December 09, 2009

Social Media Snake Oil? Yes? No?

One of our loyal Twitter followers (click here to follow the action on Twitter) asked me to speak about the retailer gold rush into Social Media. This individual wanted to know if this was a broader trend worth paying attention to, or if this was the outcome of the Snake Oil being sold to businesses.

The answer, of course, is "yes".

Yes, this is a broader trend worth paying attention to.

And yes, this is the outcome of an unbelievable amount of less-than-optimal information being shared by a small number of individuals.

The broader trend is that social media is infiltrating daily life for those who choose to let it in. In five years, you'll view the communication tools (i.e. Twitter) much like you view your telephone in your office. Did you know that your telephone is an old-school version of social media? It allows you to communicate with other people. Did you know that e-mail is an old-school version of social media? It allows you to have communications with multiple people at the same time.

Both telephone and e-mail simply become part of the fabric of your daily life. Social Media, for those who want to invite it into their lives, will become another tool, like the telephone or e-mail. That's pretty boring, isn't it?

Now for the snake oil.

Did you hear that Dell has sold $6.5 million on Twitter? This fact is tweeted once a minute.

Did you hear that Dell sells over $60,000,000,000 of merchandise a year, much of it at full price, while the $6,500,000 sold via Twitter is often outlet merchandise at a significant discount?

On an annual basis, Twitter accounts for less than 0.01% of Dell's annual volume.

If you manage a very respectable business that sells $30,000,000 on an annual basis, and you experience Dell's level of unbridled Twitter success (touted once a minute on Twitter), you will sell about $3,000 a year.

Let that fact sink in for a moment.

This is where the snake oil comes in.

I've experienced this phenomenon. Many folks said that I "had to be on Twitter". So I'm there. Big time. 1,372 followers. 1,945 tweets. More free facts and information than you could throw a stick at.

Now let's look at what is important. I analyzed where every consulting dollar I earned from 2007 - 2009 was sourced from. Source can be double-counted ... for instance, one client told me that they follow my blog and buy all of my books ... so the blog and books each get credit.
  • 73% of my consulting dollars can be directly tied to the 1,100 folks who "follow" my blog.
  • 69% of my consulting dollars can be directly tied to people I had a prior business relationship with.
  • 43% of my consulting dollars can be directly tied to people who have purchased at least one of my books.
  • 6% of my consulting dollars can be directly tied to people who heard me speak at a conference, and decide to hire me after hearing me speak.
  • 0.5% of my consulting dollars can be directly tied to the 1,372 folks who "follow" me on Twitter.

What you clearly see is that Social Media is both wildly successful (blog), and a complete, unadulterated snake-oil based catastrophe (twitter).

This, I believe, happens because of the "audience" using each medium.

  • The audience reading the blog are mostly CEOs, VPs, and Directors at non-vendor-based companies. This is the target audience I seek, the folks who are most likely to hire me. These folks can follow me anonymously.
  • The audience following me on Twitter tend to be Sole Proprietors, Consultants, and Vendor-Based leaders. These folks are never going to hire me, they follow me for competitive reasons. These folks usually have to identify themselves in order to follow me, thereby limiting the non-vendor-based audience considerably.

This is Classic Marketing 101, folks. In Classic Marketing 101, you identify your target audience, you identify what their needs are, and you communicate with them in the places where they want to be communicated to.

Social Media has snake oil tendencies when advocates promote the discipline without honoring centuries-old strategies like having a basic understanding of your target audience. If your target audience has no interest in being on Twitter, then your Social Media efforts are destined to fail.

This is what Retail brands are destined to learn, as they move into Social Media endeavors. Clearly, Dell's target audience isn't interested in hearing outlet-based promotions via Twitter, or they'd sell more than 0.01% of their volume via Twitter. $6.5 million sounds like a big number, until context is placed around the number.

So, yes, Social Media is snake oil, when applied without an understanding of basic marketing principals, as is evidenced by my failures on Twitter.

And yes, Social Media is a trend that must be honored, as is evidenced by the 73% of consulting revenue I generate via this blog.

Via trial and error, Retailers will learn which of the two outcomes applies to them.


  1. Not all consultants that follow you are competitors, Kevin. Many of us are students.... Keep on teachin'!

  2. Sames goes for vendors! Great post!

  3. Great perspective on the Dell Twitter success. But wonder how much effort & resources they put into Twitter to get that $6.5 in sales, vs trying to use other methods to generate the same amount of sales from their outlets. They're markup is probably also higher on outlet items as they're refurbished (assuming here).

  4. Marketing is all about impressions.

    Twitter is just another tool for generating impressions.

    Folks that purchase your books, who then recommend them to colleagues, who then direct senior management to your blog could very well have discovered you on Twitter.

    All these tools and media build on each other. Just as each channel in multi-channel retail affects other channels so does each media impression.

    The big takeaway I see for you, Kevin, is to post more blog articles and distribute and promote them through Twitter and other channels.

  5. Another thing to consider as well is sales after the initial impression.

    Not sure how Dell measured their sales from Twitter. But also consider the sale that occurs at a later date. 30-90 days that happen after they initially discover the Dell outlet from a tweet.

  6. Thank you folks, all good comments. There are seldom right or wrong answers to these topics, just lots of good things to consider.

  7. Thanks for the honest stats... It's refreshing to see concrete data amidst all the social media experts saying "nice words".

    We've found Twitter / Facebook to be another outlet for getting the word out, giving a little back, making business connections, and helping with SEO. As a direct sales tool for a hosting company, it's probably in the 0.1 - 0.5% range, but the intangibles of building a reputation and developing relationships are hard to measure, but are certainly there.

    It remains to be seen how effective a direct sales tool each social media arena is...

    Rob - LexiConn

  8. Alex B10:52 AM

    You raise an excellent point about the Dell factoid and how utterly irrelevant it is in the grand scheme of things, but you gloss over the value of Twitter (albeit one that is hard to quantify) a bit unfairly when pointing only to your revenue.

    From an individual standpoint, Twitter offers connections to practitioners in your field-- some of the brightest minds available really, who you can bounce ideas off of. I personally do this frequently, and it has made me a better analyst, and exposed me to better ways to do my job. Just yesterday I threw out a question and got two highly technical and custom solutions to my problem. Perhaps you're just not asking the right questions?

    At a corporate level, you're right that, for your situation Twitter probably wont bring in much revenue and there is certainly a level of snake oil involved, but there are companies that, through support online, can win loyal customers without being credited in dollars.

    For example, I know that being able to ping @omniturecares on Twitter for example is a HUGE benefit to the Omniture platform in my eyes. I would miss that feature greatly if I were to switch platforms, because I would instantly lose an excellent resource that can answer almost any question I have.

    In sum, measuring value in the Social Media world right now is very difficult to do-- you're right to seize on the one data point trumpeted about and call shenanigans, but don't throw the baby out with the bath water, there is value, and there are other people aside from yourself working actively to try and capture it.

  9. How about the rest of you? Do you side with Alex B and his thoughts? Is this an issue of me not using Twitter in the right way? Is this an issue of it not being fair to evaluate something on the basis of dollars/profit? And if value is not to be meausured via dollars, then of what value is "value" anyway?


  10. I don't think there's any issue with attempting to put a dollar figure on the viability of using a medium. The challenge with Twitter (or social media in general) is attributing the sale or the lead to those initial Twitter interactions.

    But I agree, it's good to put Twitter under a microscope and question whether it's worthwhile to continue utilizing it for whatever purposes.

    Great discussion!

  11. Alex B12:23 PM

    To clarify, I don't think it's unfair to TRY and evaluate Twitter on the basis of dollars. I try to do that every day.

    I also acknowledge that ultimately, I have failed at it unto this point, but my belief in its value is still there-- and it is valuable to me as an individual, (I suspect it is, or could be valuable to you as well). I also suspect that the more esoteric your field/question, the more valuable Twitter and good connections are. Googling for how to hack apart an Omniture plugin so that I can classify an action as a success event didn't yield many results ;)

    Finally, at least for one company, their presence on Twitter makes me a happier and more loyal customer. I can't be alone.

  12. One of the things we struggle with is the concept of "cannibalization".

    In other words, if I stopped writing books, I am confident that I'd lose half of the business I attribute to books, while the other half of the business would still happen, just through other "channels" like the blog and conferences and maybe white papers.

    Now, ask Dell what happens if they shut down their Twitter presence. Do they truly lose all $6.5 million in sales? I highly doubt it.

    This is the problem that social media has to overcome. Social Media ends up being lower on the customer consideration pecking order, if you will. Sure, you can get help via Twitter, but if that didn't exist, there'd be nothing stopping one from sending an e-mail, using the phone to place a call, or getting advice on a message board.

    At some point, we saturate ourselves with too much communication, and as a result, not everything pays back. Sure, it seems like it does, but the lower a channel is on the pecking order, the easiest it is to replace if it is gone.

    For Twitter, that is a challenge they have to overcome.

  13. Very valid point, particularly as it relates to Dell's revenue- I agree entirely with that number being rather irrelevent.

    However, with regards to help being the same over e-mail/phone, I'll disagree. Sure, Ben Gaines as an individual resource would probably remain, but part of the power of sending a tweet his way is that the issue is generally picked up by the #omniture community.

    In effect, Twitter offers a medium by which I publicly ask a group of experts to help me out, and they do so free of charge. In this sense, @omniturecares is a catalyst to get the conversation going, and others hop on and off the wagon as they deem fit.

    Put another way, he's the seeder of the Torrent, and others hop on and off as they deem fit, in some instances powering group solutions to difficult problems. Remove the Torrent seeder and sure, people may go back to FTP sites, newsgroups and what not to satisfy their pre-torrent habits, but in many ways, the new method offered a value that is tough to recapture.

    Now I suppose you could counter that a forum, IRC chat room or newsgroup would be capable of the same things, but Twitter is more plugged in with experts/practitioners at all levels than any other tool I've seen. Perhaps in that sense, it is the people, not the medium that matters, and Twitter merely holds the most captive audience at this point. Regardless, I don't know where else I could currently get the personal value out of Twitter that I get now.

  14. You describe a situation that is good for you, Alex. Now, where is the ROI?

    Somebody has to demonstrate a return on investment, or what we're looking at is simply a customer service channel ... and there is absolutely nothing wrong with a customer service channel, we've had those for decades and they're good for customers.

    You get personal value.

    Prove where the ROI is for Omniture.


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