Social Media monetization and why KPI’s could be killer
This post was made Jul 22, 2009 by Jeff Noethen
Social Media is this year’s buzz word by far. Every body’s doing it and every company is getting into it. The nice thing about social media is that it’s mostly free. The bad thing about social media is that it’s mostly free. Thus, there are resounding questions of whether social media is monetizeable. Facebook is trying to make money, MySpace too. Twitter is far behind, and most other sites all fall in the same boat. (Please correct me if I’m wrong)
I don’t have the answer to whether social media is monetizeable, but I do have some thoughts on why it might not EVER be monetizeable.
It starts with tracking and measurement. Currently, most companies control their marketing links directed toward their sites and as such they ‘encrypt’ them with a tracking key which tells their analytics provider referring site, date/time, specific link clicked amongst other things. With Social Media, companies have less control over links directed towards their site. Thus tracking is much more difficult. Yes, you can simply look at your referring site list and get a lump sum of traffic from Facebook, Twitter, Meebo, etc but this is fairly imperfect. I highly advocate that your company ensures that at the very least the links that they are blogging/tweeting/updating have the proper tracking codes in the URL so that your analytics program can tie the data back to them.
Second, we hear it quite often that Social Media is a conversation. As such, the current thought is that the only measurable KPI’s are branding KPI’s: mentions/buzz, brand index vs. top 100 (for example), and influencers. While I think these are great KPI’s to track, they are again, not easily quantifiable. The bigger problem is this: if companies accept that these are the KPI’s that analysts should monitor, then we’ll only continue to hinder the possibility of Social Media being able to monetize itself. If the only thing that companies care about with social media is ‘buzz’, instead of traffic/conversion/orders/sales, they’ll be less apt to pay the social media sites for anything. (Traffic seems to be a luke-warm metric in relation to these ‘branding metrics’ for SM)
Other questions out there are: if social media begins charging companies for the right to use their accounts, will that lessen the trust that users have in said accounts? Will that cause less of a conversation because companies are charged on a per X basis? Additionally, what if social media sites begin charging even nominal fees to users. Will traffic to these sites die because of this? Would you continue using social media sites if there were a fee?
A final note is this: if I were to set up metrics to measure, I would want to know the following: my index to benchmark on major social media sites; mentions/rate on major social sites; top influencers by site/account; traffic referred to my site; and orders placed. These metrics are ranked in descending order, thus I would place less emphasis on traffic and even less on orders placed, but I would not discount them.
Social media is great, but it is quickly becoming the focus of too much marketing attention by companies. Instead of taking a focused and balanced approach, they place all their eggs in one basket with social media.
Thank you for your comment!
However, I don’t think that’s entirely true. The beauty of Social media right now is that it’s a relatively cheap marketing forum. At least, cheaper than many paid efforts. However I do agree with you that companies should not place all of their eggs in the social media basket. They should use social media as an avenue for truly reaching their customer and showing the ‘human’ side of their marketing department. As well there can be some light marketing thrown in the mix.