Proving social media ROI a piece of cake
We’ll avoid dwelling on one job posting, but this takes the cake. An unidentified company, which described itself as “cool,” recently posted a job for a “social media czar.” The job description was thoughtfully written, touching on all the requirements such a position should have, even mentioning the need for strategy.
Then came the punch line. The job was for two hours a day, $10-$12 an hour, depending on experience.
Evidently, this “cool” company doesn’t expect much ROI (Return on Investment) from social media.
A lot of business owners I’ve met in recent months are probably not that different than whoever runs this “cool” company. Small businesses and professionals are intrigued by social media, but a) don’t have the time to get involved or b) don’t see the ROI of hiring a professional to help.
So I’m going to give you not just one, but three simple examples of ROI in social media.
1. An Atlanta executive coach (Disclosure: a client who also happens to be my wife) who works with engineering firms was in a lull in signing new clients. However, the coach recognized that LinkedIn could help her open doors. She used the Advanced Search feature of LinkedIn to identify companies that were clearly doing well during the tough economy (e.g. hiring). Working through mutual connections on the business networking site, she was introduced to executives who then contracted to work with her.
2. Charles Nelson, president of Sprinkles Cupcakes, has a company that apparently makes great cupcakes. His cupcakes are so good that he has amassed 70,000 fans on a Facebook business page. The “Beverly Hills baker to the stars” announces a secret word each day, and the first 25 or 50 people to show up with that word at any of his five stores gets a free cupcake. The ROI: A booming business and highly effective word of mouth. Nelson has not spent a dime on any other advertising or marketing in five years.
OK, you say, that’s Atlanta and LA. Those are big, highly wired cities. Well, let’s turn to:
3. The New York Times In July featured mom-and-pop shops around the country making money through Twitter. Consider just one: Silver Barn Antiques in tiny Columbus, Texas. Even before launching a Web site, the owner was able to find both suppliers and customers nationwide. “Twitter has been a real valuable tool because it’s made us national instead of a little-bitty store in a little-bitty town,” she told The Times.
So what is the value of social media to your business? Consider your goals. What is the value of a new customer or client? You know how many leads you generally need before you attract one customer. What is the value of generating a lead for your business?
My guess is it’s worth more than $20-$24 a day. Or even 25 cupcakes.
Small businesses on social media: ‘Show me the money’
Catching up with some odds and ends from the social media world:
• Thanks to Steven Moore of Marietta, Ga. (who, by the way, shares great small-business advice on Twitter) for passing on some interesting news. A new survey finds a growing number of small-business owners are using social media to promote their businesses. The survey, by Internet2Go and Merchant Circle, found about 45 percent of those surveyed are using Facebook or Twitter. Writes John Jantsch of DuctTape Marketing in his analysis:
“… small business owners are coming to understand the power of social media and the relative low cost vs. high return opportunity. However, the survey further suggests, to me at least, that while it’s easy to get on Facebook and Twitter, there’s still a gap in understanding how to make them pay. The danger in jumping into social media networks, with no barrier to entry, without a strong “hub” foundation of a blog or content portal is that it’s difficult to convert someone from the awareness that might be gained through Facebook to the trust needed to make a sale.”
Absolutely, John. Social media by itself will not help you, unless you have a clear, integrated strategy that drives people to your blog or Web site and you build a business connection. Social media are emerging as a major piece in the business puzzle. However, “puzzle” is the operative word here; small businesses are still trying to make sense of how social media can rock their world.
In short, social media consultants better always be prepared for one request from potential small-business clients. With apologies to actor Cuba Gooding in the movie “Jerry Maguire” — “Show me the money.”
• TweetDeck released an upgrade today which already has proven it significantly reduces the drain on your computer and is much more stable. TweetDeck is the most widely used third-party application to get the most functionality out of a Twitter account — seamless retweets, direct messaging, link shortening, etc. Previously, I would have to load it a second time to get all the columns to load. This version is a great improvement. I wish TweetDeck were available for BlackBerry. iPhone users have a great choice between TweetDeck and Tweetie.
• Interesting Wall Street Journal piece today on MySpace (both owned by Rupert Murdoch’s News Corp.) The article’s headline: “MySpace Tries to Recover Its Cool.” Says the WSJ:
In a strategy shift, MySpace is striving to become an online hangout for people to connect with friends over entertainment content, whether it’s the new Pearl Jam album, blogs from celebrities like British pop singer Lily Allen or a karaoke contest for the Fox musical comedy “Glee.”
The site is experiencing flat growth (especially compared to Facebook) and declining ad revenues (the article states eMarketer estimates U.S. ad spending on the site will be down 15% from 2008.)
The challenge for MySpace is how they are going to remain “cool” as users age and move elsewherewhile younger users face an endless selection of entertainment choices. We shall see.
Social media ROI: A bet worth making
Since this blog is meant to be helpful to small businesses and professionals, it’s only right to delve into a much-debated topic in the social media realm — ROI, or Return On Investment.
As business owners, you want to see a return on using social media, especially if you’ve hired someone to help you. While the amount of money invested may be minimal, the amount of time can prove taxing. Results from social media require extended effort, even more than traditional marketing. A business owner wants a financial return on that money or time.
The debate around ROI essentially features three positions.
1. There is no ROI from social media.
2. ROI needs to be redefined differently in social media. While there may not be an immediate financial return, social media offers a Return On Influence, increasing brand awareness and online reputation, thus indirectly leading to new customers and revenue.
3. Social media actually offers more measurable ROI than traditional marketing.
Where do I stand? It’s a tad complicated, but let me explain. First, let’s rule out No. 1. While I understand the business view — and almost accept it — I think it’s short-sighted. To simply state there is no direct revenue from social media misses the bigger picture.
First, let’s think about traditional advertising or marketing. It’s been estimated that only 18% of TV ad campaigns yield a positive ROI. While advertisers are rethinking their media buys these days, they certainly stuck with TV for decades. Why? Because of the promise in connecting with consumers with that advertising — whether it was creating word of mouth, brand awareness or other strategies. Whether there was a immediate bump in product sales did not seem to be the top priority. Companies, while wanting returns, could see the big picture.
Now proponents of No. 1 are trying to hold social media to a higher standard than traditional marketing. Where’s the money? This is just a fad. Etc. Etc. The truth is that social media campaigns enable companies to engage directly with consumers, including existing customers and potential ones. Traditional marketing has been about communicating a message; social media leads to direct conversations about your message with consumers and developing customer relationships. Which has more long-term potential?
Now let’s turn to No. 2. Yes, it’s true that social media provides a Return on Influence, and that’s great. It’s great that many in your community are fans of your Facebook page or tweets on Twitter. Your online reputation is boosted; your search rankings soar. But does that necessarily translate to money in the bank? I’m not ready to drop the need for Return of Investment, but I see Return on Influence as a nice add-on to a business strategy. Return on Influence opens the door to Return on Investment.
So are proponents of No. 3 correct? Let’s look at just a few of the things you can track in social media.
• Site traffic gained from social media referrals
• Comments/conversations that you can minitor
• How often someone shares your brand message with others
• Number of followers, fans, connections from social media
• Increases in RSS feeds from your site
• What people are saying about your company
• Number of inbound links to your site or a particular page
Also, there are specific social media campaigns that can be designed for immediate measurement. For example, the conversion rate can easily be tracked when offering coupons for a product or service through Facebook or Twitter. That’s just one possibility of a positive ROI campaign.
So No. 3 is true, but with two caveats. First, social media are not an automatic path to financial success. Second, they are just one piece of the puzzle. They should be used in coordination with other marketing techniques — email and traditional marketing. That is why major marketing companies now use terms like “integrated marketing” to describe what they do. They realize that marketing strategies require all these practices. And they realize any marketing campaign, traditional or social media, will take time.
The good news for small businesses and professionals is that social media are only in their infancy. The tools will get better, and the opportunities for real Return on Investment will only improve.
