Is social media free?

In 2002, I was having a budget conversation with my CFO. I was general manager of the online store and we were discussing my requests for FTEs, technology upgrades, and marketing spend. The CFO asked me, “this is an online store…why do we need to spend any more money…doesn’t it run itself?” (I’m 99% sure he wasn’t joking.)

This week, news has been circulating that FMCG company Procter & Gamble will eliminate 1,600 jobs and shift more budget into digital media. The headline over at Business Insider is a bit more incendiary: “P&G To Lay Off 1,600 After Discovering It’s Free To Advertise On Facebook.”

The statement that “it’s free to advertise on Facebook” is wrong at minimum and leads executives to a potentially dangerous point of view regarding social business.

Let’s start with Facebook and free. From one perspective, this is true – anyone can start a brand page at no cost. However, building a successful page requires investment in media, social graph activation, and integration with large-scale marketing campaigns to offer custom experiences for fans and prospects. The world is learning more this week about the amount being spent on the Facebook advertising ecosystem – over $3 billion annually. That’s far from free – in fact, P&G’s remarks justify these investments.

What about brands that aren’t pouring money into the ecosystem? At minimum, companies need individuals to manage and moderate conversations. Although communities operating at scale may have members who engage each other with little company involvement, they aren’t free. Consider Wikipedia, a community that serves hundreds of millions of visitors every month – it takes technology and people to keep the site going – supported by donations. A company like Red Bull doesn’t get to over 26 million fans without engaging – which requires FTE/personnel expense.

P&G certainly didn’t pay for every one of the “1.8 billion in free impressions generated by the Old Spice campaign”…at least not directly. This is absolutely a success story and Dion Hinchcliffe and I talk about it in our forthcoming book, Social Business by Design. It’s important to keep in mind that this is an example of successful “big seed” marketing – plenty of money was poured into the initial mass media campaign and even more was spent to keep The Man Your Man Could Smell Like relevant with real-time videos. Free? No way – W+K grew 22% in 2011.

Not too long ago, I had a client who had a problem. He was the head of digital and emerging media for a consumer products brand. Recently, the CEO’s college-age children had come home for Thanksgiving break and showed the CEO this new thing called YouTube, where companies like Coca-Cola were having great success with reposting their TV commercials. As a result, the CEO decided to slash the digital and social media budgets; my client was laid off soon thereafter. Today, they are lagging far behind their industry competition and I have never seen anyone mention their brands or campaigns in social media.

The Elephant

Social media marketing success comes at a cost. Executives must take a social business perspective instead, considering external and internal factors as well as designing for intended and emergent outcomes. Without a holistic perspective, businesses end up operating like blind men around an elephant and a lineup of digital tombstones in online brand graveyards

Disclosure: my company Dachis Group operates one of the world’s largest Facebook Preferred Developer Consultant groups. P&G is a client and our recent work includes the People’s Choice Awards and Thank You, Mom. Red Bull is also a client and we launched their Facebook presence.

0 thoughts on “Is social media free?”

  1. Peter – thanks for this post I totally agree! Social Media is not free. The most important ingredient I believe are people. People who contribute, share, link, interact and ofcourse integrate social media with other marketing programs or business activities. From a social business perspective people need to be trained and supported so that they will participate with the right intention. That is culture it needs to be part of their DNA. Do you believe in social media marketing there is too much focus on technology and too little on people? Love to hear your thoughts. Thanks!

  2. Peter – thanks for sharing these insights with us. Really interesting material. And while I agree that the first Old Spice campaign was a success that might have been due to the supporting in store campaigns pushing the product.

    Unfortunately, the second one was far from as successful and did not have the support of an online campaign as did the first one. So did this sell any more product or just produce buzz. Maybe you know we analyzed it here:
    ==> Old Spice Going viral or selling product: ROI anyone? http://commetrics.com/?p=16696/

    Finally, less than half a percent of Facebook fans who identify themselves as “like a brand” actually bother to create any content around it.

    Maybe better than TV but still – feels as if we are broadcasting the news in an empty foogball stadium.

    Peter, thanks for sharing.

  3. @Jeroen – agreed, in the long term social needs to be part of DNA for businesses to succeed. It’s ironic, because humans are by nature social beings and learning how to operate in business takes some of that away from us. We need a balance of why (people), what (technology), and how (process).

    @ComMetrics – nice recap of the campaign.

  4. There ain’t no such thing as free lunch. Everything comes at a cost and it’s impossible to get something for nothing. It’s a common misconception among us marketers. In order for our social media marketing campaign to be successful, we need time, people and technology. And I don’t think we can have all these things without spending a penny. Thanks the thoughts.

  5. The P&G remark may have been a bit sloppy and off the mark, but the Business Insider story was taken way out of context — link bait, and we’re all falling for it. Social media has some similarities to PR. Paid media? Usually not (though sometimes). Free? Definitely not. If you’ve ever run a marketing department, you know that those bills from PR agencies, consultants and FTEs to create content and mutually engage with your stakeholders is anything but free. Btw, the endgame is predefined outcomes. Not media.

  6. While social media does cost money, as does any other kind of publicity, I believe that it’ll pay for itself in time. When customers see your brand on Facebook or any other outlet, they’re more likely to pay attention, and use your product!

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