The Brains of the Outfit

I love articles like this one. I think Kievman has missed the point of doing social media for business and of marketing in general.

Marketing is about ROI.

If companies haven’t been able to find the real-world results of their social media efforts, there are two distinct possibilities. Either they’re not doing social media effectively, or they’re not measuring it correctly.

I’d be willing to bet that DemingHill’s largest Fortune clients care about ROI as the first thing of importance, but they understand that all the activities that Kievman mentions in this article are tied to strategies that bring measurable ROI.

Relationship building creates ROI by creating brand equity and increasing net promoter score. Kievman mentions “creating communities of key constituents.” Why do you do that? Those key constituents are either going to be influencers or buyers. Another point Kievman misses is that customer service, brand monitoring, brand awareness, and crisis management can all be performed or influenced via social media.

This statement is really problematic to me: “…if you are not converting outside of social media, social media will not help you convert and improve your ROI.” If an activity has a net zero effect, that’s truly money for nothing. The whole raison d’etre of marketing is to increase conversion. Does it have to be direct? No – very few marketing activities are direct.

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I was sitting in a branding interview yesterday, and had a bit of surprise. The gentleman I was interviewing was one of the principals of the company, and the evangelist for the company’s services.

The thing that surprised me was this – he knew his company’s place in the industry. He actually knew and could explain their value proposition. If I had handed him a blank Bowman strategy clock, he could easily have placed his company on it. I’d be willing to bet he could have easily explained to me his positioning relative to Porter’s Five Forces.

This type of thing shouldn’t be unusual, but it is. I interview more people within more companies who know themselves well, but are lost as to their industry and position within it, especially within service industries. For example, the employee assistance program who doesn’t know their market is commoditized and how to deal with that.

Therein lies a problem. If you don’t know your industry environment, you can’t create marketing strategies to deal with that environment, and it’s easy to fall for whatever some slick ad salesman throws your way. I even catch some of my clients in that act – they’ll get a spam promising them the world, and consider it as an option, in spite of the fact we have a solid, planned, measurable marketing strategy for them that is getting results. Luckily, my clients are all smart enough to forward it to me first and ask if it’s a good idea to pursue.

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Of the four P’s, promotion may have been changed most by Web 2.0… or has it, really?

If you’re on social media, think about the posts, status updates, tweets, and other media that you receive from businesses. The majority of them are pretty blatantly ads. They’re designed to do what advertising and promotional activities traditionally do – create brand equity, create loyalty, create conversions, and drive sales.

Social media mavens talk about creating a community. Sure, you’re creating a community. But really, what is a community? It’s loyal customers and people potentially interested in doing business with you. Sounds like a loyalty program, combined with some basic promotion, to me.

By the way, none of this diminishes the value of Web 2.0 constructs. These are valuable channels that create really high return on investment for our clients and others. The point, however, is this – you can’t go into these ignoring basic marketing constructs.

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Earlier this month, a dream was realized, and Realize, LLC was created.

Realize, LLC was born with one goal in mind – to create marketing impact for our clients. We work with you to determine the best combination of traditional marketing and the most modern strategies to help your business make marketing impact and realize greater ROI. Once we’ve done that, we help you implement those strategies.

We’d like to invite you to feel that impact. Take a few minutes of your day, and check out our new Web site at http://www.realizellc.com. Press some buttons, turn some knobs. Find us on Facebook, read our blog, try out our live chat. And most importantly, let us create some impact for you.

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The first “P” of marketing, price, has been suffering on the Internet well prior to the advent of Web 2.0 and social media. Price continues to be slaughtered online.

When setting a price for a good or service, generally accepted principle says that you should cover all of your variable costs for one unit, and a portion of your fixed costs.

In the digital domain, variable costs are frequently so low as to be considered zero, while fixed costs are relatively much higher. This is due to the ease of which units of a digital product are reproduced and distributed once created. A great illustration of this is the uproar caused by music sharing. For an individual, the costs of ripping a CD to MP3 or copying a purchased MP3 are so little that millions of people do it frequently, much to the chagrin of the music companies.

This, and a perception factor, has led to the demise of smart pricing for Internet-based products, though these two things are closely related.

The perception is that the Internet and software should be free. What created this perception? A variety of factors combined to create this – one, open-source software, much of which is available for free. Another is the wide variety of commercial and personal products that are available for free online. There are also many freeware versions of commercial applications that are good enough to be used on their own. The frontier-like nature of the Internet also helped create that perception.

What is a company really designed to do? Make profits for its owners. How many household Internet names do that? Very, very few. Youtube doesn’t. Twitter doesn’t. LinkedIn doesn’t. Facebook is profitable on an EBITDA basis, but not yet cash-flow positive. Why? Because all of these give away their basic service and depend on ad revenue to survive – a model that venture capitalists are fleeing.

How to counteract this? Well, first, charge a sustainable price for goods and services – even digital ones. Second? Take advantage of it. Use the free and inexpensive services provided on the Web to minimize the “investment” side of the ROI equation, creating enormous returns on investment for online marketing projects.

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