How Valuable is a Social Media Audience, Really?
Everyone from global brands down to local musicians and artisans have been sold on the power of digital audiences. Promises of overnight brand scaling, more authentic audience relationships and infinitely deeper behavioral data have got everyone scrambling to engage these loyal consumers via social networks. And yet, as this audience revolution continues to unfold, the ultimate goal of cutting audience acquisition costs while simultaneously increasing the returns they generate remains elusive. Audience lifetime value ratio comes down to a few key market principles. Let's look at how digital marketers are using these principles to maximize their returns while shaping the future of the fan experience.
Contests Are No Substitute for Content
The key to getting better returns out of your audience is knowledge and familiarity. To better understand your audience, we must understand the individuals that comprise the audience. Abraham Maslow’s 1943 paper, “A Theory of Motivation” presents a framework still popular today for understanding the hierarchy of human needs and desires.
Contests, coupons and other transactional rewards are excellent quick-win tactics for building audience, but ultimately fall within Maslow’s “esteem” and “self-actualization” categories at the upper layer of human motivation; whereas, deeper engagement and sustained loyalty operates at the more visceral “belongingness” layer. This is the community layer of the individual, and is best served with rich content experiences that present opportunities to contribute to the experiences of others within the audience. This shift from transactional to contextual incentives not only increases the quality of individual brought to the audience, but also reinforces the shared sense of “buy in” required to unify and direct the audience’s attention in a sustainable way over time.
You Can’t Monetize Audiences You Don’t Own
A major challenge facing marketers is working with environments where they don’t actually own their audience. This difficulty is not by accident. It’s a manufactured problem stemming from the competing interests of the social media platforms on which audiences are being built. On Facebook for instance–whose self-described DNA was as a social utility, “meant to help reinforce pre-existing social connections, not build large groups of new ones”–digital marketers not only compete with each other for the attention of shared “earned” audiences but also with Facebook, which controls the structure of the environment and whose business model is to increasingly cross-pollinate its user base across advertisers.
Social middleware helps provide digital marketers and executives with interactive dashboards and tunnel integrations into traditional CRM suites, but the reality remains that these audiences still live in environments largely outside of a marketer’s control. This is why e-mail remains the gold standard of audience ownership in digital, and continues to drive significantly greater ROI when compared to social media. Yes, e-mail competes with a feed of content like postings in social media (though much slower moving when compared to say, Twitter), but has the advantage that once opened, it is an experience entirely controlled by the marketer. Even the e-mail addresses themselves are a material asset as they can be brought to any other emergent social environment. Look back at every social network in it’s early days, and there is always some sort of “import e-mail addresses” function, though there never has been an “export” function.
How to Innovate an Owned Audience Environment
Owned environments (web or mobile) are areas ripe for return on audience investment. There are benefits to building audiences across social media, and using the tools these networks provide, but they are largely centered on reducing audience acquisition costs vs. generating returns. Looking forward, social media will increasingly be seen as an on-ramp for audiences to the much larger opportunity of the owned environment super highway.
Looking back, are you a fan of the same shows, celebrities, brands etc. that you were two years ago? 20? How about looking forward, will you be a fan of the same things you are now? Chances are in some cases you will, others you won’t, and in some you’ll go back and forth, like rediscovering the Beatles, or a Disney classic with your kids. Your natural tendency will be to expand and contract your level of engagement with various entertainment and media. This means that businesses building experiences around you that are based solely on static, present-day information will receive diminished returns.
The future fan experience will be determined dynamically, in real-time. As time goes on, the historic data driving these experiences will grow deeper and deeper, factoring in past affinity and actions taken months, years, and even decades ago. The science behind managing audiences in the Internet age is still young. Social media was a major milestone, opening marketers eyes to the almost unfathomable potential reach of their messaging. Yet, in its current form, social media remains too self-conflicted and limiting to enable marketers to effectively mine the value of the audiences built on these networks.
Marketers will maximize their audience lifetime value ratio when they are able to transfer their fans to wholly-owned environments such as e-mail, landing sites and mobile apps. It is here, that I believe marketers will ultimately leverage these three suggested market principles to close the loop on reducing customer acquisition costs without sacrificing returns.
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