With the increasing uptake of social media sites such as Digg, Technorati, Slashdot, YouTube and MySpace, together with community bookmarking sites like Del.icio.us, Reddit and Ma.gnolia, companies the world over can reach their target markets via a whole new channel.

Social networking is like viral marketing on steroids. Companies can release a new product in the morning and have it talked about by millions of users on thousands of sites by the afternoon.

Look at the bottom of this article and you’ll find a number of small icons - clicking these will allow you to share this article on your favourite bookmarking and social media sites. This is the kind of tool we’re talking about here - just give it a try and see how powerful it is.

The good news is that social media is user driven. The bad news is that social media is user driven. Yes, there’s the rub. Users are fickle creatures - they can love a product one minute and then drop it like a lead balloon the next, depending on their experience with the product, a rumor, or whether they have had their morning coffee yet. And if their experience is bad, the noise is generally louder. To protect their reputations it’s not just journalists that companies have to impress these days. It’s anyone with a computer and an Internet connection. Love it or hate it, the user community now has enormous power over the online reputation of a company or brand.

Not surprisingly, businesses and individuals alike clamor for the attention and mostly enjoy the limelight that social media can bring. Others hate the intense scrutiny that often accompanies the popularity. An example is usability blogger Kim Krause Berg’s unpleasant first experience of Digg - I Don’t Digg Being Dugg.

Online communities can even bring a site to its knees. Marketers are calling it the “Digg Effect” or the “Slashdot Effect”. Buzz for a site can cause more than good or bad publicity. As Kim found out, the effect can cause traffic overload sometimes resulting in site downtime and lost business.

Social media can also kill the reputation of a brand instantly. Take the Microsoft Windows Vista Laptop Scandal for instance. No stranger to the benefits of social media, Microsoft had allegedly tried to exploit the power of the blogosphere at the end of last year, by sending a number of A-list bloggers a free Acer Ferrari laptop loaded with the yet-to-be-released Windows Vista and Office 2007.

The pitch was a request for the bloggers to “review” the new Windows software in their influential blogs. Many bloggers did write a review, but some did not disclose their free gift. When this fact was discovered later, the bloggers were hammered by large portions of the blogosphere for what they saw as a clear conflict of interest. Microsoft were tagged both literally and figuratively as bribers and Windows Vista was widely panned with parody tag lines such as “Vista: So Bad We Had to Give it Away”. Not a great start to an online product release.

Another example of the damage that social networking can do to a company’s online reputation is the National Pork Board of America’s recent battle with breastfeeding advocate and well-known blogger Jennifer Laycock. Jennifer was sent a harshly worded letter from the Pork Board’s representing counsel, threatening her with legal action for allegedly stealing their pro-pork slogan “Pork: The Other White Meat” in a pro-breastfeeding t-shirt she had designed that read “The Other White Milk”.

The letter suggested that their case for trademark infringement was probably solid. Unfortunately for the Pork Board, the poorly-worded letter also suggested that they were insensitive to breastfeeding mothers and the plight of starving infants. The Pork Board didn’t count on Jennifer’s influence in the blogosphere and the power of social networking to carry her defiant response to the world. The Pork Board ended up receiving bags of hate mail and thousands of flame emails via their online contact form, forcing them to issue a public apology to Jennifer from the Board’s CEO and a generous donation to the Mother’s Milk Bank of Ohio in order to save face.

To their credit, the Pork Board did the right thing. They also made sure that all persons who complained about their approach to Jennifer received a polite, measured email response from the CEO. As a former PR consultant myself, I tip my hat at them. Having the apology come from the very top is smart. It demonstrates how seriously they took the complaints. The wording of the complainant response is polite and restrained. Addressing each and every complainer personally is impressive. It would’ve been tempting to ignore all the flames and issue some stock standard release.

Their choice of legal team may have been questionable, but the Pork Board’s public relations team mobilized quickly, upgraded to full damage control mode and did a great job of mopping up the PR mess before it spread too far. Social media might have damaged them, but the Pork Board’s reputation was ultimately salvaged by quick thinking and a swift online response.

Such situations underscore the growing importance of online reputation management (ORM) in our Web 2.0, social media-driven world. Companies should be tracking their online reputation on a daily basis to check for negative commentary via social media in order to avert potential PR disasters. Major search marketing players such as Andy Beal recognized the potential growth in ORM a long time ago. But I wonder how many PR/Search Marketing agencies currently offer this service?

With brand reputation increasingly at risk, you can be sure the smart agencies will be adding ORM to their service offerings faster than you can say “Can you Digg it?”

About the Author: Kalena Jordan

Kalena Jordan is one of the first search engine optimization experts in Australia, who is well known and respected in the industry, particularly in the U.S. As well as running a daily Search Engine Advice Column, Kalena manages Search Engine College - an online training institution offering instructor-led short courses and downloadable self-study courses in Search Engine Optimization and other Search Engine Marketing subjects.