08 Nov The Cost of Monetizing Social Media
Social media options are spreading like wildfire and so are the opportunities in the space. But small-to mid-size PR firms continue to struggle with how to make money from social channels, with the margins minimal for most shops. What is more, integrating social media with other marketing channels remains a difficult if not nettlesome challenge.
How to monetize social media was the major topic of discussion late last month at the most recent CFO-COO Breakfast Roundtable sponsored by CPA firm Anchin and M&A/Consulting firm Gould+Partners.
The meeting was co-hosted by Michael Belfer, accounting and audit partner at Anchin and practice leader for the firm’s Public Relations and Advertising Industry Group, and Rick Gould, CPA, J.D., managing partner of Gould+Partners.
Entering its teens, social media is a natural part of the PR and marketing conversation these days. But to make it profitable is another story.
“Social media is an integral part of marketing for most brands,” said Courtney Spritzer, co-founder and COO of Socialfly, a New York-based social media marketing firm. “It is constantly evolving and as a result pricing services becomes challenging as there are so many components to social media to make it successful. To build a team that can service all social media needs can be very costly in today’s landscape as it requires many different skill sets.”
Indeed, PR agency owners and senior executives attending the breakfast meeting had more questions than answers when it comes to budgeting for social media and generating a decent ROI from such efforts.
For instance, should the PR firm develop social media marketing products in-house? Or does it make more economic sense to go with a “white label” product? (According to Wikipedia, a white label product is a product or service produced by one company [the producer] that other companies [the marketers] rebrand to make it appear as if they had made it.) Is it wiser to expand the number of staffers who grew up on social media or recruit some grizzled PR executives to run the show? Is the cost of social media part of the monthly retainer and do you mark-up the out-of pocket costs ?
In light of the fierce competition for business among creative services firms, agency owners can ill afford to throw bad money after good with regard to distributing and tracking social media marketing.
With that in mind, here’s a few tips from the roundtable for how agency owners and managers can get a better handle on social media and wed social channels to the top and bottom lines
1. Provide continuing education. The ability to educate clients on social media’s is mission-critical, and you need to make sure that all the major business disciplines involved in social media marketing are included in the huddle. “Education is key across the board,” said Karen Crane, chief talent officer at LippeTaylor, adding that proper time keeping across disciplines for social media planning should be de rigueur. “It’s social listening, metrics, creative. It’s not just about putting one person in the room anymore.”
2. Set expenses. You must be vigilant in setting expenses carefully and not let them get out of control. “You must also factor in the (growing number of) social media salaries, which don’t directly translate to traditional PR salaries,” said Corey Finjer Bennett, COO of Hawkins International PR. Melissa Murphy, director of digital marketing, Hawkins, added that “it’s crucial that agency owners find technology partners who they feel comfortable with and can help the agency create more scale for clients. And when it comes to software expenses, decide whether you are building them into the overall fee or billing them separately.” Another takeaway: The measurement reporting derived from the software tools has to be constantly communicated (and translated) to clients.
3. Stick to budgeting. This is where things can get tricky. Despite a Wild-West environment online, agency owners have to be metaphysically clear with clients from the get-go on budgeting for social media. Create a road map for your social media marketing, and don’t deviate from it. Over-communicate with customers about the direction of the campaign, potential returns and what comes next.
What’s your experience trying to monetize social media?