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How to Avoid the Great Social Media Crash of 2011

by Jamie Turner  |  
December 21, 2010

In this article, you'll learn...

  • The five ways the Fortune 500 use social media
  • The three categories of social media measurement
  • The one formula you need to dodge the Great Social Media Crash of 2011

Warning: Social media may be heading for a big crash in 2011.

It's not going to crash because it's ineffective. And it's not going to crash because people stop using it. It might well crash because most businesses don't know how to measure the ROI of their social media campaigns.

Are you one of those companies? Are you still trying to figure out how to measure a social media campaign and calculate your social media ROI?

Well, I have some good news. Social media can be measured and you can track its ROI—if you follow the simple steps outlined below.

Using Direct Marketing Techniques to Calculate ROI

If you run a direct-response campaign and spend $1, you'll typically generate $10 or more in return. The direct-response industry knows that statistic because it's been tracking the transactional data from direct mail, paid search, direct-response TV, and other campaigns for more than 50 years.

But what if you're new to social media or new to the world of direct response metrics? What should you do then?

In How to Make Money with Social Media, I wrote about something called the 5-3-1 program, which involves understanding the five ways Fortune 500 companies use social media, the three categories of social media measurement, and the one direct response formula that all social media practitioners should know.

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Jamie Turner is co-author of How to Make Money with Social Media. He is also the chief content officer of the 60 Second Marketer, the online magazine for BKV Digital and Direct Response. Reach him via

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  • by Kevin McIntosh Tue Dec 21, 2010 via web

    Excellent post, especially regarding avg. lifetime value of a customer. All those upfront expenses on social media can seem scary if you're not committed to it for the long haul. I make the same point in The Social Media Road Trip Workshop. It takes time to build relationships.

  • by Graeme Thickins Tue Dec 21, 2010 via web

    This is great. Now if we could just get companies to spend something like, oh, $280,000 a year on social media. I guess we could say the Crash of 2010 (and 2009, and 2008) was that... they didn't. Except maybe for some tiny percentage. Okay, I know you're just making up examples with these figures. But I have to think that so many people involved in social media must be laughing at all this...

  • by Jamie Turner Tue Dec 21, 2010 via web

    Hi, Kevin and Graeme --

    Thanks for your comments and feedback. I appreciate it.

    The $280K figure is well within the budgets of most Fortune 1000 companies. But Graeme makes a good point -- what if you're NOT a huge company? In that case, you'd scale the investment down based on your size.

    So, for example, if your company generates $50 million a year in revenues, then your marketing budget might be about $500K to $1 million. If that's the case, I'd suggest you do a scaled-down social media campaign with a budget of $10K to $20K as a test.

    If the test works, then you're off-to-the-races. If it doesn't work, then at least you've tested it and learned from it.

    Make sense?

    Jamie Turner

  • by David Gee Wed Dec 22, 2010 via web

    I have been a PR practitioner for over two decades. The Achilles’ heel of the industry has always been metrics, and that is only amplified in today's budget-constrained, ROI-centric world. Anything I can have in my tool kit that helps me measure is a good thing. So thanks for a robust article that can make me sound less like a marketer and more like a business person in front of current - and potential - clients.

    Unfortunately, many CEOS and business owners still think of social media as some sort of magic wand you can wave over content or a campaign to "make it go viral" and instantly build tribes and create communities.

    I liken this thinking to the early days of the Internet when everyone thought simply putting up a website would attract legions of fans/customers.

    Today, even if you tweet, they may still not come.

    Ask the CEO of a bank holding company I met with recently. He said, sure, he had a "social media program." I asked him what it consisted of, and he said a "former intern who built a Facebook fan page and tweets 10 times a week."

    Of course the next question was about how it was doing. He said not so good. I then asked what it was supposed to do, and he said drive traffic to the website with the idea that some of those visitors would be converted to new customers.

    Then last week I had another meeting with a start-up that just took a million dollars of VC money, and they spent an entire hour grilling me about metrics and benchmarks and ROI.

    Towards the end, they asked if I could "guarantee" a million users/members on their social network site in a year. That was followed by a pay for performance proposal that meant basically no money for me if I didn't reach that wildly inflated and completely unrealistic milestone.

    These scenarios are created at least in part by stories and headlines like the one I saw this week written by a best selling business book author and nationally syndicated columnist.

    The headline on his article read, "Websites are old-fashioned: Smart businesses must jump into social media."

    You know what they say about a little knowledge being a dangerous thing?

    A social media strategy needs to be a subset of an overall, holistic communications strategy. It should support the communications strategy in supporting the business strategy. If all of the strategies and tactics aren’t aligned, and consistent, and feeding one another, they won’t achieve efficiency.

    “Invest more time mapping a strategy for not just using social media, but for integrating social media with other tactics,” says Sergio Balegno, research director at MarketingSherpa. He is also the lead author of the 2011 B2B Marketing Benchmark Report.

    When asked what their biggest marketing challenge is, all the companies surveyed in the new report said “generating high quality leads.” 50-percent of the companies surveyed rated website design, management and optimization as the best way to achieve that objective, as compared to 16-percent who rated social media as the most effective way to generate leads.

    In fact, website design, management and optimization bested virtual events, webinars, email marketing, search engine optimization, telemarketing, public relations, trade shows, paid search, direct mail, print advertising and the aforementioned social media when it comes to effective lead generation.

    Further, when asked about their marketing spend for 2011, 69-percent of those who were surveyed in the MarketingSherpa report say they plan to increase their investment in website design, management and optimization, which again, topped the list of all inbound tactics.

    Altimeter Group's recent research of 140 corporations gleaned that 46-percent of respondents listed "Website Integration" of social media as the top priority for external deployments. This may happen on a few levels, from simple linking to social media accounts, to integrating conversations right onto the corporate website with various constituents, and then your actual “friends” by using the social graph from social networks.

    Anyway, this is your post, not mine, so I'll end here. Thanks again for the info.

  • by Jamie Turner Wed Dec 22, 2010 via web

    Hi, David --

    You've done your homework! And I agree with you 100% -- there are wildly inflated expectations of social media. The only way to really make it work is a consistent, track-able program that drives prospects to a place where you can convert them to customers. That takes hard work and money which is apparently something that was lost on the bank CEO you mentioned whose social media campaign was run by "an intern."

    (I can't tell you how many times I've heard that story.)

    In any case, I'm glad you liked the article. It looks as though you've thought this all through very well.

    Jamie Turner

  • by Nancy Myrland Mon Dec 27, 2010 via web

    Wow, does this ever remind me of my 10 years in cable TV marketing with Time Warner in the 80s and 90s! Yes, we learned detailed ROI, and knew what the cost of doing just about everything was, which helps shape my efforts with my clients now.

    Thanks for a great post.

  • by Jamie Turner Sun Jan 2, 2011 via web

    Hi, Nancy --

    I'm glad you found the post helpful. And I appreciate your kind comment.

    A lot of what I cover in the article above is also included in my book "How to Make Money with Social Media." If you like what you see above, you can take a peek inside the book on Amazon:

    Thanks again for your kind words.

    Here's to a terrific 2011!

    Jamie Turner

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