Social Media Marketing: You Get What You Pay For
Thursday, June 16, 2011 at 6:26PM There is a misconception that Social Media Marketing is free, easy and cheap to do. This misconception can lead to poor results and missed opportunities for brand owners as well as digital media practitioners. While creating accounts on Social Networking services may be free to do in many cases for individuals, there are a number of real costs involved when it comes to creating social media constellations that deliver value and return on investment for larger organizations.
I was recently quoted in Malaysiakini (paywall) saying that Tourism Malaysia's RM1.8million for a Facebook page was "a bit too much". Since this is such a hot issue in Malaysia right now, and one that can have ramifications on social media budgets around the country, I feel that it is important to clarify and contextualise my comments.
My first response to the journalists' line of enquiry was to state that each Facebook campaign is different, and the cost should be dictated by a) what you aim to achieve, b) in what period of time, and c) with what budget. The costs may include consulting, design, development, application hosting, management and advertising among many more.
I did state very clearly that if Malaysia tourism is investing a lot of money in developing and hosting applications for their Facebook pages, that they would likely be spending their money on Facebook and Google ads. Ads are necessary expenditure if you want to drive a lot of visitors to your Facebook page over a short period of time. By the way, some companies pay as much as $8 per fan on their Facebook page.
The statement that the average social media campaign costs $30 000 per annum is ridiculous and I was quoted out of context here. I was referring to one of the fixed costs of doing social media marketing: the annual salary of a Social Media Administrator. If you want a more thorough breakdown of social media spend, see this infographic based on Focus research. It shows that average total spend per annum among companies who use Social Media is currently $210 000. Now, I wonder how many of those companies are national tourism ministries responsible for generating RM56billion per annum? Let the budget match the reward.
Here's the basic sums to work-out the rough break-even numbers on this particular Facebook page:
RM1 800 000 (total budget)/RM2500 (average spend per tourist) = 720 (number of people who need to be convinced to come to Malaysia per Facebook page)
720 (visitor target - see above) / ±3% (guesstimate average Facebook Page conversion rate) = ±24 000 (fans needed for the page to break-even)
With only one application out of six launched, there are already 34 000 fans of the Facebook page. Now the question is one of efficacy in converting those fans. This should be easier than with traditional media due to fact that once someone has "liked" your page they will continue to recieve updates from you. In fact, recent research has shown that advertising to Facebook fans instead of non-fans can reduce the acquisition cost of registrations by 44%, event signups by 33%, and purchases by 15%. As a bonus Facebook Pages also provide demographic insight into who the fans are, which can inform campaigns across other media too.
Lastly, one quote in the article said “(The Facebook page) should be connected to other things, like TV perhaps" - while this is a good point that media spend should be co-ordinated and cross-polinate, what I actually said was closer to the spend on the Faceook page "should be compared to other things, like TV perhaps". The point being that RM1,8million is a small fraction of tradtional media spending (e.g. producing and placing TV ads). In fact the budget per region for Malaysia Tourism is RM30million, the region is among the world's top Facebook using countries, and so perhaps the question should be "why isn't more being spent on this?".
Malaysia's Tourism Minister YB Dato’ Sri Dr. NG Yen Yen has expressed a similar sentiment (with facts and figures too) on her blog. These views are my own, although I did consult with the Minister subsequent to the article being published to find out how the budget was being spent. I will be attending a press conference in Kuala Lumpur today with the minister, but I'm also very happy to discuss further in the comments below or on Twitter.
Reader Comments (14)
Hi, am a Malaysian right here, read this note and just to share with you my point of view, that people are not really coming for the issue of 1.8mil on the Face Book page, in fact it's the unsatisfying to the current authorities, this issue has been for years. For example, if the Singapore government announce they spend 1.8mil dollars on promoting travel to Singapore, my Singapore friends will say no problem, they will support instead, why? the Singaporeans are living well, high income and low inflation, good benefits from the government (yet people will still complain, but that's normal, right? human will just ask for more); look at Malaysia, u need at least a RM10k income to survive in Kuala Lumpur, and thats for other races, bet u know the difference of benefits between malays and other races. So no matter how you going to clarify or explain to the media, the people will not accept that, i've read your biography and i believe your professional, end up what people will say is "now they are paying and hiring some so call "professionals" to involve to explain and they expect the public will accept that?!".
Thank you for sharing this perspective, Kian. I realised when the first article was published that the issue was politicized. What I've written here shouldn't reflect as an endorsement of any politician, but rather as a defense of the professional social media marketing industry - which I think is being hard-done-by in all this.
Hello there Mr Dave. I'm a Malaysian and I was drawn to your site by links on the facebook. It is sad that a Facebook venture by the Malaysian Tourism Ministry is gathering so much flak domestically and has become a subject of ridicule internationally. No doubt that you are a professional in your field and your resume is indeed impressive. I respect your views but I believe you need to take into account that the development of the facebook applications is using the taxpayers' money. It is reasonable that we will scrutinize every penny spent, especially during this kind of economic climate. I am not sure how familiar you are with the rates of the application development in Malaysia. I see online applications worth RM1.4 million that are set up, only to be congested within 2-3 days of service. Perhaps if you could take some of your time to study what the rates should realistically be. eg hardware costs, subscribed bandwidth, design and programming, maintenance that is applicable to the context of Malaysia, then we Malaysians would be eternally indebted to you. RM1.8 million might seem a paltry figure for a corporate behemoth, but for us, it is a huge sum of money, especially if the content is not of the highest standard (cue the cuti cuti Malaysia facebook app). FYI, I am a network engineer and has always been critical of how much application programmers are charging here. Thank you for your time and hope to hear some comments from you.
HI dave..
the issues that occur in Malaysia is people now has start to question government spending on RM 1.8 million for facebook is reasonable or not..
I just read the media statement about regarding issues!!
i quote the media statement from this link...
"MEDIA STATEMENT
The digital platform is a very powerful persuasion media tool for marketing in today’s IT era. National Tourism organizations and major multinational corporations are all focusing on digital campaigns eg. Australia Tourism Organization.
Tourism Malaysia is now embarking on digital marketing, promotions, advertising and branding through social media aimed at creating and developing six (6) tourism event campaigns as follows:
Citrawarna 1Malaysia
1Malaysia Malaysia Mega Sale/Malaysia Year End Sale
Cuti-Cuti 1Malaysia
1Malaysia Contemporary Art Tourism contest
1Malaysia Green and Clean Campaign
Fabulous Food 1Malaysia
The RM1.8million budget is used for:
1. Technical
1.1 Dedicated hardware deployment
1.2 Software licensing
1.3 Front end applications
1.4 Application Server engine
2. Development of six (6) campaigns which requires:
2.1 Flash games engine
2.2 Flash programming & coding
2.3 Creative Development and Design
2.4 Campaigns Ideas and Concept
2.5 Front-end Flash Design
2.6 Testing and Debugging
3. Campaign Promotions
3.1 Digital advertising campaigns on Google and Facebook
3.2 Contest, Page Wall and Tourism Fanpage Content Management
3.3 Collection and management of Database
The success of digital campaigns require a team of qualified professionals as well as technical experts as this is not just about setting up Facebook pages. Our digital promotion, marketing and branding effort is entirely different from the political Facebook Fanpage that costs nothing to establish.
The setup of Facebook Fanpage is free and not a cent is spent. DAP has completely twisted the truth and said the allocation was for the creation of the Facebook pages.
The success of a digital campaign is reflected in the number of fans joining the Fanpage. We have been very successful in the first campaign i.e the Citrawarna 2011 which has todate, recorded 24, 736 fans, thereby providing Tourism Malaysia with 24, 736 potential tourists; all these gotten within four (4) weeks only.
This is just the beginning of our entire intensive digital campaign; the fan-base is still rising and looks set to achieve its KPI of minimum 120,000 fans by end of December 2011.
In comparison with the Penang Tourism Facebook which DAP said is for free (which is the truth) as this is because they did not execute any campaigns in the Fanpage.
Tourism is the fifth economic industry bringing to the country RM56billion last year and Malaysia is ranked 9th position of the most travelled to destination in the world by the United Nations World Tourism Organization (UNTWO).
Thus, all our marketing and promotional efforts must be professionally done and this include our digital campaigns as they are not merely about information but about persuasion, marketing and branding unlike the Ministry of Tourism Malaysia’s Facebook Fanpage which is meant to inform thus it is free.
We, in Tourism Malaysia will not allow ourselves to be sabotaged by leaders who choose to twist the truths and destroy Tourism Malaysia’s efforts in digital marketing promotions and branding.
Today, tourists’ behavior had changed to consuming information from social media and online channels. Therefore, any organizations, including neighbouring National Tourism Organisations (NTO’s) have been quick to realize the potential of social media such as Facebook in their marketing strategies. To cite a few, the Philippines Tourism Department has set aside 100 million pesos or RM7million in their 2011 budget, for their Facebook venture (source: newmedia.com.ph).
The Australia Tourism Board has allocated AUD150million over the next three years for their social media initiative (source: socialmedianews.com.au.
Nationmultimedia.com also reported that the Tourism Authority of Thailand (TAT) is boosting its online promotional activities in its efforts to maintain Thailand’s position as a leading tourist destination. The agency is to increase its budget for promotions via online channels to 40% (from 30% in 2010) of its total marketing budget. (source: nationmultimedia.com).
The beauty of digital platform is that information distributed is the most-up-to-date and very dynamic. It allows us to be more flexible and to promote the nearest events. Now, it is possible for even local tourism operators to feed tourism information in the social media world.
The Fanpage sets as its KPI and aims to achieve the following targets:
An average of 20,000 fans per campaign
Minimum 120,000 fans by the end of December 2011
To increase traffic and encourage domestic and international tourism
To act as a promotional tool to disseminate information for Tourism Malaysia, Ministry of Tourism and Government.
Tourism Malaysia and the Ministry of Tourism will be able to communicate directly with at least 120,000 fans (Malaysians and foreigners) by the end of the year through the Fan page and Database compiled from the applications.
Thank you. "
FB links
http://www.facebook.com/CutiCuti1Malaysia/posts/156500271086577?ref=notif¬if_t=like
so the issue that i wanted to highlight here is RM 1.8 Million($US 600K) budget for this service consider Cheap, Over Price?? or Just Reasonable or logic??? Malaysian now become sensitive on how the Government spending they money!! So i need u to explain this as a non-political opinion!!
1. Technical
1.1 Dedicated hardware deployment
1.2 Software licensing
1.3 Front end applications
1.4 Application Server engine
2. Development of six (6) campaigns which requires:
2.1 Flash games engine
2.2 Flash programming & coding
2.3 Creative Development and Design
2.4 Campaigns Ideas and Concept
2.5 Front-end Flash Design
2.6 Testing and Debugging
3. Campaign Promotions
3.1 Digital advertising campaigns on Google and Facebook
3.2 Contest, Page Wall and Tourism Fanpage Content Management
3.3 Collection and management of Database
You are a hypocrite, curring favors with those in power so that projects can be awarded to you
Thanks for sharing, at least it shows how the opposition in Malaysia like twisting other ppl's words and statement for their own political agendas,
A good opposition is an opposition who can do well in counter checking the current government...
But sadly in Malaysia, they're power hungry animals. All they do is just playing the political games.
This sucks though, and it shows that the only thing that the current opposition leader can do is just talk, nothing more and nothing less. Only talks and it's all lies, thank god its a democracy country, and the majority are voting for the government. THANK GOD
Thanks for your comments everyone. There's nothing left to say on this other than that the results should speak for themselves - we will see at the end of the year whether or not the investment was worth it.
By the way - the budget for CNN advertising for Malaysia Tourism is about RM15million, almost 10X the Facebook budget for the year - yet that isn't something that anyone has questioned. Why not? Because everyone already understands that television production and advertising is expensive, if you go on air with a badly produced ad in a bad timeslot you will do more harm than good. Online adverting and Social Media Marketing are new and not yet as established, but can be highly effective. This isn't to say that all marketing done on Facebook et al will work but that is true of most campaigns.
Dave, your article on how social media becoming a more prominent marketing tool and why it is not cheap is really enlightening, I really appreciate your effort in educating the ordinary people who still think that Internet is cheap and free. I think we all should already remember that there is no such thing as free meal regardless of what medium people trying to use to do business.
I've noticed that it wasn't taken to account that a large number of Facebook users who have liked the "Tourism Malaysia ~ Cuti-Cuti 1Malaysia" page are MALAYSIAN. It would be presumptuous to assume that the number of 'Likes' to the page are from potential tourists from another country only.
Based on your article, you're now in Kuala Lumpur. I wonder if that has anything to do with you coming up with this article. Also the link you posted to Dr. Ng Yen Yen's blog holds no credibility whatsoever. Do you personally believe those "facts and figures" posted on her blog are enough to justify the costs?
Now some words of my own: I am sure that Social Media Marketing is not cheap and it costs some amount of money. But the quality of the Facebook Applications that have been produced (1 so far) are definitely sub-par. Do you think that these apps would even attract any attention?
Oh and one more thing. I have never heard of whichever Cuti-Cuti 1Malaysia or any other page related to this fiasco until a week ago. Score 1 for Social Media Marketing? No one ever shared it. Now that can only mean two things: 1) That the page has not drawn much attention. 2) That my friends list isn't large enough. I am more inclined to 1).
Unfortunately, I'll have to disagree with you here Dave.
Yes I believe that then Rm1.8million is fantastic money spent if it can bring in additional revenue, however to justify the cost you have to look at more than just the benefits.
For instance, am I justified in spending Rm1.8million for antiobiotics that save my life. Yes, my life is worth more to me than any money in the bank, and I'll deplete my bank account to save my life. But what If I could get the antiobiotics for just Rm10 from a local pharmacist....would it then be OK? Well it's OK if I'm spending my own money, but not if I'm spending someone elses. I'm being cheated if I spend Rm1.8million on something that's worth Rm10, regardless of it's benefits.
No one is debating the importance of facebook, and no one is debating whether or not the Malaysian government should be spending on social media. What we're asking is that if the Rm1.8million is money well spent, the answer lies in whether you could get a similar product for less, and the answer to that question is a resounding yes. It won't be cheap, but it wouldn't be Rm1.8 million.
Thank you for your comments everyone. i will agree that RM1.8M doesn't necessarily guarantee success, and that sometimes you can spend no money at all on social media and get incredible results. However, I have worked with many large organizations and I can tell you that it is very difficult to get a large number of "likes" without developing something worthwhile and advertising widely. While this campaign many not be perfect, it is a good start. I am from South Africa, and I wish that our own government was investing in Social Media to the same extent as Malaysia's government is.
Malaysiakini has just posted your latest statement on their website. All comments from the readers are no good to you.
http://malaysiakini.com/news/167469
Thanks for the link. The comments reflect the kind of emotional engagement that is fueling this scandal. Regardless of the facts, it seems to me that only an opinion that's critical of the government will appease the people who are commenting on Malaysiakini. I am representing my industry, not Minister Yen Yen, and my views are based on experience and research rather than conjecture.
I wanted to thank you for this excellent read!