The Real Cost of Social Media
Social media is free. Social media is inexpensive. You don’t have to outspend your competition. Social media saves time. Social media will save your business thousands, if not millions.
These are all quotes I’ve seen from various voices recently. Each one pretty much agrees with the other – that social media is a great tool for you to implement into your business because it’s so cost-effective and will give you quicker results.
Sadly, it’s not true.
Yes, you’ll save on equivalent costings from a traditional media advertising push. Yes, you can see instant results and measurable returns on your investment. But cheap and quick? Not quite. Particularly if you’re looking at implementing a strategy and social media campaign (and yes, social media purists, you can have a social media campaign).
It Costs Money to Plan
Let’s say you have a new product or service. Let’s also say that you’ve seen competitors enjoy success using social media to launch a similar product or service. You know yours is better, so you know that social media (used properly) would further see you outshine your competitors. So, easy, right? You just set up a Facebook page, a Twitter account, maybe a video sharing channel and off you go.
Stop. Back up a little. Have you asked yourself the right questions before you start?
- Have you thought strategy?
- Have you carried out a social media audit?
- Have you set measurements in place?
- Have you determined where you’ll be and who’ll be there for you?
- Have you set aside the right budget?
- Will you be using internal expertise or outsourcing?
- Do you have to build anything?
These are just some of the immediate questions you need to be asking before even starting. Getting the answers is going to take man hours. Lots of man hours. Multiply that by the payscale of the person/people doing that research and your costs are already starting.
Social Media is Cheap. Uh… No, It’s Not
It doesn’t matter whether you’re coordinating a social media campaign internally or externally, you’re going to have to allocate budget to it. This includes costs for strategy, community management, mobile app and moderation/maintenance. Let’s see how that might pan out (based on a 12-month campaign and with earnings based on survey results).
- Social media strategist: 10 hours per week @ $100 per hour = $1,000 per week. Total for 52 weeks – $52,000.
- Community manager: 30 hours per week @ $60 per hour = $1,800 per week. Total for 52 weeks – $93,600.
- Micro-site build (if not using existing platforms) – $15,000.
- Mobile application (more than 70% of social web browsing is via mobile phone) – between $20,000 and $150,000 depending on functionality.
- Ongoing moderation and measurement using third-party specialists – between $30,000 and $80,000 depending on frequency.
- Total = $390,600.
Now I’ve given you worst-case scenarios, since you probably won’t need a social media strategist for the whole time during the campaign. You might only need a community manager half the time mentioned above. You can also build micro-sites for less; the cost will depend on how interactive you want the site to be.
But even if you halve the total cost used in my example above, you’re still looking at $195,300. Almost $200,000 for a year-long social media campaign.
Compare that to a print ad that may cost anywhere between $50,000 and $100,000 for one run, and yes, it’s clear that social media offers a comparably cost-effective solution. But to say that it’s cheap and quick? That’s setting you up for a flawed approach from the start and will only bite you in the long run.
How about you? How expensive (or inexpensive) have you found social media, both from a financial and time management angle? I’d love to hear your experiences.
photo credit: The Gifted Photographer
122 Responses to “The Real Cost of Social Media”
That would be the social audit beforehand then, Michael?
I’m just teasing. You make a great point about pre-campaign checks being relatively inexpensive. Of course, it depends if you have the skill sets in-house to do this or not. Then again, you could say that testing the water means you don’t have to carry out an audit. From personal experience, though, a proper audit is crucial to a long-term plan.
The landscape has definitely changed. Here’s hoping those on it keep it realistic.
Thanks for stopping by, always appreciated mate.
Fair enough
Guess I’ve always seen the social audit as more of the research than the experimentation. I agree that you need the audit once you get serious, but I think companies (at least those I’ve seen in my industry as well as our own) tend to splash around in the shallow end on their own before they spent the money.Totally agree that you need to do this once you start putting money into any online initiatives.
.-= Michael Schechter´s most recent blog post …The Digital Tail =-.
I am a social media manager for various companies. I can say that the company I work with to provide this service can engage any media online platform(facebook,twitter, myspace,linkedin,onlywire).
And perform all content syndication, tracking and online media optimisation for a fraction of the cost you stated.
I can honestly say that we can do a year long social media campaign across all media for $5000 a month x 12 months the year. That is much cheaper than what was suggested, add to that, we bill only on results. Whether it be creating increased web presence, growing fanpages, changing branding perceptions online, engaging and knowing your customers and building 1to1 relationships and loyalty, finding brand ambassadors etc.
Hi George,
I tried to visit your home page but it wouldn’t open.
However, I Googled you and it looks like you’re more an SEO company than a social media solutions company.
http://thegeorgephillipgroup.com/pricing.html
http://www.linkedin.com/companies/the-george-phillip-group
Is social media something you’ve just taken up recently?
Can’t find anything on your firm….
John Haydon recently posted…. Who should manage social media at your nonprofit
You “bill on results?”
Please – send me your client list. I’d like to ask them why they’ve engaged a company that can’t be found online and has a default Twitter icon as its avatar. Just sayin’.
Erika Napoletano recently posted…. Ordinary- Everyday GirlMaybe he’s too busy getting billable results for his clients to worry about design, Erika?
Or maybe too busy creating contents as some pages are still unedited. Alright now going back to the post
You’ve given quite the right (oh well the title says it all) cost of social media that companies and strategists/managers alike should realize.
Jonha | iJustDid,org recently posted…. Gathering Stones for SuccessHaha, yeah, I noticed that – seems he’s been spending the best part of a year making sure links to other resources don’t work.
Great new avatar too, by the way!
Danny, you are showing quite a bit of restraint with this spammer…nice job!
Cheers, Jimmy – it’s more fun than taking them seriously.
Danny, Well said. I wrote a similar article a few months ago that takes this logic one step further. Now that you have calculated a minimum cost for your venture, how much revenue will you have to bring in just to break even? You might be shocked! Here’s a link your readers might enjoy:
http://bit.ly/13INRHThanks for the post!
.-= Mark W Schaefer´s most recent blog post …Number one social media trending topic: ANXIETY? =-.Cheers for the link, Mark – definitely something that more companies need to look at (and yes, the figures can be pretty shocking if you’re expecting an inexpensive “in”).
Danny,
This is a good overview, especially for larger organizations. I think this can translate to a small business that is spending money on direct mail and print advertising. One way to ease in to social media is running a parallel campaign. Direct mail and social. Then compare results.I think you bring up the big challenge– planning and strategy. It needs to be done first and costs time and money.
Thanks for sharing your insights!
.-= Tim Bursch´s most recent blog post …Top ideas this week =-.Parallel campaigns are always a definite recommendation – if you can allocate the budget to two, then do so. To replace a traditional campaign with just purely social is incredibly risky, unless you know for sure the audience is more for that market (something that GMC is looking at with their new crossover).
Either way, planning is crucial and so many forget this.
Cheers for sharing your thoughts, Tim.
It’s nice to know the market value for the skills I’m building on my own dime.
Thanks for taking the time to write this out.
.-= Dave Doolin´s most recent blog post …When B.L.O.G. Turns into J.O.B. – Downshift and accelerate =-.I imagine that the costs you outline are still far less expensive than running a traditional PR or Marketing effort. Has anyone done a study on the extent to which one can replace traditional approaches with social media?
.-= John Haydon´s most recent blog post …How To Create An Incentive For Visitors To Fan Your Facebook Page (Day 17) =-.If you take the same amount if time and resources, then yes. The problem is, the market for purely social (while growing) is still nascent and doesn’t seem to offer a direct replacement for traditional approaches. Yet. Who knows what the future may hold?
Thanks a lot for sharing this post Danny, I have heard this thought that social media is not cheap or inexpensive before as well, but saw the actual cost break up for the first time.
I think all these costs should not change decisions of firms but must change the way you pitch social media to your boss.I totally agree it will costs a lot of money if you want to create more eyeballs. But if you compare to traditional ways vs social media, i personally think social media is much cheaper and more effective especially for those who wants to get more international biz.
.-= rosamundwo´s most recent blog post …The Spy Next Door =-.It definitely helps keep costs down when reaching a wider audience, Rosamund. But then you also have to take into account translation services, moderation laws abroad, different strategies for differences in culture, etc. So it can still add up – the amount depends again on the expertise and approach.
This is a fantastic, realistic overview of a SM campaign that is, in my opinion, so often overlooked by a small/medium/large company going into the SM Stratosphere . The first reason, I find, that companies want to jump in, is becuase it seems to be “FREE” or very low cost. So they think the ROI will be perfect! Not so! If its done properly, with proper planning, then your numbers above are not so far off!
I would add to your list that would increase the hours of a community manager: Content creation. I mean GOOD content creation. This takes a heck of a lot of time. Good, valuable content is KEY to a successful SM campaign and its longevity.
Easing in, as Michael Schechter, suggests is also doable. Planning on starting small and testing the waters is excellent, but almost all companies I’ve worked with, have wanted to dive in deeper and expand once they get the taste of the SM lollipop. Its hard to stop.
Setting the right expectations for SM involvement for a company from the start is very important.
Thank you for your insight and wake up call.Great point Yasmin. Building that loyalty that helps successful SM campaigns doesn’t happen overnight. Nor does the content tooth fairy get involved – it needs expertise, relevance and timeliness – not something that comes too easily.
Thanks for sharing that!
I’m right in the middle of listening to Gary Vaynerchuk’s Crush It and it’s really quite an endeavor to manage social media in the way he’s described. But, like he says, you’d better be passionate about what the tools can do for your brand. If you’re not, then one or more of your competitors will be.
.-= Christopher Harley´s most recent blog post …RT @DannyBrown The Real Cost of Social Media http://bit.ly/8jw8sl =-.Cheers Danny, this is a great post. One of my biggest pet peeves when dealing with higher ups is that they insist that the work can be outsourced or farmed out. They also want to know how they can make Dell money ASAP.
I love that you put the emphasis on the time commitment. Much like a well-executed PR plan, SM takes time to build up your place in the community.
.-= Jeff Esposito´s most recent blog post …Wyclef’s brilliant PR response to attacks =-.While Dell is a great example, companies need to stop using them as an example (I share your peeve). Most companies don’t have the resources – financially and manpower – to carry out the same approach or investment. Show us the small to medium companies that are enjoying the same success and then we can look at similar implementation.
Cheers Jeff!
A great post, and an excellent point about pointing to smaller size biz.
What if we turn this whole cost of SM discussion on it’s head.
Like, looking at how advantageous it is for small biz first? The big boys can learn from that later Think Hyper-local, think small budget, think replacement of traditional media costs. Think increase in revenue.
We run a small antiques store in Cambridge, Ontario, and have abandoned traditional advertising models since 5 years ago. We no longer print biz cards, nor flyers, nor newspaper ads. We use our websites and now, most recently, our Social Media skills and toolset. Biz has grown every year, in fact 80% of our biz is from out of town. When a customer asks for a biz card we just say “green spot antiques” on the net.
We use a website, static html till 1 month ago, now based on WordPress. We use a NING online group for our Members. Both do direct sales. Neither are beyond the capabilities of most biz owners, although some technical expertise is appreciated. In all cases, very simple alternatives exist.
My point is simple, for a very small investment you can actually see how these SM tools expand a very small business’s reach. No large $$ required.
What IS required is, like you said, a plan, a vision, and some time. For a small biz it’s very simple to shave $20K/year off their ad costs, AND increase biz by 25% using a few simple online tools now. Perhaps THAT is the real growth market for SM these days. Hey, even GOOGLE is aware that Hyper-Local is the “next big thing”.
Now, if only I could get myself to pay myself that $100/hr community manager charge.
But for us, as a small biz, it’s as much a matter of survival and growth, as it is of costs. We KNOW that whether we spent time or money on other approaches the returns were diminishing in recent years.
I do believe that SM is no longer a choice, even for small independent biz, regardless of actual cost. But a small biz is more agile, and can bootstrap itself quite quickly into a profitable ROI on their SM activities.
cheers
Vince.
.-= vince jelenic´s most recent blog post …Scott MacFarlane is now a member of GreenSpot LIVE- Shop for Salvage Chic Antiques, & Vintage online =-.Hey there Vince,
(You’re in Cambridge, ON? Nice!)
Thanks for your example. I agree, social media offers a fantastic “in” for small business especially, and with WordPress, Ning and a little expertise, you can make a great presence for yourself. You might like this example I looked at last year:
http://dannybrown.me/2009/09/02/old-dogs-new-social-media-tricks/
Where I was looking at this example is the full-on campaigns and strategies, where certain levels of manpower, technology and moderation is needed. That’s not to take away from your example at all, which is a great one (and some of my more successful clients have been the smaller ones that know bootstrapping and where to focus). Sometimes, though, a larger reach and outlook is needed, and that was the gist of this post.
But for sure, hyper-local is becoming much more widespread and that can’t be a bad thing at all.
Cheers!
Wow, thanks Danny for the great link to the farm family site… i’ve bookmarked.
I wish our biz would allow us as simple a design as their, I loved it. An excellent example of a simple biz using simple tech for a whole new outlook and outreach.
It’s interesting how, in both scenarios, large or small, the actual TOOLS are not the cost, it’s the time management and planning that is essential.
“Execution” is becoming the new currency in Social Media. And the beauty of that is, anyone can execute with proper guidance or planning.
cheers (from Cambridge)
and should you ever get out this way, knock on our door, we’re……………………….. listening.
.-= vince jelenic´s most recent blog post …New Arrivals Jan 20 ,2010 =-.
Hey Danny. Thanks for putting into words what had to be said. Effective social media takes man hours. Man hours cost money. And to hire professionals who know what they doing requires the estimated hourly costs you are proposing. Well done.
.-= Christopher Ming Ryan´s most recent blog post …Will Everyone Want An App? Q&A With Scott Suhy – CEO of Pointabout, Inc. =-.I came across this link in a Twitter post and I am now a Fan of Dan Brown. Working mostly within the SMB community, I find this information and your insight invaluable. Most SMB’s think they can do it themselves and little do they relaize the full cost factor in time alone to implement properly. Great Article.
.-= Thomas Townsend´s most recent blog post …Year End in Review =-.Cheers Thomas – as I mentioned, the figures above are “worst case”. But whatever way you look at it, the cost is much more than many people realize and it’s something to keep in mind and consider as part of any approach.
Danny, glad you brought up this subject. Even for individuals, it’s good to know that social media isn’t free. Time like money is spent.
Danny,
Thank you, everyone I talk to says you have to take advantage of social media because it is easy and free. I say you need to take advantage of it but not because of those two reasons. You are one of the first people who admits that it is not a cheap endeavor. Your numbers seem dead on.
Great article. I am a new socia media consultant and these figures are very helpful.
Danny – a great analysis. There are distinctly different skills sets required for different industries and the organizational sizes/complexities considering social media.
Most of the organizations I see market in are running annual revenues less than $5mil, with only a few points in profit. There was so much hype about the ‘free-ness’ of social media, that many of these organizations have been seduced (dare I say, suckered?).
They also don’t understand early on that it is about creating 24-48 hour mini-productions, in effect – great content that people will want to share – not traditionally based static shotgun advertising.
We’ve been using Microsoft Project to manage strategies for clients – the strategies are robust, we like knowing exactly what we need to do, the client likes seeing measurable objectives, and being organized allows us efficiencies so we can have time necessary to be reactive to dialogues.
I could speak more, but I only took a break from working on a study of SM in the restaurant biz across all fifty states.
I’ve been looking at Microsoft Project recently, Jeffrey – recommended then?
Your point about different industries is bang on – too many go for a one-size-fits-all approach, when there are way too many differentiators for that. Education is key, and it’s all too often bypassed.
MS Project is extremely robust. We manage multiple clients over different industries and not one has a similarity to the other. Using Project manage each one is invaluable.
Being able to enter a blog production schedule on a Gantt Chart, then link each production date to the actual Word document; or, linking milestones from Project into Outlook from all the clients – well, I think you get the picture.
I want to second that even before you land the client you have to be able to demonstrate the ability to conduct project mgmt efficiently, be able to calculate the investment (breakdown and ROI/ROR) and set forth achievable milestones that are agreed upon to qualify as successes.
If you need assistance with MS Project, let me know as I once taught the software application in the mid-90s. Echoing Jeffrey, it’s extremely robust and very useful if you’re serious about evaluating lead and lag times, etc. There are cloud computing options that beat it, though.
Danny,
Thanks for elaborating on this costs of social media. One addition, and I find that I do this a lot for my clients: create a social media strategy. The cost will depend upon time/effort/industry/country of business.I wrote a blog post a while ago that focus on the potential hard costs associated with social media. I think it nicely compliments your post: http://www.communityorganizer20.com/2009/09/11/budgeting-for-social-media-success/. I think your post really gets at the cost side of it with concrete cost lists. A great resource, and one I’ll certainly share.
One last thought: I do agree with both you and @greenspotting (your conversation above), and this would be an interesting blog post in and of itself: where can the paid consultant be of most use to the cash-limited business? I know you’ll have plenty of thoughts on that as well. In fact, it would be an interesting roundtable post with a few businesses and a few consultants (you know, 3 consultants, and we have 4 opinions…)
Thanks,
Debra
.-= Debra Askanase´s most recent blog post …Try These Dynamic Digital Storytelling Platforms =-.Hi Debra,
I definitely agree about strategy – it’s my first bold call-to-action
There’s a follow-up post about the small business approach coming soon. Cheers!
So glad to see someone starting this conversation in a serious way. As a social media agency for the home furnishings industry with larger clients, the minimum financial investment for a larger company-to start- is 120K.
I recently moderated a Technology Symposium panel where Maggie Fox-CEO of The Social Media Group was one of the keynotes along with Emily Riley of Forrester.
One of Maggie’s key clients is Ford.
She concurred with this pricing structure to start.
I also asked our panelists what they planned to invest in social media. Their answers came out either as percentages of their ONLINE marketing budgets or as percentages of their OVERALL marketing budgets. I thought this was interesting. 20% of overall marketing budget was the largest amount heard from a large company on the panel and 5% of the online marketing budget was the smallest amount heard.
Companies want to know what are they paying for when they invest 120K to start or more. Here is my breakdown for them:
1.Research as to what people and platforms are best to accomplish company objectives.
2. Internal company set up and preparation (legal, guidelines for employees, initial training)
3.Overall strategy development
4. Content strategy and curation of content on an ongoing basis
4. Implementation
5. Ongoing execution- the “community manager” part
6.Ongoing communication, strategy re-adjustment and training needed -internally.
7.Measurement and reporting tools on an ongoing basis-not only the costs for the tools but the costs for analyzing the data, preparing reports and the time required to deliver actionable insights to key players internally as well as externally if necessary.I hope this helps everyone following your post, Danny.
Social media is a very powerful tool but there are definitely costs involved up front and on an ongoing basis that are real.For my clients, the ROI has been completely worth it but I definitely think companies need to take a blended approach and use social media in conjunction with traditional media for at least a few more years.
Social media is all about trust and trust takes time to build. It is not a replacement, in my opinion, for traditional media, it is a slow build (unless you get lucky and get virality on a piece of content fast) that allows for real time two way conversations around a well thought out content strategy.
Agreed, Leslie – I think it’s going to be a long time before anyone’s really in a position to get rid of all traditional media and go purely social.
To your point of investment breakdown – anyone that’s not doing this falls within the questionable practices description. Asking a client to part with more than $100k and not showing them where it’ll be spent and how it’ll be measured?
Hmm…..
Good overview, Danny. You’re spot on.
Trouble is it’s getting to the CEOs and getting them to realise that this kind of investment does bring in results.
I’d like to see some new tools emerging that help us help clients demonstrate how social media works.
Just putting together an Excel file is a hassle. I want to easily track tweets and ROI. Data is a strong way of convincing potential clients how social media works.
Bit.ly (http://bit.ly) is a good starting point, Jon. It tracks tweets, RT’s, clickthroughs, who’s sharing and more. You can then tailor this back to a vanity URL for a promotion, and then export the results into a .csv file for an Excel presentation.
I think the article is very informative but is approaching the topic of social media costs very narrowly. What has been presented is most relevant to big organizations, which Danny also mentioned in response to a comment earlier. What has not been mentioned is how adaptable social media is to the resources at hand. I am just starting out and my clients are mostly small businesses. And I have found social media tools to be of tremendous benefit for learning, developing products and services, and communicating in very authentic ways my ideas and marketing solutions at a far smaller budget than has been described. And I am finding great results from my efforts in terms of building my expertise and clients. However, it is important to integrate social media efforts with other marketing and community efforts to maximize the benefits from all channels cumulatively. It certainly needs to be well planned, but there is so much scope creativity as well, that much can be accomplished with far less resources.
Social media channels provide an authentic way for marketers to connect with their clients and build relationships and communities like it was not possible with one way communications. It requires time and other resources like any other marketing effort, but it provides the possibility of far greater results with much less cost than traditional channels.
Hi Shalini,
The example here isn’t for large companies per se – more a look at how a full integrated campaign might pan out, cost-wise. This is for small, medium and large businesses that don’t have the expertise in-house.
You can definitely work to a smaller budget, but then you need to look at how the savings translate to the loss of dedicated personnel.
Let’s say you don’t go with a community manager, and you have either someone in-house run with it, or the owner of a small business themselves. Does that in-house person have the expertise needed to build community? To encourage engagement? To track interaction across numerous platforms? To know the appropriate responses dependent on these platforms? To report social mentions? To adapt and make recommendations depending on community touchpoints?
There’s a lot more to community management – effective community management – than just encouraging tweets or blog comments, and many forget this (not putting you in this category at all).
Poor community management can cost a lot more than the wages you pay a dedicated community manager with proper expertise in that role.
Or, on the other side, let’s say it’s a small one-man business. You teach him or her how to use some of the popular social tools. Now he or she has to manage them, as well as run the business. All the time taken away from core business management needs to be costed. If the average business owner makes $100,000 a year and needs to spend 10 hours a week (minimum) to make social work, that’s almost $20,000 in costs right there. That doesn’t include building additional tools to help him succeed.
Yes $20,000 is a lot less than the figures I quote above. But that business owner that’s just getting used to social? That’s $20,000 without an in-depth strategy, or a fluid action plan if a platform disappears, or ways to monitor and measure, and more.
Costs are relevant to need, no matter how small or large the business is. Smaller businesses may be able to dip toes inexpensively, but building a solid platform to grow from there will cost.
Thanks for sharing your thoughts, always appreciated.
Great reality post Danny. Social media in actuality has never been free. Time is money. Technology is money. People have been so enamored with the “free” tools and applications, and it was easy to lose sight of this.
Most companies have always found a cost associated with social media (at least the clients at my company), and because of that many are still not fully vested in social media strategies. It is our responsibility as marketers to help them along the way; to be realistic and enforce the fact that like all marketing, social media is an investment.
.-= Anna Barcelos´s most recent blog post …Five Confessions of an Integrated Marketing Communications Marketer =-.I counsel clients to use their existing collateral for social media – use what you got in new ways – until they understand the medium and have built an online community. It’s not free, especially when you consider the amount of time required, but it can be done at a reasonable cost.
Longer term, evaluate how it fits into the overall marcom budget, which is (or should be) ROI driven.
.-= Global Patriot´s most recent blog post …Doctors Without Borders in Haiti =-.Dan,
Thanks for adding your article to real-world thinking about social media costs. Your absolutely right there’s no free lunch…including in the social media world.
Even if a company uses internal resources, by the time they add in personnel costs (for a social team combo of exec, manager, tactical engagers) plus cost of technology, a social initiative can still potentially rack up low- to mid-six figures even with a modest program.
I know lots of folks like to think that technology costs aren’t an issue with free usage channels like Facebook or Twitter, but if you plan on measuring or scaling your social media efforts, then tech costs will be part of the cost structure.
Social business valuation is one of my passions. Any folks interested in more information of the business of social business or valuation, can find it on my website.
http://pathlightsolutions.com/WorkshopseSeries/tabid/56/Default.aspx
Thanks for this terrific article. While social media is no-barrier-to-entry if you want to do it all yourself, when it comes to creating a campaign and executing an effective strategy (and analyzing it after the fact) there is no substitute for a pro. Unfortunately, too many clients see that there’s no cost to use Twitter and conclude there’s no reason they should pay for expert advice and execution on social media.
I am constantly approached by sole proprietors and very small businesses expecting to offer me peanuts or “a discount on our products” in exchange for a social media campaign that gets them results. I spend a lot of my time explaining to them why this is not an appropriate choice for them and why it’s an unrealistic expectation. Unfortunately, there will always be shysters and people who think they know what they’re doing who will take those deals and end up hurting the business or failing to represent it well.
I have taught “Twitter 101″ classes only to see people who were in my classes with ads in the paper, giving their OWN classes on Twitter four weeks later. I mean, I’m a good teacher, but I can’t turn someone into a guru that fast. It’s a difficult situation when “civilians” have no reliable way to tell the difference between a true expert and a fly-by-night.
I should clarify that when talking to sole proprietors and small businesses, I generally suggest they either read up or take a class, then handle their own social media. One-person brands are highly successful on social media if they’re done right, because social media rewards authenticity and is forgiving of beginner errors.
It’s still not as good as a professional campaign, but if the small business is bringing in less than my consulting and execution rate, it makes no sense for them to go into hock to hire me.
I think that’s a great point you make. Yes, you can start a Twitter account for free; yes, you can have a Facebook fan page for free. But what then? And who’s running it> And how do you target the audience from there (is there even an audience to begin with).
You don’t build your own house just because you saw someone else do it; otherwise, you’ll just end up like the first two of the Three Little Pigs.
Can you provide some sources for the numbers you cite? I’m stumped how mobile application development would be that high, for instance. Thanks.
These are some of the questions you need to ask:
http://news.selectstartstudios.com/how-much-does-an-iphone-app-cost/
And then costs (man hours, tech, cross platform compatibility, testing, etc) all add up pretty quick on top.
Danny, great post and I’m sure an eye-opener for many.
Two comments: one real advantage I like w/social media is how well it can drive decision metrics (compared to print, for example).
Second, where did you get the stat that 70% of all web browsing is via mobile phone? I really question the validity of this (but will bow down if provided a verified source!)
Hey there Paul,
I forgot one word – it should have been “social web browsing” (stats from eMarketer and Nielsen). Good spot – I’ve updated the post
Finally. Thanks for this post, Danny. Someone had to at least estimate, to dispel the irresponsible rumors that all of this is fun and free and the people who execute have nothing but time on their hands and who are having fun and don’t need to be paid.
.-= Jim Mitchem´s most recent blog post …The Hybrid =-.Cheers Jim. That’s the scariest thing at times, and the key point that many clients don’t want to face up to – just because the tools are all free or relatively inexpensive, doesn’t mean the implementation and execution is.
Kudos. I enjoyed your post as well as all of the comments, although I disagree with those who seem to think we’re heading for a showdown between “traditional media” and “social media.” It’s really all just “media” — some of which will survive and some that won’t — and the key is finding the proper balance. In a new whitepaper, “Conversation-Centric Marketing: Making Sense of the New Social Order,” our firm, Media Logic, presents a new model for marketing. I invite and encourage you to read it and tell us what you think. The paper and a video are available at http://www.mlinc.com. There’s also a related post on our blog at http://bit.ly/745oyR.
For sure, David – social reaches its full impact as part of a fully integrated solution, not a standalone one. I remember when IM came out, and email was supposed to die. Or CD’s came out, and vinyl was meant to die.
Just because something can displace something else, doesn’t mean it necessarily will. And until social gets a more widespread buy-in from both consumers and companies alike, it’ll be like that for a while yet.
Thanks for the links, I’ll be sure to check them out.
Social media is where email is a few years ago (and sadly still is). Execs saw it is and cheap, easy and a TON of ROI. But we all know now that to do it well, and to sustain a decent ROI from it, it takes time, effort, thought, money, etc. –> the same as social media.
I feel sorry for folks who think like this — nothing that is going to drive business and revenue (almost nothing) is ever easy and cheap.
Couldn’t agree more – it’s an old saying but true, “you get what you pay for.” Email marketing (when done well, and there are some firms doing a great job) can be really effective – but only if the long-term commitment is there. Otherwise it’s just another email.
Thanks for this post. Do you think there will be a social media bust (just like the dot.com bust). I work with companies to build social media campaigns and it surprises me how many CEO’s, directors or marketing managers I talk to that think getting in without doing any research is okay because ‘social media is cheap’. They get in with no plan, no research, no strategy and then are surprised when I ask if they are getting any ROI.
Social media seems to be treated like a silver bullet – something that will cure all, bring in the customers, increase sales and let me retire rich. So wondering if we are ‘heading for a fall’ in social media?
Not sure if there will be a social media bust as such, Kerry-Ann, but I do think there will be two defined camps – successful implementers and non-successful stragglers. The ones that make the investment now and for the long-term will adapt and succeed; everyone else will just be playing catch up.
Thanks mate. I really searched a pricing model for social media marketing and found yours
.-= Florian Simeth´s most recent blog post …3 Dinge, die ein Unternehmer in einer Rezession nicht tun soll =-.Hey there Florian,
Cheers fella, glad you enjoyed.
If it really does cost this much money (which I doubt) then big companies are screwed, because a small company doesn’t have to spend anything close to this to get results.
@EverywhereTrip You gets what you pays for.
I’m looking at it from a full integrated strategy and methods. We work with smaller clients as well as larger ones and the costs are different; but then so are the options available.
If a small business has the bandwidth and resources to do all of the above (and include the continuous adjustments and listening requirements needed to gauge successes), then by all means, you can do similar for less. But probably not within the scope of all that’s explained above.
Like anything, the products, tools and services (and then skill sets to do it properly) is where any cost comes in. Would you use an abacus to budget your marketing expenses, employee pay, supplier invoices, building insurance, overheads, etc?
Same with anything in business – you can always bootstrap. Just don’t compare resources and results to a more integrated program.
What’s worse than the real cost of social media is the hidden cost of social media. We are paying the hidden cost of internal marketers dabbling without a strategy and without a goal…leaving other marketing strategies and efforts to suffer. Social media is like a shiny object catching our attention, but then we realize we are staring into an unexplainable supernova and before we know it our eyeballs are fried. Thanks for your post; i’ll go grab my sunglasses so I can keep looking but through the lens of reason.
Hey there Kyle,
Poor planning – gotta love it, huh? A lot of companies don’t scope things out, hand it to a team they think can handle it, and then wonder 6 months down the line why they seem to be hemorrhaging money without seeing return on it.
Hey ho…
The tools are free. The experience to wield them properly is not.
I own a mobile Disc Jockey and entertainment business too. Now that times are tough, everyone is a DJ. You can pick up cheap speakers for a couple hundred bucks, load a laptop up from LimeWire and be in business the next day.
Or you can spend thousands on gear. Pay a service for a legal library, then practice honing your skills until you’re confident that you won’t ruin the biggest day in some bride’s life. Experience. It’s more than just a word.
In today’s down economy anyone with a Facebook account is a social media expert. This has watered down the quality and perpetuated the cycle of misinformation.
Like the $150 karaoke jock ruined the market for the highly skilled, the home made social media guru will do the same for the skilled social media manager.
Chris Eh Young recently posted…. The Social Media WorkoutGreat examples, Chris, and so true. The problem is, without the expertise, so many companies are getting crapped on in the meantime and don’t realize it until it’s too late.
This is a good post and I enjoyed reading it although some of the costs appear to be worst case scenario.
There are of course costs associated with any business development or adoption of new tools and techniques.
But what is unique about SM and tools such as Twitter is the ability to measure it’s effectiveness as both an acquisition and retention tool and to determine the profitability of individual customers which will in turn allow organisations to jetison their unprofitable customers.
The print ad and other mass media channels you mentioned, that attempt to create awareness and reach all segments by carpet bombing all consumers with the same one-size-fits-all message are no longer necessary.
In summary, use SM effectively and you can measure the impact and effectiveness of every single cost. Something you cannot do with traditional media tactics.
Whilst the advertising obituary writers are not putting pencil to paper yet, they have got out their sharpeners.
Marcus Osborne recently posted…. Advertising campaigns need to be integrated across the organisationHi Marcus,
Social media definitely allows an immense amount of ways to track and measure success. Yet you can still do this with more traditional media as well:
http://dannybrown.me/2010/11/22/traditional-versus-social-media/
Mix both platforms together… Well, there’s a reason integrated usually works best.
Great job spotting and deflating the myth of the “free” social media. Many companies believe it is free and try to build platforms based on the assumption without doing an audit and effectively considering the situation. A great article entirely on all the real cost of instituting a social media presence
Hey there Andrew,
Cheers, sir, appreciate the kind words. It’s always one of the first things we carry out for a company, the audit. You don’t always have to have a major presence yourself, but you do need to know where and how much you need to be there.
That alone can save you time and money – always a great start.
Great point, and I love the math.
You are absolutely right that the cost of social media starts with salary mass rather than media budgets, which is why it’s so often underestimated. It may also require capital expenditure, investing behind physical asses – think of the Gatorade Mission Control room for instance.
Beyond “budgets”, this will need a rethink of the way marketing relates to other business functions, such as HR and IT. And risk management will be a greater part of the equation. In the past, it was easy to treat marketing and advertising as an adjustment variable in the P&L, freezing part of your planned budget. Once you’ve hired community managers or build a listening command center, things get much harder – print or TV ads are much easier to cancel or “fire”.
Tom
@tommoradpour
Thomas Moradpour recently posted…. Epic Fail! The Art Of Screwing Up With StyleGreat points you make here, Tom. We speak quite a bit with smaller businesses as well as large ones, and many want to handle social media themselves.
That’s always the main goal anyway – we’d much rather teach than operate -, but often they feel that by running the project themselves (at least in the beginning), it’ll be much more cost-effective.
This might very well be true – but then they need to look at how much a salary they give themselves, and then how many hours they’ll have to take away from their core business to “do” social media.
Add in some other questions, like “Are you ready for a crisis if one explodes?” and it then becomes clear there can be much more involvement than simply monitoring feeds and looking for opportunities.
Gauging how much to involve yourself with, and how much you can outsource, is a definite balancing act, but one that can make such a big difference in the long run.
Cheers again!
Worse case scenario or not, a real issue for smaller firms is that these costs (and the activities and processes they represent) don’t really scale down all that well… certainly not in anything like a linear fashion.
Companies used to spending a few thousand dollars year on traditional media, trade shows, maybe a loyalty program or such really get caught flat footed regarding social media operations & budgeting. And strategy? Forget strategy. Strategy is just “that word” George Bush mispronounced so hilariously.
They get sold on how easy and low cost it all is, over promised and, often, incredibly under-delivered by the social media smooth talkers who move from train wreck to train wreck shaking their string of shiny new media bells and trinkets at the unsuspecting.
I was reading a post by Mack Collier today about “social media experts”, and one thing that came away with the most is how much you could transpose the term “social media” for pretty much any profession in the service-oriented results field.
Give me someone with a solid business, marketing, strategic background (that knows social media) over someone that “does” social media and simply blogs about results any day.
Mack’s not too far off. The old adage “How do you know when your consultant is lying?… His lips are moving” applies, all too frequently. I’ll take a person who’s walked a mile in my shoes and tripped a time or two, any day, over the person who has yet to take a step but,knows the definition of a mile down to the gnats eye lash…
Hi Danny,
I felt you were talking about me in the first sentence; I have a post titled Social Media is free…Phew, I am off the hook.
I hope the people who should be reading this will stumble upon it. The more we are going to write about social media cost (@MackCollier did a great job, @Thebrandbuilder also totally dissected the ROI of Social media), businesses will realize that social media needs to fit in a larger business structure and should be given attention.
Also, as the industry is maturing, I bet tools will play a big part in the on-going maintenance.Social measurement can’t be properly done without a human analysis which will require skills for business intelligence.
This is not the last we see of the cost of social media.
Always enjoy stopping by.
@KarimaCatherine
Thank you Karima
And I love the discussion of the ‘real’ costs of social media, thanks for extending it, Danny. What happens when companies start to see the real expense associated with social media is that they will start to as for the real GAIN they will see from implementing social media plans. Which means the onus is on agencies and consultants now more than ever to quantify exactly how they will either generate revenue for companies that hire them, lower their business operating costs, or both.
Which means the people that do their job well will thrive, and the ones that can’t produce, will be in trouble. The end result is that companies will be getting better guidance and results from more qualified experts. I am ok with that
That’s the keyword right there, Mack – “gain”. If you’re not seeing what you’re getting from your investment, then you’re not getting anywhere near the full picture. So why invest in the first place?
Cheers, mate!
It’s definitely where a lot of businesses seem to be tripping up, Karima – they see social media as a one-size quick fix, as opposed to an important part of a solid, integrated approach.
Can you just use social media and nothing else for campaigns? Sure, and there have been some great examples. But the real benefit comes when mixing it up with the other parts of you business, so it’s second nature and normal, and not “that cool internet thing”.
And I’d only say good things if I was talking about you, hehe.
I really need to quit taking time away from reading blogs – every time I do, you come up with something like this! (Wait, maybe I need to take breaks more frequently?)
I’m putting this one in my “Link It Rather Than Rewrite It” folder Danny. Even if I find your hourly wages a little low for parts of this (if you can find a strategist that works for $100/hr as a consultant, you aren’t in a bigger city!) you hit the nail squarely on the head: the tools may or may not be free, the people and the time to execute definitely aren’t.
I love this one. Love.
Haha, are you saying I just have little spurts of goodness then?
I agree, I was surprised at the results of the hourly rate (I had a Twtpoll and LinkedIn question when I originally posted this). Rates are definitely higher in most of the places I’ve seen.
Cheers, Lucretia!
Valuable stuff, Danny. Most people look at the long term perspective thing, and get all irritated.
I love it. I think it’s awesome to look at the next six months as a time where you’ll be building realities and creating results. Love the hustle!
Ryan Critchett recently posted…. Push Marketing Being Left Behind?This is great! Thank you!
Great piece! I work with a ton of local small businesses though and I think they would have a heart attack if I proposed these prices to them!
I agree, the small businesses I work with would not let me in the door with those prices. I’m in the Lancaster, PA area and I’m wondering then what your pricing structure looks like if you would like to share that information
.Shoot me an email and I’ll reply back! gillian@betteryourbusinessvb.com
where did your downloadable sheet go? where you broke everything out?
maybe i’m thinking of someone else. could have sworn it was you though.
Never thought SMO campaigns can be this pricy.
Love that you are shining a light on this. The man hours it takes to make an impact with Social Tech is often overlooked.
There is one aspect you might want to consider. The beauty of SM is the ability to ease in. While you are right about the costs of a proper campaign, this isn’t necessarily how all businesses tend to start. The ability to test the waters is something that is not really an opportunity for traditional print.
We were able to test the viability of the space for our business with our current staff and only started to move funds into the space once we saw our customers were there and interested in interacting.
.-= Michael Schechter´s most recent blog post …The Digital Tail =-.