THE BLOG

Social Media: Risks and Rewards

12/06/2013 13:06 BST | Updated 10/08/2013 10:12 BST

Social media and digital technology are increasingly important business tools and many organisations are turning to these channels to connect directly with customers and generate new business.

What you might be surprised to hear, though, is that when we spoke to 500 UK small business owners as part of an annual campaign to better understand entrepreneurship, we learned that, surprisingly, small businesses lag behind in the adoption of social media. Just under a third said that they are actively using social media, while seven per cent said they would like to but don't have the time. On a scale of how beneficial the following are to an SME business, word of mouth (86 per cent) and advertising (43 per cent) still ranked way ahead of social media and blogging (26 per cent). The full research report can be found here.

In big business circles, social media is becoming an essential business tool - so why aren't more small businesses taking full advantage? Is the perceived risk and time commitment considered to be greater than the reward? There are certainly a number of grey areas that SMEs must be aware of and prepared to mitigate if they plan to move their business into the social media space, but it would undoubtedly be advantageous for small business owners to get their arms around this sooner rather than later.

The Risks

Defamation

Defamation claims against SME clients are increasing, both from members of the public posting on the SME's website and from small businesses themselves publishing their own defamatory statements.

In the case of third party comments being defamatory...

SMEs can manage the risk of becoming tied up in legal action by having clear terms and conditions stating what is and isn't acceptable on the site, as well as a robust 'take down policy' that is stuck to rigidly. In the event of a complaint about the content on your website, you need a clear process for responding, including removing the comments / content if appropriate. This approach should make it clear that the person posting the comment is responsible for the statement, rather than your business being held accountable.

In the case of your own comments being defamatory...

Twitter has proved itself to be a particularly lively place for defamatory statements as users are liable for their own tweets, and those suffering defamation via the site are often willing to sue. If you have employees who use social media on behalf of your business, you must put in place robust social media guidelines that cover the do's and don'ts on what to say, when to say it, and where to say it.

If you are in a position to employ an external company to manage your social media outputs on your behalf then you should use the contract agreed between you both to ensure they are responsible for claims that may arise from content they have produced.

Intellectual property

Using somebody else's intellectual property without their permission will attract unwanted attention. For example, using an unauthorised image in a campaign or republishing an article without permission can lead to problems. Media owners (such as record labels) and image libraries are particularly keen to protect their intellectual property and we often see claims for misuse of images and music. The easiest way to get around this is to seek permission from the rights owner to use their content. A fee can be charged for the use of rights, but this can sometimes be avoided by offering to hyperlink to, or credit, the rights website.

Data privacy

If any of your social media plans involve the use of personally identifiable information, or they target specific customers or members of the public, then you must be clear about your responsibilities and safeguards. Controls and legislation about the use of personal information are developing rapidly to mirror public concern and it is essential to have an understanding of your duties. A clearly stated privacy policy, and user terms and conditions, are both essential. The Information Commissioner's Office has published a helpful guide for SMEs (which can be found here).

Having considered the risks, it is important to consider the significant rewards that engaging in social media will deliver to your business...

The Rewards

It's simple. The more you engage on social media, the more you build the brand of your small business.

Conversation and relationship building

Seeking out business-specific conversations to engage in is an intelligent and effective way to build your online profile and position your expertise in front of relevant audiences. This can be achieved across a range of sites, from topic groups on Linkedin to timeline discussions on Facebook and hashtags on Twitter.

Additionally, these places are great for meeting and learning from others. For example, on Twitter search for hashtags like #SMB or #smallbiz. Not only will you find small business advice, resources and news, you will also discover a whole network of like-minded entrepreneurs to learn from and exchange ideas with.

Positive feedback

Online is also probably the easiest forum for customers to share their positive feedback. While the negative side of honest posting on the internet can damage your business, a happy customer who takes the time to compliment you online serves as a very strong brand endorser. This kind of independent personal recommendation lends credibility to your business and is far more likely to be trusted by third parties.

In summary then, social media and online activity is a powerful force in today's increasingly global and inter-connected business arena. In order to gain a competitive edge in this space, SMEs need to fully understand it, embrace it and use it both intelligently and consistently. For those businesses concerned about the associated risks, gaining insight from an insurance expert and on SME online advice forums can be invaluable for you and your business.