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Social media has exploded in use in America since the 2000s, and this growth has had profound impact for business and institutions. The reception of the media has been varied, with some industries or bureaucracies (e.g. the IRS) utilizing its dynamics, while other sectors have proceeded more cautiously in integrating it, being wary of its potential problems. Legal complications and ethical considerations have affected its acceptance by business, even as the public has embraced the greater engagement offered by social media. An understanding of these factors can help further the prosperity of your own enterprise.
Implications for Finance
One third of adults with higher net worth have either enquired about changes in their financial arrangements based on info they’ve found on social platforms, or requested modifying where they receive their investment advice. So strong has the impact of social engagement elements become on business communication (sometimes measured in the form ‘likes’ or similar metrics afforded to the influencers) that some marketing firms have emerged to help encourage the perceived reality of higher social media likes and followers for companies or individuals active on the platforms.
Opinions about, or ratings concerning the financials of organizations can be very efficiently disclosed and communicated through the likes, follower statistics, or other feedback supported by the main social communities. This engagement can go in both directions, however, in impacting how companies are perceived—good assessments shared on the platforms can inflate the positive image of the business, while the sharing of bad reviews may foster a negative impression of the company and its stock value.
In general, the financial sector can use social media to comply with legal or other requirements through several emerging best practices, such as: a- creating and designating personnel or profiles that will officially represent the business on the platform (Linkedin et al); b- interaction should be natural and conversational, free of sales jargon, hype rhetoric, or selective customer reviews; and c- firms participating in social media, to avoid penalties by the Financial Industry Regulatory Authority (FINRA) should develop Written Supervisory Procedures (WSPs) to govern its online communications.
Implications for Fundraising
Besides these dynamics, the popularity of a community generated by a financial entity through social media likes, tweets, followers, views can be utilized to successfully fundraise online, through such methods as crowdfunding. One of the main strengths of crowdfunding is its ability to harness the power of social media to unite a large community around a project. Here are tips for getting the most out of social media in a crowdfunding campaign.
Because many campaigns primarily reach those closest to the creator, social media is the most effective way to extend that support beyond friends and family. This is indeed a very effective way to reach your extended network of friends, acquaintances, colleagues and business relations and inform them about your project and its crowdfunding campaign.
Your extended network is an essential source of support. Up to 30% of seed funding comes from people you know, many of whom will hear about your project online. Members of this core network play a dual role: they spread information about your campaign in their own social networks (thereby creating a target audience from whom you can solicit funds) and help you reach the first level of funding. 20% critical for your project. According to Kickstarter, 80% of projects that reach this important funding threshold end up being successful.
Implications for Prosperity
Social media contributes to word-of-mouth in the transmission of information about your campaign on the multiple existing networks: a tweet can be transmitted several times and a Facebook post can be found in many news feeds. This viral transmission of information is an illustration of the strength of social networks and makes it a particularly economical way to take advantage of the networks of your loved ones to then reach theirs.
Soliciting contributors outside of your immediate network is an important step in reaching your ultimate fundraising goal. For example, in his book Kickstarter for Filmmakers, James Cooper claims that 29% of the backers of his short film Elijah the Prophet were either people he had only interacted with online or complete strangers (many of them). They must have heard about the project online on social media.
That said, getting the most out of the world of social media requires caution and good judgment, especially when it comes to promoting a crowdfunding campaign. For example, if you don’t prominently display social media links on your campaign page, it could be difficult for funders to mobilize their social networks for you. On the other hand, if you take an overly aggressive approach (posting for the sole purpose of asking for money), it could discourage potential contributors. A properly structured social media campaign can integrate improving your firm’s popularity or reach, its fundraising, and its prosperous future.
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