Posted by Scott Cohen On December 10, 2011 in story time I 5 Comments
Titles, like tweets and subject lines, are the hook to reel in your readers. (My point made: at least you thought this title was interesting enough to come and see what I’m ranting about today.)
My gripe today is about social media and its apparent lack of a “standard” ROI for most small and mid-size businesses. I’ve looked at countless reports and data on small business social media campaigns, and I’ve reached this consensus: Only one in 100 see any real ROI from their social media endeavors, and only one in about 1,000 sees an actual profitable ROI from their investment.
I’m admittedly a bit old school here, but let’s apply the old rule of 10X revenue for marketing dollars spent: If you invest $1000 per month for 12 months, your minimum ROI should be $120,000. You can bet dollars to donuts that those numbers are rarely attainable from a social media marketing standpoint.
So, if your chances of making a true ROI are so slim, why should you follow the hype? If you took that same $1000 a month and went to Vegas to play Roulette (which has one of the highest odds in favor of the house at 36 to 1), you’d have a better chance of increasing your investment than you would spending that money on a social media program.
Social media is still all about community and content. And content is still the number one pain point in most small and mid-size businesses. Community is difficult as well because social media is a time and resource hog—a resource hog which many SMBs simply can’t afford due to the considerable outlay of cash it takes to build a social media program that only “might” bring a return on those precious marketing dollars.
(Before you get all grumpy about the “Email marketing guy bashing social media,” know that I’ve helped many businesses and non-profits with their social media efforts, and there have been some wins in those groups. Our stance is simple: Let’s find where your marketing dollars are going to go to give you the best ROI as well as sustainability over time without breaking the bank.)
The answer, for most, is email marketing. Email marketing continues to provide a great return on investment and is manageable for even small businesses on budgets. Of course, email isn’t a guaranteed win for everyone. But done right, with a solid strategy and planning, the costs for success with email are much smaller in comparison to that of social media.
The majority of case studies you see about great social media successes typically involve big brands and those with large marketing budgets. Small businesses shouldn’t reference these studies when making a decision about getting into social. Why? They don’t have the budget or man-hours to pull off those types of social campaigns.
Social media can be used to help drive list growth by running sweepstakes on Facebook or by having an easy sign-up form integrated there as well. But you don’t need to break the bank doing so. Also, if you’re going to use social to grow your list, calculate the ROI of your list acquisition source(s) and see if those subscribers are performing well enough to continue the cost of acquisition through social.
Either way you decide to go, make sure you get help in making your marketing decisions. Some small businesses have seen good ROI through social, but unfortunately, those are a small group compared to those who have failed.
So does social media cause rats in laboratory cancer? Maybe not. But it can cause a cancer in your marketing budget.