Why Social Media is Not Free

Sujata Ramnarayan
Marketing Management
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Key Takeaways
On Facebook, there’s no cost to create a page and subsequent updates, but companies still need to find other means to bring consumers to their pages. Even after bringing fans to a page, companies might be forced to pay for “social endorsement” updates on their prospects’ and customers’ feeds. As Facebook goes public, it is apparent that the company is thinking along these lines to increase its revenues as its regular and ordinary display ads usually get ignored.

Social media has become popular as a communication channel for companies partly because of its low barriers to entry, along with its popularity among target customers. By all measures, it is clear that social media is here to stay. Social networking has become part of the fabric of people’s online social lives. According to a Pew Internet survey of U.S. adult Internet users, 65% said that they use social networking sites in 2011 compared to 34% in 2008.

Social media channels are free to enter, but associated costs and problems become apparent later. That is also probably one of the reasons why the return on investment has been hard to measure. The perception that these channels are free, although prima-facie true, hides a number of problems. Looking at three of the major problems associated with this misconception will help companies plan a social media strategy that increases ROI.

Author Bio:

Sujata Ramnarayan
<p align="left"><strong>Suja ta Ramnarayan</strong> is the managing principal of SMStrat, a strategic marketing consulting firm that focuses on digital media. Her background includes several years in the industry as a senior analyst at Gartner where she managed the digital media research program, as well as her work as an assistant professor of marketing at Humboldt State and as an adjunct professor at San Jose State. She may be reached at <a href="mailto:Sujata@smstrat.com">Sujata@smstrat.com</a>. </p>
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