Five important lessons on the economics of social media

economics of social media

I would like to tell you a short story today about my friend Stanford Smith. If you hang with me through this little tale, I promise you’ll see five important lessons about the economics of social media unfold. And then we’ll discuss how you can make this work for you and your business.

A story at the heart of the economics of social media

Some time in early 2011, I started to see an increasing amount of activity on my Twitter stream that mentioned @pushingsocial. Intrigued, I clicked and discovered Stanford.

I watched his Twitter account and soon began to read his blog. I was blown away. This guy was one of the best writers I had seen on the web. He was also an original thinker who was effectively connecting the dots between an agency, clients and content. I wanted to get to know this man!

So, I called him up.

We hit it off immediately and I think we talked for two hours. He was more than a mysterious Twitter connection now. We were beginning to be friends.

At this point I was hiring my first regular bloggers to contribute to {grow}. Stan agreed to be one of my first contributors and penned dozens of posts that became some of the finest work on this blog. He blogged on {grow} for almost two years, the second-longest tenured blogger behind Mars Dorian.

The exposure Stan received through my blog helped pump up his presence and reputation. He was becoming a social media star!

One of Stan’s dreams was to write a book. As I was working on Return On Influence, I got stuck on the difficult research about the history of influence marketing and thought of Stan. I wondered if he would want to help me on the project. He jumped at the chance and he got his first mention and credit in a published book in 2012.

The benefits grow

Stanford SmithAbout this time, my publisher McGraw-Hill wanted a follow-up to the mega-hit book Tao of Twitter Could I write a similar small, helpful book on blogging? Stan had mentioned to me that he was thinking about writing a book on blogging but wasn’t connected to a publisher. This seemed like a match made in heaven and we decided to write Born to Blog together.

The process of writing the book with Stan was one of the most pleasurable creative experiences of my career. Our working styles fit like a hand in a glove. We didn’t always agree and we exposed our divergent views in the book, making it richer, honest, and human. It is now the best-selling book on blogging in the market.

As I was planning the 2012 Social Slam event, I knew I needed to have Stan on the stage. He volunteered his time for a chance to speak and appear on a panel. He was a huge hit — his first professional speaking appearance.

After our book came out, Stan decided to leave his agency and start his own business. I was able to funnel leads to him that turned into paying customers. I felt great that I was able to help him get some business traction in some small way.

This week Stan had me on his new podcast and we reminisced about how far we have come together in a short period of time. Here was a deep personal connection on display, two people who would support each other over a lifetime.

The business lessons of the economics of social media

This is more than a feel-good story about friendship and collaboration. It also illustrates important lessons about the dynamics of the social web, the economics of social media, and the measurement of social media success. Let’s dig a little deeper.

1. The essential role of “rich content” 

Sure, content is king on the web but not all content is created equal. Could this connection have formed through only a tweet, a Facebook post, or a LinkedIn update? Probably not. It was Stan’s blogging that got my attention.

Through his blog I was able to learn about him as a man and as a business professional. I could see his powerful writing skills on display and gain insight into his values and experience.

To have the best opportunity for massive exposure and real connection (for an individual or a business), you need to generate at least one source of “rich content” — generally a blog, video series, or podcast. This becomes the fuel for the rest of your social media platforms.

Content is the catalyst to creating business benefits on the web.

2. The truth about weak links

One of the most misunderstood ideas on the web is that your audience equals power. It doesn’t.

I have 90,000 real followers on Twitter. If I ask them to buy my new book through a tweet, how many will open up their wallets and do it? Probably none.

That’s because most social media connections are “weak links.” They are merely opportunities — doors to be opened — not real relationships ready to take action.

The true business benefits are created by doing the work to convert weak links into strong ones. I recently published a social influence case study where I raised $6,000 for a charity entirely over the social web. But nearly everyone who donated was somebody I had actually met in real life!

3. Networking as a human

The turning point in this story was my first phone call with Stan. Does it seem bold to you that I actually called one of my weak link connections? But making that human connection is the way business has been done for centuries. We conduct business with those who we know and trust and that is not likely to occur if we rely on Twitter alone!

So many businesses I see have created a digital divide between themselves and their customers. We need to remember that behind that avatar is a person who has the potential to have a deep and loyal connection to us. If you don’t do the work and reach out, you may never discover that.

4. Beyond ROI, the economics of social media presence

Let’s quickly list some of the business benefits mentioned in this short story.

  • Exposure for Stanford
  • Original content for my blog
  • A publishing credit in Return On Influence for Stan.
  • Research help on the book.
  • A collaboration that led to Born to Blog.
  • An opportunity for Stan to start his speaking career.
  • A high-quality presentation for the Social Slam event.
  • Customers for Stan.
  • Exposure for my new book on Stan’s podcast.

… And I could go on. Now look at this list and answer this question: How many of these important, tangible business benefits could neatly fit on a spreadsheet or pie chart? Not many.

My point is that benefits like “exposure,” “new content,” or “collaboration” are qualitative, not quantitative. I’m not saying don’t measure, or don’t drive toward ROI if you can. What I am saying is that if you don’t also recognize the real qualitative benefits of the web, you could be missing important value!

5. Expectations and helpfulness

Another characteristic of this case study is that the business benefits accrued over years, not weeks or months.

This is such a huge problem for most businesses today — we manage toward quarterly goals. An economic platform built on relationships doesn’t fit cleanly into that model, so somehow we need to adjust our expectations to fully grasp the opportunities.

One last point. I have had a long career in corporate sales and marketing. I had been conditioned to ALWAYS be selling and I’ve had to adjust toward adopting the mindset of authentic helpfulness. If Stanford sensed in our first phone call that I was “selling” something, would we have become friends?

For somebody who has grown up in a traditional sales role, it is pretty unnerving to stop selling and start helping. And you can’t fake authenticity. You need to make that shift to “If I generously help people, the business benefits will follow.”

Putting it to work

I realize this post has been on the “long” side so thanks for making it this far!

It is important for me to acknowledge that there are many, many economic benefits of company social media applications in customer service, sales, HR, research, compliance, purchasing and more. We have covered just one small sliver of social media economics today and yet, I think MOST businesses and individuals can benefit from the networking aspects of the social web.

I passionately believe that if you understand some of these economic drivers you can make these social media networking opportunities work for you and your business too.

Are you with me?

Illustration courtesy of Flicker CC and Geraint Rowland