Face(book) It – Your Social Media Strategy isn’t Paying Off

According to eMarketer, last year, U.S. companies spent more than $3 billion on Facebook brand pages and social media advertisements and the return has been universally abysmal. GM went on record in May of this year in the Wall Street Journal saying that FB ads don’t pay off and that GM was ending all investment in FB advertising.

That said, The CMO completed a survey in February 2012 and found “…that marketers continue to increase spend on social media. In the next 5 years, marketers expect to spend 19.5% of their budgets on social media, almost three times more than the current level! Within a year, marketers expect to spend 10.8% of their budgets on social media.”

Unless the results change, however, marketers are going to lose interest in this “shiny new toy” and eventually drop or at least significantly reduce their investments in social media.

That would be a mistake.

The problem doesn’t lie with FB et al per se. The underlying problem, in my opinion, and what has recently been corroborated by research is that your social media strategy needs to include authentic customer engagement and not be viewed and used as yet another one-way digital advertising channel.

To help make this case, one of my portfolio investments, Get Satisfaction!, will hold an event on Thursday, July 26th to unveil recently completed research in this area.

Do Venture Capitalists Suck?

Dave McClure, formerly with PayPal now at 500StartUps, posted a great article this past week he titled, “Scaling Venture Capital. We suck. We can do better.” I encourage you to read it.

Dave makes two points. The first point is that most venture capitalists are hypocrites. They expect entrepreneurs to build large, global companies while they as venture capitalists have never personally held an operational role nor built and scaled a large, global successful company.

I think it is this issue that tends to cause a lot of friction between entrepreneurs and venture capitalists and it is this point I am going to focus on here.

Are You Capitalizing Upon Your Social Media-ness?

I had a great meeting with Bindu Reddy last week. Bindu is the CEO of MyLikes and the former head of product management for Google Apps. Her husband and co-founder of MyLikes, Arvind Sundararajan, is the former tech lead for AdSense.

The premise behind MyLikes is simple: we are more likely to trust the recommendations of our friends, colleagues and advisors more than we trust consumer ads and the opinions of people we don’t know (with the exception of Hollywood celebrities and sports stars because, of course, we all know they are completely believable, role models for our children and extremely well educated – sarcasm intended).

Who Are You Building Your Business Applications For?

I have had the privilege of meeting with many early stage business software CEOs and teams over the past 5 years since moving from an operational role to an investing role.

Each of these teams is passionate about the products they are creating. However, many, in my personal opinion, share something in common that may prevent them from growing their companies as fast as they might otherwise.

Most are so intent on building their products for and then marketing/selling to daily practitioners they forget about creating a version of the product or a set of features in the product for the people who aren’t likely to use the product very often, or at all; the people who must approve the expenditure.

Are Physical Sales Seminars Still Relevant?

I recently attended a Marketo seminar held at the Sofitel in Redwood City. The title of the seminar was “Silicon Valley Revenue Rockstars” and was replicated in a number of cities. The focus of the seminar was on how the role of Marketing is being transformed from primarily brand creation and management to a function that is held accountable for  revenue production.