Redefining reach; the new marketing equation

While I was at StartupCamp this past Sunday here in San Francisco a few of the future founders came up to me asking my advice on how they should approach PR/advertising.

Many of their questions (as small pre-startups) echo the same quandary that major marketers are facing. What is the right way to get the message out in a measurable, cost effective manner. In larger companies it really seems that they value the medium (seeing a spot run in primetime, an article in a major newspaper) more than the benefits that come out of them.

One of the ways that I tried to help guide them and explain why social media is so powerful is the following scenario. Look at these two equations and let me know which one has the most benefit to you:

1. Message 1,000,000 to possibly reach 100

2. Personally reach 100 who influence 1,000 who influence 10,000 who influence 1,000,000

They are two very disparate scenarios, but that is social media in a nutshell. You're not wasting millions of untraceable impressions on TV, radio and print buys. You're forming real relationships with people that spread their version of your message along the chain.

It seems pretty clear right? But this is a huge mental leap for most marketing organizations. The new model is about building relationships that grow and spread to new relationships. Here is a graphical representation of this shift. Advertising will have diminishing returns over time as social connections will deliver more and more value.

There is a huge value paradigm shift that has to happen here. The traditional scenario is very front weighted with value, but it is constantly in a state of decline as time goes on. You pay for the creation of the ad and the media buy and then sit back and pray.

With the social media option, you invest up front, but your spending has to scale as your message spreads to new audiences over time. The value you get takes longer to build and catch up with the advertising model, but it will eventually exceed it. That's a hard thing to budget, but it's important to note.

How do you help people make this jump? It's possible, but it takes time and dedication. What are your thoughts on the equations?

Technorati Tags:
marketing, Matt Dickman, PR, strategy, Techno//Marketer, advertising, social media, influence, reach

Comments

[Adam Singer]

Thanks Matt, this post is very insightful and I linked a few people to help them see the value in social media.

I think you're right on point with this and you helped me make a clear explanation about something today.

Cheers,
Adam

[Sean Howard]

Hi Matt,

Great post.

What is likely so challenging is that in a traditional marketing buy, once the purchase is made, it is done. Set. And we just wait to see what happens. And we tweak things, but that's about it (best case.)

But there are so many hurdles the other way. And no guarantees. I've helped so many people start blogs, for example, and the majority never make it over the hurdle of readership, passion and belonging to something larger.

The results can be amazing. But the price is difficult to lock. And the timeframe can't even be given.

[Steve Woodruff]

We're right in sync; here is how I put it on a recent blog post of mine: http://tinyurl.com/5n7fyt. I focused on terminology; however, you've pinpointed one of the key business arguments for the new approach - I'm going to add a link to your thoughts.

[robert john ed]

Matt,

I dig the chart quite a bit. But I also think that the social media line is bound to fall as well. I don't think that anything can continually rise as such (though your graph may just be short).

I'd like to see the graph in the long run. That's probably what most marketers are thinking as well in terms of their spend. So how do we measure? I agree with your post and enjoyed it.

Thanks.

[Matt Dickman]

Adam -- Thanks for the comment and I'm glad you got some value from it.

Sean -- You're 100% right. Social media is a "vehicle" that effort must grow to support, not contract as in advertising. Great point on the failure rate in social media. It's very true, this is hard work and something that takes time and serious dedication (personally or from a corporate standpoint).

Steve -- Thanks for the link, definitely right in line here.

Robert -- Agreed. This chart is just an illustration over the mid-/long-term and not drawn out over 5-10 years. I think what makes this so challenging is that most of the great examples of successful social media efforts have come in the past four years. Nobody knows what will happen to them or how they will evolve.

I think that if a company truly uses social media to make personal connections, their value will continue to grow over time. If companies stop engaging or get lazy the trend will drop in a heartbeat. Longer term measurement will be the real trick and is still TBD in my opinion. I think we'll need to look at the unique individual layer to find lifetime value (or something like that) which may take 5+ years.

[Freek Bijl]

Matt,

Your message is as simple as it is true. For the most part I totally agree.

But, from a marketing agency perpective I think that they (or we) will stick to the "old way", because it is easy money. The new way takes an investment (building relationships). Who will pay for that? Especially when there is a lot of uncertainty about succes.

Another thing: what about companies who sell cheap butter or toiletpaper?

[Tom Buchok]

Matt,

I couldn't agree more with social media's potential to connect with 100 who, in time, influence 1,000,000.

Your post, and some of the comments, bring up the most important part: it takes time and genuine energy to start a dialogue with customers. And this fact alone make it so very valuable within the marketing mix, because it is real.

Tom