The Hidden Costs Of Social Media for Banks & Credit Unions

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I’m really tired of hearing social media gurus preach about how social media will transform marketing. They usually can’t explain why this will be the case. And when asked for examples, they often cite people in the Middle East tweeting during a revolution. Which is great, but has nothing to do with marketing. 

If there’s a transformative potential for social media, it lies in this: The incremental cost of communicating with customers and prospects is, for all intents and purposes, zero. 

This has, until very recently, never been the case. 

Prior to the advent of email, the cost of communicating was high. Marketers either used mass media avenues (TV, radio, print) or direct mail. The cost per message was high. 

As a result, the return on investment per message was important. Each message had to pay its way. And that’s why obsessed over response and conversion rates.

Social media brings the cost of messaging way down. As a result, marketers don’t have to obsess over the ROI of each message, allowing them to shift the nature of communication from persuasion to engagement. In a world where every message doesn’t have to have an ROI, we can actually carry on a conversation with customers and prospects. 

But most marketers are missing something important as the economics of marketing change:

Costs shift from message distribution (dissemination) to message creation.

In the old world, marketers did spend a lot of money in crafting their message (witness the size of the advertising agency business). Despite this cost, more was spent on disseminating the message than creating it. After all, the message was created ONCE. Then tested, revised, and launched. And then the bulk of the marketing cost was in getting the message OUT.

Marketers in the new world have new mechanisms for getting the message out thanks to social media tools and channels. Tools and channels that radically slash the cost of dissemination.

But what too many marketers don’t realize is that there’s a new cost in town: The cost of message creation. 

Too many marketers don’t have a clue how to have a conversation with a customer or prospect through social media. Either they tweet or post their tired old marketing messages, or they deal with customer service requests. But marketing messages designed for mass media channels are inappropriate for social media channels.

I guess I can only speak to the financial services industry here, but there’s not a single financial institution that I’ve talked to — and I talk to a lot — that consciously think about the mix of messages they disseminate through social media (i.e., the mix between marketing messages, educational content, news alerts, and other types of messages), nor do they test and refine the messages they disseminate. 

Thanks to social media, the cost of marketing is shifting from message dissemination to message creation. And that’s not a grammatically correct sentence, since it’s about messages — in the plural — today, not the message. 

Seth Godin wrote that “marketing is the story marketers tell consumers.” That’s simply not accurate. It’s “stories” in the plural (and if you want to be even more correct, it’s not about the stories marketers tell, but the stories that marketers get consumers to tell). 

It’s hard to equate a tweet or Facebook posting to a story, but this is mincing words. It’s about the message. More frequent — and more meaningful — engagement with consumers, means having more frequent and meaningful messages and things to say. 

The cost of creating those messages, and understanding which ones are most effective, is the hidden cost of social media.

 

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