Deciding how and where to allocate your advertising dollars can be a bit of a crap shoot. The traditional mediums like television, radio, and print are all showing signs of decline. At the same time they can easily reach the largest audience. The question comes down to quality vs. quantity. By the end of 2008 television advertising was down 10.1%, newspapers were down 18.7% and magazine and radio were down a respective 14.8% and 11.7%. While the traditional advertising mediums are in a tailspin mobile and web advertising rose 18.1% and 9.2%.
Even if the traditional methods are down, they still reach more people than the new web 2.0 style will, right? To answer that, let me tell you a story about a liquor store on the east coast that was trying to start an online delivery channel of its business. They were already locally successful and figured why not take it to the next level and open up an online division. Once all of the logistics like building a e-commerce site, factoring in the new costs (hosting, staff, delivery, etc) they were set to go. Now all they needed was traffic.
They bought a billboard on a busy freeway, launched a direct mail campaign, and placed a radio ad. All three campaigns offered the same thing, free shipping on all orders from their new website. The results from the different campaigns are as follows:
The billboard returned 170 orders, the radio ad delivered 240 orders, and the direct mail yielded over 300 orders. Overall they netted 710 orders from their initial investment of $7500. This works out to a $10.56 per order ROI. Not bad, but it wasn’t exactly the turnout they were hoping for. Not to mention that during a busy rush their retail location could do that in an afternoon.
They decided to try some of the web 2.0 technologies to see if they could improve upon the original campaigns performance. Since they had been using Twitter to alert customers about new products they had already developed a decent sized fan base. The first step was to ask their fans to recommend them to their friend and families. Next they put out the same offer of free shipping via Twitter. After the first 48 hours of the offer being tweeted out, they received 1700 orders. The ROI on this is amazing since there was no additional media costs involved.
So why was Twitter able to return more than double the orders in a fraction of the time? Basiclly, they were sending the offer to people that had already expressed an interest in their products and services. From there the basic nature of social networks took over. In this case Twitter users saw the tweet offering them free shipping on any online order. From there individuals are able to re-tweet the original post and it then goes out to their entire friend (or in Twitter’s case followers) list. This happens again and again and the message is sent out to a very large (and rapidly growing) number of people.
According to the Did You Know 4.0 video on Youtube (http://bit.ly/33INWM), Americans have access to over 2300 cable TV networks, 5500 magazines, and 10,500 radio stations. As impressive as that is it is nothing to the next generation of media. We now have access to over 140,000 iPhone applications and 1,000,000,000,000 web pages. Combine this with the ability to with a few clicks share what I find interesting and useful with my friends, family, and followers, you get a very powerful tool.
If you want to pin it down to the main reasons social marketing is performing better than traditional marketing you can look at it this way. Ads that come across Twitter are coming from companies that you have chosen to follow. In the case of Facebook, ads are sent to you based on information in your profile. From there it is left up to the end user to disregard, act upon, or share the information.
What is more valuable, having millions of people see a 30 second spot on about your product or service, or thousands of really interested people speaking praises about you and giving their personal recommendation? People are becoming increasingly skeptical of marketing tactics and as a result looking toward their social networks for advice on their purchases.
So again I ask you. Where will you spend your marketing dollars?
Brian Evans
Atomik Ink
All Things Atomik 