A Social Media Compliance Update Ten Years Later

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Jun 30, 2014


THE RULES OF THE SOCIAL MEDIA ROAD

The constraints and regulations social media managers should or need to follow depend on what industry they're in. Financial services companies are subject to a number of regulations that other businesses don't face, including the need to incorporate a lot of fine print in their consumer advertising.

"Every American knows what an APR is these days, but they still have to have a description of APR" in loan and credit card advertisements, Caldwell says. Regulators view financial services companies use of social media as advertising, so a social media post trumpeting a bank's low APR would need to include the half-page of six-point type that an online or newspaper ad contains.

But the lure of money to be made is causing some financial institutions to take the social media plunge, albeit tentatively. Morgan Stanley restricted its advisors involved in a small Twitter trial to a set of prewritten and preapproved tweets, for example. The Financial Times reported that the trial seemed to be a success, as 40% of the advisors said that they had acquired new clients via social media, and Morgan Stanley decided to expand its advisors access to social media.

Publicly traded companies are another group that must mind their P's and Q's when using social media. In July 2012, Netflix CEO Reed Hastings stated on his personal Facebook page that the company had streamed more than 1 billion hours of video the previous month. This seemingly innocuous statement caught the attention of U.S. Securities and Exchange Commission (SEC) regulators in San Francisco. After a months-long investigation, the SEC ruled that posting company information on social media was permissible as long as the company notified investors what channel it would use for the announcements. Even though Netflix's share price jumped after the Facebook post, the SEC chose not to punish Netflix as it acknowledged that there was "market uncertainty" about how to use social media for company announcements.

Bob's Red Mill, an employee-owned manufacturer of whole-grain products, is at the other end of the regulatory spectrum. The company is an avid user of many social media channels but has no regulatory issues to consider when it promotes its products, says Cassidy Stockton, the manufacturer's social media manager.

USE TOOLS TO FOLLOW THE RULES?

Despite the widespread availability of tools to minimize social media mishaps, surprisingly few Fortune 1000 companies (only 30% to 40% use an enterprise-grade tool, Thomas estimates) take advantage of them. The reason is surprisingly simple. "They don't see the need for it because something bad hasn't happened to them yet," Thomas says. "It's only a question of time, you know." Gartner's Caldwell agrees, saying that "most [companies] are not doing much at all. They're just not very clued in the risk."

So what are companies doing if they haven't purchased software to mitigate their social media risk? Many are incorporating social media usage and training guidelines into employee training, "but it's not pervasive," Caldwell says.

Others are using social experience management software, but only for new product rollouts. "[They] incorporate social media listening into a launch so they can respond to anything that comes up around that product launch or related to it very quickly," Caldwell says. "I had one client use the term ‘emergency marketing.' That's about as narrowly focused as they're getting right now."

Companies of all sizes should have a discussion about how important social media is to their business and assess the risks of using it in any significant way. "You have to start out by saying, ‘What are we doing, how are we using it, what is the business value we expect to get, what are the risks, how do those risks impact the business value, and for those risks that significantly impact the business value, how are we going to manage them?'" Caldwell says.

Intel uses a combination of training and software to manage its social media risk, Armstrong says. "We require all employees and agencies engaging in social media (social media practitioners) on behalf of Intel to take required training," he says. "That covers rules of engagement and guidelines on what we're able to disclose externally. Transparency is also a big one for us, and we push to make sure anyone responding on Intel's behalf communicates clearly around their role on the topic."

Caldwell says that companies must develop a social media management strategy to prevent US Airways-esque mishaps. "As you ramp up your official use of social media, you probably need to either get software or services," he says. "And if you're starting to deliver services via social media, then you also need to look at security issues and data privacy issues. The key isn't necessarily software; the key is to take a look at how you're using social media, what are the risks, and then either redesign your usage or put in place the right risk management techniques, whether it's the soft techniques like training or whether it's the harder technical solutions like software."

As with many similarly sized firms, smaller companies such as Bob's Red Mill are using social media management software to keep current customers happy and acquire new ones. "It gives the customer more flexibility in how they want to interact with the brand and allows us to share information that may help others who have the question, but are afraid to ask," says Stockton. The improved level of customer service and ability to successfully market products using social media management software justifies the cost.

Despite the occasional embarrassments and SEC investigations, experts believe that businesses will continue to embrace social media to attract new customers and to retain existing customers. "I think the next few years are going to be super exciting," says Sprinklr's Thomas. "Social media shrunk the world, I like to say. We need to start operating like local stores, the corner store in your local town where everyone knows everyone. You have to go back to the basics-great service, great product-to really taking care of your customers and having relationships with every one of them."

(Image courtesy of Shutterstock.)

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