Are Social Networking Websites Worth the Money?
A recent article appeared in Time Magazine entitled "Facebook Takes a Dive: Why Social Networks Are Bad Businesses". In sum, the article's basic argument is that social networking websites aren't worth the money invested in them.
We respectfully disagree.
Social networking websites can be approached from two different perspectives, that of a small business, and that of a big business. The small business perspective really boils down to WOMM -- "word-of-mouth marketing". WOMM entails the use of one's personal contact network for business objectives. For instance, if I, Raphi Salem, were to post a message to my 700+ friends on Facebook, I know that only 10% of them might see the message before it disappers or gets deleted. Of the 10% that sees the message, only a fraction will respond and help me with my business request. This demonstrates the importance of having a large social network through which to disseminate your business. Granted, business and pleasure don't always mix. A recent message I sent out asking for leads for retired doctors and dentists to join my advisory board received a rather tepid response, but my April Fool's prank from a few weeks ago received overwhelming feedback. Despite this contrast, the social networking effort is still worth it for me -- as a small business, all I need is one advisory board member to bring me one account, and the social networking effort is more than paid for.
And now, to the big business perspective. Numbers don't lie. Big businesses have big budgets and bring in lots of overhead. With tens and sometimes even hundreds of millions of users logged in to various social networking outlets, it's an obvious choice for big businesses to mark these outlets for targeted marketing campaigns. (Social networking ads have gained even more traction in recent times with the decline of traditional marketing venues. I'm looking at you, printed ads.) Maybe some big companies haven't made their money back yet on social networking expenditures, but they will in due time, especially as online social networks continue to expand and diversify.
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