Tuesday, June 29, 2010

Social media: Are businesses making money?

Businesses are scrambling to get on social networks, but some skeptics are wondering if anybody's actually making money from them. The Wall Street Journal reports that a study Forrester Research conducted for the the National Retail Federation said only 7 percent of retailers surveyed cited social networks as one of their top three most effective tools for gaining new customers. (On the other hand, 90 percent cited marketing through search engines like Google). It's in keeping with a common theme I've been hearing from people who are frustrated that, despite all the buzz and the eyeballs social networks generate, reducing it to dollars and cents and measurable impact for companies is hard. It's the old ROI question -- return on investment -- that the proponents of social media marketing keep getting from prospective clients.

It's not a new question for Jason Keath. The Charlotte native is the founder of Social Fresh, a successful social media marketing conference that began in Charlotte and is now held in six cities. The reason, he says, is simple: people still aren't sure what they're doing in the space. "Most people are not seeing results because it's so new. They're still in the educating, 101 phase, how do I use these tools...But there are a few people who are the early adopters who are seeing results."

He points to Starbucks, which recently used social media to drive its Free Pastry Day campaign and brought a million people into its stores. Since you had to print out a coupon from Facebook or Twitter, or show your coupon on your mobile device, the results were easy to track. And, most importantly, the promotion also required you to buy a drink in order to get the free pastry. Starbucks' profit margin on the coffee likely more than made up for the cost of giving away the pastry. Smart. "Businesses that are investing in social media in smart ways -- they're making money," Keath says.

And so, I imagine, is Social Fresh. The conference has tapped into the seemingly insatiable appetite businesses have to try and ride the social media wave. Keath, who recently moved to New York City, says he's had serious requests from business people and marketers in 40 other cities, asking that he bring the one-day Social Fresh conference to them. His new Big Apple base gives him more networking opportunities, he says, but Charlotte and its growing business market remains important to him. Tickets for year's Social Fresh Charlotte conference, to be held August 16, are already selling briskly enough that he's thinking it could prove his biggest event yet. This year's event, he says, will have more "drill down" topics, taking attendees beyond the basics to application-type issues such as how to ramp up social media without adding staff, and forming strategy for using social media monitoring and management tools. (Registration prices jump July 15, but even with its pricey $300-range tickets, last year's Social Fresh event in Charlotte sold out).

Keath believes as the gap closes between social media's capabilities and users' skill levels, we'll see more winning campaigns and less skepticism. He's probably right. But as Web 2.0 evolves, networks and concepts rise and fall so quickly that it's hard to tell what's coming next. We're headed for territory none of us has ever visited. It's a thrilling thought. But it's also scary. Just ask anybody in the newspaper industry.


Anonymous said...

So, how would all this play during an economic depression?

Maybe they could use twitter to distribute food stamps.

Or maybe form flash mobs where they're handing out the gubmint cheese.

Anonymous said...

What is a Social Media Consultant:

1) A self proclaimed marketing guru thats been out of work for the past 4 years that one day decided to only follow people with auto follow accounts (just google auto follow directory) to boast his own follower count to make his self look good.

2) A 'wanna be PR professional' that is tired of real PR work.

3) Someone that doesn't know that how to calculate ROI and can simply say, "well, its relatively new" and "It takes time" and "Its about relationships" for his ROI analysis.

4) All of the above

I'm gonna go with ......4!

Anonymous said...

Everyone is jumping on the latest 'get rich' scheme.

It is now called 'social media'.

If you ask most 'social media gurus' to show a case study with ROI they will tell "Well everyone is doing social media...and I need a paycheck"

I can't believe someone would charge just to setup a facebook page or any other social media garbage platform.

I love the part where it says that only 3% said it helped their business. Smart business owners will spend their time/money on marketing that can produce ROI.

Chad Blenkin said...

Most companies aren't achieving social media success cause they are using these platforms the same way they do traditional media.

In addition to that, most companies aren't ready and prepared for social media. Not cause they don't have content publishers or resources to manage it. Because their business isn't ready to be referred yet. Until that happens the company is only making things worse by being on social media.

Sokule said...

Nowadays social networking has become a part of everyday activity. And most of the money making businesses these days depend mainly on Social Media for marketing their products or services.

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Nilofar Ansher said...

As in all new technologies that is slow to acceptance, the culture of social media too is facing resistance by traditional consumers, business houses and media analysts. But one cannot deny the "growing" reach of the social media platform. With ever increasing progress in digital technologies, social media and its allies will be the only wave of the future worth riding.

Dianne said...

nice post!

Kevin Beamer said...

Yes, social networking sites or social media helps in generating money. By just posting your products or services in your account, you will surely have a client who might be your friend, relative or common friends of friends. Internet marketing helps in depression by cutting down the cost of starting a business. Without stalls contractor leads the business, into a new phase of "barter".

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John Baldwin said...

I think since social media is relatively new in the marketing field, some businesses are not utilizing it properly. Even with the help of user-friendly social network web designs and innovative social networking development ideas, businesses should still study this new medium and apply the necessary steps to gain customers.

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