Business Blogging - A $13,000 Investment.



Time, The Key Issue in Social Media Marketing (SMM).
Last month in her book review of Now is Gone, But It’s Not Too Late, Brandy Cummings wrote about SMM resource requirements. While I have not read the book yet, is has most certainly been added to my reading list.

The major resource that will need to be tapped in order to be successful with new media is time. This is something that I have said often before. Livingston suggests that a small business should be able to dedicate 8-10 hours a week to their blog or other social network activity. That is the minimum that you will need to be able to develop quality content and make quality contributions to your community. If you can afford that, you can afford to start your new media efforts.

An Approximation of SMM Costs
If as a small business you do engage social media and do follow the resource allocation Livingston suggests, you would have to contribute about 520 man-hours over the course of the year. I don’t know how your organization values time in terms of dollars, but further assuming that the time is worth $25/hour, your are actually look at a $13,000/year investment. Before jumping into the fray of SMM, ask yourself whether this investment will yield a positive ROI. Could those same hours have been utilized to obtain first-order results?

First-Order vs. Second-Order
First-order results are those that, in my opinion, tie directly to the bottom-line and have clear ROI case. You used direct marketing efforts which yield $xx.00 in sales. Second-order results, i.e. those generated through SMM are much harder to measure. You started a blog, posted some content, added a few comments here and there, helped another forum member, and through the ether and magic of the internet, managed to land some clients. Here’s a good illustration of second-order effects from Facebook’s Aditya Agarwal:

Second order effects are influences that reach you from beyond your immediate network. Marketers can think about it from the perspective of a hotel operator: You will encounter a hotel by virtue of the fact that a friend reviewed the hotel, not because you are friends with the hotel.

What to do?
Given limited resources and time, what’s a small business owner to do? Is the $13,000 investment worth it, or is a simple “about” page sufficient? My gut instinct is that “yes, it is definitely worth the investment.” For my current venture siphs.com, the break-even point is ~130 subscribers. My only concern is that the 520 hour investment is actually very much on the low side. I suspect that to do SMM well, you need a near full-time resource. There is only one way to find out so its certainly worth a test. I’ll post a summary of my activities here from time to time to keep everyone updated!

March 28, 2008 | Filed Under Small Business, Marketing, etc 

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