With social networking sites attracting unprecedented levels of traffic and interaction (overtaking even the likes of Google), Fasthosts' Andy McLaughlin explores how small businesses can use this communication channel to create new business opportunities.

The age of the active surfer is in full swing and the exponential growth of social networking sites (MySpace, Bebo, YouTube) is heralding a new dawn for tech savvy small and medium sized enterprises (SMEs).

Today's climate of online interactivity offers businesses an opportunity to supplement traditional, above the line marketing methods with tactical, targeted messaging aimed at influencing customer buying decisions.

But to realise the potential benefits offered, SMEs must first understand their environment. In the realms of user-generated content, money isn't as important as the currency of style and approach - brands are measured by the same criteria as any other member of the community.

A world of interaction

MySpace is the most visited website in the US with a reported 111m users, accounting for 5 per cent of all internet visits.

The constantly evolving content and easy interaction at the heart of the social networking experience has meant people are increasingly favouring these websites over traditional media.

Ofcom's 'The Communications Market 2006' report last August showed that 16-24 year olds in the UK are watching an average of seven hours less TV a week, with the popularity of social networking sites being cited as the main reason behind this change.

Forums, podcasts, and blogs have all entered main stream culture. But while consumers have been quick to embrace these technologies, business adoption is only really starting to take off. 

British-born Bebo has 25 million members worldwide, is the sixth busiest site in the UK and is threatening to knock Google off the top spot.

In terms of demographic, it is not only the young that use social networking sites. Ofcom's 2006 communications market report also revealed that 41 per cent of all UK internet users aged 25 and over have a social website homepage. This is in addition to the 70 per cent of all 16-24 year olds signed-up to social networking sites.

The appeal of constant interaction and dynamic content has meant that the commercial value of these websites has become invaluable.

This is not for those willing to pay for banner advertising space on the networking sites, but also for brands prepared to experiment with communicating directly with community members through their own content contributions.

A new route to CRM?

Since anyone can be a member, including businesses, social networking sites offer SMEs an excellent opportunity to tailor campaigns and messaging aimed at community members.

By tapping into a culture of advice, relating good and bad experiences and relaying the latest news, brands can take advantage of the huge numbers of people using these sites. This promotes their product, and keeps readers informed of developments, launches and special promotions.

The possibility of a campaign making it 'viral' - with forum users and web page owners pushing content that catches their eye to other members of the community - is a mouth-watering prospect for small and large businesses alike.

Users of social network sites won't shy away from letting people know about their positive buying experiences, and with the sheer number of people in the community, 'word of mouse' promotion has never had such reach.

Walking the content tightrope

Whilst the strength of brand positioning on social networking sites isn't defined by ad spend, to get results SMEs need to keep content reader-friendly and their positioning understated in order to win the trust of an audience.

Those willing to dip their toe in, like Adidas, have found success by playing on specific themes such as football, tapping into popular culture. The company drafted in its glamorous troupe of footballing icons to provide engaging content, while successfully crow-barring in product placement.

Recording artists such as Lily Allen and The Arctic Monkeys have also profited from their social networking airtime, with the MySpace pages of these respective acts proving instrumental in breaking them into popular consciousness and driving sales.

If executed well, brand positioning on social networking can reap similar rewards and help SMEs to achieve sales growth, increased brand awareness and most importantly, endorsement amongst their target audience. But be warned.

If too little respect is paid to the conventions of the community, where quality content is essential for success, then the users of social networking sites can just as easily deliver a knockout blow to a business as they can champion it.

Messaging that's shamelessly commercial, splashed with prices and provides little editorial value is likely to be met with negativity. In the eyes of community members this is no better than aggressive pop-up advertising.

SMEs making the net work

To take advantage of the social networking revolution, SMEs should start at home. By embracing some of the best characteristics of social networking for their own website, small businesses can capitalise on the appeal of interactive, dynamic content.

By maintaining a forum area or business blog, SMEs can interact and build relationships with potential and existing customers. A regularly maintained blog attached to a spokesperson for the company can help keep old customers informed of developments and attract new ones through regular, opinion-led content.

Not only is this a great way of personalising the business and offering interesting, insightful comment, but a blog also has the potential to attract more traffic than a just run-of-the-mill ‘about us’ page.

Maintaining a forum area will also provide value by promoting discussion on product-related topics and giving businesses an insight on their target audience and how they should be approaching their customers.

From these first steps, SMEs will have the foundations to work out their niche within the major social networking sites, where they can experiment with putting a face to their business, or even attempting other creative ways of attracting interest in their product.

Finding the winning balance of intriguing content and product placement though is a challenge in itself.

A good example of the kind of approach that works well can currently be seen with General Motors' fictitious band 'The C.M.O.N.S'.

These 40-inch puppets designed by underground artist Boris Hoppek with input and backing from MTV are currently enjoying fevered cult status on and offline. It presents a tongue-in-cheek observation of rock band culture as well as featuring subtle product placement for Vauxhall's Corsa range.

A word of warning

Entering the world of social networking also has the potential to do lasting damage to a business. A community member pouring scorn over a bad buying experience can be near-impossible to get rid of, even if it's not tacked directly onto the business’ promotional page.

As long as businesses are aware of potential pitfalls, overall the benefits far outweigh the negatives. SMEs are best positioned to take advantage of social networking revolution.