(See for instance this story about how Warner Music Group tries to track the results of its social media campaigns.)
Now I’m not going to pretend to have all the answers yet. But having run a social marketing platform for the last two years, I have gained some insight that might help frame the question as it evolves in the months ahead.
It’s About Awareness
The biggest problem artists face today is generating awareness. This is particularly true for emerging acts and even more so for DIY artists. Just see the debate raging over how little sales artists using TuneCore or CDBaby are generating. But just creating a Facebook or Twitter account isn’t enough. The average artist on Facebook has less than 500 fans. Very few have more than 1,000. And the average conversion rate conversion rate on Facebook is around 2%, 4% for Twitter is 4%. These are estimates based on my experience, but I’m not alone. The best way to deal with these kinds of rates is to apply them to larger numbers (ie: 2% of 400,000 is a lot more than 4% of 500). And that requires generating more awareness not necessarily more likes, follows and friends. Artists need to feed the machine at one end so that the conversions on the other end have more impact.
Consider The Costs
But this does not mean grow at any cost. And let’s be clear… cost can be a major factor when considering your social awareness options. There are basically two ways to increase your virtual fanbase. One is to pay Facebook or Twitter to place ads into the profiles or streams of users they feel are most likely to respond positively to your message. But while that’s fast, it’s awfully expensive. The average social marketing cost via these platforms is about $1 for each new fan gained (see this WSJ article for more).Now consider that against the conversion rates mentioned above. Why pay $50,000 to gain 50,000 new fans when only 1,000 are likely to convert to a sale. To get the return on your investment, each of those converted would have to buy $50 worth of goods to make it even break even (more when you consider the revenue shares involved in the music business).
The second way is to engage your fan base to make recommendations for you, such as conducting campaigns that reward fans for sending all their friends a link to your website, that sort of thing. This is a perfectly valid and even useful practice, but now let’s look at engagement rates. Liking an artist on Facebook is a pretty low-impact action. It requires very little time, effort or even thought. Getting those followers to do anything is hard. Look at the engagement rates of the top brands on Facebook. It’s all 1% or less. So while this method is much cheaper than buying ads, it’s far slower.
Social Media Is A Place For Conversation, Not For Commerce
The other day I had to buy a mattress. But I never went to Facebook or Twitter to conduct research or get recommendations or to make a sale. I went to Google. People go to Google because they’re searching for products that they likely want to purchase. They go there for information about products once they’ve decided they want to buy something. Some 70% of people searching for information about products on Google are in a buying mindset. People on Facebook are not. This is why sales figures are not the best metric to base the success of social media campaign. Consider Coke. Its Facebook strategy is to gain eyeballs, not sales. Their marketing executives get their bonuses not on sales data, but on purchaser intent metrics. It’s about brand recall, and that’s what artists, managers and labels should keep in mind as they consider their social strategy.
We live in an attention economy now. I can sign up for any one of several music subscription services and for a monthly fee stream any song I want. And as that model grows, the question is going to be “what do I want to listen to when I can listen to anything?” Artists will be paid for how many times their songs are streamed, not for one-off album sales. When that time comes, even superstar artists will need smart social marketing strategies to survive.
Mike More is co-founder and CEO of Headliner.fm, a collaborative marketing platform that allows artists and other content owners to promote each other to their respective fanbase with the intent of gaining new fans.