Social media sites such as Twitter and Facebook are ubiquitous thesedays on TV, in the media, and on the internet. But should businesses bespending their valuable time using social media? There are many opinions about whether social media is effective in marketing your business;some say it is a waste of time and money but some say it should be avital component to the marketing strategy of any business. There aretruths to both sides, it’s all about how one uses social media thatdetermines their ROI.

Lets first consider Facebook. Facebook ads allow advertisers toselect segments of their users that they want to target based on theinformation they have gathered from them (age, gender, occupation,likes, interests, etc). Since Facebook has a ton of information abouttheir users, it may seem like Facebook provides high quality, targetedads but the reality is that click-thru-rates of Facebook ads tend to beextremely low (and so do conversions). Earlier this year, General Motors (GM) announced that they will not continue purchasing ads on the social network after spending about $10 million in 2011 due to lack ofconversions.

A much better alternative to spending for ads on Facebook are fanpages. A commonly cited dilemma for Facebook’s business is that theyprovide a free way for businesses to connect with their customersthrough fan pages, which makes their ads a more expensive alternative.My advice is to take advantage of this and create a free fan page foryour business that you can use to interact with your existing customersrather than trying to get new customers by spending money on ads thatmost likely will not work. As you fan page grows and your customersspread the word about your business, it will attract new customersnaturally, at no cost to you.

LinkedIn is a little different from Facebook as LinkedIn is onlyintended for professionals/job seekers, unlike Facebook, which isintended for everyone. This allows advertisers to cater their ads tomore targeted traffic that is more likely to convert. Of course, thiswould depend on what type of business you are promoting. A job searchwebsite or an outsourcing company could probably get a decent ROI fromadvertising on LinkedIn but most businesses that do not cater to thetype of traffic that LinkedIn receives probably would not benefit fromLinkedIn ads.

Twitter offers two ways for advertisers to buy ads on their website.The first is to buy a spot on the Trends section of the site and thesecond is to buy sponsored tweets that will only be seen by users thatare likely to be interested in whatever the advertisers have to promote. I can’t speak for how well these ads work since I have never boughtthem, but I can’t imagine them working very well. That is becauseTwitter’s traffic is similar to Facebook’s. The majority of visitors goon Twitter to interact with their friends or share pictures or just have fun; they are not in a buying mood. Rather than using Twitter as a tool to get new customers, it should be used as a tool to interact withexisting customers through informative and quality tweets that willprovide value to customers and keep them coming back for more. Having an active Twitter account is also a way for a business to “humanize”itself and be better able to connect with the consumer. It can also be a great way to answer any questions that customers might have beforedeciding to buy.

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