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Getting to the heart of why social media works

Why do online social networking sites exist? This is not a rhetorical question.

Why were they not just a quickly passing fad? Two decades after the concept came to prominence, why are more than 500 million people still flocking to sites such as Facebook?

Many businesses have joined in with social media sites, creating Facebook pages and Twitter feeds, and expending great effort to increase "likes" and "followers."

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But without understanding the fundamental reasons people use social networking sites, their social strategies may be doomed to failure, says the author of a new book, "A Social Strategy: How We Profit From Social Media." It is published by Princeton University Press.

The author, Mikolaj Jan Piskorski, started out as a skeptic. In 2003, as a young Stanford Graduate School of Business professor, he nearly talked Reid Hoffman out of setting up LinkedIn. Real-life social networks already worked well in helping people find new jobs, Piskorski argued. Why reinvent the wheel?

@Joe Gates It is different but parts might be better and worse. One house might be a country villa and a second a penthouse apartment - they are different but you can say this part is better and not just different.
AT 11:04 AM JUNE 22, 2014

But the founders of LinkedIn, which has a market capitalization of more than $19 billion, ignored him; and Piskorski came to realize that online social networks provide something different and valuable for their users.

Real-life social networks are not as efficient in practice as in theory. They are prone to failure, such as when a potentially beneficial social interaction does not take place.

Perhaps the woman of your dreams lives in western Australia and you are in San Francisco — you will never know. Perhaps she is at the same party as you, but there are a lot of people present and no quick way of telling who is single and looking for a relationship. Perhaps you refrain from sharing pictures of your holiday because you worry about boring friends — yet at least one of them does want to hear about it.

Such social failures happen because of distance, lack of time or even social norms that make it hard to approach someone or ask something.

The first half of the book analyzes a number of social platforms, from the EHarmony and OKCupid dating sites to Twitter, Facebook and Japanese social network Mixi, looking at how these provide solutions to social failures — and why some work better than others.

Read these first chapters in detail only if you enjoy extensive charts and data sets that spell out formally what most people know at gut level.

For example, EHarmony, which pairs people on the basis of hundreds of questions, is better at producing matches than OKCupid, which offers a free-for-all on choice.

Everyone else, especially business readers, can skip ahead to where author Piskorski starts describing social strategies that really work because they address a need.

For instance, EBay's Group Gift application allows groups of friends to collaborate in buying a present, and offers suggestions based on what the recipient had liked on Facebook.

Yelp encourages contributions of venue reviews by giving prolific contributors "elite" status, which enables them to attend parties and meet other Yelp Elites.

Nike's NikePlus enables people to track their sports performance and share tips, such as favorite running routes.

These successful social strategies have increased loyalty to the brand, raised willingness to pay for a product or lowered the acquisition costs for data and new customers.

These are no longer blind efforts to attract "likes" and create buzz; these are strategies with measurable outcomes.

Most businesses are still struggling to measure the return on investment from social media. No one quite knows how to put a value on a "like" or a "retweet."

For companies struggling to measure social media, Piskorski offers a different way of looking at the problem, and his three tests — the social utility test, the social solution test and the business value test — provide a way to see whether a project is working.

Palmer is a social media journalist at the Financial Times of London, in which this review first appeared.


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