Doug Garnett’s Blog


The Key Truths About Social Media Are Already Known by Direct Marketers

Social media experts have spent the last few years telling us how hard it is to calculate the value of social media connections to monetize their efforts. I’ve read their posts and articles with high interest – because we all want to learn where social media has the most substantive value.

But it’s time to realize there is no hidden magic to social media. The fundamentals for estimating the value of social connections are the same fundamentals that have been used in direct marketing for over a century – lessons Claude Hopkins reveals in his writing about mail order advertising in the early 1900′s.

Consider a post I read the other day. It was published in a major national media business newsletter. And it suggested (surprise surprise) that mere viewings might not reflect any business value for online video.

Didn’t anyone learn marketing basics? Of course mere viewings don’t mean much and we know that without an intensive direct marketing background. It’s part of basic communication theory – something we teach in the “Introduction to Advertising” courses at Portland State University.

Truth is that when you have a bar that is far too low for consumer engagement, then everybody gets engaged and nobody ever gets married.

So let me suggest a new rule: Before you can call take on the title of “social media expert”, you have to take a direct marketing class. Here’s some of the lessons that would be taught in that class:

Mere consumer action has no value. Quite often, in direct marketing, reducing the number of consumers who act will increase your net profit. I once had a campaign that drove leads at $25 each. We modified the creative so that it chased unqualified leads away. The lead cost doubled to $50 per lead, but the net revenue result was 5 times higher – that’s right FIVE times higher.

Attracting people with entertainment often attracts thrill seekers who won’t become valuable consumers. The subscription folks have known this for decades. Heavily incentivized introductory subscription offers always generate the highest number of new subscriptions…and the lowest number of long term subscribers. So if you are attracting social connections with “cool video” (like the Old Spice campaign last summer), you’re not likely to see any business result (which is exactly the end result of Old Spice’s 2010 campaign according to the AdAge analysis).

Marketing IS all about selling product and it pays to be honest about this. Selling doesn’t just happen – to get sales you will someday have to ask for an order. So it may feel great to start with noble intentions to use content to get engaged consumers who seek connection with your brand, but you have to sell something at some point. Worse, what consumers hear from these noble campaigns isn’t at all noble. Too often content is used as a “bait and switch” to sucker people into connecting with a brand. By contrast, direct marketing profit history suggests that if you are honest up front about your intentions, consumers respect you for it and you will generate higher revenue in the long run. (Consumers KNOW we’re in the business of selling things. So it frustrates them when we try to suggest we’re not.)

It’s easy to raise expectations so high that your company can never meet them. Let’s learn from loyalty efforts. Programs around the world claim: “We’re your best friend forever – just tell us what you want.” But no company can deliver what this implies. So, with the exception of coupon clippers who belong to lots of programs, the average consumer has probably found at most 4 or 5 loyalty programs that deliver what they consider significant value. (For me, having joined 30 or 40 loyalty programs, only a few programs deliver any value – United MileagePlus, Delta Skymiles, Amex Rewards, Avis Preferred, and, um, uh…I don’t have any more.)

So let’s cut through the social media BS. There are already hundreds of thousands of articles, books, and reports created by hard working (and very smart) direct marketers that lay out the fundamental models for analyzing the impact of social media investment. It’s well past time for them to be applied.

Copyright 2010 – Doug Garnett

Categories:   Brand Advertising, Business and Strategy, Communication, consumer goods, consumer marketing, Human Tech, Innovation, internet convergence, marketing, Media, Retail marketing, Social Media, Technology Advertising, technology marketing, Video


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