It’s quite possible that the pool of new customers will evaporate, creating a clamour among companies to retain existing customers and more aggressively target and acquire new customers from competitors. This will force organisations to further differentiate their brands, propelling social networking and community sites in to the spotlight like never before, as they will be vital for building, and extending the reach of, brand loyalty.

In fact, social networks are already making their presence felt as a fast-growth influencer on retail customers. According to Web 2.0 Retail Technologies, a research report recently published by Jupiter, 25 per cent of online shoppers consult social or community websites to research potential purchases. 

So, the key question for marketers is how to ‘monetise’ social networks. How can we tap in and sell to this reservoir of consumers without upsetting their traditionally anti-marketing sensibilities?

Facebook attempted to do so recently but was left red faced after it was, ironically, attacked by a 50,000-strong user group on its own site – Facebook: Stop Invading My Privacy – for failing to protect its users’ privacy. The site launched a system that published details on Facebook of individuals’ activities on other websites. For example, revealing that a user has bought a particular CD or DVD. In return for feeding the information back to Facebook, the other websites received a free advertisement for their services.

Criticism around infringement of privacy escalated because users were required to actively opt out of sharing their information rather than opt in, which is considered best practise.  Eventually, Facebook was forced in to an embarrassing U-turn and it no longer publishes information automatically about their users’ activities.

As with the more established online marketing paths, the key is to offer the individual something that is relevant and personal to them – something that genuinely enhances their experience.

Amazon, for example, has managed to do this successfully via its ‘Bookshelf’ application on Facebook. Users can opt in to Bookshelf, revealing to their friends which books they’re are currently reading and which books they recommend. A link appears beside each title, taking the user to the corresponding book on the Amazon website. Effectively, online book clubs are created, with users referring their friends to Amazon to buy the lauded titles.

Consumers are no longer just a source of content, but also a major source of referrals. It is logical, then, that brands must communicate direct to consumers i.e. on an individual’s profile page, signalling a power shift away from marketing to the masses.

If a company can identify advocates of their brand, then these advocates will promote the brand for them via their online social networks. Essentially, social networks are able to combine the power of word-of-mouth advocacy with the exponential reach of online referrals, making their impact fast-moving and significant.

For example, if you unexpectedly receive lots of orders for one product or, conversely, your brand is inexplicably bombarded with negative criticism, it’s quite possible that this activity began with an influential consumer on a social network who has referred his or her peers to your site.

It is imperative, therefore, to adopt an organised approach to metrics and measure the impact of social networks. In doing so, a monetary value can be attached to an advocate in exactly the same way that key performance indicators (KPIs) are calculated for traditional marketing tools. And this means valuing consumers based not just on how much they spend on your site, but by how many referrals they make to your site.

This is very easy to do using web analytics, which can measure the activity from a consumer’s social network page; the number of people referred to your site by that person; the number of people buying who have been referred by that person, and the value of their purchases.

Most UK companies are adopting a wait-and-see approach, which makes it too early to say exactly how much influence social networks will have. The real proof will be shown when major retailers start to test and track the effects of social networking over time.

However, marketing instincts tell us that the potential for marketing to social networks is huge. Affiliations with other complementary brands is a well-worn tactic; companies affiliating their brands with individual consumers is something else entirely. And for the companies that sensitively handle these networks – that is, preserve their social value and respect privacy, while making them commercially viable – the rewards could be enormous.