Social media sites such as Twitter and Facebook are ubiquitous these days on TV, in the media, and on the internet. But should businesses ...

Social media sites such as Twitter and Facebook are ubiquitous these days on TV, in the media, and on the internet. But should businesses be spending their valuable time using social media? There are many opinions about whether social media is effective in marketing your business; some say it is a waste of time and money but some say it should be a vital component to the marketing strategy of any business. There are truths to both sides, it’s all about how one uses social media that determines their ROI.

Lets first consider Facebook. Facebook ads allow advertisers to select segments of their users that they want to target based on the information they have gathered from them (age, gender, occupation, likes, interests, etc). Since Facebook has a ton of information about their users, it may seem like Facebook provides high quality, targeted ads but the reality is that click-thru-rates of Facebook ads tend to be extremely low (and so do conversions). Earlier this year, General Motors (GM) announced that they will not continue purchasing ads on the social network after spending about $10 million in 2011 due to lack of conversions.

A much better alternative to spending for ads on Facebook are fan pages. A commonly cited dilemma for Facebook’s business is that they provide a free way for businesses to connect with their customers through fan pages, which makes their ads a more expensive alternative. My advice is to take advantage of this and create a free fan page for your business that you can use to interact with your existing customers rather than trying to get new customers by spending money on ads that most likely will not work. As you fan page grows and your customers spread the word about your business, it will attract new customers naturally, at no cost to you.

LinkedIn is a little different from Facebook as LinkedIn is only intended for professionals/job seekers, unlike Facebook, which is intended for everyone. This allows advertisers to cater their ads to more targeted traffic that is more likely to convert. Of course, this would depend on what type of business you are promoting. A job search website or an outsourcing company could probably get a decent ROI from advertising on LinkedIn but most businesses that do not cater to the type of traffic that LinkedIn receives probably would not benefit from LinkedIn ads.

Twitter offers two ways for advertisers to buy ads on their website. The first is to buy a spot on the Trends section of the site and the second is to buy sponsored tweets that will only be seen by users that are likely to be interested in whatever the advertisers have to promote. I can’t speak for how well these ads work since I have never bought them, but I can’t imagine them working very well. That is because Twitter’s traffic is similar to Facebook’s. The majority of visitors go on Twitter to interact with their friends or share pictures or just have fun; they are not in a buying mood. Rather than using Twitter as a tool to get new customers, it should be used as a tool to interact with existing customers through informative and quality tweets that will provide value to customers and keep them coming back for more. Having an active Twitter account is also a way for a business to “humanize” itself and be better able to connect with the consumer. It can also be a great way to answer any questions that customers might have before deciding to buy.

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