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You are still not sure about Social Media. You’ve heard is the right thing to do but you don’t really know what is the actual value behind your Social Media strategy. Everyone else is doing it so they must be right.

If you were looking for an answer to the value of social media question you’ve just found it:

Social Media is Not Profitable. 

Let’s take a look at this self explanatory McKinsey’s graph comparing the Conversion Rate from different channels. It is not hard to say that Social Media is not a very profitable channel compared to e-mail and organic search.

social-media-is-not-profitable

Facebook and Twitter are not looking good in this graph, are they?

Meeting with your Manager – Crunch Time

This is the worst part of Social Media, when in the board meeting your manager asks you how well have you spent your budget on Social Media and the Key Question: “What has been the outcome?”

Your answer in terms of Re-tweets and Likes does not seem to get your manager very happy, so you try with community management, engagement, branding, etc. Your manager still does not look convinced…he tell you to stop Social Media.

The Measurement Issue – Direct Response Channels

Your manager expects from you, as digital marketing manager, a comprehensive and detailed report about every channel where the company is investing money explaining what has been done with the budget allocated to each channel and what was the outcome of it. Direct Response is the nature of digital marketing, and that is one of the reasons why we, digital marketers, love it.

Everything can be measured, so decisions are just a matter of comparing numbers.

ROI (x) > ROI (y) = Increase Budget in “x”

Even I can solve the Equation! We can all be Marketing Managers now. Making decisions is so much easier in Digital Marketing

Unfortunately, this is not always the case across all Digital Marketing channels and unlike easily measurable channels like Pay Per Click (PPC), other digital channels like Display Advertising or Social Media are not so easy to measure. This does not mean that they are not effective channels.

Is Social Media Profitable?

If the term profitable is taken from a PPC/direct response point of view, Social Media is not profitable as the direct income will not be greater than then investment. Stop blaming your community manager and thinking he is not good enough. You will never see Social Media paying off looking at it that way.

Let’s imagine instead of a website we have a high street shop. If you have visited London you probably have been around Oxford Circus area, plenty of shops everywhere paying overpriced rents for central locations in the main shopping street. None of these shops are profitable and the manager /brand is more than aware of this. Then, are these guys not very good at Maths?

Learning from the basics – Traditional Marketing

Companies need to invest in branding activities, and this does not get you a direct outcome back, but it works and is required if you are looking to last more than a year as a brand. Direct response channels is a great way to start, but it should not be the end of the strategy. If your brand is looking to grow you will need to start building brand unless you can be the cheapest of the market forever (I doubt it).

It is time to learn our lesson from what traditional marketing has been doing for long time and only then we will manage to understand how Digital Marketing  can help our business to get bigger and better. Let’s Start building Brands and Stop Sucking at Marketing

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