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Why social media is not the most effective channel for new business

Why social media is not the most effective channel for new business Bart Burggraaf

Let me preface this article by saying that social media can work as an acquisition channel. In fact, it is used by many businesses every day. And for some businesses, it is a better channel than average. But on the whole, other channels are more effective at acquisition, and time and money can be spent better elsewhere -- especially for those on a limited budget.

The crux of the matter is that people are in passive content mode when using social media, mixed with a little communication mode. When looking to market to people who are currently looking for your product, companies need people who are in task oriented mode. So while we can spend money finding and tempting people that are in a different mode, it is more effective to do so when they're in the right frame of mind.

The above chart is just for illustration to help visualize the difference in "mode" that people are in when on social media channels. When it comes to aligning your marketing channels with a specific goal in mind, typically social media is where the passive content mode is most used. People are actively communicating in forums and via email, and of course also via social media. And when it comes to users achieving task oriented objectives, you might find most people are using search, comparison, and shopping sites.

There is of course a fair bit of overlap. But in broad strokes, if you have a direct marketing strategy, you want to be where the task oriented people are. If you want to affect brand attitudes, you want to meet with people in active communication mode. And when you want the general audience to know of you and affect brand awareness, passive content mode is where it's at.

When you look at companies that are successful in social media, they are not directly marketing their products. They are providing customer service and thought leadership, helping retention and awareness, and shaping brand perception. They leverage this large and attentive audience to gain business, but it is an indirect (yet cost-effective) way of doing things. The small to mid-sized companies (without a disruptive product) that we do see succeed at this (without further direct marketing) are needles in a haystack.

If you want to use social media as part of your marketing strategy, it is imperative you do so from a place of offering prospective customers value -- producing content that is of interest to your target audience and being a thought leader in your industry. When you do that, you receive the deserved attention from your target audience -- not to mention picking up some new business along the way.

Similarly, social media is an excellent place to provide customer service to prospective and existing customers. It will show (publicly) that you provide the service needed to gain the respect and attention of your target audience, while increasing retention of your current clients.

Accordingly, you will gain a lot of benefits from providing both thought leadership and customer service on social media. But when it comes to generating new clients and getting the highest ROI, social media (paid or unpaid) should be an additional channel -- not the main part of your marketing strategy. Of course, I'd love for you to prove me wrong. Make a comment below with your thoughts and examples.

Bart Burggraaf is managing director and partner at MediaGroup London.

On Twitter? Follow iMedia Connection at @iMediaTweet.

Partner atMediaGroup London a full-service financial marketing agency that is a part of the MediaGroup Worldwide, Bart has founded the London branch of this financial marketing agency group. Prior to this, he managed global marketing at...

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to leave comments.

Commenter: Alex Co

2014, July 09

Bart, Coshared is new service and with progress of time there will be more users and place for any type of business. Unfortunately, people are afraid or too shy to try out new services and tools. Maybe you know the reason?

Commenter: Bart Burggraaf

2014, July 09

Thanks Justin, it's indeed all about balance and I think Social Media is increasingly being touted as a cure-it-all.. hence this post, but I think we can all agree that content marketing and distribution via Social is a good tactic to have in the mix!

Thanks also Alex for the comment; it depends very much on the type of company I guess!

Commenter: Alex Co

2014, July 09

Thank you, Bart! I absolutely agree that social media might be not the main channel, but it still work well for companies with a limited budgets for promotion. I'm talking about corporate marketing on Facebook, there are no extra fees placing your message on partners Facebook pages. I use Coshared for this need. It's easy way to reach new interested customers.

Commenter: Justin Belmont

2014, July 08

Interesting take on social media, Bart.  Something that we quickly learned at www.ProseMedia.com is how important it is to find a balance in your marketing strategy, and that includes not using social media as a crutch.  Social media, as you said, is best for engaging you audience and maintaining dialogue with them, something that will ultimately increase brand loyalty. Content marketing is all about producing valuable content, and social media is a great resource for getting that content out there. Nice post.

Commenter: Bart Burggraaf

2014, July 08

Thanks Andy, these are more visualisations than charts, but I take your point; they could use a little design love to make them clearer...

Commenter: Andy Wiedlin

2014, July 07

You might be right, but your argument would be more compelling if you labeled your charts.