The second of the two panels took place last night and is part of the Social Media Week which is going on this week in London and around the world. It was organised by Sam Michel‘s Chinwag. The panelists were founders of social media startups selling services to brands and companies that want to engage with the social web. They were mostly agency businesses.
Their common message?
That budgets for social media are rising fast but lack of accepted measurement techniques and RoI methodologies is hampering market growth.
Stories of big brands engaging more with social media are legion, but perhaps the best soundbite is Pepsi’s decision to drop their TV Super Bowl ad spot for the first time in 23 years and instead spending $20m on a social media campaign. Starbucks and Majestic are other brands who are being innovative and spending big in social media (for more details on Starbucks see here and for Majestic see here).
Unsurprisingly given the spend on social media the tracking and measurement opportunity has been obvious for a while now, but despite that, solutions haven’t been forthcoming. Entrepreneurs I’ve spoken to, including some who are active in this area, say that is because it is a very hard nut to crack.
The biggest challenge stems from the diffuse and fast moving nature of the social media landscape. Investing in software development to track something which may not be (as) important to your intended customers by the time your product is ready is a dangerous game.
The second issue arises from the varied ways in which social media gets used and the newness of the medium. Social media campaigns can be about customer relationship management, marketing, sales, and/or customer research, and a lack of clarity on the part of customers as to why they are engaging in social media contributes to the tracking and measurement problem. All the panelists last night described how the first thing they do with prospective clients is help them develop a set of objectives for their campaigns, a common feature of immature markets.
It seems to me that both these issues are surmountable. I think the social media landscape is stabilising – my guess is that Facebook won’t go the way of Myspace and Friendster, and as brands get more experience with social media through 2010 best practice will start to emerge. Social media campaigns across the four areas listed above might start to be regarded as distinct areas with different providers.
The companies which seize the tracking and measurement opportunity will most likely also play a roll in defining what those best practices are.