Making a Business From Social Media

May 11, 2008 · Comments

storefrontWho’s making a business from social media? Audio and video producers are, for the most part, scraping by, give or take a few notables (several of who are being paid from VC money). Bloggers are making money in varying degrees, depending on their advertising opportunities, or their opportunity for consulting. I’m going to leave the “entertainment” category out of this discussion for that reason (though you’re welcome to argue it back in). So, who’s really making a business out of social media?

Early Adopters: Advertising, PR and Marketing

First to market with actual paying jobs in social media are public relations and marketing firms. Why? Because if you squint your eyes, the tools are the same thing: a means for communicating professionally. Is that wrong? I don’t think so, provided we don’t lose ground with regards to how these new tools re-humanize technology-assisted communication.

Using social media for “viral” advertising is popular, but mostly because it’s low-cost, low-barrier technology that permits folks to get a message across through different channels. Will that last? I can’t see why we’d go back to $100,000 spots, when we can create the media and distribute it for free, especially where the world is shifting to those free methods, too.

Business Users

I’m not sure what department an internal corporate social media practitioner would fall into. Project management makes sense, because inside the firewall, these tools facilitate collaboration, status messages, data sharing, and other uses that would work well for facilitating projects. Product management and R&D might adopt the tools as well, but there probably wouldn’t be a pre-defined role for someone who simply knows how to use the tools.

Comparing the Two Most Likely Businesses

On one side, we have obvious jobs: PR, marketing, advertising. On the other, we have a potential role for daring companies, or a more likely future of an adoption of the tools by several people after receiving training from a more expert user. So, there are two options.

Which makes more sense? On one side, you have a mountain of communications companies hoping to adapt quickly. On the other side, you have businesses who aren’t as motivated to change their internal processes. But will there be a point where businesses take back their external arms for outreach to their customers? In a world where companies talk directly to their customers, the media, and prospects, will the business of communications go in-house?

Not Necessarily a Primary Business

We’re all jumping up and down and excited about social media and what these tools can do for us. WHAT, exactly, do these tools do for us that translates into a business directly? My answer: for lots of people, they don’t.

Looking for a career in social media would be like seeking a career in email. Instead, use these skills to cultivate another ability of yours. If you’re a salesperson, use social media tools to build leads, understand need, get the word out about your products. If you’re a nonprofit professional, you’ve already figured this out, and use these tools to aid in awareness, fundraising, communication, and more.

Instead of focusing on how these tools will become a career, focus on how you can equip others with these tools. THAT, I believe, is the business, in the short term. But even that will be the short term.

What do you think? Agree? Disagree? What’s your take?

Photo credit, Greg Westfall

The Social Media 100 is a project by Chris Brogan dedicated to writing 100 useful blog posts in a row about the tools, techniques, and strategies behind using social media for your business, your organization, or your own personal interests. Swing by [chrisbrogan.com] for more posts in the series, and if you have topic ideas, feel free to share them, as this is a group project, and your opinion matters.

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  • beckymccray
    A long time ago (like 2006) you started saying these same things about podcasting and video. Same point. It's not the tools, it's how you use them.
  • I think you are right with the "Looking for a career in social media would be like seeking a career in email."

    I always said that social media as such is nothing new, and you never made any business from chatting with people.
    With the exception of professional "conversation partners".
    And I mean the ones you had in the 18th - early 20th century, the women who spent their days with aristocratic women, talking and entertaining them.

    But you can use the new tools of social interaction to help your business, to extend it's reach sometimes.

    You need something to sell for money, and with that money, you can finance people whose job is to interact with customers and business partners, using whatever tool they can.
  • The more time I spend looking at/participating in this space, the revenue model is clearly indirect and offline. I don't think there is any meaningful revenue in blogging/social media directly, it's a brand channel. Social media ultimately is a brand visibility model, which drives consulting and speaking opportunities, not much more as far as I can see.

    I guess there are ads, but that requires crazy volumes mathematically. I guess you could assign a value to free drinks in a strange city as a revenue channel, but I'd rather buy my own drinks in costa rica, not sure how I would do that blogging or via social media. Not trying to be negative, just pragmatic.

    ~jon
  • What about as a Community Manager?
  • For me, it's an enabler of a new business model. We not only should consider how social media can be grafted on to old business models, but how the connections enabled by these tools can actually create brand new business approaches.
  • I agree. Social Media is a tool that you can use to get business, not a business in itself. Unless you are the platform provider, like facebook or ning.
  • Yes Becky, agreed. The larger issue that I think Chris is raising is whether someone can make a living from consulting & executing social media strategies alone.

    It's difficult and here's why

    1) social media is knowledge of tools, knowledge that is free and accessible - why pay for that? primarily it's a time savings.

    2) social media is mostly creativity, not deep complex expertise like brain surgery - most people think they are creative, half of them are, the other half don't want to pay for it. Issue finding the people that value it enough to compensate.

    3) social media, excluding audio & video production, is writing, that's a tough task for most businesses to place a consistent cost on. For example, a high level CEO that values speech writing will pay good bucks for it, another that wants to talk off the cuff won't, so it's a tough call to nail down a revenue stream that doesn't vary for good writing.

    4) social media is being made to seem easy, even audio and video production is being brought in-house by companies who two years ago were paying outside service providers. Why? In part because technology tools are FREE, I'm not knocking it, I'm just emphasizing it, and in part because companies are supplementing their higher cost production with useful, low cost versions in the same format. Personally, I think that's a great idea for the company, helping clients become self sufficient is a good thing. I think there is a false assumption that clients will be around forever, today nothing is forever.

    Now to the positive stuff, sorry Chris for being so wordy I'm just getting the thoughts out here. Chris I think your point about using social media in the job function you currently have makes sense, however, I believe companies will miss an opportunity it those tools and their impact are not understood and applied throughout the organization. That requires coordination and perhaps training.

    I do see an increasing need for the overall social media strategist to be a side by side partner with CMOs or corporate communications roles. That social media strategist understands that a wide spectrum of corporate entities is being touched by social media. For example, because social media is a conversation about the product or service, I am involved with discussions from How to use twitter? to What elements should the product contain? So is that social media or product development or market research?

    And this, Chris and Becky, is the much larger issue of whether marketing as we know it will morph into a greater consumer driven product management function, with less effort for marketers in the role of demand creation. Time will tell (a time honored cliché if there ever was one)

    Now for a question to Chris. Please give me your advice on a post this long, I usually hate writing long pieces on someone else's space. Should I have just tracked back to a post at my place? Thanks big fella, Happy Mr. Mom’s Day!
  • I agree, Its a tool and how effective that tool will be depends on how well you use it.
  • Adam Gershenbaum
    Very well put. I was having this conversation the other day discussing how no matter what role I am in, Social Media or not I will be looking to streamline everything I do using some form of Social Media or Web technology. It's just how a lot of us think. Every thing I do I ask how I can stregnthen or personify this with some type of Social Media or technology?

    With that said, it really does not matter how well designed a site is and how Social Media Optimized things are, if the product is not good and the content is not engaging then there will be no conversation around it. The Meatball Sundae analogy. Social Media is not a business model but a way to personify, enhance, and translate a broader more traditional marketing plan in another space that people are consuming. It is a way for PR, Advertising, and Marketing to optimize their campaigns and put their product or message in the hands of the increasing consumers that ingest content and products online. Think about a supermarket and you had a product on an end cap for 50 years and you payed 100K a month to keep the product there. Then the store introduces a section where more and more people are grabbing items there than your end cap and for 20k a month you can position the product there. You might say ok, I already sell a ton of units with my end cap why spend money to put it in the new section? Because it is an alternate revenue stream. Because the adoption rate of purchases made in this new section is growing faster than your steady end cap sales.

    We live in a have it your way society where consumers can act faster than corporations can make decisions. That gives the consumer power over your brand. It is almost bad PR not to pay attention to the social media space and track the pulse of your message or brand.

    A generation of people are around the corner who don't gather around the water cooler to have discussions. They gather around content.

    Here is an article about the future of newspapers. I think it is a great example of how publications need to adapt to change and while not the business model, social media should certainly be a part of their bigger picture.

    http://strange.corante.com/archives/2008/05/07/...

    And here is a site that is helping those newspapers adapt.
    http://www.statenewslines.com/
  • You may have all kinds of great ideas to open a wine bar, but unless you're an architect and interior decorator, you'll probably need one or both to make it happen.

    You might have a great idea for how to create a buzz for your brand, but you'll need the social media architect to make it happen if it involves "social" at all, rather than pure viral video or such.

    Consulting is probably the best way to make actual income IMO barring some incredibly heavy traffic you can send to Amazon, Google etc, or, a specific sponsor. I think the sponsorship idea, done properly has legs, once a sponsor realizes it :)
  • I'm by no means a social media expert but I'm helping a large corporate client embrace this mindset to solve a very significant business problem.

    To a great extent the perceived barriers to entry are small because of the simplicity of the tools. This makes it difficult to 'own' the tools, which is a good thing. Greater chance of adoption. Of course this allows much misunderstanding of true quality of guidance in an advisor which opens up the market for charlatans.

    Like many things, web sites in general, intranets, corporate collaboration... anyone early on who can lead the marketplace simply and easily through the knowledge gap will have an advantage but I agree it's short-term at best.
  • I spent 45 minutes at SOBcon telling you how I create businesses out of social media audiences. The part you don't seem to like is all that icky "selling something" part. :-)
  • @Brian - oh, I plan to do exactly what you told me. Have no doubt. : ) But that's sales by way of social media, not social media as the end product, n'est pas?
  • How in the world could social media be the end product?

    Except for eager social media consultants, I suppose. :-)
  • Oh, I see. That was your point. I should read slower. :-)
  • Brian Clark is a great writer, not a great reader, is that what I just learned? :)

    Good stuff Chris.
  • Hi Chris...

    Well, being someone who does "social media consulting" I'd have to agree with you on some of your points...

    For awhile now, I've seen how the folks grounded in what might be called "legacy media" (advertising, journalism, p.r. and the like) seem to do pretty well when they add social media to their skill sets. I find the "legacy" folks coming to me for advice when they hit bumps in the social media road. But, they never actually want to pay me for my knowledge. In fact, some have even treated me like it's my responsibility to just hand over everything I've learned to them....

    So, I'm careful about how I speak of what I actually *do*.

    Now, since I don't have a "legacy" media background, I'm something of a maverick. Subsequently, I end up working with a number of maverick thinkers who are like me, and who I've met through networking. For some of them, I do jobs that could be classified as "community management" (like Connie Bensen suggested)--for others it's stuff related to the various aspects of social media.

    So, while being a social media consultant is, in some ways, like being, say, an email consultant, there are ways in which you can display your skills that can lead to all sorts of interesting jobs. But it's not easy, it takes time and f2f connections to build a reputation. Then there's maintaining the reputation, lots of what could be called "old-fashioned sales," and constantly keeping up on new things. Oh, and living where the cost of living's not too high. That helps too :-) Still, I'd agree that I'd never advise anyone to go into *just* social media consulting. It has to be part of a bigger picture.
  • beckymccray
    Since Albert replied directly to me, I'll presume to put in a second comment.

    I cannot speak for the larger business or corporate perspective. From a really small business perspective, these tools have to compete with all other demands on my marketing time, including getting a new sign, reworking my pricing strategy, and training my people.

    If you want to make your living consulting with small business owners like me, you'll need to do more than tout the latest shiny social media tools. You'll also need to talk about the much broader issues I face and how you can make them easier for me. I'm not thinking about easier "consumer driven product management functions." But I am thinking about my customers all the time. And THAT is how you convince me to do business with you.
  • I'm covering the mortgage as an social media creator and consultant (though I'll be the first to admit it's not the most lucrative career yet). The best advertising is word of mouth/reputation and the personal social media sites I put together for the public good.

    Clients tend to be split between individuals with a message to get out (a lot of journalists or would-be journalists) and larger institutions who have dipped a toe into social media but are now drowning in hundreds of unorganized Flickr photos! I come into these projects as a jack of all trades. I have the personal knowledge about how to make a social website work, and the technical knowledge to "build the plumbing" so the organizations can actually use the social media (fifteen years in the nonprofit world helps me understand the internal dynamics of the organizations, which is always a big selling point).

    I'm not sure where it's all exactly heading, except to know that five years from now I will probably be doing the same kind of work but also probably be calling it something different!
  • Chris,

    There's a great opportunity for social media consulting as part of a larger consultation, such as PR or management. I think you're right (much to my chagrin since I wish I could work as a consultant combining the two) that consulting about blogging/podcasting/et al alone probably won't last. But integrating social media as part of a larger PR plan is a great idea, not just focusing on social media by itself, but showing how it all works together for the betterment of an organization.

    In-house PR departments (in possibly some variation of a spokesperson/spokesblogger/online ombudsman/head of social media role) will probably inherit social media in the long-run. It makes sense, since PR pros can use it to engage in a conversation with external customers, evangelists and detractors, and internally with employees who feel like they have no outlet to safely discuss their concerns.

    This discussion reminds me of the PR firm I used to work at, and how a lot of PR firms have a long way to go before really getting social media. At one staff meeting I was, as usual for our office (I was the office social media evangelist), pushing for us to start a weekly podcast, dealing with PR issues in our region (a lot like Inside PR, creating meaningful content without advertising for the firm). The senior account executive looked at me and dismissed me with “well, all of the scripts will have to be vetted before we record them.” The executive didn't understand that this is a conversation – not a scripted “radio play” to advertise the business. Another possibility for social media/PR consultants – visit various agencies still mired in the “go write the client a press release” mentality and introducing them to social media strategies.
  • I am working with the idea that customer intimacy comes from two sources empowered employees and engaged customers.

    It's a marketing/management consulting opportunity enabled by social media, involving as it does customer measurement, innovation, culture shift, brand advocacy etc.

    I understand the social media as a communications channel argument having spent time in advertising and running advertising budgets. But as the point has been frequently made the tools are cheap - its how we use them and for what.

    Maybe thinking about what people are talking about and where and how that conversation can be enhanced.
  • Hello Chris,

    I think that you are one of the very few people who understand that most social networks are not very effective and therefore at OpenNetworkers.info we are introducing a syndicated strategy and focus on deep and clustered searches instead.

    Most people on LinkedIN e.g. are just busy building their 'Ego' there is no real 'networking' and no quality interaction.

    http://www.opennetworkers.info/forum/topic/show...
  • I think we've yet to see the full potential of social bookmarkeing which will in its turn produce web 3.0! I use web 2.0 for general marketing, that is, spreading the word!
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