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CEOs and Social Media

Social media involvement is deepening quickly at most companies. Ford already is spending about 25 percent of its mammoth marketing budget to leverage its early auto-industry leadership in social media. And the overall trend is clear: Social media investments are gaining an average of 5 percent this year while companies are typically cutting at least 5 percent from print, television and outdoor advertising budgets.

As chief of Hyundai in the American market, John Krafcik has driven the company right into the social media ocean—without taking the plunge himself. The president of Hyundai USA spends up to an hour and a half each day monitoring Twitter and Facebook feeds about the company, its brands and products, but Krafcik does so under an alias and doesn’t contribute to the social stream of consciousness.

“Right now, social media is a wonderful opportunity for me to listen and really feel the pulse of what’s going on,” Krafcik says. “But if I get out there in it myself, I want to make sure I can be committed to stay and deliver. And the time constraints are considerable.”

Krafcik’s dilemma is common to CEOs these days. First, chiefs often figure crucially in whether their companies will heavily engage in the fast-changing and often arcane world of social media marketing and communications, weighing the unprecedented hype surrounding the genre with their memories of the last great Promising Technology. And second, more and more company heads are deciding whether to “tweet” under their own names, post leader-worthy thoughts on Facebook or Google+, pal around on LinkedIn, appear in a video destined for YouTube or blog under their own monikers on corporate web sites.

“Social media is an extension of socialbehavior, and socialdiscourse is hugely important inbusiness. That means the ROI isthe highest in theworld.”

Such decisions face heads of more B2B companies as well as consumer-facing enterprises. BAE Systems Inc., for instance, is the $18-billion U.S.-based unit of the giant British defense and security contractor, and CEO Linda Hudson blessed her communications department’s full-on launch into social media last year as a way “to engage with a community of thousands each day, including the users of our products.” She did so even though information in her business “often is heavily restricted or nuanced, and a poor choice of words or a misplaced decimal can hurt shareholders or even endanger customers.”

Social media involvement is deepening quickly at most companies. So far, social media draws only about 2 percent of marketing expenditures at Atrion Networking Corp. even though the $60-million, Warwick, R.I.-based company is immersed in the infotech world. But Ford already is spending about 25 percent of its mammoth marketing budget to leverage its early auto-industry leadership in social media. And the overall trend is clear: Social media investments are gaining an average of 5 percent this year at the 600 member companies of the CMO Council, the most of any type of marketing, while surveyed companies typically are cutting at least 5 percent from print, television and outdoor advertising budgets.

Social media

This is happening even with most CEOs feeling that the answers they want aren’t keeping pace with the questions being kicked up by the rise of social media, including concerns about corporate transparency, digital security and brand vulnerability. One of the biggest criteria for their decisions is return on investment. The typically tiny financial outlays required to participate—a 20-something marketing staffer or two to field tweets and post tactically on social media networks, for example—can pay off hugely but also engender outsized PR disasters.

Many CEOs remain frustrated because practically no one has been able to quantify returns yet. “There is not [a single] way to answer the ROI question,” says Jason Breed, the social-media practice lead for Accenture. But David Sable insists the returns are immeasurably great. “Social media is an extension of social behavior, and social discourse is hugely important in business,” says the CEO of Young & Rubicam, one of the world’s largest marketing agencies. “That means the ROI is the highest in the world.”

So at this point, many companies are wading into the social-media milieu with CEOs relying only on anecdotal evidence and even gut feel. LinkedIn provided the high-quality candidates that led to the last three high-level hires by Atrion, for example. Language Line has tripled sales to $300 million over the last two years in large part by surrounding its over-the-phone interpretation services, for 911 dispatchers and others, with social media marketing and communications. “Language is a social activity,” says Louis Provenzano, CEO of the privately held concern based in Monterey, Calif., “so to us it’s very obvious that we need to be active in the growth of social media.”

Based in Paramus, N.J., Megabus.com is the largest unit of Coach USA, a unit of U.K.’s Stagecoach Group. Megabus has grown to a $120-million company in just five years by providing Internet purchase of low fares on intercity travel among 60 North American cities. And social media is in large part responsible for its takeoff, as company spending has risen to nearly $100,000 this year from about $20,000 the first year.

“We use it to get our brand out there and
for any promotions, announcements of new service areas… and then we watch how it spreads compared with what we’d have to pay for print or radio.”

“It’s one of our largest demographics that tends to be involved in social media, of course,” says Dale Moser, CEO of Coach USA. “We use it to get our brand out there and for any promotions, announcements of new service areas—anything new and different. And then we watch how it spreads compared with what we’d have to pay for print or radio to get the same kinds of demographics. That would be hundreds of thousands of dollars each time, compared with very little for social media.”

Even huge, long-established companies without obvious connections to the social media zeitgeist also have gone all-in. They include Best Buy, where CEO Brian Dunn has become a world-leading apostle of social-media marketing. “Best Buy’s message has to be where people are, and today, that means being on social networks,” says the chief of the Minneapolis-based consumer-electronics and appliances retailer. Otherwise, a company “risks not being in the conversation at all. Over time, I believe that can be fatal to a business.”

But does that mean CEOs must be personally involved in “the conversation?” That decision can make the questions surrounding social media even more acute. Dunn’s unequivocal answer is, absolutely: His personal Twitter account has 5,000 followers. Jeff Joerres, CEO of the biggest private employer in the world, Glendale, Wis.-based Manpower, also tweets about important global labor-market news and has a personal Facebook page that has picked up more than 1,000 “friends”—including 700 Manpower recruiters around the world.

“I was at the World Economic Forum” in Davos, Switzerland, earlier this year, Joerres recalls, “and while I’m speaking about the shortage of talent in China, I also have a tweet going out with my 140-character observation about the latest U.S. unemployment-claims report. And look at those who followed it: newspapers, magazines, university people and human resources executives from all over. Many of them end up tweeting back or e-mailing me.”

“If I’m waiting formy luggage, that’senough time tomake a statementabout somethingthat goes out onall my social-mediafeeds at once.”

Even banal social-media missives by CEOs can be effective attention-getters, conversation starters and brand builders, especially if the chief is communicating with a restricted group, maintains Eric Darr, executive vice president of the Harrisburg (Pa.) University of Science and Technology. “For those minutes, I feel like I have the CEO’s attention,” he says. “It makes you feel special, like having the CEO’s cell phone number.”

But many other CEOs remain ambivalent about devoting their own precious resources to social media—daunted by the time commitment, heeding security experts’ warnings about exposing their thoughts and movements digitally, wary of conceding any of the insularity that gives them some of their authority, concerned about making a costly mistake in some sort of social media forum, or just dubious about what they consider a fad that still has to prove itself.

BAE’s Hudson, for instance, has launched an internal blog but so far has refrained from using her own professional account on Twitter. “I’m not ready to travel down that road until I’m convinced that I have the time, and processes in place, to use the tool responsibly and effectively for the betterment of my business,” she says. “And once you initiate engagement on social media, expectations are high about recurring content—and it takes time.”

Social Media

For Gary Hirshberg, vanguard of the organic-food movement and a hero to Millennials as founder of Stonyfield Farm, it seems that blogging and tweeting should come naturally. But they don’t to the CE-“Yo” of the Londonderry, N.H.-based yogurt company. Much of his misgiving is generational, believes the 49-year-old. He still believes in “personal conversations” and likes to go out and make about 150 speeches a year before audiences of real people. And, Hirshberg says, “I can never seem to get the time.” He has a blog, but he only makes about 10 entries a year.

But lately, social media has been growing even on Hirshberg. For fun, he filmed a video about the wonders of organics that was paired as a YouTube “rap-off” against another organic-company CEO, Seth Goldman of Honest Tea, and has picked up more than 72,000 views. He’s willing to use social media to parry opposing views on industry issues. And increasingly, Hirshberg allows staffers to excerpt his speeches and put them on his Facebook page.

“I have to admit that it’s unbelievably effective,” Hirshberg says. “I get more feedback from my Facebook page than from anything else I’m doing.”

Blog Guidelines

Hundreds of IBMers (though not CEO Sam Palmisano) have blogs. In 2005, IBM published a set of rules to guide IBMers who wanted to blog. The guidelines offer good general guidance for anyone—including CEOs—thinking about starting a blog.

  1. Speak in the first person.
  2. Respect copyright and fair use laws.
  3. Safeguard confidential and proprietary information.
  4. Protect company clients, business partners and suppliers.
  5. Respect your audience and your coworkers.
  6. Add value.
  7. Don’t pick fights.
  8. Be the first to respond to your own mistakes.
  9. Adopt a warm, open and approachable tone.

Key Takeaways

  1. Social media isn’t going away—CEOs need to decide how to handle the medium.
  2. ROI numbers and other data mostly aren’t available. CEOs must rely on other criteria.
  3. Personal involvement is a separate consideration from corporate involvement.
  4. Despite the challenges, an increasing number of CEOs are opting to engage in some form of social media.

About dale buss

dale buss
Dale Buss is a long-time contributor to Chief Executive, Forbes, The Wall Street Journal and other top-flight business publications. He lives in Michigan.