Businesses in the financial sector are starting to trim spending on social media marketing after encountering some pitfalls when using such platforms, says Anthony Cooper, MD of business intelligence company Pearlfinders.
Following a bumper rise in investments in social media over the last couple of years that reached its peak at the end of 2011, the new platform started to alter the way consumers communicate with businesses, with firms tending to use social platforms to provide customer service and for recruitment.
Alongside the benefits, however, financial companies started to realise that there were risks in terms of complying with strict rules and regulations in the sector as well as potentially being exposed to criticism and negative sentiment.
The share of financial services companies using social media for marketing purposes slipped to just 6% in the April-June quarter of 2012 from 8.5% in the previous three-month period and 22% in the fourth quarter of 2011. The steep decline proves that financial services providers now look unfavourably on social media and that the sector has started to use social networks in a more cautious manner.
Banks, for example, are now reviewing their social media marketing plans as they are concerned over the negative feedback generated. They have been especially criticised for keeping silent in the social media space on issues like bonuses, system failures and money laundering charges.
According to Cooper, there will be some revival in social media investments of marketers in the industry towards the year-end, but first of all businesses will need to understand that the lack of trust in the sector stems from muted openness and that transparency is what they need to work on.