped by a large margin and the CEO was fired [Jarvis 2009, p.12]. At first Dell followed a “Look, don’t touch” policy, ignoring the blog. After a massive loss in revenue, the company was forced to act. An IT-Support team was dispatched, contacting every blogger and offering personal assistance in fixing problems with their product. This move by Dell brought them a lot of positive feedback from previous angry customers. After this incident, a permanent team of workers has been put into place, monitoring blogs and offering immediate assistance, as well as feedback on the companies’ behalf [Jarvis 2009, p.20]. This is a good example of how powerful Social Networks are and that ignoring them can lead to an escalation. Listening and replying to customers demands has to be a top priority. 2.5 Corporate Security & Lost Productivity Due to the mentioned risks in chapter 2.4, a good amount of companies have decided to restrict access to Social Networks at work, in order to reduce the chance of being victim of data leakage or other threats. In addition fear of lost productivity has encouraged a ban. A survey performed by Sophos has confirmed that these fears are shared by several companies. The results of the survey are displayed in Figures 2 and 3.

8

Fuzziness & Choosing the right Social Network

3. Fuzziness & Choosing the Right Social Network In the following chapter, a closer look at the Social Network Market will be taken. Currently there are over 200 Social Networks, each trying to focus on a particular group of users. While some offer unique features to attract new users, others choose to provide the most used services. The five most popular networks, which have managed to gather the most unique visits in 2010, are the following shown in Table 1 [WebTrends 2010]:

3.1 Choosing a Social Network Social Networks rise and fall by the amount of users they manage to gather. The community is what defines a Social Network. Companies have to know which aspects are appealing to them, in order to profit from joining a network. Depending on a wide range of different factors, companies will have different need(s). Based upon those need(s), an appropriate Social Network will be chosen. Therefore the first step in the task of understanding why companies would choose a particular Social Network is to analyze their need(s). The most obvious question would be: “Why would a company join a particular Social Network?” The answer to this question is not trivial and before answering the why, it is necessary to understand the decision making process, upon which an indirect answer to the why can be given. Companies can have several need(s) and interest(s) at the same time, which increase the difficulty of finding an adequate answer to this question. Classifying groups by companies with similar need(s), would be an impropriate approach. The amount of companies with different need(s) configurations is too big and in addition the fuzziness between the groups would be very high. Instead a different approach will be taken, with the help of a more constant variable. While companies can have several different need(s) at once, a need itself stays constant. Therefore the classification will be based upon the set of need(s) of company. Whether a company has one or more is irrelevant. But each need will require a specific service in order to be satisfied. For instance the need to network can only be satisfied by allowing users to get in touch with each other. What Social Networks do, is offer a service or multiple services which will satisfy one or more need(s) at the same time. The concept behind this approach is displayed in Figure 5.

9

Fuzziness & Choosing the right Social Network

Figure 5 shows the situation when companies have decided to join a Social Network but not yet which one. Each company knows their specific need(s) and is seeking for the best solution to satisfy them. On the other side, Social Networks offer a given set of services, trying to satisfy the need(s) of companies. Needs are replaced with numbers in this example. Meaning that any number could be replaced with a need such as:

• Publishing • Networking • Discussing • Expressing • Etc.

When company A, B or C starts looking for a matching Social Network, a decision making process is being run through. This particular process is displayed in Figure 6.

10

Fuzziness & Choosing the right Social Network

The key step in the decision making process is the evaluation of alternatives. This is where companies rate and rank possibilities, in order to choose the best Social Network. Due to the importance of this step, a simple mathematical formulation will be given, trying to express the fundamental values which are relevant in the decision making process. 3.1.1 Metric Module 1: The Restricted Decision Given:

• Company B has needs of type 2 and 4. • The ability to choose from all Social Networks. • Full accesses to information and decision makers are perfectly informed.

Restrictions: • Has no dislikes or other negative tendencies towards a particular Social Network. • Decides unbiased, regardless of choices other companies have made or community size. • Decides only depending on how good predefined needs are satisfied and nothing else.

Decision Process:

The company rates all Social Networks, depending how well they satisfy existing need(s) with a value from 0 – 100% ergo {0:1}. If no service is available, a “no value” remark is made. This process is similar to what every human being performs when the possibility to choose is given. The percentage values in Table 1 are used for demonstration purpose only and are to be specified by each company. Formula:

i

n

iirestricted bafW ∑

=

×=1

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Constraints:

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≤≤ℜ∈=

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bbba

Performed Calculation:

The calculation yields the highest value of Wrestricted = 0.8, which means that W2 or in this example Social Network B would be the best choice for the company.

Wrestricted Best matching solution ai Service exists (binary value) bi Company rated value of the service

11

Fuzziness & Choosing the right Social Network

It is important to keep in mind that the calculation in Table 2 is only correct, if all the restrictions are enforced, which weakens the informative value of the solution. Therefore a better approach needs to be found. 3.1.2 Metric Module 2: The Advanced Decision Given:

• Company B has needs of type 2 and 4. Uncertain Values:

• The ability to choose from all Social Networks. • Access to all information and the possibility to build an uninfluenced opinion. • Know-How on how to use certain Social Networks • Can suffer from the Network Effect. • Etc.

Decision Process: The company runs through the same decision making process as in metric module 1, with the slight difference that all the restrictions from before are removed. Thus an additional variable δ has to be added to the formula, which will account for all effects which influence the decision making process. Positive effects account for affinity towards a network, for instance a large amount of existing and potential customers. Negative effects on the other hand account for uncertain values and other reasons why a certain candidate should not be chosen. A negative effect would be a high density of competitors in a particular Social Network and the resulting lack of efficiency in advertising.

Formula:

∑∑==

−=n

ii

n

iii nn 11

11 βαδ

Constraints:

}11|{}10|{}10|{

}10|{

}1,0{

≤≤−Ν∈=≤≤ℜ∈=≤≤ℜ∈=

≤≤ℜ∈=

=

iii

iii

iii

iii

i

bbba

δδδβββααα

( )

+

×= ∑

=i

n

iiiadvanced bafW δ

1max

Wadvanced Best matching solution ai Service exists (binary value) bi Company rated value of the service αi Positive effects βi Negative effects δi Sum Value of the effects

12

Fuzziness & Choosing the right Social Network

Performed Calculation:

This time the calculation yields Wadvanced = 0.7, which means that W3 or in this case Social Network C is the best choice for the company. While this result is a surprise, due to the fact that it doesn’t cover any need(s) of the company, the reason lies within the uncertain values. For instance a majority of the customer base could be on Social Network C, which for company B is much more important than having need(s) satisfied. The company is willing to sacrifice the satisfaction of need(s), just to be able to reach out to the majority of customers. 3.1.3 The δ-Effect The important statement of this mathematical analysis is that in certain cases, the offered services are not as important as the positive effects, such as amount of customers or the affinity. As soon as communities are in question, factors such as the network effect play a major role in the decision making process. Negative δ-values are possible, because the company can suffer from several handicaps, which will outweigh the positive effects. Negative network effects, also known as congestions are an example. δ consists of a wide range of influential factors, which can’t all be named. Each company has to find their specific set of positive and negative effects. A possible example is shown in the following figure:

In Figure 7, the δ-value will be 0, which means that the satisfaction of needs in this particular Social Network will be the only priority, as the negative and positive effects nullify each other. The hardest part is to determine the correct percentage values of each effect. This mathematical formula is a hypothesis and is only true if used under the defined conditions. A survey could help reveal the importance of the δ-value, compared to the satisfaction of need(s). In addition the creation of a standardized list of positive as well as negative effects would be desirable. Further research is to follow on this topic.

13

Fuzziness & Choosing the right Social Network

3.2 The Network Effect The network effect is an economic expression, used to define a gain in value of a good, while at the same time the amount of users consuming the good increases. The effect can be negative, as well as positive, but is often referred to in a positive context. There are four different types of effects [Sundararajan 2006]: Direct network effects: The more users join Social Network A the bigger the benefit for everyone. Indirect network effects: The more users join Social Network A, the more complementary Social Networks will be created trying to gain a slice of the user base, which will indirectly increase the value Social Network A. Two sided network effects: The use of Social Network A by a certain group of users will increase the use of Social Network B by different group of users. Local network effects: Users within a Social Network are influenced by a small fraction of users, usually those whom they are connected with and not by the overall community. 3.3 Social Network Landscape After defining the need(s) of companies, a vital variable upon which a clustering can be attempted, an overview of the current Social Network landscape is shown in Figure 8. All Social Networks are divided into groups, based upon the need they are primarily trying to satisfy. While the diversification is very raw and certain Social Networks could be classified in a different group, it is an attempt to give a small overview. However one has to keep in mind that the fuzziness between certain groups is very high.

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Social Networks & Business

4. Social Networks & Business

In order to analyze possibilities, which Social Networks render possible for business, a SWOT analysis will be given, where positive as well as negative aspects are summarized. In addition key features of Social Networks will be looked into, which can be used by companies to cut cost and strengthen the position on the market. 4.1 SWOT Analysis of Social Networks for Businesses The SWOT analysis displayed in Figure 9 shows all the positive, as well as negative aspects of joining a Social Network for a company.

It is necessary to keep in mind that [Morgan 2008]:

• Every strength is a potential weakness • Every weakness is a potential strength • Every opportunity is a potential threat • Every threat is a potential opportunity

With this in mind, the SWOT analysis is a very delicate approach, trying to list the main features of Social Networks, as it is hard to narrow down exact points which can be doubtlessly generalized. The diversity and possibilities of Social Networks are too big. Depending on the company, the framework which surrounds it and other factors, can lead to a completely different SWOT. It is advisable to perform such an analysis, before deciding whether to use Social Networks for business or not. Even if there are more negative aspects then positive in the end, and the final decision would be to rather not use this type of technology, it is still a valuable solution.

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Social Networks & Business

4.2 Web 2.0 Maturity While certain companies use internet services regularly, others are yet to discover the power and possibilities which lie within. Therefore a short classification of companies will be made, upon which further recommendations can be conveyed. Companies can be classified within the following groups:

• Web 2.0 Novice Company • Web 2.0 Advanced Company • Web 2.0 Expert Company

4.2.1 Web 2.0 Novice Company Novice companies represent those with the least Internet awareness and utilization level. These companies use the Internet for the sole purpose of publishing their website. Knowing that Social Networks exist and that these channels can be used to promote the company may be there, but the lack of IT-Know-How and functionality of Social Networks hinder the use. 4.2.2 Web 2.0 Advanced Company Advanced companies have a website and use Social Networks to promote their products and services. However the amount of used network channels is very limited. Active profiles on different Social Networks exist but the use of Web 2.0 media is simply seen as “nice to have” and not more. Therefore little time and money is being invested. The portfolio contains random Social Networks and has no or very little structure and effect on the business itself. 4.2.3 Web 2.0 Expert Company Expert companies are professionals when it comes to using the broad range of possibilities offered by Social Networks. Companies of this type have a diversified portfolio of Social Networks, through which they promote their products and services. The portfolio has been composed carefully and advantages and disadvantages considered upon creation of a profile. A decent amount of time and money is being spent, in order to push the companies brand into the desired direction. 4.2.4 Forbes Top 100 Companies: Are they all Experts? The Forbes Top 100 companies list contains the strongest companies, based on their market value. These companies all have in common that their marketing and IT-budget are high, compared to budgets of small and medium sized companies. A survey which has been carried out in 2010 analyzed various aspects regarding the use of Social Networks by companies. The results are the following:

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Social Networks & Business

Figure 10 gives insight on how many companies in Europe, the United States and in Asia are using Social Networks as an interactive platform for distributing information, as well as receiving feedback. Overall the amount of companies is high with 88% in Europe and 86% in the United States. This shows that the Top 100 companies are definitely relaying on the Social Network channel.

In a further survey, the use of the four Social Networks channels Twitter, Facebook, YouTube and Business Blogs has been measured. 65% of the Top 100 companies are using Twitter, 54% Facebook, 50% YouTube and 33% Business Blogs.

The last Figure shows activities which have been performed on Twitter, by either simply publishing news or using the platform to engage into direct interaction with customers by responding to tweets and re-tweeting. The amount of companies trying to interact with their customer base is a lot lower, which is an interesting observation. Twitter is obviously still being primarily used to publish information and not to build up online customer relationships and engage into conversation with customers. 4.3 Possibilities offered by Social Networks There is a broad range of different possibilities which can be used to enhance performance of the company with the help of Social Networks. Depending on the needs, companies have to choose from a specific set of networks. William Baker, a professor of marketing at the San Diego State University, narrowed down four aspects which make Social Networks attractive to business. Quote: “Social Networks help companies build their business, find collaborators, hire good people and go global” [Portfolio 2010]. In addition to these four key areas, the author has added a fifth, which includes everything that has to do with branding.

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Social Networks & Business

4.3.1 Building the Business This is a very general title but it summarizes all the necessary steps needed to establish a business. Everything from having a business idea, up to conducting a customer survey, in order to adjust products and services, is covered by this title. As to give a better explanation, three examples will be made. 4.3.1.1 Business Idea, Innovation and New Markets Having a bright business idea, which will eventually turn into a successful business, is the first and possibly hardest step. Depending on the level of information and market analysis, risks can be identified and solutions found. Gathering adequate and precise data is not easy and can be very expensive. This is where Social Networks offer a good and easy to use solution. Social Networks such as YouTube, Twitter and Facebook offer a massive amount of information. Users comment on products and services provided by companies. These comments are valuable information, as they give an insight into the user opinion. Companies, as well as individuals, seeking for input upon which they can develop a product or business, are offered free ideas. Companies should monitor this information and deliberate whether it is worth to try and satisfy this need or not. In addition to the evaluation of existing comments, it is possible to launch a small survey which can help determine the level of need. All of this can be done without having to depend on expensive market research institutes. In a survey conducted by William Baker, 1,600 executives were asked about their social networking activities. The result showed that companies, which rely heavily on external Social Networks, scored 24 percent higher on a measure of radical innovation than companies that don’t [Portfolio 2010]. 4.3.1.2 Product Development Another important step into creating and maintaining a business is the product itself. A good product sells well, which means that the product or service is appealing to a wide range of customers. In other words, the closer the product is to what the customer wants, the more likely it will be purchased. Allowing potential customers to participate in the development process of a product would increase the chances of selling the product. This is a possibility which is being offered by Social Networks such as Twitter, Facebook and YouTube. Companies can post certain steps of the development process on their profile and ask for feedback. If the development is very confidential, then broad questions can be asked, which will indirectly give the requested feedback. The gathered information can be used to increase the appeal of the product. Having a test laboratory for products is still necessary but the more feedback is available, the less likely a product will have flaws. An example of such a product development is given in Chapter 4.6. 4.3.1.3 Market Survey Upon launching a product or service, it is necessary to know how the market behaves. In order to stay competitive, features such as quality, price and customer service need to be comparable with other retailers. Forums, discussion boards and other platforms where customers can exchange experience should be taken serious by every company, as they play a vital role and have a major influence on potential customers. A survey performed in the United States of America revealed that 84% of the Americans are influenced by reviews. Online reviews come next after word-to-mouth

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Social Networks & Business

publicity. In addition 66% declared that they visited a forum in order to obtain information about the product, brand or service before purchasing [PositiveArticles 2010]. Social Networks have a similar effect as forums, as they offer a platform where customers can exchange their opinions. Therefore it is necessary to keep track on what is being written on these platforms and if possible respond by either commenting or adjusting the product or service. An example would be the release of an advertising video on YouTube, upon which viewers can comment on the video and write whether they liked it or not. This is the kind of information, which companies use to measure the level of satisfaction. YouTube is an ideal example, as the comments are written right underneath the advert and therefore are focused on the particular site. In general however, information will be spread on different sites and platforms and keeping track of all information is a sheer impossible task. Companies have to decide how much time and money is going to be invested into this channel of information gathering. 4.3.2 Finding the Right Collaborators Finding the right collaborators can be split into two different groups. One group represents the suppliers and the other retailers and business contacts. Both groups have different Social Network platforms which have to be used to establish contact with. 4.3.2.1 B2B & Social Networks Platforms such as Alibaba.com, which focus heavily on B2B e-commerce, modified their website and business strategy by adding a twist of Social Network onto their platform. Mixing Social Network features similar to what is being offered by Facebook, Twitter and LinkedIn with a commercially focused background, is being expected to increase the user base. The main service being offered by Alibaba.com and other B2B e-commerce solutions is to offer a platform, through which suppliers and retailers can establish contact. Small and medium sized companies can profit from this platform by finding cheaper or better suppliers or offer their services and products. The Social Network addition allows Twitter-style feeds to be posted, as well as a direct link to LinkedIn. So instead of having to look for suppliers by visiting exhibitions and through marketing ads, companies can directly access a pool of potential suppliers via LinkedIn and Alibaba.com. This can lead to reduced costs and saved time. 4.3.2.2 Networking Networking is of great importance when it comes to finding appropriate business partners and possible customers. However it is very time consuming and especially small and medium size companies suffer, because they have to devote much needed human resources into this, instead of the core business [CIO 2009]. An additional method, which could facilitate this process, would be using a networking platform such as LinkedIn. Upon creating an account, users have the possibility to look for other members who are working in the same branch and establish connection with them. LinkedIn is a good way to get in touch with partners, other retailers or simply people who might have knowledge in a certain field which could be of inters to the company. Using this service can lowers costs and increases the chance of finding an adequate business partner or customer, due to the large amount of community members [LinkedIn 2011].

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Social Networks & Business

It is important to keep in mind that online networking platforms can’t compensate for the importance of real life face-to-face meetings. They are very helpful when it comes to establishing first contacts but further steps into building a business relationship have to be performed the old way through meetings. 4.3.3 Hiring good People Methods used in recruiting have changed in the recent years. Professional headhunters as well as corporate recruiter rely more and more on Social Networks when it comes to finding the best match for an open position. The reason why recruitment changed has to do with the boom of networks such as LinkedIn, Xing, SimplyHired and Tianji, where users publish their entire CV ranging from education and work experience up to contacts. According to LinkedIn, there are members from all 500 of the Fortune 500 companies, in 130 different industries and over 130’000 recruiters actively using the platform. With over 40 million LinkedIn members, there is quite a pool of members to choose from [HumanResources 2010]. The key to successful Social Network hiring, is a professionally setup profile with keywords. By using keyword search, employers can seek for possible candidates and directly contact them. The other option would be to publish the position on LinkedIn and wait for employees to contact the company via the internal mailing system. This allows cost reduction due to being able to avoid expensive advertisements and external recruiting agents. However adding keywords to a profile or publishing jobs is not for free, depending on the amount of keywords and job advertisement, a small fee is being charged [HumanResources 2010]. In the end the person in charge of recruiting decides which method will be used. It is advisable to use Social Network hiring in addition to existing methods. Especially when it comes to filling positions which demand special requirements, it is easier to use keywords to track down a group of candidates who fulfill these requirements, then launching a newspaper advertisement, not knowing if the target group is being addressed at all. Similar to establishing new business contacts through Social Networks, does hiring also depend on actually meeting the person at a certain point of the recruiting process. There is only a limited amount of information which can be taken out of a CV. Things like appearance, behavior and how well a person performs in a team are factors which can’t be measured without seeing the candidate in person. Once again Social Networks are ideal to establish a first contact and a certain level of communication but in the end the last few steps have to be done the old way. 4.3.4 Advertise Products Globally Most conventional marketing techniques aim at affecting as many people as possible. While advertising platforms such as television, radio and print media can reach up to a few million people at best, Social Networks such as Facebook, Twitter and YouTube have user bases of a few hundred million users around the globe. In other words, with a user profile, video advertisement or tweet a much bigger amount of potential customers can be reached globally compared to conventional advertisement. The more time people spend on the internet, the more advertising will shift from conventional mass media to social media. In addition the cost of creating a social media advertisement is cheap or even for free. It is all about getting the attention of customers and the masses. Marketing strategies, such as viral marketing, have never been easier to execute.

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Social Networks & Business

4.3.5 Branding Building up a well known brand takes a lot of time and money. At least this was the case until platforms such as YouTube, Twitter and other Social Networks showed up. Nowadays a company, brand or product can become famous within a few days. While this is certainly an exception and not the norm, the chances of establishing a famous brand have increased, especially for companies with rather small marketing budgets. In order to be an exception, a product needs to dazzle customers, if it wants to convince the internet masses. The rest will be done by the Social Network users themselves, with the help of posts, tweets and other discussion methods. Releasing an advertising video on YouTube alone for instance won’t do the job, it is still necessary to spread the word. Linking the video on other platforms will drastically increase chances of more people viewing it and as a result pick up momentum. If the advert is exceptional, viewers will share the link among friends. This is a hard task to accomplish and only very few companies achieve a famous status overnight. Companies need to keep in mind that it has never been this easy to reach out to such a huge audience, at such small costs, but the audience is very picky and it takes a lot of creativity to convince them. The downside of Social Networks is that it can take a few minutes to destroy a brand, which has been built up over years. Using this channel to boost a brand has to be done professionally and well planned. The Internet doesn’t forget, and revoking adverts is nearly impossible. Once something has been launched it is out of the publishers’ control. 4.4 Creating an Enterprise Social Network After looking into the positive, as well as negative aspects of joining a Social Network, the question arises whether it would be a better option to create a personal, customized networking by the company. Which would be the benefits for the company over joining an existing one? In order to discuss these questions, two different examples will be given, which represent two possibilities on how customized Social Networks can be beneficial to companies. 4.4.1 Example: Migipedia – Customer based Solution Migros, Switzerland’s biggest retailer, launched in 2010 an own Social Network platform under the name of Migipedia. The idea behind the network, which is currently still in its beta phase, is to offer a discussion platform for Migros products and services, where customers can express what they think. It is not setup as an online store, meaning buying products over Migipedia is not possible [Migipedia 2011]. On Migipedia, users have the possibility to register and create profiles. Users can participate in polls, contests, post comments on products or use the forum area. In addition, all Migros products are listed in a database, which allows visitors gather information about a particular product. It is a combination of information platform, as well as feedback and innovation tool. An example of the innovation is the regular opinion survey performed by Migros. Users get to choose which products are to be added to the existing range of products, as well as the shelves. In other words, customers get to choose what they want and Migros will add the product, if the demand is high enough. Migros expects to fine tune its product range with the help of this platform. Furthermore, customer concerns about products can be expressed, which allows Migros to act fast if certain products are compromised [Migipedia 2011].

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Social Networks & Business

4.4.2 Example: N-Square – Employee based Solution Nissan launched an internal, private Social Network named N-Square. Compared to Migipedia, the idea is not to deliver a platform where customers can discuss about products and participate in product development but to offer workers a place where internal, work related topics can be discussed. This way, obstacles within the communication between different parties, especially in heavily hierarchy based companies, can be overcome. Workers, no matter their hierarchical position, can express their thoughts and point out positive as well as negative things and be sure that their opinion will be heard [ICH 2007]. Internal Social Networks tie workers together, as they give every worker the feeling that he or she is part of the company and that their opinion matters. This boost has many positive effects on work and productivity and is a reason why personal Social Networks are appealing to companies. 4.4.3 Employee Social Networks Company intern Social Networks provide companies with a set of tools which can be used to boost a company’s productivity. Three tools which are being used mainly are displayed in Figure 13.

Connect: Connect employees throughout the company, especially those who share similar

responsibilities, interests or expertise [LeverageSoftware 2010, p.1]. Share: Allow employees to share knowledge, practices, information and experience through

the Social Network. Finding questions to answers can be faster by searching the network, as somebody else might have had a similar issue in the past and posted a solution. Allow supervisors from different teams and locations to exchange information and experience [LeverageSoftware 2010, p.1].

Discover: Let employees participate in the process of finding solutions problems. Offer a platform where ideas can be expressed and discussed. Fast sharing of information and receiving of feedback can improve the overall performance [LeverageSoftware 2010, p.1].

In branches where competition is fierce, Enterprise Social Networks can help companies become more productive, innovative and cut costs. For companies without widespread communication channels such networks can be a good solution. Another positive aspect is that a “social layer” is established by adding a Social Network, which will have a positive effect on the workforce.

22

Predicting Future Trends with Twitter

5. Predicting Future Trends with Twitter Being able to predict future trends is an advantage many companies seek for. Whether it is to predict future stock prices or the result of a soccer game, the sheer power of being able to do so would allow companies to make less risk driven decisions and increase profit. In order to be able to predict trends, information is needed. For instance if an investor is trying to find out how the price of a stock will perform in the next few days, the evaluation of existing information is essential, in order to be able to draw a conclusion. However gathering information is usually the critical part, as much of it is spread and hard to gather. This is where Social Networks come into play. Twitter, one of the biggest blogging platforms is the perfect source to gather information. People from all around the world are posting thoughts about any given topic, at any time on this particular network. Research teams around the globe have realized that the sheer amount of centralized information, published on Twitter could perhaps be used to predict trends, by evaluating the tweets with the help of algorithms. 5.1 Predict Stock Prices – TwitterTrader.net The basic idea behind TwitterTrader.net is to serve as an information aggregator. Economists at Technical University of Munich are using tools that analyze tweets to predict individual stock trends. Their research has led to the creation of TweetTrader.net, where forecasts can be found for all S&P 500 listed stocks [TwitterTrader 2011]. Every day on Twitter, thousands of stock-related messages are sent. Tweets are marked by investors using company stock symbols, such as "$AAPL" for Apple or “$GOOG” for Google. In addition to stock symbols, messages contain keywords such as “buy”, “sell” and “hold”. TwitterTrader.net is looking for these specific keywords, upon which trends are being calculated. By doing so, stock market behavior can be predicted up to one day ahead [VentureBeat 2011].

Figure 14 shows the concept behind TwitterTrader.net, which basically scans through the entire pool of posted Tweets, looking for finance related posts containing stock symbols. These Tweets are then

23

Predicting Future Trends with Twitter

being scanned for keywords, which may contain information able to influence the stock price. All keywords found to a specific stock are further being bundled in a database and used to calculate and predict future trends. The calculation itself, which determines whether the forecast stock price will go up, down or stay at its current level, depends on two factors:

1. Amount of Tweets An increase of Tweets on a particular stock today will result in a higher traded volume of the stock on the next day. In addition a high amount of Tweets indicates a high volatility, as people consult their peers for information and thus a higher rate of disagreement between Twitter users whether to buy, sell or hold [VentureBeat 2011].

2. Investor advices Depending on the amount of positive or negative Tweets, the stock price reacted within the next 24 hours. Strong buy signals for instance lead to an increase of the stock price [VentureBeat 2011].

A year after the launch of the platform, an internal carried out study showed, that if investors had orientated their share purchases according to the Twitter sentiment in the first half of 2010, they would have achieved an average rate of return of up to 15 percent. A total of 250,000 tweets were evaluated in the study [VentureBeat 2011]. 5.2 Predict Soccer Results – FIFA World Cup 2010 Another example which shows that Twitter is indeed a tool which can be used to produce forecasts, is a case study performed during the FIFA Soccer World Cup in 2010. The use case is based around the idea of being able to foresee match results, by analyzing Twitter posts, before the match has even started. A similar approach has been chosen, as in the example of TwitterTrader.net. In order to collect data, a Twitter-Search-Application has been developed, which scans all Tweets for a particular keyword. An example would be the term #wc2010 for world cup 2010, upon which all data matching this keyword would be stored in a database. After the collection of data, calculations and evaluations would be performed with the goal of delivering a match result, based upon the Tweets of people who are discussing this topic. In order to be able to predict results, exact search criteria had to be defined previously. For instance in a match where the Argentinean team would participate, keywords such as #ARG or #Gauchos would be specified, in order to gather the highest amount of posts related to this match. Once the match started, the search application would be deactivated, as to not distort data. Furthermore results from sports bets have been included, as well as posts on Facebook which have been linked to Twitter. The results of the study were that 15 percent of the total 25.000 Tweets were giving the right final result of the match in the first round of the tournament. In the second round of the tournament Tweets reached an accuracy of 18 percent. This is a good indication that Twitter suits as a forecasting tool, as long as the data collection is performed correctly. Another important aspect is to understand the dependencies between the search criteria and the final result. The better the criteria are specified, the higher the chance of having an accurate result.

24

Conclusion

6. Conclusion

The use of Social Networks for business offers new opportunities to a company. Depending on the level of Web 2.0 maturity of the company, the effect of adding this technology can yield a good amount of positive effects. Therefore it is no surprise that 88% of the European and 86% of the American Forbes Top 100 companies are using Social Networks to be more competitive. Benefits of using Social Networks range from discovering new business opportunities, finding the right collaborators, hiring good people up to global advertising and branding. The spectrum of possibilities is wide and depending on the need(s) of the company, the correct platform has to be chosen. However finding the correct network is not a trivial task. There are many different obstacles, such as the network effect and the main question which aspect is more important to the company, having need(s) satisfied or being where the crowds are. While certain Social Networks can cover both aspects at the same time, others can’t. In the end it depends heavily on the type of company and the targeted user group. Apart from the positive aspects, there are negative ones as well. These threats have to be taken serious by every company which decides to use this technology, as the digital world has different rules and behavior then the real world. Threats such as viruses & malware, privacy issues, cyber bullying and stalking as well as data leakage and negative publicity can cause serious damage to a company. Corporate security and productivity can suffer by adding Social Networks to a company. Because of all these threats, a good amount of companies have decided to ban these services at work. The trend however, shows that more and more companies decide to join in on the Social Network boom and don’t want to be left out. Especially in markets with fierce competition, this additional channel can deliver a cutting edge advantage over competitors. Another option chosen mostly big bigger companies is the creation of an Enterprise Social Network. A personal, customized platform upon which either customers or workers can express what they think. By doing so valuable information is being gathered, which can help boost the overall performance of the company. Another interesting aspect is the research performed by teams around the globe trying to use micro blogging tools, such as Twitter to predict future trends of stock prices. Platforms such as TwitterTrade.net use special algorithms to scan newly posted tweets and filter out valuable financial information. Upon finding and collecting the right data, calculations are performed in order to be able to deliver an up to 24 hour forecast of stock price movement. After running a test portfolio for half a year, an average rate of return of 15 percent could be achieved. This was the result after evaluation over 250,000 tweets. The conclusion of this paper is that companies should not miss out on the opportunities offered by Social Networks. A company specific SWOT analysis should be performed, in order to determine whether the company has the capacity of adding this technology or not. In addition a portfolio of Social Networks should be created, which will yield the biggest gain for the company. It is important to keep in mind that the Internet doesn’t forget, therefore every campaign has to be thought through carefully and negative consequences elaborated. However, the amount of positive aspects should outweigh the negative ones. Learn from mistakes other have made, in order to save a good amount of money and time.

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Literature

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