We’ve established that word-of-mouth has reached a whole new level with the rise and rise of social media in its various forms (particularly Twitter). But what is a company to make of all this new noise? Well, there’s some great stuff there… but there’s also a big catch to be wary of, too.

For a start, it’s now possible – in some instances – to answer many of our market research questions without having to actually ask them. ‘What is the sentiment surrounding Product X or Campaign A?’ ‘How are people using our product/service?’ Simply searching Twitter and the blogosphere (and soon, Facebook) may give you a pretty good idea, while the conversations on forums are another good place to start. Social media (and Web 2.0 in general) has effectively given organisations the ability to eavesdrop on the conversations that their market was already having offline anyway. Of course, it is important to remember that using online search does not necessarily provide a representative sample; however, it’s not a bad place to start.

Secondly, the flow of information has become more complex. While previously brand communications were primarily a B2C concept, we’ve now got channels for genuine B2C2B conversations, while also being able to track the C2C communications mentioned above. Perhaps more importantly, we’ve seen several high-profile examples of C2B communications – that is, significant communications about brands that have been instigated by consumers. This is not new (think Nestle powdered milk and New Coke protests), but certainly something that has gained momentum based on the possibilities opened up by new online publishing and distribution platforms.

Thirdly, we now have transparency, accountability, and speed of dissemination like we’ve never seen them before. Social media and Web 2.0 are merely amplifiers and accelerators of these things. In theory, all these factors should be advantageous to companies with ‘nothing to hide’: transparency allows consumers to peek into the internal workings of an organisation via corporate blogs; accountability provides the opportunity to impress the market with genuine corporate social responsibility endeavours; and rapid transmission of information ensures that the brand message is spread quickly via multiple channels.

But perhaps one key thing to remember in all of this is the old adage that ‘talk is cheap’. The proliferation of social media channels means it’s getting cheaper, too. So beware that just because consumers express an opinion in all this chatter, it doesn’t necessarily mean they’ll follow it with action. For instance, recent research by one particular brand revealed that, for all the green sentiment out there, only 10% of their customers indicated they were willing to pay an additional 0.7% to offset the carbon emissions associated with their purchase. Worse yet, when the brand went on to provide this option anyway, the uptake rate was less than half a percent (or around one-twentieth of customers who had said they would).

This above example illustrates an important point. You can’t rely on what consumers say, you must also study what they do. It’s tempting to use the shortcut method of ‘monitoring the conversations’ (a favourite service of social media experts), but it is a grave error to rely heavily on sentiment as a predictor of behaviour. The talk may be getting louder, but it’s no less cheap.

So by all means, dive into social media: listen, explore, and engage. But think twice before you’re led into making weighty marketing decisions based largely on online chatter. Talk is indeed cheap, and getting cheaper. Remember, consumers won’t always put their money where their mouse is.