According to a recent Nielsen study, social media accounts for as much as 22 percent of the time spent on the Internet worldwide, with three of the Web's top brands driving the social traffic: Facebook, YouTube and Wikipedia. In addition, three-quarters of the world's consumers visit social networking or blog sites.
Not surprisingly, businesses are racing to harness this audience and its influence.
But as with any new medium, some early adapters have had measurable success while others have stumbled, offering cautionary tales. Still other firms grapple with the loss of control inherit in creating effective social media campaigns, which allow for two-way communication with customers and instant feedback.
For those on the sidelines or wrestling with the lack of metrics to make an informed decision, Reshma Shah, assistant professor in the practice of marketing at Emory University's Goizueta Business School, and co-author Jamie Turner have teamed up to offer a guide to social media and profits. In their new book, How to Make Money with Social Media: An Insider's Guide on Using New and Emerging Media to Grow Your Business, Shah and Turner explore the do's and don'ts of emerging media.
One of the first tasks the authors address is dismantling several misperceptions of the Internet.
A lot of people use social media just as a branding tool, says Turner, who is the chief content officer at The 60 Second Marketer, an online magazine for the marketing community. But it's difficult to show a direct tie between what you do on the branding front and a lift in sales. The beauty in social media, if you do it right, is you can actually watch the specific rise in sales that results from a social media campaign.
In their book, Turner and Shah highlight the five ways Fortune 500 companies are using social media effectively, offering examples in branding, e-commerce, research, customer retention and lead generation.
Shah, a veteran consultant for companies like GE and The Coca-Cola Company, encourages marketers to familiarize themselves with each and to think tactically about their goals and outcomes.
For example, a post on Twitter or Facebook is not only about awareness (branding); it can also give marketers valuable information about a customer (research), point the user toward a purchase or promotion (e-commerce), or make them part of a larger sales funnel (customer retention/lead generation).
Dell, for instance, often tweets a special offer-a value add for followers. According to Turner, the company makes millions of dollars each quarter by sending deals directly to its avid audience. For Dell, this is just one execution of a larger initiative that includes staying active on many social platforms.
Indeed, Shah stresses, you have to think about social media from an integrated marketing strategy perspective.
That includes keeping an eye on the bottom line.
According to the authors, social media is particularly useful for limiting the cost of retaining customers. Since it commonly costs more to gain a new customer (anywhere from 3-5 times more than keeping an existing one), customer service and brand messaging are cost efficient uses of social media.
For example, companies like Comcast and Southwest Airlines address customer frustrations via Twitter, using the two-way conversation to troubleshoot problems with cable boxes and lost luggage.
Marketing managers can also use social media to generate direct leads. According to Shah and Turner, organizations that offer a product or service online and in the brick-and-mortar marketplace can use online hype or offer content to users on a relevant subject to garner leads or foot traffic.
At the 60-Second Marketer, Turner and his team strive to make the online magazine an information station for marketing professionals. As readers continue to return for more information, they get introduced to other companies, like BKV Digital and Direct Response, that offer services to marketers. It's a subtle, long-term exposure to the traditional sales funnel, Turner explains.
Regardless of the approach and/or goals, measuring the success of any social media campaign is crucial and, according to the authors, should be tracked to the point of customer conversion. The conversation started online can continue in a way that makes money for a firm, whether it is by sales calls, leads or customer retention.
The authors are quick to note that managing the customer conversation is an important part of determining success in a campaign. Customers can share their experiences via word-of-mouth through the same channels companies use to engage them.
As we know, the customer is king, says Shah. What someone thinks, and more importantly, what they say about you to others-both positively and negatively-impacts what they are likely to do. Nowadays, the consumer has so much influence over a brand's perception that it's even more important to have a good strategic social campaign. If you don't monitor and track the comments going on in the blogosphere, then you can do yourself more harm than good.
This is one reason Turner sees the tide changing, with managers willing to embrace the uncertainty of social media for the advantages it can bring.
Managers are past the stage of uploading a video to YouTube or jumping onto social sites because their brands 'just needed to be there,' explains Turner, who is a marketing speaker and has worked on campaigns for big brands like AT&T, CNN, Motorola, and Cartoon Network. They're getting past the stage of just tactics and are moving toward a strategic stage of the game where they're thinking more in-depth before they launch a campaign.
Shah has witnessed this evolution as faculty advisor to the Goizueta Marketing Strategy Consultancy (GMSC), a student-run program that partners talented Goizueta MBA students with leading organizations to create strategic marketing solutions. In May, a team of six students was awarded the top prize for assisting Manheim, a division of Cox Enterprises, in developing a social media strategy.
It was a win-win for companies like Manheim and the future managers. Students are on the higher end of the spectrum for social media usage, says Shah. With that kind of experience, companies can tap into their expertise to find out what the newest social media platforms are.
In addition, students are unbiased and not limited by current organizational boundaries, situations and interests. Breaking through these barriers is one reason companies seek out GMSC, but it also highlights a larger issue that can impact the effectiveness of a social media campaign.
According to Shah, companies often run into problems by creating too great a separation between the communicator (the producer of the campaign) and the brand manager (the one with an eye toward effective messaging). This disconnect can kill a campaign.
The only way to launch a social media campaign is to think about how it fits into your overall marketing plan and what you hope to accomplish through your marketing communications efforts, adds Shah. Unless you are a startup company, it's rare that your social media efforts will stand alone from your other marketing efforts.
Finally, Shah says, think strategically. Stay on top of it daily. Those are the components for a successful social media campaign.
For a sneak peak at the contents, Click here (PDF).