Social media and its importance

In simple terms, social media is a way of communication using online tools such as Twitter, Facebook, LinkedIn, and so on. Andreas Kaplan and Michael Haenlein define social media as follows:

"A group of Internet-based applications that build on the ideological and technological foundations of Web 2.0 and that allow the creation and exchange of user-generated content".

Social media spans lots of Internet-based platforms that facilitate human emotions such as:

• Networking, for example, Facebook, LinkedIn, and so on
• Micro blogging, for example, Twitter, Tumblr, and so on
• Photo sharing, for example, Instagram, Flickr, and so on
• Video sharing, for example, YouTube, Vimeo, and so on
• Stack exchanging, for example, Stack Overflow, Github, and so on
• Instant messaging, for example, Whatsapp, Hike, and so on

The traditional media such as radio, newspaper, or television, facilitates one-way communication with a limited scope of reach and usability. Though the audience can interact (two-way communication) with these channels, particularly radio, the quality and frequency of such communications are very limited. On the other hand, Internet-based social media offers multi-way communication with features such as immediacy and permanence. It is important to understand all the aspects of social media today because real customers are using it.

Today's corporate marketing departments are maturing in understanding the promise or the impact of social media. In the early years, social media was perceived as yet another broadcasting medium for publishing banner advertisements into the world. Unfortunately, many still believe this to be the only use of social media. While it's not deniable that social media is a great tool for banner advertisements in terms of cost and reach, it's not limited to that. There is another use of social media that can turn out to be more influential in the long term. Businesses need to heed to the opinion of the consumer by mining social networks. By gathering information on the opinions of consumers, they can understand current and potential customers' outlook, and such informative data can guide business decisions, in the long run, influencing the fate of any business.

Current customer relationship management (CRM) systems create consumer profiles to help with marketing judgments using a mixture of demographics, past buying patterns, and other prior actions. These methods basically empower companies to keep a close eye on their consumers. The customer data available via communities such as LinkedIn or Facebook is quite detailed. A financial business with access to such data would not only know the intricate details of a customer, but also the interests of the customer, and evidence that might be beneficial in preparation of future marketing plans. Every minute of every day, Facebook, Twitter, LinkedIn, and other online communities generate enormous amounts of this data. If it could be mined, it might work like a real-time CRM, persistently revealing new trends and opportunities.