At this time, I'd address this as benefits for companies that participate (costs/dangers of participation is something I might address in the future), as this is probably a question that a marketing department of the company would most likely ask (though, I believe that benefits reach beyond just marketing of the company and will address that as well).
I would break down my answer into three separate categories, based on types of social networks involved:
1. internal social networking (networks within the organization)
2. external social networking (i.e. presence on Facebook, Twitter, or number of similar sites)
3. internal-external networking (i.e. networking that takes place on company's site and create community encompassing insiders as well as outsiders).
Internal Social Networks:
As many companies transition to enterprise software, digital asset management, cloud computing, and other forms of gathering and sharing data, they start to see the benefits on intra-networks: facilitated collaboration, increased knowledge transfer within the organization, increased opportunities for peer reviews, creation of smaller teams within the organization organically based on the participants' interests, increased productivity as they cut down the "noise" of endless emails, creation of wikis as knowledge encyclopedias, increased involvement of employees in a more active and participatory/network exchanges (as opposed to hierarchical) and, thus, decentralized decision making.
External networks:
When it comes to external social networking I can see number of benefits there as well. According to Forrester Research, overall adoption of social networks is at about 80% of people in the U.S. Others estimate that about 80% of Americans are now on Facebook alone, and out of those who are not 1/5 plans to join. They use social networks for all kinds of things, from connecting with long lost friends, to staying in touch with family, to connecting & recommending brands/companies to family, friends etc.(http://3.ly/3282) And, this is where the benefits for a company/brand kick in... Most people trust personal recommendations more than adds, so social networks are one of the ways to reach out and expand the potential customer base.
For example, creating a facebook page, that aims much broader audience then just developers and web architects, could lead - if interesting enough - to a base of future developers or architects, particularly among college students, who tend to spend 4-5 hours a day on FB these days, and tend to abandon traditional forms of web surfing. In a similar manner, growing the Twitter base from little over 1,000 to over 5,000 in a relatively short period of time also increases visibility. Even if you assume that only 1/3 will actually read the tweets, it's way more than the traffic that a company had in the past and spreads the awareness about the brand?
The trick, of course, is also finding the right networks and making yourself visible on those networks. Facebook is one example, but Linkedin also comes to mind, or weebiz. I imagine there are also networks mostly frequented by IT people/developers, etc. - those are also places where you want to be present... not just as a company that advertises there (I don't think that buying banners is a way to go), but by encouraging employees to participate actively in conversations & forums.
Internal/external networks
By the same token, creating company's own forums will actively engage followers and partners - if you respond to their questions, praises, and most importantly complaints you will increase loyalty to the brand. Forums will also encourage horizontal connections between customers and partners (as well as communication between your company and customers/partners). People tend to be more loyal if they are personally involved, it makes stronger ties (see Gladwell's article, which is relevant tho it's more focused on activism and networks). Furthermore, if their contribution is recognized by the company itself, it will make them feel proud and will help the company to identify "influencers" - those who are connected and share .
Moreover, if you are successful here, you will be able to turn the customers into the evangelists. DayIgnite 2010 in Chicago, where all registered participants received iPads (with one of the best apps I have seen, instead of conference program in a form of a bulky book AND ugly canvas bag, as we usually get at the ASA) and most of them tweeted from the even in real time (see #dayignite on Twitter) was an impressive example of such engagement. In sociological terms, it was a moment of "collective effervescence" that could be recreated online as well, and could build up the "buzz" around company's product (in Day's case making it a "cool enterprise software", if that's not an oxymoron in an of itself).
But, what does this do for a company? You may think about company's visibility as series of concentric, sometimes overlapping, but always expanding circles. The more people learn about the company, the more people there are that THEY will tell/post/tweet to, and the potential customer base is growing. The tweets from DayIgnite were not read only by "usual suspects" but by followers of all who posted them... and that's something the company would want to encourage. Once again, people tend to put more faith in "personalized" recommendations or experiences (as opposed to traditional marketing).
Social networks (both internal external and external) provide a chance for a company to get a real time feedback and "check the pulse" of its audience -- see what the glitches are, as well as recognize the positive features of the product. Two consequences come to mind: Firstly, finding out what should be highlighted in traditional marketing approaches. Secondly, the feedback could lead to increased innovation - whether it is something that your customers point out as a problem and your employees work out a solution for, or it is something they share through the company's website/or social network site that can be included into the next version of the product. Thirdly, the more people participate in a conversation, the more decentralized the conversation is, chances are that the new product or new marketing campaign will be more successful. Even though all your employees may be uber-smart not ALL the smart people work for you. You need to work with smart people inside and outside of the company.
To conclude, by strategically positioning company within social network, you create social capital, something that might be more difficult to measure but is probably as important as any other form of capital and creates new opportunities (or constrains, depending on how the company is positioned). Being more involved in social networks can create connections outside of your usual groups. People tend to hang out with people who are like them... expanding the network might help you expand the horizons and think outside of your usual box. Finally, social networks are here to stay (at least for a while) and thus should be seen and integrated strategically. They should also be seen as SOCIAL (or sociological) phenomena (not only technological) that needs to be approached from a sociological perspective in order to be useful - observing patterns of interaction and engagement, and incorporating it with other strategic plans and decisions is a must for a company that wants to continue to be successful in the future.
This is probably longer than it should be... academics tend to be wordy.... feel free to let me know what you think of it.
MissRed
PS Couple of links that helped me think this through, in case you want more readings.
http://www.
