“Facebook profit hits an all-time high, unaffected by recent scandals—so far.”
“Twitter posts record $100 million profit but loses 1 million users.”
The above are recent headlines from top publications about the profitability of two of the biggest social media networks’ advertising business models.
It gets interesting. The following screenshot (courtesy of Statista) shows Instagram’s revenue from 2015 projected through 2021.
With social media sites posting record profits every quarter, and with projections of an increase in their revenue year over year—based on the advertising business model they rely on—certainly, the businesses that advertise with them must be making bank? Not necessarily.
According to recent research from MDG Advertising, only 20 percent of businesses are able to measure the impact of social media on their bottom lines. A whopping 44 percent do not know if social media is working for them. In fact, a particular study provides an even clearer picture: 62 percent of small businesses report that Facebook ads aren’t working for them.
The question then, is: Should you do away with social media? That would be foolish. Social media sites aren’t going away anytime soon. In fact, they will continue to be more of a force to reckon with. And for every business reporting social media to be ineffective, there is another experiencing massive success. You just have to know what you’re doing.
If you can work on the following six things, you can rest assured of an increase in the effectiveness of your social media efforts:
Realize that ‘social media’ isn’t a business model
Many business owners fail at getting results from their social media efforts because they expect “social media” to be their business model. For these businesses, regardless of the effectiveness or ineffectiveness of other measures they put in place, they assume that all will work well once they can commit a lot of time and money into promoting their business on social media.
It doesn’t work that way.
Even for the social media networks, social media isn’t their business model—most top social media networks have an ads business model and, as a result, optimize every aspect of the experience on their platform to ensure that people keep advertising and paying them money.
If you want to get results from social media, you should realize that social media—no matter how much you are spending on advertising—is only a means to an end: It will get you clicks and exposure to users, but everything else from there on depends on you.
Start tracking your ROI
There’s only one way to know if your social media efforts are working, and that is by tracking your return on investment. Social media can be very deceptive: If you put out a post or an ad and get thousands of likes, it is easy to assume that your efforts are successful. Not necessarily.
You only know if your social media efforts work if you track. What is the cost of a click? How many clicks do you need to turn a profit? Did you set up conversion tracking? Most social media networks provide tools and means for you to track how your efforts are performing on social media, so start using them.
Leverage the familiarity principle
The familiarity principle states that we tend to be more receptive to, and liking of, something with more exposure to it. Depending on your industry and several factors, it can be difficult to effectively measure your ROI—or generate profit—if you only focus on people’s first exposure to your brand. This is where the familiarity principle comes in, which you can take advantage of through retargeting.
Retargeting is so powerful that research shows that it can increase your click-through rate by 76 percent, your brand awareness by 1,046 percent and your sales by 50 percent.
Don’t be too obsessed with getting new users: Retarget old users and visitors—they are more likely to convert.
Ensure an optimal website experience
When using social media, it is important to be prepared: Your content can go viral, your ad can suddenly become a hit and so many things can happen. It is even more important to realize that people are now more impatient than ever—any delay can be dangerous, so much so that a single second delay can cost a business 7 percent in conversions.
You don’t want to be like Best Buy on one of the busiest days of the year, when it had to find out on social media that its website was down.
If you’re using social media for your business, then you’re most likely directing the social media visits to your website. Here are some tips to optimize your website experience:
Ensure that you have a good, reliable server: If you host yourself, carefully monitor things, particularly during periods of peak traffic. If you pay for a host, make sure that you’re not using a host with regular performance issues. Otherwise, look for a better host (my review of web hosting companies breaks down various web hosts by performance, so you don’t need to look far).
Don’t just rely on external information about the performance of your website and server: There are website uptime monitoring tools that help you track the performance of your website around the clock, notifying you of any downtime, lag in performance and other errors, so that you don’t have to find out on social media, and so it doesn’t affect your sales.
Realize that the faster your website, the better your conversions: According to research monitoring real-time data from 33 major retailers, improving page load time from eight to two seconds boosted conversions by 74 percent. Disable unnecessary add-ons, optimize your images, enable server caching and take other steps to ensure your website experience is faster.
Realize that there are more social media users on mobile than on desktop: Ensure your mobile website is well set up and that mobile users are automatically redirected there.
Reduce your social media ad cost by retaining and nurturing users
In an attempt to ensure more profitability, social media networks will continue to make it difficult for businesses to reach their followers on their platform for free. Research shows that organic reach on social media is declining, and that it has been doing so for years. It won’t change anytime soon.
As much as you can, get your social media users to also follow you in other places where you can reach them without having to break the bank. This could be through email newsletters or push notifications. Use incentives if you have to. This makes it easy to reach them repeatedly, with multiple offers, for a fraction of what it would cost to reach them on social media.
Listen and engage
60 minutes: That’s how long 72 percent of Twitter users are willing to wait for a response, and 84 percent of people expect companies to respond to their social media posts within 24 hours.
While social media can serve as a great way to get new users and improve profitability, it can also serve as a coffin for your brand if you fail to listen and engage to what people are saying. Word can quickly spread, and you have a disaster before you know it.
When users complain on social media, you want to listen and respond in a way that people see that you’re paying attention. Not only will this help your brand image, but it will also help contribute to new users discovering your brand.