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Jul 18, 2008

Corporate Social Networks Are A Waste of Money, Study Finds

Corporate Social Networks Are A Waste of Money, Study Finds

fakesmile.jpgHow would you feel if you spent more than $1 million throwing a party and less than 100 or even 1,000 people showed up? That sinking feeling is spreading over corporate boardrooms around the nation, according to study performed by Ed Moran, a director at consulting mega-firm Deloitte.

It may be all the rage, but are company-built social networks for customers to socialize in really smart?

According to Wall St. Journal coverage of Moran's study, "Thirty-five percent of the [corporate] online communities studied have less than 100 members; less than 25% have more than 1,000 members - despite the fact that close to 60% of these businesses have spent over $1 million on their community projects." That means some of those $1 million parties probably had less than 100 attendees. Somebody got fired for that, right?

Former RWW staff member Josh Catone found the WSJ story first over at his new gig and offers some good advice for companies seeking to avoid this terrible fate.

According to the study's author, the biggest problems are the following:

  • Overpriced, shiny features.

  • Insufficient and inexperienced community management. (See our massive post on community management earlier this week.)

  • Bad metrics and criteria. Though Moran says most companies can talk the talk, saying they are looking for engagement and word of mouth, they end up measuring in page views. He says that's bad. It probably wouldn't be so bad if they were getting any page views...

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