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Most advisors are frustrated and ready to throw social media out the window, but the game is about to get even tougher. Social media won’t be free much longer. Here’s how I see it happening and what it will mean for advisors who are counting on it.
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Too good to be free much longer
For zero money, social media opens up a variety of doors to anyone with access to the internet. For this reason it has been an equalizer for smaller brands with tons of creativity but with a decimal of the marketing budgets that the big brands have.
I take that back.
Social media isn’t entirely free. It’s mostly free.
If you want to lurk and passively exist on social media, there is no charge. It’s free to join LinkedIn, set up a profile and invite people to follow you. It’s free to post content to your news feed consisting of your organic followers. But to execute marketing strategies that get more visibility, you have to pay. Examples include:
- Paying for LinkedIn “In-mail,” which messages people (including some semi-famous ones) on LinkedIn without being connected prior;
- Placing advertisements into the news feeds or email inboxes of people you are not connected to who you are including in a marketing campaign (example: I want to put my blog about defined-benefit-plan terminations into all employees of UPS); and
- Conducting espionage, such as seeing who viewed your profile by purchasing a LinkedIn plan.
In other words, for advanced marketing capabilities you have to hand over the cash.
You can see the overarching threat of capitalism within striking distance. Microsoft bought LinkedIn, and (as recent news confirms), we can count on Facebook to sell us down the river for a dollar.
At the present, these platforms make money from people advertising on them. But there’s only so much you can saturate the newsfeed until people stop paying attention to advertisements or opt-out entirely. Then, when the advertisers get zero ROI, they’ll stop paying the platforms.
Social media platforms haven’t quite yet figured out how to make more money off of us all, but soon they will – because they have to.
This is the proven paradigm and how marketing works. You get enough people to pay attention to something by making it free and then once they’re hooked you start charging. Sometime in the next three to five years social media platforms won’t be free anymore.
How a fee-based social media model could work
Just to be clear, what I’m going to say is conjecture; I have no connection to anybody that powerful. But if social media were fee-based, here’s how it would work.
- LinkedIn will make an algorithm that evaluates every social media participant and ranks him or her into five categories based upon usage, following and engagement. The 5s are the cool kids at the party and the 1s are the lurkers (I mentioned this is my last article).
- Once participants were ranked, LinkedIn will charge a monthly membership fee for using the platform varying by rank. Charge the 5s a lower fee and the 1s a higher fee.
- Then the algorithm will adjust for your engagement. People who get better engagement will get a lower cost of advertising.
- Anytime a connection request is initiated, a fee is charged by one participant to another. The cost to join a 5’s network is higher than the cost to join a 4’s network. These payments occur in the form of LinkedIn credits that you can use for advertising, etc.
Read the full article here by Sara Grillo, Advisor Perspectives