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A social media policy is an internal document that guides employee interactions on social media platforms like Facebook, Instagram, and Twitter. These platforms provide opportunities for companies to engage with potential customers and shape their brand identity. However, the rapid nature of social media also poses risks, as inappropriate posts can damage a company's reputation. The video discusses the essential components of an effective social media policy and emphasizes the importance of adopting one. The presenters, eFORMS, state that viewers should watch until the end for a link to a customizable social media policy template. Finally, the video aims to clarify the distinction between social media policies and social media itself.