Apparently, even MIT is studying the effects of social media on business and marketing.
In short, the researchers found that using social media to advertise a new product or service is only a good thing if the product is as good as you claim it is. If the product actually stinks, using social media will quickly backfire and hurt your sales more than if you had ignored the twittersphere all together.
Of course, we don’t need scientific research from MIT to understand why this happens. Social media gives customers an easy way to comment on the things they buy. If you engage this segment of the market for your business, you have to realize the risk of making all your customer complaints into public fodder. Then again, if you’re sure of your product and your target audience loves it too, then there’s probably no better place to be.
Just don’t constantly sell and push your own stuff exclusively… most people don’t go to social media sites for shopping. Its the fun, socialization, and information that they’re really looking for – not another sales pitch.