Marketing Is Not the Big Issue of Social Media for Businesses

For businesses the issue with Social Media isn’t really marketing. I’d argue the bigger issue for businesses is actually transparency. There’s an old saying about eating at a restaurant, “what you don’t know won’t hurt you.” Social Media has opened up a whole new set of cost burdens for businesses; PR people need to learn new skills and understand the impact of new communications technologies, marketers the same. Then senior management needs to understand the strategic impacts of social media to the business.

The result is an increased level of transparency. Across all aspects of a business (marketing, HR, production etc.). This not only presents a PR and marketing challenge, it also impacts governance, investor relations, product management, government relations and regulation/legislation. Such a broad set of issues from the newest communications revolution leaves a lot for businesses to suddenly contend with.

Now, we are starting to see business fight back, seeking to claim their rights; do they see this as a bid to manage transparency? Restaurants in New York are pleading the city not to force them to display health department ratings in their front windows; for fear it will drive customers away (to me, if you’re up to health standards you shouldn’t be worried, so naturally, citizens are asking what they’re hiding.) Social Media played a part because citizens took the issue into the blogosphere, Twitter and Facebook. Then they called their councillors and put pressure on them. So the citizens are demanding more transparency and restaurants want less.

Because of the consumers ability to create and repurpose digital content in Social Media, it has created a conundrum for businesses; how much to reveal, and when it’s revealed what might be the consequences? Add to the mix the Enron, Conrad Black and financial crisis of 2008, citizens are demanding to know more. To have access to more. Obama’s government is opening more and more data to citizens everyday, England is doing the same. Canada is shutting down more doors than it’s opening.

Already, businesses (especially public ones) must contend with increased regulatory requirements for disclosure. Because consumers / citizens are creating the content and politicians react to citizen sentiment, businesses feel the tension of this already tense relationship grow increasingly tough.

The real cost impact to businesses then, is not the PR/Marketing aspect, but that of exposing their business practices overall. Public companies expose a lot of info through filing rules, private businesses not so much. European private businesses have for many years been more financially transparent by government regulation, but not American or Canadian. This could all change. What is the risk of confidential business practices being exposed? Methodologies, processes and strategies are corporate secrets and are vital to healthy competitive markets in a capitalist society. And lets face a truth here; capitalism has done more good for humanity globally than any other previous form of commerce.

This all means an added cost burden to business; more PR/IR people, more governance / legal costs, more people and a deeper understanding of consumer activities in the Social Web. Add all this into marketing and PR costs – the consumer will be the one to bear the subsequent price increases to offset the costs.

What do you think? Is increased transparency good or bad? And if so, for whom?