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The 3 Worst Ways Companies Waste Money in Social Media

They say you learn something new everyday...

And one of the things I recently learned was a new oxymoron: a social media budget.

Because in most companies, it simply doesn't exist. They expect Fans, Followers, Likes and Pins to fall from the sky.

But that's not the worst part...

No, the worst part is when you see how companies actually spend a social media budget if they have it.

Because most of the time it's wasted on vanity metrics and hot trends.

And the problem typically resides with the HIPPOs (highest paid person's opinion), because the highest paid person is also (usually) the least knowledgeable and furthest away from the front-lines.

Here are three of the worst ways that companies waste money in social media.


The social media budget cartoon Image Courtesy of socmedsean



Money Waster #1: Squandering Your Offline Resources

One of the best ways to grow a social network is to funnel people from existing sources.

That could mean your existing website traffic or email database. Or it could simply mean your foot-traffic and other offline sources.

This is the best source of visibility and awareness most companies have. But by overlooking a few key principles, they're wasting time, energy, effort and money.

For example, the typical offline, social media call-to-action (CTA) usually looks like this:

In this case, all you're doing is promoting Yelp (and cluttering up your window). There's no CTA, and no customer benefit.

And this problem isn't isolated to small mom-and-pop shops either.

Large corporations and big ad agencies do this all the time on commercials. Next time you're interrupted during your favorite television show, count how many commercials show a Facebook icon, and... nothing else.

No Facebook page URL, no direct call-to-action, and no reason or incentive to actually get-off-the-couch and take action.

Again, all they're doing is promoting Facebook. And promoting Facebook is a terrible long-term strategy (which we'll discuss in Money Waster #3 below -- and why you should use email marketing instead).

Now compare this to a good example from a paper receipt:

It has an extremely clear call-to-action, and a compelling reason to take action.

Now think about how powerful this is...

Customers are MUCH more likely to leave a negative review on Yelp than a positive one. But if you can incentivize people after a good experience, than you start to really harness the potential of customer-generated marketing.


Money Waster #2: Community Management Free-For-All

"The average, large company in the US has 178 corporate-owned social media accounts", according to Marketing Pilgrim.

Contrary to popular belief, social media isn't free. So exactly who in your organization is responsible for managing 178 different social media accounts? Who's going to create new content for each, and respond to customers in a timely fashion?

The tiny, underfunded, understaffed Social Media department?

The cost associated with proper community management is significant. And for 178 different accounts, it's astronomical.

But that's not even the worst part...

You're also completely confusing your customers. Which accounts are they supposed to follow or interact with? Who do they respond to with general questions, product support, or service follow-up?

Countless psychological studies have shown that when people are presented with too many options, they freeze up and don't make a decision.

So they give-up completely, and are left with a bad taste in their mouth.

Or instead of working through their customer support issues, they go trash your business on Yelp.


Money Waster #3: Facebook Double Taxation

It's been said that the definition of insanity is doing the same thing repeatedly but expecting different results.

Keep that in mind as you read the next few lines...

In the early 1990s, America Online (AOL) spent over $300 million in mailing CDs to everyone's mailbox. According to then-CMO Jan Brandt:

At one point, 50% of the CD's produced worldwide had an AOL logo on it. We were logging in new subscribers at the rate of one every six seconds.

In a decade, AOL rose to over 25 million users -- an unbelievable number at the time. They were the hottest company in the world. And they began opening up new opportunities for brands to reach consumers.

Companies raced to build up their AOL brand pages, and you would see "AOL" all over the commercials.

But eventually it fell out of favor (like every social network to date), and lost users in droves. Those huge marketing investments companies made into AOL was wasted -- because it was a "closed system". All the data and user information belonged to AOL, not the companies who worked so hard to build it in the first place.

Today, we have the same exact thing going on with Facebook.

Companies love talking about "Likes" and promoting their pages wherever they can. But here's the problem...

Facebook is starting to double-tax you to reach your own fans. According to the NY Observer,

"Facebook acknowledged it as recently as last week: messages now reach, on average, just 15 percent of an account’s fans. In a wonderful coincidence, Facebook has rolled out a solution for this problem: Pay them for better access." "As their advertising head, Gokul Rajaram, explained, if you want to speak to the other 80 to 85 percent of people who signed up to hear from you, “sponsoring posts is important.”

So if you want to reach more of your own fans -- the ones you already spent time, money and energy acquiring in the first place -- you have to PAY AGAIN with advertising.

That doesn't seem very logical, does it?

Getting referral traffic from Facebook is great. And using it to reach new people, while also increasing engagement and retaining customers is good too.

But don't throw a lot of money down the drain by investing in a closed system that you don't own or control.

If you're looking for awareness, then track visits, not "Likes." If you're looking for sales from repeat visitors, then use email marketing, not Facebook.

Because social media has changed the medium -- not the principles.

And timeless marketing strategies still apply.

Join The Conversation

  • Brian Ash's picture
    Dec 13 Posted 4 years ago Brian Ash

    Offering discounts in exchange for Yelp reviews is a dangerous tactic. If Yelp finds out, then a business could find all their reviews getting filtered (hidden). Tread carefully...

  • FixCourse's picture
    Dec 3 Posted 4 years ago FixCourse

    Thank for your comment. I think it depends on the organization's goals, and why they're using social media in the first place. For example:

    • If the goal is support, then maybe it's Customer Service
    • If the goal is "awareness", then maybe PR
    • If the goal is sales, then maybe it's Marketing.

    Ultimately, the best teams are always cross-functional with different types of people (but sadly, it doesn't work like that). 

    Here's a recent article with more information.


  • Dec 3 Posted 4 years ago ellyzabet

    “And timeless marketing strategies still apply.” Do you think that the marketing team should handle social media? I find that a lot of PR teams handle social media.

    I totally agree with “the problem typically resides with the HIPPOs”…Maybe there should be a rule -- you can’t comment on social media if you haven’t actively been using it (like Pinterest) within the last 6 months. It goes back to timeless marketing strategies for hiring a marketing managers. Simple example: I’ve seen that marketing brands for pet food products won’t hire you if you don’t have a pet.

  • Nov 28 Posted 4 years ago scott.gelber

    Very well put. Enjoyed the read.

  • Nov 27 Posted 4 years ago DEEP3R

    This is a great read. Facebook definitely is double-taxation, and I see many folks spending too much time focused on Facebook, and not their own website.

  • Social Comms's picture
    Nov 26 Posted 4 years ago Social Comms

    Great article!  I concur completely.  

    I speak occasionally on social media for B to B events and I always try to drive home your point of concentrating your social media community presence with the brand to a few sites.  As you mention, significant resources are needed for any effort plus it is very confusing for customers if the brand directs them to too many areas.  

  • FixCourse's picture
    Nov 26 Posted 4 years ago FixCourse

    Thanks!  I find it useful to use verifiable 3rd party research, personal data/analytics, and then put it in a high-level narrative they understand (increasing revenue, decreasing costs). 

    Sometimes it's also better to ask for forgiveness instead of permission... so take the initiative and run a few tests -- then you can show them proof of how your strategy/tactic is better for the organization long-term.


  • FixCourse's picture
    Nov 26 Posted 4 years ago FixCourse

    Thanks for your comment. I love social for customer communication - it's the best channel for two-way conversations. 

    The individual medium depends on your preference and also industry/customers (and where it matches the lifecycle adoption curve). I've written in more detail here

  • FixCourse's picture
    Nov 26 Posted 4 years ago FixCourse

    Thank you John - great minds think alike! :)

  • John Siracusa's picture
    Nov 26 Posted 4 years ago John Siracusa

    Brad, Great article.  Truly.  I speak at many major financial events and speak to similiar points as you have here.  Thanks for sharing.

  • Nov 26 Posted 4 years ago songbean

    The organization of the article was kind of confusing in places, but the information is useful.


    Lately it seems that as far as postings are concerned, facebook and twitter tend to have the same function. I personally have found twitter to be much more convenient for direct contact with company social media reps, but I wonder what your opinion is on the overall usefulness of each medium for customer communication..?

  • kidaphex1975's picture
    Nov 23 Posted 4 years ago kidaphex1975

    Great article, very insightful, clear and precise, with usable knowledge. Now, if I can only convince my HIPPO to listen to some sense!



  • FixCourse's picture
    Nov 22 Posted 4 years ago FixCourse

    Thank you Peter.

  • FixCourse's picture
    Nov 22 Posted 4 years ago FixCourse

    "You're" or "Your"?

    Thanks for your constructive comment.

  • Nov 22 Posted 4 years ago Kelly Johnson

    That should  be "your" good example, not "you're" ironically.

  • Nov 21 Posted 4 years ago LIVING WAY NET


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  • Nov 21 Posted 4 years ago jmccourt6

    You're "Good Example" from YELP has a typo. It says Got to Yelp and write a review. So it's not really a good example after all.

  • Nov 21 Posted 4 years ago Peter Hadas


    You could not have presented this more succinctly. Good job.

  • FixCourse's picture
    Nov 21 Posted 4 years ago FixCourse

    Thanks - appreciate it!

  • TheTysonReport's picture
    Nov 20 Posted 4 years ago TheTysonReport

    With you on this 100% Brad - absolutely right.

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