Corporate Connections

Companies find social networks can get people talking -- about their products

By ELLEN SHENG January 29, 2007

The social-networking bandwagon is getting awfully crowded.

For companies looking to better connect with consumers and build brand loyalty, social networks are increasingly looking like the ideal tool. Users get a forum in which to share information, pictures and videos about themselves and their likes and dislikes -- and, companies hope, talk up a product. Companies, in turn, get real-time feedback on trends and products. And they can even bounce off ideas still in the works.

The incentive is obvious: People are flocking to social-networking sites like MySpace and Facebook, according to Web-tracking service Nielsen/NetRatings. MySpace, which is owned by News Corp., got more than 53 million unique visitors in November, making it the seventh most popular site on the Internet, while privately held Facebook got about 11.6 million visitors.

Social networking is "even more targeted than online advertising," says Rachel Hoenig, co-founder of New York marketing firm Digital Power & Light. Banner ads gave companies the chance to change ads quickly and direct them a bit better, "but banner ads are still one-way communication," she says. By contrast, social networking is more of a dialogue between the user and the company, she adds.

One natural area for social networking seems to be sports. After all, sports and the hottest sports apparel and equipment always get people talking.

The National Hockey League, for instance, has set up a social-networking site, NHL Connect, where hockey fans can create personal profiles, add friends, upload photos, post videos from YouTube, make comments and join chat groups. The site also has NHL news, game schedules and the ability for users to look up other fans based on their favorite teams and players. In addition, the site links to blogs by contributors as well as team blogs for the New York Islanders, Anaheim Ducks and others.

"Our fans have, for years, expressed their points of view on our game through message boards, chat rooms and blogs," says Keith Ritter, a spokesman for the NHL. "If we didn't provide the tools that our fans want, they would migrate to a place that did." He adds that the NHL doesn't have traffic or membership numbers for the site.

Over the summer, sports-apparel maker Nike Inc. set up a social-networking site, Joga.com, for soccer enthusiasts. The site, built with some technical help from search engine Google Inc., encourages local soccer groups to sign up and create profile pages. Fans can blog, create communities around particular teams or players and organize local games. The site also includes pictures and exclusive video, profiles of famous players and articles about various styles of play. Nike says that by the end of the World Cup games last July, Joga.com had attracted one million users, the most recent data the company would disclose.

Even a maker of gym equipment is getting in on the action. LifeFitness, which makes treadmills, weight machines and other fitness equipment, allows individual gyms to set up a LifeFitness site to create a sense of community around that gym -- and, of course, make exercisers more aware of its wares.

LET'S TALK

What's New: A variety of companies are using social-networking sites as their newest marketing tool.

What's at Stake: Companies hope to build brand loyalty by giving people a place to share likes and dislikes -- including about the products themselves -- with others.

The Bottom Line: The move takes advantage of the social-networking craze and gives companies a targeted way to advertise.

Raj Rao, divisional vice president at LifeFitness, says gyms have a big problem with customer attrition -- typically losing about a third of their clientele each year -- because people feel "they don't have any relationship with other members."

LifeFitness, a subsidiary of Brunswick Corp., based in Schiller Park, Ill., aims to change that by allowing users of its sites to create their own profiles and list fitness goals, workout regimes and other personal information. Like-minded users can then find each other on the site to swap workout tips and challenge one another, among other things. Users also can share workout information -- duration of workout, weight lifted, calories burned, heart rate -- with a sports club's trainers to make sure their workout habits are right for their fitness level and targets.

People also love to talk about where they've traveled or get others' insights on where to go and what to do next. So some airlines are creating social-networking sites to help users give -- and get -- feedback and advice to manage their travel time wisely.

Franco-Dutch airline Air France-KLM launched a social-networking site earlier this year aimed at business travelers to China, called Club China. The site offers members tips on doing business in China as well as assistance on tasks like finding a translator or car service. Members also get perks, such as admission to China Club, a country club with locations in Hong Kong, Shanghai and Beijing.

Once users set up their profiles on the site, they can search for prospective business contacts based on industry, home country or company size. They also can find other club members who are traveling at the same time, attending a particular conference or trade fair. One Club China member is Arie Herweijer, regional sales and marketing manager at HITT Traffic, a Dutch maker of traffic management and navigation systems, who travels between the Netherlands and China about 11 times a year. Mr. Herweijer says he finds the site useful for finding contacts he might not otherwise come across.

"China is hot," says Vikram Singh, director of customer relationship management at KLM. "KLM has its own ambitions to serve China....We thought it would be good to step in and facilitate in whichever way we could to connect customers." Club China boasts about 3,000 members, with about 40% of members logging on every month.

PERSONAL BUSINESS Some of the social-networking sites created by big corporate sponsors

Mr. Singh says the Club China site was initially set up as a value-added feature for members, but the company finds that it's increasingly getting valuable feedback about its own services. Customers might make suggestions about, say, putting in more-comfortable chairs at a certain airport lounge or adding a better selection of magazines. Mr. Singh says Club China users "can ask for virtually anything" on the site's open format forum.

A frequent flier in economy class, Mr. Herweijer often makes comments on the site. He hopes that with his frequent patronage and activity on Club China, he might get an occasional perk like a small glass of wine or upgrade. It hasn't happened yet for Mr. Herweijer, but "I keep pushing that," he says.

KLM also recently launched other sites with similar features: one targeting golf aficionados, Club Golf, and another for frequent travelers to Africa, called Club Africa.

To make a social-networking site succeed, marketing is essential, says Ms. Honig of Digital Power & Light.

When Nike first launched Joga.com, it simultaneously launched an ad campaign promoting the site. For instance, tags on Nike merchandise had Joga.com inscribed on them and invited people to join the site. Since then, the company has relied on online word of mouth, a Nike spokeswoman says.

Yet even with publicity, not all social-networking experiments are sure bets. Some say retail giant Wal-Mart Stores Inc. made some missteps when it set up a site, called The Hub, for middle- and high-school kids to promote last fall's back-to-school season.

Peter Cashmore, editor of Mashable.com, a blog about social networking, says that starting with the tag line "School, my way," the site didn't come off as believable and sounded like a company trying too hard to be cool. He adds that some profiles seemed more like ads for the company.

Another thing, he says, is that the site tried too hard to control its user base. For instance, the site would ask kids that signed up for their parents' email to get the parents' permission. While some sites targeting younger kids do this, larger and more popular sites such as MySpace and Facebook do not explicitly ask for parental permission.

Mr. Cashmore says Wal-Mart's move "was a little too much" and seriously limited the number of users it could sign up. While seeking parental consent has value since exposing your online identity is risky for anyone, a closed network is unlikely to experience the viral growth of MySpace or YouTube, he says.

A Wal-Mart spokeswoman declined to comment on the site, saying only that it was intended to be temporary for the back-to-school season. The site closed down after 10 weeks on the Web.

Experts who have set up social-networking sites say sometimes the biggest obstacle for companies is overcoming corporate arrogance. Many companies underestimate the amount of work needed to maintain the site once it's up.

Unlike a traditional site, which can be set up and then updated from time to time, the content on a social-networking site is constantly changing to stay current and to deal with customer feedback. A site that stays static is a problem, since users will get bored and stop visiting. What's more, if any criticism isn't dealt with quickly, it can put a dent into a company's image. And if customer chatter turns nasty, the company needs to be prepared to react quickly. On the other hand, a company that tries too hard to control its image on a site can come across as fake.

Companies also shouldn't read too much into things. Feedback from a site isn't a substitute for true market research, says Scott Gilbertson, the former interim chief executive of retailer J.Crew, who has since started his own firm, Ludi Labs of Mountain View, Calif., which focuses on social networking. The online audience may not be representative of a company's entire customer base, so data are likely to be statistically skewed, he says.

--Ms. Sheng is a reporter for Dow Jones Newswires in Jersey City, N.J.

Write to Ellen Sheng at ellen.sheng@dowjones.com