What Can You Expect from Social Networking?

Social media is being talked about everywhere these days and for good reason. Social media sites like Facebook and Twitter are bringing companies more business every day. In fact, Pepsi announced recently that for the first time in 23 years they are not going to be advertising Pepsi in the Super Bowl! Instead of doing Super Bowl ads Pepsi plans to spend 20 million dollars (yes, that’s million) on a social media campaign. This announcement highlights the shift for companies, both big and small, when it comes to spending marketing dollars on social networking.

Does Social Networking really work?

Asking whether social networking works is like asking whether any form of networking works? Why go to networking breakfasts? Why attend industry functions? If you don’t leave a networking breakfast with a contract, but you leave having made three good contacts, was it a waste?

Whether you’re talking about Facebook or Twitter or some other social networking site, it’s good to go in with an end in mind. What are you trying to get out of it? Are you trying to improve your brand? Establish communication with your customers? Take advantage of social networking’s viral aspect? Meet other industry leaders?

Each of these purposes will require a different approach. Twitter and Facebook are excellent for reaching out to your customer base and spreading your branding message. Linked In and Plaxo are better for reaching out to other business owners for forming strategic partnerships.

So, yes, social networking works, but only if you have a clear goal in mind and use the proper method to achieve that end. Approach social networking like any other networking event or like a trade show, and you’ll probably be happy with your results. Approach it like buying a billboard ad or sending out a direct mailing advertisement, and you might be disappointed.

What’s my ROI?

Trying to measure a Return on Investment, or ROI, for a company’s social networking strategy may be like asking someone to quantify happiness (although apparently some people try to do that). Measuring the effectiveness of your marketing is a big key to being successful. So, it’s understandable that a business needs to measure the costs of any marketing strategy it implements and then measure the monetary results to find out if the strategy is worth continuing. But how can you possibly measure the results of your participation in social media networks?

The good news is that the actual financial investment in social networking is pretty low. Unless you’re paying someone to do your social networking for you (or are purchasing advertising on a social networking site), you’re looking at more of a time investment than a monetary one. So, your dollar investment may not require a lot of return to justify what you spend.

However, as the saying goes, “time is money”. If you spend hours every day on social networking at the expense of other business activities, that needs to pay off. So, how can you measure whether you’re spending the right amount of resources on your social networking strategy?

Again, you’ll want to start with an actual strategy, complete with some measurable end.

Want to get out your brand message?

Perhaps the strategy is to increase the number of people following you on Twitter or the number of fans on Facebook. That’s something you can measure.

Trying to establish a particular contact within a company?

Map out how to get closer using Linked In. Did you manage to get linked in to a contact within the right company or within the right industry this month? Great! You’re on the right track.

Of course, there are some tools that can help you look at your numbers. You can use Google Analytics or other similar programs to track your traffic and see where it’s coming from– visitors to your site from a social networking site is a good indication that you’re doing something right. Each site generally has its own set of helpful tools, as well. For example, Facebook fan pages have an “insight” section that provides you information about the number of visitors, interactions and even demographic information about your fans.

So, what’s the bottom line?

The real return on investment for social networking is that it builds a community of people who go on to boost a company’s brand. It also provides a forum where a company can defend itself against detractors. In many ways, social networking sites are more of a public relations tool than a marketing tool.

The new media engages a company and its potential customers in a conversation. If people get value from your social media presence it will boost your company’s image and cause more word of mouth advertising to take place, and word-of-mouth is the generally the best possible form of advertising. While word of mouth traffic generated from social media is difficult to track in terns of ROI, it provides traffic that has already been convinced by “social proof” that your brand is worth viewing. These are potential clients who are already half sold on buying from you, so when you actually DO traditional marketing, you’re more likely to get a return.

Social media optimization is not about spending X amount of money and raking in Y amount of dollars through a clear connection. It’s about creating a positive, cooperative atmosphere that will eventually bring good results to your business. In order to maximize your profits, your company needs to build an excellent social media presence in 2010 and beyond.