What Social Media Marketing is about?

In Milan Kundera’s words, Business has only two functions - marketing and innovation. Social Media has evolved to become a domain that involves both these functions. The growth of Social Media in the last decade has been beyond imagination. It has almost become a case where the adoption of Social Media will not give the firm/organization a competitive advantage but rather not using it would put the firm at a competitive disadvantage. Another domain what we can refer to as the sister concern of Social Media and that has seen gain rapid prominence at almost the same rate would be analytics.

Social media channels like Twitter, Facebook, LinkedIn etc give us data that is -

1. Huge
2. Representative of the sentiments of the user

3. If analyzed can give insights which can be leveraged by marketers for different purposes

What are the points of purpose for marketers?

Digital media has been used for marketing for quite some time now. Television Advertisements are becoming popular more on Digital Media than on TVs as such. It is a time where the phrase ‘going viral’ is more heard of than people looking at the television and saying ‘the ad is good’. Marketers have identified this new entrant called Social Media into Marketing and are effectively trying to utilize the digital platform for their marketing purposes and hence the classification –

1.     Conventional marketing

2.     Digital marketing/Social Media Marketing/Online marketing

The few reasons why marketers are now turning to Social Media for their marketing efforts would be–

1.     Social Media marketing is less expensive

-          Designing a Social Media campaign for your product/service may more likely be less expensive (unless you are just using Social Media for uploading your ad and hence trying to propagate)

2.     Social Media marketing has ripple effects

-          A comment on a positive/negative experience from a consumer by using a product has good chances of reaching more people via social media than via word of mouth.

3.     Social Media marketing gives directional insights on conventional marketing

-          Analytics and Social Media combining together can give valuable insights to marketers such as answering the questions (say) while launching a product such as,

o   Who are the people who are likely to buy your product? – This can be answered by analyzing the profile of the top users who engage the most on Social Media

o   Would it be necessary to make any changes to the product specifications before launching the product? – This can be done by identifying top users on Social Media who are engaging the most about the product (like users Tweeting @AppStore the most are most likely to buy the next Apple product) à Giving away sample products to them before the launch of the product àGetting their feedback on the product à Making changes to the product before its launch  

Are spends on Social Media Marketing justified?

Today, marketing managers of various firms face a tough dilemma – Is spending on Social Media Marketing justified? If yes, what are its returns?

As a matter of fact, measuring the ROI of Social Media Marketing is by far very difficult. The reason is simple – It is difficult to attribute the sale of a product to a specific Social Media Marketing effort. The returns on any conventional marketing effort are measurable. You come up with a new ad campaign for your product and the change in sales over the time the ad is aired on television will be the returns on the marketing effort. But an online marketing campaign is one where the users engaging may/may not end up being the consumers of the product. Let’s take the very famous Social Media marketing effort by Dell for its Dell Streak phone. Dell wanted to break the clutter with a dramatic and an innovative idea – Creating Virtual Experience of the phone on MSN home page. There were around 30 lac users who had taken a virtual tour of the phone on the page and Dell was able to interact with more than 2.5 lac users via this campaign.

Going by metrics that govern engagement on Social Media, the campaign was a runaway hit. But the conversion rate (conversion to actual sales) of this marketing effort was again unmeasurable. There are several such examples on how Social Media marketing efforts have resulted in increasing the Social Media footprint of the brand/product but the conversion rate of such marketing efforts to sales is still questionable. Going by forecast values, $11 billion are expected to be spent on social media advertising in the United States by 2017 (BIA/Kelsey) and it is sure to grow along similar lines in the rest of the world as well. One can only expect the availability of powerful analytical tools in the future that enable marketers to measure the return on investment from Social Media Marketing.