Until about five years ago, however, the true impact of these networks could not be measured precisely. But now, we can see that the social networking boom has unleashed great waves that are breaking business models left and right, and it's all for the better.
Social media give companies a chance to humanize themselves, giving fans exclusive content in return for their loyalty. Not only do companies gain more fans over Facebook and Twitter than any other platform, but companies can use one of several analytics tools to measure the growth of their brand on those networks to find out the topics or methods that resonate best with fans. It's an effective strategy, and it's helped change the fortunes of several companies on the brink of solvency.
Jeff Ragovin, the co-founder and chief strategy officer at Buddy Media, spoke at Mashable Connect 2012 in Orlando, Fla., to explain why companies must adapt [to social], or die. In his lecture, he used three companies -- Mattel, Ford, and Kodak -- as poster children for why social media are an essential part of one's marketing strategy.
Mattel and the Bald Barbie
On Dec. 20, 2011, a Facebook page was launched for a Beautiful & Bald Barbie, but it wasn't launched by Mattel. The page was started by two women -- Jane Bingham and Rebecca Sypin -- and its mission was to build enough momentum to eventually petition Mattel to create a bald Barbie for kids with cancer.
When it launched, it started because Bingham and Sypin both had daughters who lost their hair due to cancer treatment, and they wanted a bald Barbie to make the baldness feel normal. The story spread fast, and the Facebook page grew from 0 to 40,000 fans in a few weeks. A month later in January, the story got out to media outlets. By March, the page had 150,000 fans. Thousands of photos and stories were shared about kids with cancer, and more than 150,000 people poured out petitions to Mattel, and pictures of their own children fighting cancer, all for the sake of getting this doll made.
Finally, on March 27, Mattel announced it would produce a bald Barbie with wigs, hats and scarves.
Play is vital to children, especially in difficult times, Mattel said.
By listening to its customers and adapting and making important business decisions around them, Mattel's company value skyrocketed. Had it not created the doll, it would have suffered the consequences. Mattel has shown an almost 20 percent increase in its stock price since last March.
Kodak's Dismissal of Social Media
For 131 years, Eastman Kodak was the big name in film. When you thought of cameras, you thought of Kodak. It was a dominant brand for so long, but today's it's almost extinct. That's because Kodak tried to adapt, but failed.
In the early 2000s, film was declining but camera sales were increasing. People were taking more photos than ever, but it was all going digital. Kodak saw this trend, and had a chance to save itself. In fact, it made a major move that could have made Kodak into what Flickr is now.
In 2001, Kodak acquired Ofoto, a thriving startup that only lasted two years before it was bought out. Ofoto was the first company to create the idea of digitally sharing photos with a community, which was a monumental idea. It was easy, it had a catchy name, it had a good business model, and it was simple: Upload photos, share with friends and purchase them. Ofoto was going to be Kodak's key to the future.
Kodak bought Ofoto and immediately integrated it into their site. But instead of following the trend and thinking ahead, Kodak tried to leverage Ofoto to drive behavior back to fuel printing and ignore digital sharing. Kodak completely ignored Ofoto's foundation of a digital community, and it paid the price. It had adapted, but Kodak fell back into its roots, blowing the opportunity to turn Ofoto into one of the biggest community sites in the world.
Eleven years later, just this January, Kodak filed for bankruptcy. In February, Kodak stopped making digital cameras altogether. Shutterfly bought Kodak Gallery for $23.8 million; meanwhile, Instagram -- a community of photos invented about 10 years after Ofoto -- was purchased by Facebook for $1 billion, with no business model!
At one time, Kodak traded for $50 a share; now, it's 27 cents. Even the most prolific and memorable brands can die by ignoring the power of social.
Ford's Story of Revival
Detroit's auto companies were failing in the mid-2000s, and Ford could have easily died out, but instead it decided to pivot and adapt to social. As a result, Ford is driving full-speed while others are stuck in neutral.
In 2008, GM, Ford and Chrysler faced bankruptcy. Ford could have taken its money and fled, but it didn't; instead, it reinvented its brand in 2009, spending a quarter of its marketing dollars on digital and social -- double that of competitors, at the time.
Ford made its Fiesta one of its big social launches. Ford's plan was to give the car for free to about 100 digitally savvy bloggers, and while they would get to keep the cars, the bloggers would have to make a video every single month. As a result, the Ford Fiesta campaign went on to grab 7 million views on YouTube, and 132,000 people asked to be regularly updated with news about the car. More interestingly, 83 percent of the attracted audience had never visited Ford before.
Ford has not looked back since. In 2010, Ford launched its new Explorer exclusively on Facebook. Ragovin says the launch had more impact than if they ran a Super Bowl ad, but it's only because they decided to humanize the brand.
Not only did we want to reinvent the vehicle, we wanted to reinvent the way we told the story, Ford said.
In 2011, Ford reported its biggest annual profit since 2009. In 2012, Ford Social launched, which brought together Ford owners and fans, as well as those who wanted to improve the overall brand. The company said that as of January 2012, social media is bigger than advertising.
Since investing in social, Ford's stock has leapt 600 percent.
Is It All Social?
Social media may have changed the futures of (at least) three major companies, but social doesn't deserve all the credit. Each of these companies had a story to tell and a quality product to share. Still, focusing on digital and social was the right choice: Marketers say Go to where your fans are, and that's exactly what these companies did. Rather than talk down to their audiences, Mattel and Ford eliminated the barriers between themselves and their fans, showing themselves as humans instead of corporations.
At the end of the day, what these successful companies have in common is that they listened to their fans, and they adapted. They molded their content to their fans which made it personal and significantly more effective. There are too many reasons to go digital: It's cheap, it's a direct line to your audience, and it allows you to emphasize your best qualities and realize your worst tendencies. But as Kodak proved, just going digital isn't enough. You have to embrace it.