Cost vs Value in Social Media Marketing
As a social media marketing firm, one of our primary duties is to keep clients informed about all their options and alternatives. Over the years, it has become abundantly clear that one area of confusion surrounds the actual cost versus value associated with social media marketing. In fact, according to numerous different survey’s, this one question consistently in the top concerns cited by small business owners. Contrary to popular opinion, this isn’t merely an academic question nor is it solely due to failure to inform clients; instead, it has to do with the very nature of social media marketing versus traditional methods of marketing.
Social media marketing creates a sustained, long-term relationship with a client which also yields impressive secondary and/or indirect results via their affiliations and relationships. This is unlike any prior marketing options; for example, in the past when a small business owner printed out 10,000 post cards to mail to clients, it was rare for their friends and family (much less other business associates or acquaintances) to see the postcard. If the client itself even read it, it typically went in the trash after the first view. Yet social media marketing, by its very nature, is social. It automatically shows up in the affiliations of each and every contact made and has the potential to influence hundreds – if not thousands – of friends and family members associated with each original client. That residual value is just one aspect of social media marketing that is totally unlike any other options.
Of course, no printing or postage costs are also attractive features in our above example but social media actually goes beyond saving money and is actually able to make money. For instance, it’s well known among many marketing circles that once a company reaches a point of critical mass, their own contacts and connections become incredibly valuable assets in their own right. It’s comparable to a lawn company or other service industry…the client list is as important – if not more important – than the actual tools and equipment. Anyone can purchase the required tools and equipment to start another company but building up a robust client list can take years. It’s the same with social media marketing; those clients and their associated contacts are valuable commodities actually capable of generating income via direct sale and residual or indirect methods.
The Formula for Success
So, is there a formula for social media success and how much does it cost? Well, it may come as a surprise but the total “cost” of conducting a social media marketing campaign is often over-estimated by most small business owners. This is because they fail to take two very important aspects into consideration when conducting their calculations:
1. Tax benefits derived from write-off’s
2. Value of social media assets
The first consideration, tax benefits, can literally add thousands of dollars to the bottom line of many small business owners each year…in fact, the smaller the business owner the more likely they are to benefit. Remember, Uncle Sam typically doesn’t allow a small business owner to write-off the value of their own time which can be substantial if a sole proprietor is attempting to handle all their own social media marketing. On the other hand, outsourcing social media marketing is a legitimate business expense where nearly all aspects are included in the total fees.
The next major consideration is the value of the social media assets derived from a solid campaign. Like the client list for the service provider, this is a veritable pot of gold for small business owners and can actually become a viable asset.
To get a clear picture of the actual cost of social media marketing one would use the following formula:
Campaign Cost – (value of social assets obtained + value of tax benefits) = Actual Cost
In some instances, it’s actually possible to generate positive results…ie, the actual cost is lower than the price tag of the social media campaign!
What’s it Worth?
By now, most small business owners are probably wondering what their own presence is actually worth. Now, it’s important to remember that these numbers are constantly changing based upon total volume of traffic, content and other variables. However, there are a few tools and other bits of information that can provide a quick estimate. For example, maybe you would like to know how much your Twitter account is worth…visit http://whatsmytwitteraccountworth.com and type in your user name to find out. Think it’s chump change? Perhaps but consider how much well known celebrities like Lady Gaga ($11,247,313) or Justin Bieber ($9,914,148) are worth. While few will reach that type of celebrity status, there are plenty of ordinary examples well into the tens-of- thousand dollar range; Superchiste ($266,131), Jadande ($118,637) and oodles of other relatively unknowns.
Of course there are other ways to measure total value including “lifetime value” of each contact. These are commonly incorporated into investor type documents when assessing the value of a social media site. Currently, here are the lifetime values of each client according to the given social media site:
Facebook – Not surprisingly, Facebook leads the pack with an estimated lifetime value of $118 per user.
LinkedIn – Many small business owners might be surprised to learn that LinkedIn makes a strong showing at $104 per user but given the high cost of recruiting and growing importance of B2B, LinkedIn has created a strong niche area in the social sphere.
Twitter – $71 per user isn’t shabby for a company that has yet to hit their major marketing stride. Keep an eye out on Twitter over the coming months; the recent Android traffic may push this up substantially.
Foursquare – Although currently estimated at $40 per user, the growth of local and mobile marketing is likely to make this grow.
Pinterest – A relative newcomer, Pinterest has generated immense growth in recent months propelling the site to just over $28 per user.