I had an interesting discussion with Jeremy Koch of Pertnear (the guy responsible for 88,000 fans, in 4 weeks, at half price) to try to answer some questions a lot of businesses have right now about social media marketing:
- How do we monetize Twitter and Facebook?
- Should we wait to build audience on those platforms until we’ve figured that out?
- How do monetize the audience once we have it?
Brian: I’ve heard some discussion that Social Media is just a bubble…. that we should expect some bursting in the not-too-distant future… Do you think that’s true?
Jeremy: It has been my experience that “bubble” bursts come from imbalances. If you can identify the imbalance, you can avoid suffering from the burst.
Brian: What are some of the most common questions you get about Social Media?
Jeremy: The most common are 1. How can you monetize Social Media? 2. Are there any case studies that show a return on investment with Social Media?
Brian: And how do you answer those?
Jeremy: As soon as there is a widely accepted theory of how to monetize Social Media, the game will change and it will become much more expensive. And when everyone adopts the same theories on how to monetize Social Media, it won’t work as well as predicted, in part because of the competition. Keep in mind, people will still use the same methods, simply because there is a track record and/or case studies. Companies will throw significant dollars at these methods, and then you can throw the case studies and theories out the window. There could be a mass exit for companies using Social Media, or at least significantly decreased ad spend and resources dedicated to the strategy.
Brian: So you’re talking about how the bubble would burst for individual companies?
Jeremy: What is interesting about the bubble burst is we do not expect it to be on a global level, but rather at the company level. If companies do not put the proper strategies in place, their bubble will burst! Companies will decrease the size or even eliminate their social media departments. As this takes place you could potentially have the same theories and methods start to work again.
Brian: So what do you recommend companies do now?
Jeremy: We run a small Social Media agency (shameless plug) and we get to talk to many companies at many different revenue levels. We have dealt with everything from Fortune 1000 clients to the small mom & pop bistro with 10 tables. We run in to many of the same questions and concerns regarding social media marketing, we also run into a few that really get “it”. There is no Social Media strategy that will work for every company. We have a small percentage of the people we talk to that seem to get “it”.
Brian: What is “it” that they get that others don’t?
Jeremy: It’s not knowing HOW they are going to monetize social media- but they believe they will be able to. They see that if they build this large audience while it is still relatively easy and inexpensive, then while their competition is playing catch-up, they will be driving revenue.
Brian: Facebook audience building does seem to be huge right now. What I’m seeing (and working on) is Fortune 1000 companies going after 6 figure audiences, or bigger… mid-sized companies in the low to mid-5 figures. Small businesses are trying to get higher in the 1,000’s.
Jeremy: Eventually what will happen is every company you can think of will be purchasing ads to try to build audience. This will drive demand and cost up across the board. Companies may be so concerned about building their audience that forget about building the relationship with their audience.
Brian: And yet the relationship is critical to monetizing the audience, isn’t it?
Jeremy: Driving revenue and monetizing social media marketing is not automatic. It takes a significant amount of time and effort to build a relationship between a brand and an audience, but it can be accomplished. Building a relationship with an audience can be a very difficult task for a brand, especially if they have had a tendency to be very stale and without personality in the past.
Brian: What’s the key to building a relationship that drives revenue?
Jeremy: Passion drives revenue! There are no rights and wrongs in creating a successful social media campaign – there’s not something that will never work, and there’s nothing that will always work. The good news is there is something that will usually work, if you know your audience and you know how to create passion and positive emotion.
Brian: So what’s the take-away about Facebook marketing for the average company?
Jeremy: What it comes down to… Really at the end of the day, if you build the audience, you have the ability to figure out how to drive revenue. If you wait until “everybody is doing it” you might not be able to. As long as there is no widely accepted method to monetize social media, and there are companies not really getting into Social Media, there is a huge opportunity.
Here are the takeaways I gleaned from the interview:
- We’re in a unique early phase of social media marketing history, ripe with opportunity. And it’s cheaper now than it will be later on.
- Audience building comes before monetization.
- How you will monetize the audience becomes clear during the audience building phase – not before audience building. You have to build the relationship and find out what they respond to before you can monetize.
- Don’t just build audience. Build relationships while building audience size.
- Case studies are nice, but standardizing Social Media strategies leads to increased competition and decreased opportunity.
Early adopters win – middle adopters can still win – but as for late adopters, who knows… maybe not.
This is nothing new. The same pattern happened with SEO and AdWords. As time went on, competition increased, and the slowest companies finally looked for help based on success stories that happened earlier, when things were easier. In the internet marketing age, the spoils go to the early and mid-adopters. The earliest adopters suffer from the bleeding edge, but those who adopt a new marketing channel just after that may be the wisest. And that time is now for Facebook Marketing.
If your competition adopted earlier and is suddenly beating you, and if you’re a public company and the board is pressuring you, you’re going to be building a Facebook audience really soon. It’s some of the mid-sized and small companies that demand proof of monetization first, because they believe they can afford to wait. Hopefully this interview shows that you may not get those answers ahead of time, and that when other companies find those answers, you may not be able to use the same answers at a positive ROI.
Photo credits (Flickr Creative Commons Attribution license):