Monday, December 29, 2008

Can You Make Money With Social Media?

In the last 10 minutes, I have edited my Facebook profile, accepted a new invitation on LinkedIn, watched a video a friend emailed me, looked up "almanacs" in Wikipedia, and written in this blog. That's social media at its finest!

But, did any business benefit from that activity? Not directly. My company will build site traffic, recognition, and credibility with this industry-specific blog. Does it make us money? That is the question that I have been pondering...

Can you make money with social media? I'm talking about businesses and corporations. Everyone is raving about social media as the next biggest thing. But is anyone making money? There are entire conferences in NYC about "monetization" of social media. Lots of buzzwords, but I'm not seeing it.

I come from a direct response background. You spend X on a direct marketing campaign, you get Y response, equaling Z return on investment. How do you measure the response from social media? How can you tell if you're making money?

After some comparative research, I'd classify social media as anything that exists primarily as user-generated content. This includes social networks, such as Facebook, MySpace, YouTube, Twitter, and LinkedIn. It also includes blogs, forums, videos, and podcasts. Even wikis and knols would count. I read many articles proclaiming the virtues of social media and how it can benefit businesses. There were few examples of how it could actually make money for a business. The examples I found were consumer-related. For instance, a retailer of clothing for teenagers posted pages on MySpace and YouTube with games, contests, or links that drove traffic to their website.

What about marketing life insurance to middle-age adults? Or annuities to seniors? Can social media help you? What about business-to-business? How does my company, Allegro, market its services to other businesses with any measurable results?

I'm not sure. The social media movement is about relationships. Social media exists to foster conversations and connections between people. Participants in social media are looking to engage with others, to extend beyond one-way communication.

I think we can use social media to build relationships. I may need to change my direct response thinking to find new ways to measure the effectiveness of that relationship. While a prospect may not send in a reply card or "respond" in some way, he or she is still interacting with your company.

Here are some "relationship" benefits you may get from social media today:

Find feedback
It's easy to find out what customers are saying about you and your products. Set up your own microsite and ask for comments or opinions. Write a blog or launch a forum and invite feedback.

Conduct research
Use social media as a channel to learn more about your customer's interests, tastes, and preferences. Conduct surveys or polls. Find out where your customers are and see how they are using social media.

Reinforce your brand
Social media can help you build your brand image. Use a blog to discuss topics related to your business. Use videos to show the benefits or unique features of your products or services.

Find new customers
A group or page on a social media site can link readers to your website. If they found you through social media, they should be a targeted visitor and can hopefully be converted into a customer.

I have to be honest. I think social media has yet to be used to its fullest potential in the business marketing realm. We need to think of new, creative ways to make it work for us.

If you have examples of how social media has helped a business achieve measurable results, I'm eager to hear them. If you are skeptical about the business benefits of social media, let me know. Let's begin some two-way communications!

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