Investing In Social Media

One of the most common misconceptions that people have about social media is that it is free. While the various platforms (Facebook, twitter, Youtube etc) are indeed free to use, the cost of leveraging them effectively are very often quite considerable. Many social media newcomers are lured in by the dazzling power and far-reaching influence of these platforms but often fail to recognise that there is a very real (and often high) cost associated to creating and managing them. Yes, the barrier to entry is non-existent; heck, even my friend’s dog has a couple of hundred twitter followers. But what is the value that social media brings to your business? And, more importantly, what is the investment required to generate said value?

Small business owners will tell you that their scarcest commodity is time. Yet, this is the one commodity that is the most abused. It is inarguable that having, say, a Facebook page for your business is extremely valuable in today’s marketplace. And business owners are indeed investing a great deal of time, money and effort into creating functional and informative Facebook profiles for their businesses. It has become such a reflexive behaviour that business owners often neglect to objectively calculate the value that it provides them. And I am the first to admit that I eagerly jumped into creating a Facebook page and spent a great deal of time and money launching it. But was this time and money well spent?

Within the first week of launching my business Facebook page, I had gained 1000 ‘likes’. After completing a half-dozen back flips, I doubled my efforts and, within a month, I had gained an additional 1500. I became so focused on chasing ‘likes’ that I failed to notice that I wasn’t making any money. As a first-time business owner, I hadn’t yet determined what the value of a ‘like’ represented to the business. But a ‘like’ had to be a good sign, right? Yes, it is great to achieve a sense of brand recognition, but does it (or will it) translate into future revenues? After all, the whole point of running a business it to make money. Having spent a great deal of time cultivating my Facebook page and spending money on finding followers, I then realised that I needed to find a way to determine if this was a good use of my (limited) resources.

‘Likes’ and ‘followers’ are a great form of internet currency. On a very superficial level, a business that boasts a great deal of online followers can appear to be more legitimate in the eyes of prospective clients. As such, it is understandable why businesses invest a great deal into padding their social media numbers. But if the business does not have a valuable way to translating this currency into paying clients, the investment made into social media is lost. This is a mistake that I made in the early days; I invested a great deal into inflating my social media numbers without having a strong mechanism in place to translate these followers into actual revenues. When it comes down to it, all businesses need to be able to place a monetary value on their social media properties. Failure to do so can be extremely costly.

So, how does one actually measure the value that social media provides a business? Unfortunately, this is an extremely difficult question to answer. A multinational company has a very different social media objective than, say, Bob’s Burger Shack. From the perspective of a small business, social media has a very utilitarian purpose: find clients.

 If this is your primary objective, the success you find through social media can be quite easily measured by using standard analytics tools. For example, on an average day, social media platforms account for approximately 30% of my company’s overall web site traffic. Once I had uncovered this number, I determined that 30% of our marketing efforts should be devoted to social media. Unfortunately, this was not a good metric to follow. Further analysis determined that the social media traffic was actually only responsible for 5% of our overall revenues. So, how should we approach this situation? On one hand, social media is generating a lot of traffic to our web site and providing us greater brand visibility. On the other, it was providing us with very small tangible results.

Using social media can often feel like playing the lottery. A well-timed tweet on a popular topic can launch an unknown entity into a global superstar; a well-made video can turn a small-time lounge singer into the next Whitney Houston. It is this unbridled power that entices small business owners into using these platforms in the hope of catching a wave and expanding their business into large, new territories. However, these expectations need to be tempered. The overwhelming minority of businesses ‘go viral’ and it should not be a legitimate strategy for any enterprise.

It is indisputable that a strong social media strategy can reap major rewards for your business. However, as with any marketing initiative, due diligence needs to be performed before any real investment is made. In particular, small businesses need to be careful about the investment that is made into social media. It can seem like a great idea to run Facebook or twitter campaigns, but you need to have a strong understanding of what you stand to gain from it.

As with anything in business, don’t jump into anything without having a good understanding of what to expect.

For any comments on this piece please reach out to joe@thescrib.com