Corporate Social Networks Are A Waste of Money, Study Finds

How would you feel if you spent more than $1 million throwing a party and less than 100 or even 1,000 people showed up? That sinking feeling is spreading over corporate boardrooms around the nation, according to study performed by Ed Moran, a director at consulting mega-firm Deloitte.

It may be all the rage, but are company-built social networks for customers to socialize in really smart?

According to Wall St. Journal coverage of Moran’s study, “Thirty-five percent of the [corporate] online communities studied have less than 100 members; less than 25% have more than 1,000 members – despite the fact that close to 60% of these businesses have spent over $1 million on their community projects.” That means some of those $1 million parties probably had less than 100 attendees. Somebody got fired for that, right?

Former RWW staff member Josh Catone found the WSJ story first over at his new gig and offers some good advice for companies seeking to avoid this terrible fate.

According to the study’s author, the biggest problems are the following:

  • Overpriced, shiny features.

  • Insufficient and inexperienced community management. (See our massive post on community management earlier this week.)

  • Bad metrics and criteria. Though Moran says most companies can talk the talk, saying they are looking for engagement and word of mouth, they end up measuring in page views. He says that’s bad. It probably wouldn’t be so bad if they were getting any page views.

Other Perspectives

The study was performed in conjunction with Beeline Labs and titled The Tribalization of Business. How bad do things really look? That depends on who you ask. Beeline’s summary of findings don’t sound so bad at all. A press release that appears to have originated from Deloitte looks a little more somber. The Wall St. Journal coverage focuses on absolute gloom and doom. The report itself? You’ll have to request a copy and get in line, apparently. Look out, here comes the future!

Let’s face it, though. Social networks where a brand name product is what everyone rallies around are a dumb idea. They are stupid. No one should submit themselves to the indignity of creating a user profile and friend connections based on cola or cat litter. We have written before about the never ending market for niche social networks and we’re down with that. Hell, we like to read about countless niche social networks on the Ning Blog just for fun. If brand-centered social networks are failing, though, it’s probably because they are brand heavy and stupid.

The matter could probably warrant more thoughtful discussion, but instead we’ll leave you with this image, from Purina’s Breeze for Cats. It’s a “community” focused on cat litter. Ask yourself, is there hope for humanity?

Fake Smile photo by Lauren Photography

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