Return on Investement (ROI)

12 03 2010

As the Social Media Revolution continues to expand and change the online world, many companies ponder the best strategies for reaching consumers on this new landscape. Undeniably there is a vast and untapped market out there for any company to reach and engage. In other words, each of them have their very own groundswell, a fan base of varying sizes but unequivocal devotion a brand or product. Groundswells everywhere are just waiting to be reached and tapped. To be engaged in some sort of interaction as the internet continues to vie for their attention in one way or another. The challenge for marketers who attempt to engage customer in the social media arena is to figure out the best way to do so. At the same time, they have to maintain accountability and prove why they do their jobs. The best way to do so is by getting customers to see their efforts and thus create some sort of business transaction. Companies want to make sure that the efforts and expenses that they put into social media outlets pay off in the end. More importantly they want to make sure that they are creating a profit.  This is more commonly known as the Return on Investement.

There are a number of outlets for people to reach their consumers online. The three most popular being: Facebook, Twitter and Blogs. Each site offers different advantages and benefits over the other. However, they are best used in a combination of all three (see my previous research on best practices for using Twitter). The most recent discussion by social media scholars have focused on Facebook and its ever expanding presence and power. Today Facebook has over 400 million active users (see more numbers here), that is more people than the population of the United States. These users interact with Facebook in a any number of ways. From connecting with friends, posting status updates, but most importantly for this discussion, they become fans of pages and share links. According to Brian Solis, today in 2010, we are in an era of social media marketing, based on information, rationalization and resolve (see more at this Mashable article). In other words consumers are tired of traditional advertising. It is not a secret that it has become a mostly ineffective way to create sales. Yet the profit motive continues to be an important consideration for decision makers and companies. Solis mentions the fact that there are no clear, tangible standards or figures that show ROI numbers for social media marketing. Thus many people are hesitant to engage with social media initiatives. In this instance hesitation is the same as ignorance. Most people are doubtful to try out new initiatives for fear of failure. Missing out on social media initiatives and continuing the same marketing practices of the past few decades mean that companies will continue to struggle to develop effective marketing strategies, reach their consumers on an arena that is comfortable and familiar to them and avoiding the further monetary benefits that reaching the groundswell can bring. A key component of social media is the constant flow of communication that like-minded people have on this field. As Solis discusses this can be an incredibly important way to foster sales:

Customer Insight

Customer ratings and reviews rose to the top of useful marketing feedback, as they delivered tangible ROI insight. In 2009, 80% of respondents reported that customer stories and suggestions shape products and services. As a result, brands earn the trust and loyalty of their customers by listening and responding.

Developing a strategy remains a murky area for people who are trying to tap into this market. However some media critics point to the fact that the social media landscape is starting to become more stable and reliable. Steve Rubel says that out of this discord one player is starting to emerge as the definite source to reach consumers: Facebook (at least for the time being). A fairly recent occurrence that has been noted with Facebook is the fact that it is now starting to overtake Google in terms of directing more users online. Rubel says that he “treats Facebook as his private newsreader”. It seems that Rubel is not the only one. As more and more companies begin to experiment with social media marketing, Facebook seems like the best place to begin. Many companies have set up their own “Fan Pages” on Facebook. This strategy has many benefits: it offers immediate recognition, ease of use and direct access to consumers. Fan pages offer the author the ability to publish statuses, much in the same way as any regular Facebook user can. As people begin to connect with and become fans of more and more entities and companies they care about, their list of fan pages can grow at a tremendous pace. Many of these companies use their Facebook fan page to publish news releases or link to their websites, among other interactions. Rubel has some ideas as to why Facebook is gaining tract:

…in an age of infinite noise, the site (Facebook) actually helps me manage my attention. What’s more it makes it easier for me to connect with streams I care about from brands, news sources and thinkers like Jeremiah Owyang and Om Malik. I also like the richness of the conversation and how it’s easy to read, navigate and respond.

Thus it makes sense for Rubel to use his Facebook as his primary newsreader. It seems likely that many other people to begin to follow suit. Given the fact that Facebook is a website where people devote much of their attention, it makes sense for companies to invest in social media endeavors. What makes Facebook such an important tool for marketers is the integration that they get into the everyday lives of people. People can choose which pages to add to their news feed. This is incredibly important. Customers are electing to be exposed to this information; they want to give their attention to it. This is a prime target audience for marketers. Ten years ago, it would have been nearly impossible to find a group of people who are simply willing to listen to what companies have to say. Facebook facilitates this. Given Facebook’s structure, some will want to share content posted by companies with their friends. This is word-of-mouth marketing at its best. Given Facebook’s exponential growth the benefits and most importantly the profits of social media marketing are likely to be found on this platform.

The time has come for companies who are ahead of the curve to begin investing time, energy and money into establishing, fosterling and maintaining a media presence. Instead of worry about ROI and numbers they should foster a strategy that will help them tap into these audiences. It is clear by now that the audience and more importantly the attention is there. What remains to be done now is for companies to take the steps and try new marketing approaches that will work in the 21st century. Although strategies can be varied and go through much trail-and-error before marketers are able to fine tune the best way to reach their publics, they need to start now to gain this advantage. The best strategy will most likely be different between one company and another. What is clear is that the worse strategy is doing nothing and avoiding social media marketing altogether. There will be some companies that avoid it, but the ones that do not will most likely see benefits from this. More importantly they will be able to produce that ever important ROI.

Links Cited:

http://mashable.com/2010/01/26/maturation-social-media-roi

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/02/14/BUU51C0AMN.DTL

http://www.steverubel.com/facebook-now-drives-more-traffic-to-web-sites

http://www.steverubel.com/three-ways-to-manage-your-attention-with-face





Why is Social Media Important?

10 03 2010

This blog started out as an assignment for my Communication 491 class-a Seminar In Social Media and Communication.

The content and focus of this blog will now switch gears. I want to be able to join in the conversations that are happening out there in regards to Social Media. Social media is now an important aspect of society, both on the online as well as the offline world. It has also become an important aspect for the lives of many people.

As someone who one day wishes to work in this field, and boy do I have a number of dream companies I would like to work for in mind, I want to be able to study this phenomenon in more detail.

So this will now be the focus of my blog. I’m excited to see where the ever-changing world of social media will take us. For now I leave you with this video, that shows just how significant this phenomenon is: