Is Social Media Worth Your Time?
It’s getting harder to find a business communication that doesn’t urge you to “like us on Facebook.” But what are those “friends” really worth to the companies that seek them out? A recent study aimed to find out. The survey of over 2000 users of the social media site who had liked a brand revealed that each “Like” is worth $174.17. At first glance, it affirms the stampede of businesses rushing to develop an online presence. But here’s the problem: that payoff only refers to major consumer brands who actively and strategically manage their Facebook activity. Using the results of Zara, Disney, and Coke as a benchmark will likely prove disappointing for most businesses.
Marketing professor David Reibstein notes, “Everyone is buzzing about social media. They think they need to be doing it, but they’re not clear what doing it means. They’re on LinkedIn and Twitter and Facebook because they’re afraid not to. What are you getting out of it? To know the answer you need to be able to explicitly measure the effects of your activity. The effort has to connect to something that has a benefit to the organization.”
The co-author of Marketing Metrics: The Definitive Guide to Measuring Marketing Performance continues, “Marketing through social media is much ado about almost nothing. In some ways it’s like measuring the people who walk by your store. Maybe some of them will stop in, and maybe some of them will make a purchase. But just counting the passersby isn’t useful. You need a metric that correlates your social media marketing to revenue. If you’re not going to take that step, it’s probably not worth the effort.”
Reibstein teaches executives how to measure the value of marketing in Wharton Marketing Metrics: Linking Marketing to Financial Consequences. “We spend a lot of time talking about the cost and value of customer acquisition and retention, and building a brand. Those are your core goals, so no matter what your marketing efforts are you need to know how they are affecting your financial goals. Once you understand how to use metrics to measure your marketing activities and see what you are spending versus the value you are creating, you can use this to allocate your resources. It could be social media, or billboards, or sponsorships. The important point is that whatever the channel, you need to take the next step to figure out how your efforts are directly affecting revenue (and profit). What’s a waste of time is getting online for the sake of getting online — maybe you read about the $174 — and believing or hoping that it’s working.”
Reibstein’s point about spending versus financial results might surprise some who have jumped into social media believing it’s free, or at least low cost. While it’s true the entry fee is zero in some cases, what you’ll have to pay to run a social media campaign might make you reconsider your decision. One recent estimate calculated a campaign to cost over $200,000. And while some companies are enjoying significant ROI, including Dell and Victoria’s Secret, there isn’t data to suggest that lesser efforts pay off. While Marketing Metrics helps measure the value you add in terms of your brand and your customers, the one measurement Reibstein doesn’t want you to need is how much you lose if you get it wrong.