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Get rich or die trying

Alex Christie

1 July 2009

I think the above sentiment is particularly apt when looking into the ever evolving world of social media. Calculating the ROI companies are likely to receive as a result of partaking in some form of social media is a tricky business: for some, particularly the PPC evangelists will wax lyrical about the importance of quantifiable click through rates, others are only interested in direct sales and the bottom line.

However the truth is I don’t believe that there will ever be a definitive answer to this question, putting numeric quantities around human relations, exchanges and interactions is in many ways just not quantifiable . That’s not to say that these social media campaigns are not an important part of the marketing mix – there are certainly what seems to be endless examples of successful campaigns.

Perhaps what is more noteworthy for me is the profitability of the social networking sites themselves. The corporate interest in sites such as MySpace, YouTube and more recently Twitter has been well documented and the vast sums of money involved make even the recent price Real Madrid paid for Ronaldo look paltry in comparison. Especially when you consider that the ROI that they will get from the purchase of these Social behemoths is largely unknown. If I was to invest in a media channel such as YouTube, I would want to know to the nearest penny how much revenue I would generate over a period of time and from what. This is again similar to the case of Ronaldo, although for 80million I would expect the lad to be able to win a match single handed, on his own…..with both feet tied together .

All this is why I was so surprised to hear the news that Facebook is actually making money, or at least on course to do so, in 2010 it will actually be regarded as ‘cash flow positive’. Perhaps finally a social site has developed a profitable method from which it can extract money from its advertising! This may also mean more social sites trying to remain independent and ignoring the prospect of racing towards a stock market float or a big business take over. But as with most things in life, only time will tell!!

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