Thursday, June 4, 2009

Corporate Budgets Must Reflect the Shift in Influence

If musical artist Don Henley were to craft an anthem for today’s journalist it would very well be titled the “End of the Influence.”

That’s because the shift in impact on awareness and credibility from traditional sources such as the news media, columnists and pundits to online communities and social networks continues to accelerate.

The numbers prove this out. Advertising revenue for newspapers has cratered due to dwindling readership and interest. Broadcast and radio are experiencing a similar crush.

In comparison, the time spent by business users and consumers in social media channels has made a stunning leap. According to research shop Nielsen Online, total minutes spent on Facebook in April 2009 grew nearly 700 percent from a year ago. Twitter saw its user time on the site skyrocket by more 3,700 percent. Even MySpace, which realized a 31 percent decline in user time, still logged an impressive 83 million minutes of use in April.

For corporate marketers the take-away from this realignment of user interest and engagement is clear. It’s absolutely paramount to adjust budget allocations to focus on the channels of increasing influence. You have to fish where the fish are, right?

A recent forecast from Forrester Research indicates this trend is well underway. The analyst firm anticipates a 34 percent compound annual growth rate in social media spending during the next five years with a jump from $716 million this year to more than $3 billion in 2014.

In no way am I proposing that organizations eliminate their spend on traditional advertising and public relations outreach. Quite the contrary as these tactics continue to serve an essential role in the marketing mix.

Rather, it is clearly time to strike a better balance in budget based on where key audiences reside. The numbers tell all…they’re in social networks.

1 comment:

Norman said...

You're right. There are several challenges, namely:

1. Many organizations do not have anyone focused on social media.

2. People within an organization may be using social media but in an unofficial way off the side of their desk, meaning there's no corporate-wide strategy or voice. If that person answers questions on whichever social network but is gone on vacation for a week, there's a gap in response and a loss of momentum.

3. Companies not currently budgeting for social media don't know how much to allocate in terms of employee(s)' time. Asking an employee to spend 2 hrs per week may be a big increase relative to what the firm had been doing, but that's a drop in the ocean. The result: few tangible results over the course of 2 hrs per week, and the organization drops the initiative.

4. The need to establish and meet short-term goals. It's difficult to generate a following or traction quickly on social media. It takes time and patience -- which is a tough sell these days. Whereas placing an add can be quick and offers understandable metrics.

5. The people in charge of budgets and priorities may not be familiar or comfortable with social media. Most of the quizzes on Facebook seem to be time-wasters so why should an organization get online to find out what TV shows your friends like?

That said, every new client we talk to now asks us about social media, our experience, and the experience of other clients. But many still relegate social networking as a nice to-do, not a must-be done.