Web 2.0: The risk, the reward

The online community that is web 2.0 is a force that cannot – should not – be ignored. Effectively engaging with ‘citizen media’ will become key to business survival. By LUCINDA SCHMIDT.

By Lucinda Schmidt

When Skype launched a global online business ratings service in February, it was a clear signal – if any was needed – that web 2.0 is a growing force. The SkypeFind directory, built entirely from user comments about any business anywhere in the world, expects more than one million ratings by the end of this year.

Web 2.0 refers to social networks, blogs, wikis, online message posting, podcasts, and other web-based communities that create their own content to interact with one another.

MySpace, YouTube and Wikipedia are well-known examples of what is sometimes called “citizen media”. Anyone with an opinion can publish a blog, post a rating or upload a video or photograph to share with the rest of the on-line world.

A recent study by web audience measurement firm Hitwise showed that web 2.0 style sites now account for 12% of US web activity, up from just 2% two years ago. And another study, released in April, found that more than 70% of 15–34 year olds were actively using social networks such as MySpace.

For businesses big and small, web 2.0 represents new potential ways of marketing to forge stronger ties with customers. But there are also big risks in a format that is essentially word-of-mouth on steroids. There is little control over content in this online, anything goes wild west, where consumers turn to each other for advice on just about anything.

“Word-of-mouth is now visible, indelible, measurable and impossible to control,” proclaims one marketing blogger. “It is now impossible to deny the influence of online conversations on brands.”

What if someone hates your business or your product? In the past, they might have slagged it off to five or 10 friends. Now, their negative online comments can reach thousands of people immediately, and stay in cyberspace forever, picked up by every Google search of the company name or product.

Lawyer Nicholas Pullen, a media partner at Holding Redlich, says the law can help – up to a point. But the first thing to remember is that people are allowed to express an opinion about your company’s products or services. If they’ve had a bad experience, you can’t stop them telling others about it – whether that’s through an online ratings service such as SkypeFind or bitching to a friend over coffee.

“It’s very difficult to defame a company about its products or services,” Pullen says. Where the law will step in is if that negative comment goes further than being a genuine opinion, and strays into defamatory or misleading statements such as “the company is run by crooks” or “it’s deliberately ripping off customers” or something else that implies malice by the company.

Even then, companies with 10 or more employees can no longer sue for defamation, after state laws were changed last year to make them largely uniform around Australia. Far more useful for companies is the Trade Practices Act, which prohibits misleading and deceptive conduct.

Pullen says the first step in fixing a misleading online comment about your company is to trace the owner of the website. Although many sites disclaim any responsibility for comments posted by others, Pullen says they are usually happy to remove the offending words to avoid the hassle of lawyers.

If the owner is impossible to trace, the next prong of attack is the internet service provider (ISP). Pullen says ISPs are protected from legal responsibility for the sites they host, but once they are notified about disputed comments this protection disappears.

Even though the ISP has no power to edit the sites it hosts, Pullen says it will often threaten to shut down the site unless the owner removes the comments – again to avoid the hassle of a law suit.

In most cases, Pullen says a lawyer’s letter is enough – but you must be willing to back it up with court action to seek an injunction if the comments are not removed within 24 hours.

“Most responsible websites will respond very quickly,” says Pullen, who has had more than 80% success from just sending a letter. “The material can be taken down pretty easily and these sites just don’t want lawyers in their face.”

And if you also prefer to avoid lawyers altogether, another option is to hop into the online debate yourself. Internet strategy consultant Ross Dawson says web 2.0 is really about participation – and any company that ignores this does so at their peril.

“It cuts both ways,” says Dawson, noting that companies can’t choose to be invisible online. Web 2.0 is not about companies deciding to be rated; consumers comment on whatever they like.

“It’s important to understand that web 2.0 is not just about technology. It relates to social trends, including the trend towards self-expression,” Dawson says. “We’re living in a world where people can express their opinions far more freely.”

At a minimum, Dawson sees web 2.0 as a great opportunity for companies to monitor – for free – what consumers think about them and their products, competitors and industry.

“This is an extraordinary tool that any business should tap,” says Dawson, describing web 2.0 sites as a “treasure trove” of customer feedback. “Corporate Australia has been a massive laggard – two or three years behind many countries – in terms of takeup of web 2.0.”

His advice, if people say bad things about your company online, is to avoid lawyers and old-fashioned press releases. “If you want to respond effectively you have to be part of the same conversation. This diffuses the negativity and creates a balance in the conversation.”

Sara Davis, of online marketing consultants Commercial Interactive Media, has similar advice. “The biggest risk, if you don’t get involved, is that it all happens without you. Web 2.0 is all about people participating and engaging; if you don’t participate you’re completely left out.”


Dipping a toe into web 2.0

  1. Listen to and learn from online conversations about your product, company, industry and competitors.
  2. If you choose to participate, speak honestly and transparently. Move beyond press releases and give your company a human voice. Options include your own blog, posting comments on other blogs, being active at Yahoo Answers and sharing videos on YouTube.
  3. Provide compelling content in accessible formats. One success story in Australia is podcasts by small wine producers, interviewing experts about their wine.
  4. Go to the sites where your lead consumers are going. If you want to know what your customers are going to be doing, you have to engage in it yourself.

Source: Ross Dawson, chairman of Future Exploration Network.



For further study and information in the internet as a business tool, see our Growth Resources section by clicking here.



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