Thursday, May 1, 2014

The Failure of the Public Relations Agency and the Rise of the Social Media Consultancy

In recent years, Public Relations (PR) agencies are struggling to find their role in the new information environment. The is because the proliferation of social media, which has made communications less hierarchical, has effectively eliminated the PR agency's intermediary role.

As social media (which is essentially free) begins to dominate the information environment and companies start to own their own communications platforms (like Facebook, Twitter and Instagram), the traditional revenue sources of media placement fees of PR agencies are drying up. Additionally, the ease of using social media and creating powerful online content has also created a situation where companies increasingly go in-house and rely on their own marketing and communications teams to do the "PR" work.

At SG Social Media Guru, we literally saw the writing on the wall and as such have deliberately positioned ourselves as a social media consultancy as opposed to being a public relations agency. We believe that the new information environment requires a fundamental mind-set shift to see social media as a tool for not only engagement, but also a tool for positioning and branding.

One of the main changes we believe that will separate the truly successful company from the rest is the use of employees as brand ambassadors. In this new paradigm, branding a company no longer relies on a centralized campaign led by a PR agency, but on every employee who is now taught how to brand and position the company and are actively encouraged to communicate this to their social media network. The power of this approach is that the company:

A. Taps on the personal network of their employees. This is particularly important for small and medium enterprises (SMEs) that do not have a large advertising and promotion budget. Assuming each employee has a social media network of 300 friends, a company of 10 will automatically have an "organic reach" of 3,000. And, if the employees are taught how to effectively use social media, the multiplier effect of shares, likes and comments on Facebook could literally increase this reach by a factor of 10.

B. Capitalizes on the word of mouth effect. As friends believe friends, the likelihood of an advertising message being believed when it comes via social media is infinitely higher then if it came via a newspaper advertisement. The impact of "spontaneous" employee sharing on social media is equivalent to that of word of mouth advertising, which studies have repeatedly shown to be the most effective form of advertising.

In short, in our opinion, social media will in the near future replace traditional main stream media as the primary advertising platform. PR agencies that continue to cling to the old business model of relying on media placement and ad development fees will eventually fail, while PR agencies that make the switch to becoming a social media consultancy will thrive. At SG Social Media Guru, our core "PR" business is in (a) the training of employee as brand ambassadors; (b) the offering of online reputation management services; and (c) in owning a full suite of social media platforms upon which clients can use to complement their own social media channels - this is similar to the current practice of paying newspapers for advertisements.

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