Much has been made of 2009 being a year of frugality for marketing departments and social media becoming the new darling for budget constrained companies. That said, I want to throw a contrary viewpoint out there: social media marketing is not necessarily cheaper than other forms of marketing.
What social media marketing achieves is a trade of time for cash. If you're capital constrained, you're going to be trading big cash spend for big time spend. If you're okay with that, if you have the personnel resources to spare, then social media marketing is going to work well for you.
Social media requires a hefty investment of time, and even in the best of times has a squishy ROI. You can't load up a social media marketing plan like you can an email marketing plan and say that if we post this item to Facebook or we Twitter this web page, it will result in 354 clicks to our product page and 14 purchases. You can do that with reasonable confidence with email marketing - you know what your open rates are, you know what your clicks are, and you know the revenue behind a click. There is no such formula or set of statistics for social media.
One of the catches in tough economic times is a stronger demand for ROI - making sure scarce resources are well-allocated. How do you calculate social media's ROI?
We do know the market value of some items in social media; an inbound link from a certain class of web site carries a market value (in terms of what it'd cost to buy that link) so if you can get one for free, then that inbound link's value can be directly attributed to social media's ROI if the link couldn't be obtained any other way. I know that if Chris Brogan twitters this blog post, there's an audience of 26,566 that will briefly see it in their Twitterstream; on a CPM basis, I know that I would have to pay a certain amount for access to the same size audience. If he went a step further and asked you to link to it from your web site, then I'd have additional hard ROI I could build into my numbers.
Even with that, the ROI is tough to crunch. I wouldn't necessarily make a business decision for social media based on those numbers, would you?
If you're looking to get impact out of social media marketing, take a hard look at what you're doing right now inside your company using more expensive channels and see where social media marketing might make a difference. For example, in my own work at the Student Loan Network, we're always looking for great partners to work with; having a prominent LinkedIn network (cspenn at gmail dot com, all requests accepted!) is a great, low-cost way to find new partners to work with. Twitter has transformed from a big chat room to an honest-to-goodness source of lead generation and link building. Blogging is pure SEO food, podcasting has built the name of the company in the industry far beyond what should rationally be possible without massive ad spend, and the connections made through events like PodCamp, Podcasters Across Borders, and other conferences have driven incredible business connections.
I would argue that social media marketing isn't cheaper per se. What I would argue is that it opens new, different doors and gives you opportunities you might not otherwise be able to generate without far more cash resources than you have access to, and therein lies its true value.
If you're in marketing, how are you presenting why social media marketing is right for your company? Comment below! (comments are moderated but will be approved pretty fast)
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