Note: This post originally published in our CIO Insights blog on Oct. 8, 2012.
Social media is now ubiquitous and has fundamentally changed how businesses engage with customers.
A recent study by global law firm DLA Piper, for which I work, revealed that 76 per cent of large employers have some form of social-media presence with 86 per cent on Facebook, 78 per cent on Linkedln and 62 per cent on Twitter.
The potential benefits of social media for businesses are clear: an ability to market and advertise in a direct, interactive and usually free way to a potentially massive global audience. But as social-media use increases, businesses are becoming aware of the risks.
The ability of users to post comments and opinions on social media networks provides a platform for criticism, whether or not justified, and the misuse of a business's brand and content.
Further, the use or misuse of social media by employees brings a series of challenges for employers in monitoring staff activities. Key risks include loss of confidential information, harassment and reputational damage.
Companies need to consider how to minimise these risks before they arise and plan how to deal with them if they do. Here are five steps for businesses to take in connection with their use of social media.
1. Develop a social-media policy and train staff
Most employers should be considering implementing a policy to set guidelines on acceptable use of social media. The policy should cover employee use of social media -- for example, employees' own Facebook or Twitter accounts - and use by the business.
Clearly, risks and priorities will vary from business to business, so it is important to tailor policies. Also, policies need to be able to adapt to the broad and fast-changing nature of social media, which is not just Facebook and Twitter, and can include blogs and sites such as YouTube.
Once finalised, the social-media policy should be communicated to staff. There is certainly a case for training all staff in the use of social media, but brand managers and social-media page administrators in particular need skills in dealing with users on social networks.
2. Monitor user-generated content
A recent landmark ruling by Australia's advertising watchdog has confirmed that companies could be liable for comments made on their Facebook pages by users.
While the ruling is applicable to Australia only, it has alerted regulators and brandowners around the world to the importance of monitoring user-generated content on social-media sites, and whether they need to be doing more on this front.
Under the ruling, no differentiation was made between comments posted by the company and those made by users, leaving the company liable under advertising laws for all comments made on its page.
In the UK, the current indication is that the Advertising Standards Authority (ASA), which has had an online advertising remit since March 2011, will not be making changes to its current position. Essentially, it will only intervene on user-generated content if an advertiser takes a user post and highlights it as a testimonial.
However, the Committee of Advertising Practice (CAP) is presently conducting a two-year review of the ASA's online remit, so it remains to be seen whether this position will ultimately change.
In the meantime, brandowners are taking a risk in having completely unmonitored social-media pages - for brand-reputation reasons, if not because of advertising law.
3. Deal with customer complaints carefully
Administrators of company's social-media pages should be vigilant about content posted by users, but they should also be careful when interacting with them.
A number of brands use social media to interact direct with fans and users - for example, dealing with commonly-asked questions and customer complaints.
However, some companies have made situations worse by simply deleting negative posts or tweets. This practice raises potential advertising-law concerns. Others have engaged in online arguments with users on social networks, unwittingly creating bad publicity.
An aggressive reaction, however justified, to a complaint is usually best avoided. Instead, it's better to have a measured response, informing the user what is being done to address his or her concerns.
If the issue is complex, your social-media presence may not be the best place to conduct a conversation with a disgruntled customer.
Before using Facebook, Twitter and other social networks, you should carefully check their terms and conditions. This measure is particularly important in the context of running promotions and competitions. Not complying with their rules risks your page being removed.
For example, you cannot use Facebook's Like button functionality as a voting mechanism for a promotion, nor can you notify winners through Facebook, such as through messages, chat or posts on profiles.
You must acknowledge that the promotion is in no way associated with Facebook. With Twitter promotions, a key rule is that you must discourage users from creating multiple accounts - to dissuade them from entering a contest more than once.
5. Monitor use of your brand and fake user names and pages
Brandowners should also be vigilant about the generic use of their brands by social-media users and should look to prevent their trademarks losing distinctiveness and therefore legal protection.
Brandowners should also keep a careful eye on infringers on social networks, in particular the use of fake pages and usernames. On the one hand, fan pages may not necessarily cause harm to a brand: Coca-Cola's Facebook page was originally started by two fans.
But the potential for, in particular, infringement of intellectual- property rights and defamation is clear. Facebook and Twitter will take down infringing content, but at the moment, there is no equivalent process for social-media usernames to the uniform dispute- resolution policy used for domain-name disputes.
So a brandowner may need to consider court action if a social network refused to take down a fake page or username.
Damian Herrington is an associate at law firm DLA Piper's UK intellectual property and technology practice.