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Short of saying we’ll all be doing business from Foursquare-fueled hover cars, the future of social media and small business is very much an unknown. While most social media-savvy businesses undoubtedly have an online presence, the ability to then monetize online efforts is still in its infancy.
The usual suspects — Facebook, Twitter, Foursquare — have already proven to be great ways to engage with an audience and promote a brand, but what are the next steps in using these social networks to earn real money for your small business?
Soothsaying necessarily has its limitations. In order to peer into the future of small businesses and social media we took a step back and tried to build cases based on the evolution of trends and some successful examples. Below, find some key ways that your business can develop those ideas to (hopefully) earn some good old-fashioned cash.
New Platforms
It’s clear that social media will continue to evolve both in its appearance and its offerings. It is unclear, however, whether this means that our beloved Facebook and its ilk, will be replaced by entirely new platforms, or whether it will become more robust as it’s used for more complex actions.
“I have a hard time seeing Facebook ever going away,” said Scott Scheper, an entrepreneur and VP of Strategic Partnerships at Yontoo. Rather than e-mail blasts or bursts of self-promotion, Scheper suggests that small businesses try to create added value. “… Something that people have a lot of fun doing that you can put your brand into subtly. It’s kind of like product placement and getting eyeballs on [your brand] without having a stand-out ad.”
The idea is more about viral than Madison Avenue: Create content that is attached to your brand that would naturally get shared online. Scheper also pointed to the cost-per-share model as touted by Ad.ly’s in-stream advertising.
In-stream advertising has been gaining popularity as a way to leverage social networks to better target buyers. “You have a pipeline into somebody’s brain, almost,” said Andrew Nusca, a writer for tech and business site ZDNet.com. That pipeline is also an important way to gain information. He said networks like Facebook and LinkedIn would become even more important for the huge amount of data they index. “This is a data game, this is a war over data,” Nusca said. “That LinkedIn knows your work history, that Facebok knows what you like or don’t like… That’s why they changed those pages, because they can look it up. They’re tags.”
We’ll have to wait to see whether the data giants of today or the new platforms of tomorrow will win out among small businesses.
Capitalizing on It
With all this data available, the trick will be for small businesses to find their ideal audience and market strategically. Loudspeaker networks like Twitter are invaluable for broadcasting, but they retain very little personal information.
Small businesses by definition have smaller budgets and must watch their dollars more closely, explained Mike Svatek, Chief Product Officer of social commerce consultancy bazaarvoice.com. “If you can see ROI [“Return on Investment”], it’s much easier to keep pouring money into it.” Svatek said MotoSport, one of their clients, saw a 21% increase in conversion when their mailings included user-generated content and product reviews.
Facebook will have to deal with more businesses as they become better at marketing online. “I think as marketing and advertising gets savvier about how to use social platforms, they’re going to start putting demands on the Facebook platforms and Twitter platforms [to provide more feedback and services].” Still, Svatek sees advertising on Facebook or Twitter as a way for business to ultimately drive customers back to their home sites.
New Ways of Thinking
Any innovation in monetizing social media will be limited by the ability of analytics to keep up. Analytics and metrics will need to be just as advanced as the ads they monitor in order to truly change the way small businesses can approach marketing. This is partly why all three of our biz experts believe traditional banner ads will always be a part of monetizing social media.
“There are so many solutions and services built for tracking those ad sites,” Scheper said. “If I’m published and I want to show ads in a new format, I’m going to have to call up a huge agency and now I’m asking them to work harder and ask them to step away from their typical routine… it’s a little bit of a tougher sell.” For Scheper, there is a disconnect between the creativity of recent social media-related ads — from Old Spice’s viral videos to small business Facebook apps or Foursquare promotions — and the analytics designed to measure them.
“I don’t think that banner ads and traditional advertising models will go away,” Svatek said. “I do think advertising is a function of its medium.” Banner ads might be around forever, but their basic function will change. Svatek gave the example of a highway billboard by the side of the road. Because of the limited time a driver has to interact with the sign, the ad has large, bright pictures and just a few words. Online ads are based around creativity and interaction. The user is expected to click through and gain added value, much like Apple’s new iAd advertising platform.
Businesses that can tailor their efforts to focus on interaction and appeal to their users’ unique contexts will be the most effective in converting social media into money. Much of that interaction might come from your own friends. “We know throughout history that word of mouth is the most powerful way to get someone to perk up and take action,” Svatek said. In-stream advertising, news feeds from Facebook, and user-generated content are all ways for a business to monetize a customer’s interaction with both their friends and the brand.
Directly Monetizing Your Efforts
While we can dream of a time when the hours spent updating an online profile will directly translate into money for small business, “the most immediate opportunity for anyone, big or small, right now is to drive the traffic back to a website,” Svatek said. One of the biggest mistakes small businesses make is not leveraging the content they’ve already created. Svatek saw missed opportunities where small businesses could repurpose traditional content for use on their social networks.
All of this, however, depends on approaching social media with a concrete goal. Scheper suggested small monthly steps like getting one sale via Twitter or converting one user per month via Facebook. While businesses shouldn’t invest a huge amount of time joining every new network they see, it can be useful to secure your handle or company name on startup sites with promise. You don’t want to be late to the game and find out that your preferred username or vanity URL has already been taken.
While Nusca said it could be possible to translate social media into real cash for small business, he believes that social networks are really just platforms. “It’s a conduit, it’s a pipeline,” Nusca said. “Twitter would have to bend to the will of every company that tried to make money off of it. I don’t think it’s possible for the platform to expand that way.” Small businesses will have to continue using these networks as mouthpieces for their brands and as platforms to build customer relationships — the development will be better-targeted ads and more effective outreach.
Potential for Growth
So which of all the popular networks is the best one to put your money on? Which should you devote the most time to now in order to best reap the rewards later? Unfortunately we don’t have one answer, but we did get some insights depending on the kind of company you are. “I would say Facebook or LinkedIn,” Nusca said. “It depends on the business you’re in… It’s because they are both tied to real people — you are you. And they have real data.” Nusca sees the value in obtaining information on individual, identifiable customers. Business sites might benefit more from LinkedIn’s emphasis on work data whereas Facebook is better for getting information about personal tastes and pop culture.
Scheper thought Foursquare had the most potential for its emphasis on geo-location and its focus on businesses and real places. Still, he acknowledged that Twitter is the best site to get content to go viral whereas Facebook is most effective at building and maintaining long-term consumer relationships.
Geo-location was a key area for Svatek who saw the future of social media and small business hinging on mobile. “The nice thing about a mobile device is, mobile is inherently social,” Svatek said. Consumers think of phones as ways to connect to friends. They’re also becoming a quick and easy way to spread mobile commerce. The (sometimes strange) success of ring tones and other micro-transactions could easily be applied to small business purchases or perks.
Svatek also stressed the importance of search engines like good ol’ Google. Google is still the biggest router of information on the web. With phones, most people find information by typing in searches on the go. A well-optimized site can show up high on search engine results — a fact made all the more important when considering how many fewer results pop up on a mobile screen. Svatek gave the example of Swanson Health Products, another client. They implemented a technique that allowed all of their user-generated content to be indexed by Google. As a result, they saw a 163% lift in traffic and a 67% increase in keyword diversity from inbound traffic. Not only did their numbers improve, but they were attracting new customers from a more diverse range of search results.
Regardless of how large or small your business may be, the future of social media monetization is far from certain. We’ll continue to keep an eye on trends and small business resources to help you make sense of the future of social media.
Series supported by Gist
This series is supported by Gist, an online service that helps you build stronger professional relationships by bringing together information from across the web for all your contacts and their companies, giving you the right information at the right moment to get a first meeting, deliver an amazing pitch, or just find a better way to make a connection. Gist does all the work for you, assembling a dynamic collection of all your contacts and their companies from your e-mail inbox, your social networks, or even your CRM system automatically building and updating their profiles as new content is published – by them or about them.
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Image courtesy of iStockphoto, LockieCurrie
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