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.