Blogs
Getting to grips with the multifarious online onion
Sarah Evans-Toyne
18 June 2010
Within a few breaths of a suited and booted Chancellor announcing that the Financial Services Authority (FSA) would be sliced and diced into different guises, the City watchdog issued its first explicit promotions guidance and warning to firms over their use of ‘new media’, including Twitter, Facebook, forums, blogs and iphone applications.
At the beginning of February, the Regulator undertook a cyber sweep of 30 Twitter and Facebook pages using different search terms within the financial sector. It looked at the pages containing a wide range of promotions, including those from small and larger firms that offered a wide range of products, such as financial advice and investments.
The FSA visited a variety of forums to gain an insight into posts and comments, examining discussions on insurance, investments, investment advice and mortgages. It found that companies were posting Twitter updates or commenting on blogs and in some circumstances this activity was promotional and didn’t comply with the FSA rules.
The FSA says financial firms must ensure they provide appropriate risk warnings when using new media such as social networking sites, blogs and forums to promote their products and services. It also suggests that firms should consider whether channels are suitable for different types of communication and whether Twitter, with its 140-character limit, is suitable to be sufficiently balanced for promotions.
This is all seems perfectly sensible guidance and in line with the existing stance taken by many firms, who are carefully adhering to the ‘merely inform and educate’ vs. promotion dichotomy and adapting use of channels and risk warnings to meet these rules.
It comes at a time when social networks are surging ahead in popularity. May was a significant landmark in the online world, as it was the first ever month that social networks have been more popular than search engines in the UK. Given that open-network social media posts also appear on Google, this adds a big value to financial services businesses seeking to influence and sell their wares in the online marketplace.
It’s natural that financial services firms want a piece of the online action and a stake in an increasingly competitive word-of-mouth marketplace where they not only need to protect their brand but get involved in conversations. And social media reaps dividends for modern business that are prepared to listen, learn and engage.
The watchdog’s perplexing long-silence on this issue has been a source of personal bafflement. The new guidelines should provide some useful clarity for firms concerned about operating in this space.
However, there will be inevitable questions that remain. For example, how will they enforce anonymous postings which are popular on many a discussion board. Further guidance on linkages will probably need to be issued. The new media sales environment is a multifarious onion, where people follow a more complex customer sales journey which can be influenced by many different types of online participant and conversations.
Setting rules is essential to protect consumers but they will need to be frequently revisited to ensure firms don’t lose out in the more powerful word of mouth marketplace. But firms have now been warned – and it’s time to seize opportunities but watch out.
