Use of Social Media Continues to Grow – But Innovation Potential Often Remains Untapped
Information EconomyZEW Business Survey in the Information Economy
Today, around one in two companies in the information economy have a social media presence, which they primarily use for advertising and marketing while neglecting the innovation potential of these networks. Companies still make far too little use of this communication channel to obtain constructive customer feedback as a means of improving their products and services. These are the results of a special assessment published in the latest Business Survey in the Information Economy, for which ZEW Mannheim surveyed around 1,000 companies in the German information economy.
Looking at which social networks used by companies in the information economy use, it becomes clear that networks like Facebook, Instagram or XING, a career-oriented networking site with a focus on German-speaking countries, are particularly popular. Already 30 per cent of companies that are active on social media consider these platforms to be extremely important for their success. The companies are also highly optimistic with regard to the next two years, with more than half of them expecting the role of social media to become increasingly important for the success of their business.
Thanks to the great number of users on Facebook, Twitter and co., businesses can reach a wide audience with their social media activities. “Social media networks are cost-effective digital channels to communicate and interact with existing and potential customers. It is therefore not surprising that advertising and marketing are the two most popular areas of application,” says Dr. Daniel Erdsiek, project leader in the ZEW Research Department “Digital Economy”. More than 80 per cent of companies in the information economy active on social media use these platforms for advertising and marketing, six percentage points more than in 2016. The second most important area of application saw a similar trend, with around 62 per cent of the respondents using social media channels to improve customer relations and loyalty.
Share of companies using social media to get customer feedback remains stagnant
Constructive criticism and creative input can be systematically evaluated as part of an established social media strategy to improve company products and services. “If companies wish to use social media to improve their products and services based on their customers’ feedback, they will also require additional human resources. Social media specialists should therefore not only maintain a good customer relationship but also communicate closely with the business divisions responsible for product and service development and improvement,” explains Professor Irene Bertschek, head of the “Digital Economy” Research Department. However, this innovation potential often remains untapped by companies in the information economy. Merely 31 per cent of the respondents use social media to improve their range of offerings, and this share has been stagnant since 2016.
The information economy consists of the sub-sectors information and communications technology (ICT), media service providers and knowledge-intensive service providers. In these sub-sectors, the use of social media is particularly popular among firms in the ICT sector (64 per cent) and media service providers (79 per cent), whereas knowledge-intensive service providers use these networks to a far lesser extent (37 per cent). In addition to creating profiles on social networks, the use of social media also comprises activities like microblogging on, for instance, Twitter, as well as operating a company blog or enterprise wiki.
