Why many businesses lose money with Social Media

Although users love social networks, they do not go to it to make decisions. Large companies explore their massive reach, but without much effect on sales.

I love social networks because they have changed the way to communicate between people. In fact, they have democratized communication so that people now have potentially more capacity and reach many media.

As a consultant, however, I realize that there is still a clear understanding of their role for businesses. This way of interpreting their use has to do with the substantial difference between communication and marketing.

Analyzed data from dozens of Web sites from various sectors, it is almost impossible to find cases where economic effort in Social Media show results associated with the activity performance. It is normal, therefore, that the managers of Social Media is very often support the ideas of engagement and loyalty.

Why many businesses lose money with Social MediaIn this connection and as much as these words sound good, marketers should remember that engagement and loyalty are also measurable and quantifiable … Have you ever tried asking your Social Media manager who will present the economic data justifying the result of their tactics of engagement and loyalty? Ahead!

Engagagement remember that the customer is not flow as well and think we’re getting an excellent brand, but get new benefits of that fact. Neither is it causes noise, except that noise causes a media presence that can be quantified (if Media Markt).

The reality is that the only marketing that makes sense, more in the current company with the difficult economical situation is one where you put 1% and 1.5% get get in return. Retweet, comment, chat, post or respond, communication are all actions that have no value when no performance clarify that produce the enterprise system.

Why Social Media makes many companies lose money?

There is a key to answering this, and is in the nature of one communication channel: Facebook or Twitter are places where people are not going to make decisions. Moreover, are channels where expressly go for “take-no-decisions.”

The reason of a set of business is based on the human need to separate from their normal life, day to day, and put your mind in different spaces that keep us from decisions. In this sense, Facebook, Twitter (generally the Social Media) solve a similar cinema-need, music, consumer electronics (yes, today is not bought by necessitated, but for entertainment), travel and television. If you are reading this and you’ve tried to run sales campaigns on Facebook, you will understand now because conversion rates are so low in general.

The need for people who buoyed Facebook is not the interpersonal communication, already it through other routes (and in fact is just what you’re missing, paradoxically) but to entertain (industry entertainment). Most Social Media environments are entertainment products. Mention some specific part as Linkedin, for example.

Not surprisingly, this approach already handled a couple of years ago American marketing agencies, and many experts from across the pond, in general when selecting the appropriate channels to their customers strategy.

Why is it interesting business to be in Social Networks?

Of course there is room for certain businesses within Social Media, which can fit into that hole where the user is in “no decision” mode. Overall I would say that there are two important points to start evaluating taking a position on these channels:

  1. Companies also sell entertainment, or linked to emotional aspects.Such companies may be, for example, organizers of concerts, bands, shows in general, sports, artists, organized groups for leisure activities (camping, outings, excursions, religion, etc.), psychologists or personal assistance some, NGOs, broadcasters, consumer electronics vendors, etc. If you are in any of these examples, you have a chance to start a friendly conversation with potential buyers (or current buyers) and bring to the acquisition of less invasive way. But what business services? ¿Lawyers?¿Electronics and hardware for professional use? financial products? There are many appropriate channels, direct sales triggers with high conversion ratios, where dump budgets and control returns clear and direct advertising investment recurring manner.
  2. Big brands that are in the Social Media a means of mass communication with a large “reach” and where the aim is to notoriety. A good case are energy companies or large food brands or soft drinks, with wide budgets, and which provides an opportunity to communicate massively your messages (with great effort strategy, analysis and monitoring itself can be obtained an effect noticeable, but this is not the case of most companies can only afford a person writing some promotional post) and increase the value of the asset “brand”. This asset can only be worked with powerful budgets, and once the main problem of the sale already solved otherwise. Remember that the asset “brand” has a book value, which can be obtained also growth and economic performance. Televisions, for example, are another interesting example we can see very well in the case of Mediaset. A business entertainment such as television, enters the space of Social Media with a perfect fit and get more dynamic, feeding back their content, and causing actual (viewers glued to their content, their characters and their television products, we return engagement and return to sit on the couch).

Is that communication in Social Media then not worth it?

Title review “Describer why companies lose money with Social Media” and not “Find out why all businesses lose money with Social Media”. It is not an intention of underestimating this channel, but to remember its role and how it can add value in some cases, and a very high proportion impediment remove.

The gain value occurs when better investment alternative lower yield. The loss of value occurs when an alternative would produce greater benefits and despairing getting a lower yield. This is the reason that calculations as the NPV or VF, including the opportunity cost in the formula.

If you’re in Social Media or plan to become pregnant, you should review your alternatives and what kind of value you business. Do not be put off just because the idea of ​​communicating, but by the time going through your business (a startup, for example, can only afford immediate and direct selling mechanical, but a large company of commodities may require other actions) and analyzes your options well. Remember to communicate your 200 followers is not much to communicate, and compare it with the returns that could be obtained with the same amount on other channels.

And in any case … good luck with your choice!

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