The Risks and Rewards of Social Media

Does extending your brand through social media carry risk for your company? According to a recent article by eMarketer, many companies believe that social media is one of the top five sources of risk over the next three years, and the most popular social sites have the most potential for risk.

eMarketer analyzed results of studies by Deloitte and Forbes Insights in which American executives ranked social media the fourth greatest potential source of risk in coming years. 27% of executives surveyed named social media as a risk, placing it behind only the global economy, government spending, and regulatory changes.

In a separate study the Altimeter Group surveyed companies about which sites were potentially dangerous and how executives believe these sites could negatively impact their brands. Facebook, Twitter, and YouTube, the most popular social sites, were chosen as the three riskiest social media sites in that order.

In terms of specific concerns, companies named reputational damage as the greatest risk followed by release of confidential information and loss of intellectual property. The individuals surveyed by the Altimeter Group all deal with social media as part of their jobs, giving them an extensive knowledge of the specific risks associated with different social brands.

As social media continues to evolve, brands need to consider which, if any, specific sites could be beneficial. At its core, social media is a medium for companies to connect with customers and clients in an honest, open manner, bridging the gap in a way that was much more difficult without these sites. This open communication, however, also leaves companies vulnerable to a certain level of risk from critics and users looking to tarnish the reputation of a brand.

Using social media effectively can have a huge positive impact on brands in terms of awareness, media coverage, and public perception, but missteps can also prove costly. Companies shouldn’t fear entering the social space, but they should just make sure that they have the tools in place to use the medium in the most effective way – owning the right usernames and handles on the right platforms is the first step.