Social media are not free

The following was once overheard at an advertising agency: ‘So this marketing manager tells me we should do a fanpage on Facebook. And he tells me not to ask for extra budget, because he knows that Facebook is free!’
Social media are, obviously, not free. Their development requires resources – real people spending real time and real money – for planning, creative insight and actual product management. These costs may be hidden costs, but they are costs nonetheless, and need to be calculated.

The excellent How Corporations Should Prioritize Social Business Budgets by Jeremiah Owyang and Charlene Li sees three major social business spending areas:

1. Internal Soft Costs: Staff to Manage the program, Education and Training, and Research and Development.
2. Customer-Facing Initiatives: Ad/Marketing Spend on social networks, Traditional Agencies (deploying social media), Boutique Agencies (specializing in social media), and Influencer/Blogger Programs.
3. Technology Investments: Brand Monitoring, Community Platform, Custom Technology Development, Social CRM (SCRM), and Social Media Management Systems (SMMS).

Their seven key trends for 2011 are:

1. All corporations will gear up on Staff to manage social business, yet investment in Training and Education will be low.
2. Corporations will invest heavily in Ad and Marketing on social networks, though fail to truly engage or leverage the social graph.
3. Advanced buyers will spend nearly 3X more on Boutique Agencies than Traditional Agencies.
4. Nearly all buyers will invest in Brand Monitoring, but don’t expect the ROI problem to be solved.
5. Community Platforms become a mainstay of Marketing and Support.
6. Advanced corporations will invest in Custom Technology Development, including integration of social networks on the corporate website.
7. To scale, more mature programs will invest in nascent systems, such as Social Media Management Systems (SMMS) and Social CRM (SCRM).