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Social Media To Cost 20 Percent Of Budget

September 30th, 2010

When I talked to SEC Founder Judy Mod about the “free, overnight success” myth surrounding social media that is being sold to so many marketers today, she told me that she tells senior executives they need to start thinking about social business in terms of budgeting—and to allocate 20 percent of their budgets to social media over the next three to five years.

“When they pick themselves off the floor from shock, I explain that the impact to business is that disruptive,” Mod said. “When you are talking about major budgets across many companies, you realize the disruption could be as impactful as many of the technology disruptions we have seen in the last few decades.”

Are you prepared to put 20 percent of your budget toward your social strategy? And are you ready to pitch the business case for making the investment in that social strategy to your executive team?

Well, a radical change like this does not come without some significant impact to IT. (Isn’t it all just about IT anyway?) I am a strong believer that the most critical element of this fundamental business shift will be the impact it has on how we capture, manage and consume data. I have been working diligently to design a new information architecture that will meet the needs of this new world.

A solid social strategy is not based on an iPhone app or a viral video. The folks who are hiring a “Twintern” to manage the reputation of their brand in the social space might get some short-term PR over the idea of hiring such a role. But the companies that embrace social media as the new PR—well, that’s a whole different ball of wax.

One of the biggest mistakes companies make when executing a social strategy is delegating strategy to junior people and then wondering why the firm doesn’t get a real value out of social media. How many “what were we thinking?” Web sites did we see in the 1990s? We also see companies silo their efforts in social media from their business initiatives.

At the end of the day, if your social strategy isn’t driven by your main business drivers, 90 percent of the value of “social” is left on the table. Bu the real disruptive threat is that you open the door for a competitor to leverage that 90 percent to lower its cost of customer acquisition at your expense.

My advice to everyone who is considering the next steps in a social strategy: Focus on doing business socially, not on doing social business. Start with a strategy. Then set goals. Next, build a plan. Execute it violently. Brag.

Term Of The Week: “Social Scrooge”—slang for business leaders who believe they must enforce tighter controls on social media than they do on the Web or in E-mail. “Our executives are a bunch of Social Scrooges. They have implemented a zero-tolerance policy about using Facebook, LinkedIn and Twitter at work. There go my sales leads.”

What do you think? Leave a comment, or E-mail me at You can also follow me on Twitter: @todd_michaud.


4 Comments | Read Social Media To Cost 20 Percent Of Budget

  1. Greg Troyer Says:

    Todd, some constructive feedback for you on this. First, you are preaching there is one right way to approach social media. That’s ludicrous. Everyone is still figuring this stuff out and learning as they go. Secondly, you quote someone who leads the Social Executive Council saying we need to spend more money in this area. Really? I wonder why someone who leads such a council would say such a thing. Finally, your childish cheap shots at some of your restaurant competition seem beneath someone such as yourself. Instead of criticizing the iPhone apps, twintern, etc. that YUM brands has put out there, maybe you should say these are nice first steps. After all, the twintern was put out there over 2 years ago and most retailers are yet to do anything in this space.

    Best, Greg

  2. Todd Michaud Says:

    Thank you for taking the time to post. First, let me start by saying that I in no way intended to take a shot at YUM. I just did a lookup on Twintern and saw the references. When I wrote the column, I did not have them in mind at all. I apologize for the appearance that I was taking a dig at them. That was absolutely not my intent.

    As a matter of fact, I often use YUM as an example of a restaurant brand that is doing a lot right in social media. When it comes to “social media” I think that those tactics are not only spot on, but are having huge impact. Would I love to have an iPhone app with over a million downloads? Absolutely.

    I think that the title is misleading. The point that I was trying to make is that is just the beginning. Customers are changing the way they interact with businesses not just with marketing, but sales, operations, customer service and even with other traditional non-customer facing organizations like IT, finance and development.

    The point was you can’t stop at social media, you have to adopt a social strategy that transforms your entire businesses. Almost every book or article on the topic stops short. I strongly believe that this will be transformative, a highly disruptive, change in the way we do business. Businesses will be forced to invest a large amount of money in that transformation, or fall woefully behind.

  3. A Critic Says:

    It’s difficult to take any journalist seriously when he or she is unable to write an article without grammatical errors. When making comparisons, the correct word to use is “than”, not “then”.

  4. Steve Says:

    boy, some readers are cranky :)

    i’ll use this aticle as proof to my clients that they need to forget the thought the facebook is easy and cheap, and dedicate time to make a plan and assign resources, budgets, and visionary thinking toward it.

    i’ll use my own anecdotal evidence here. I work at home, and we recently switched out internet service from a local ISP who was falling behind, to Time Warner Cable’s Road Runner service. The speed jump was amazing. But 7 days later our internet and tv service was down. I went to the TWC RR website for my local area, but there was nothing mentioned in the “alert” box featured prominently on their main page side bar. So I turned to twitter on my iphone to see if anybody nearby was tweeting anything. nothing. Then I searched google to see if this huge corporate entity had a twitter account I could follow. I found their twitter help desk, but it appeared to be a nationwide help desk, so I asked if TWCRR had a local twitter account that I could follow to learn about service outages in my local area. They pointed me to some crap twitter account that was a firehose of pure advertising for TWCRR services. Nothing resembling a real human. But the nationwide help desk did follow-thru for me and found that our area had experienced a cut fiber optic cable that affected a 50 mile radius area. This was a pretty big service interuption, but there was nothing on their website abuot it, and no local twitter feedback about it. I had to ask the nationwide help desk about it, and then they went to find out about it and then tweeted about it to the entire nationwide list. Does that seem retarded? Or am I expecting too much from the highly paid executives that run the company, that maybe they could brainstorm and come up with ideas on how to use social media like twitter to coomunicate effectively with customers, instead of just pooping more advertising on all of us?


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