Can you make money (revenue) off social media sites like Facebook, Twitter, Instagram, etc? And if you can’t, will social someday become a fad?
Let’s start with a couple of basics: Facebook and Twitter, the two behemoths in the general social media space right now (I’d classify Instagram as Facebook, and I might include YouTube as the third behemoth), are now both public companies. As a result, they have evolving needs. As a result of that, Facebook’s organic reach is down — essentially, to get your stuff seen by more people among your likes/fans/followers, you need to pay for it — and Twitter may be nearing a tipping point where it does the same thing, clogs timelines with brand postings, and drives users away (no one wants to see 40 tweets in a row from Coca-Cola, even if you are an avid soda drinker). This is all happening at a time when the recession isn’t necessarily over, quarterly earnings are consistently very important, showing ROI is crucial to higher-ups, and we’re all still believing that TV is the path to the most eyeballs despite the top shows on TV (sans NFL) having older median demographics. Companies spend about 2-9% of their overall marketing budget on digital initiatives (generally speaking), which is fairly small.
Add all this to this personal nugget: I’ve been on a bunch of job interviews in the last couple of months, mostly related to social media + content creation. I’ve probably heard north of 15 times the idea that “… well, we’re looking for someone who can come in and explain to us what we want to do here…” with also the concept of “… need to be in the space, but not sure what we want to do there…” mixed in, and a bunch of (although less than you’d expect) “… want to figure out how to make money from this…”
It all got me wondering: if social media ROI / social media as a revenue-facing tool can’t prove itself in the next 3-5 years, is it going to become akin to something like HR, that’s deemed important but perhaps associated with a negative connotation partially because it doesn’t face the bottom line directly?
First thing to note is this, and this is important: you can make money from social media, and you can do it directly (the video above, while a bit boring, shows one example) as well as through lead generation (new people finding you via your efforts on social and/or at creating content). The latter is a little bit harder to prove, but the dirty little secret of most businesses is that no one completely knows who brought in what — is a case of Miller Lite sold because of a tweet, because of a celebrity who endorsed it, because of an ad, because of shelf space, because of price, because of the group of friends you’re with at that time, or some other reason altogether? In each of the above cases, a different person(s) would be responsible for “the sale” back at HQ. Unless you poll every individual person who has ever bought Miller Lite / Clorox / a Beyonce song / whatever, you really have no idea where the spark came from to spend your money on this thing. That’s maybe a side issue with “big data:” if done right, people are afraid it could blow the lid off where the real value is (OMG, we’re paying this advertising agency how much?).
1. Figure out what you want to accomplish in the space. If your goal is money and just money, then you probably want to be selling things, or offering things, in the space. If your goal is money but also adding new customers (who may not eventually spend anything) and new followers and new e-mail list participants, then you’re talking about lead generation and revenue; the former is perhaps a bit easier to manage in some respects. Regardless, though, it begins with a conversation with stakeholders: what are we trying to do on social, as opposed to in other marketing spaces? And in 1 month, 6 months, 12 months, and 24 months, what would success look like there? You really need to avoid the idea of Ready, Fire, Aim here.
2. Figure out what platforms line up with what you’re doing. Again, avoid the headlong rush into it. You likely want to be on Facebook, yes — it does have 1 billion active users, which would be very hard to get on TV save for World Cup/Olympic-type events — but you need to think about what you could do there given their new algorithm, how people tend to interact with it, etc. There are no shortage of social channels, from social local on out, and being on Pinterest or YouTube may not work for your brand and your needs. LinkedIn may work for some things, but not for others. It’s OK to avoid a big space, or a “hot space” (one that a lot of people are discussing), if it doesn’t work for your brand. If it doesn’t work, your content will be forced/seem forced, and no one will want to interact with it.
3. Essentially, 1 and 2 above say “make a plan.” So work on that first.
4. ROI Calculation. This is important. It’s actually insanely important, because areas that can easily define their ROI — sales, finance — get the stuff they need, and areas that can’t (HR, social, IT in some respects) are semi-derided aside from people declaring “We need to be there” or “Send a tweet about it.” You need to determine how — the how – ROI will be calculated. Is it going to be new followers? Percent increase? New e-mail members? Leads into the sales funnel? Simply number of posts? Merchandise/products sold off specific links? Once you figure out the what – your plan — and the how – the measurement — you’re off to a good start in terms of connecting social back to business needs.
5. Look at exemplars. People have done this. Here’s an Instagram story. Here’s a Facebook one. Here are a couple of Twitter examples. Here are some broader digital marketing examples. Here’s the basic idea behind all of this: marketing isn’t actually a science, and you should be weary of people that tell you that. Instead, marketing is about how stories are told from an organizational standpoint. That’s what resonates with people. You need to find a way to tie that back to revenue, yes — because that’s the only way to get increased “buy-in” from above in most cases — but the essence of what you’re doing isn’t even scheduling tweets and content and cool photos. It’s basically about telling a story.
It will be interesting to see what happens in the space in the next half-decade, though: if ROI can’t be proven and Baby Boomer-generation leaders stay in power as opposed to retiring, will some companies navigate away from the space and back to traditional marketing methods? Is the whole thing a fulcrum that will eventually swing back, and then swing back to social in 10-20 years with a more rigorous focus on the monetization of it?