However, at the mid-market level - where I typically try to ground my thinking - the ROI analysis on launching your own branded community is rough at best.

Ultimately, there are very few brands that people care enough about to spend leisure time with that brand, online or off. I don’t see that changing. Thus, while online communities - while potentially effective - are a high risk, high cost proposition that are probably not low hanging fruit for most brands.

j

First off, there is a significant difference between Social Networks and Online Communities.

As you say, social networks, like Facebook can be used for research - especially if you are into semiotics or ethnographic. They are a great way to watch and learn from consumers while they are getting on with life, as opposed to creating a “false” situation where you are asking them questions in a traditional market research manner. Just like the saying goes: “if you want to understand tigers, watch them in the jungle, not in the zoo”.

But I suspect what Sapient are getting at, and the reason why the opportunity is much more than simply observing people hanging out in Facebook, is that they are really talking about online communities. Brands can use online communities to get close to their customers and engage them in a direct conversation (as well as listening in to the conversations customers have with one another).

A classic example is Dell Ideastorm where thousands of customers have made suggestions for Dell on how they can improve their products and services. Thus leveraging virtual communities can be as much about customer-led innovation as insight and research. Threadless is another classic example.

Virtual branded communities (where you are gathering customers who want to talk about your product or service and how it fits into their lives) are very different from social networks. In some ways they are the online equivalent of traditional focus groups. But they can also provide much more than a sounding board or research tool. They can also enable an ongoing conversation with customers, they can become the centrepiece of an Open Brand and they can help drive advocacy and word of mouth.

Personally I think the last benefit is the most essential. In the “Pull” world of marketing, a customer community might just be your greatest driver of Word of Mouth and thus sales. See this post for the differences between advertising on a social network and marketing using a virtual community.

And keep up the great blogging!
Charlie

You are spot on the money here! I spend my life working with agencies on how to improve their business development i.e. find new customers.

When I really want to work with my hands tied behind my back I can honestly say that my clients are the ones who are the 100% negative of Sapient’s list.

Great analysis!
Rebecca