Monday, December 5, 2011

An Observation on Monetizing through Social Media

In another group that I read and occasionally post to, the question came up about charging for a service or content vs. using ad revenue.

The site discusses financial information and has a lively conversation. It's been free for some time, but the operator is now asking for donations. This was my reply, aimed at the proprietor of the web site:

"My $0.02 on ads vs. pay. I've been in the digital media payment/social network business for the past 4 years. As you experienced, ads only pay significantly at very large scale, like >1M uniques per month. 

"For smaller scale, catering to very devoted 'fans' if you will, it is much better if you have a paid site. The critical caveat is that there must be continuous engagement by, in the words of Hollywood, the 'talent'. In this case, the talent is you. 

"IMHO, this is why business is slow to embrace social media in a conversational way: the one-to-one or one-to-few (less than a thousand) nature of the conversation. When you get above a thousand or so active participants, you hit a ceiling. As you have seen, even if only a small % of the 1,000 people ask questions or start a conversation and expect an answer, it's overwhelming. This, of course, quickly overloads the talent, as you are experiencing. Some sites hire ghost writers to pen the writings, like Oprah and many other large social graph celebrities. But I doubt that's your style or strategy.

"It's been shown that the predominant digital products/site access services men pay for (not necessarily in order), is financial info, entertainment, health info, a passion (music, guitar playing, sports, etc.) and of course, adult. But financial info is the #1 for men, above all else."

At Bitmenu, we've noticing more social media experiments being put in place by large corporations and see that only a few are scaling up. For our sellers, paid services offset the costs associated with managing social media engagement. In addition, a continual flow of new for-pay promotions establishes the seller's authoritative voice and trust with a discerning audience. Finally, social media conversations carry these offers to new markets.

The benefit of selling premium content to a core audience:  offset social media engagement costs, increase brand trust and authority, and grow your base.