What’s the Secret to Monetizing Social Media?

This guest post is by Neil Patel of KISSmetrics.

Have you been able to make money from social media? Has your effort and time on Facebook, Twitter, LinkedIn, YouTube, and your own blog paid off?

If you’re like most bloggers, you probably realize it’s not so easy. However, no matter how difficult it seems, it’s not impossible.

Just like Darren Rowse of Problogger, there are people and companies out there who are turning a profit with social media. Let me introduce them to you and show you how they do it.

Step 1: Build brand awareness and traffic

I love what Gary Vaynerchuk says in this interview when asked, “How do you monetize social media?” His answer: the same way you monetize any other media.

Vaynerchuk says that from newspapers to magazines, to blogs and commercials, advertising has been the backbone of social media monetization. However, he points out that you shouldn’t even be thinking about monetization until you’ve built up traffic and brand awareness.

Fortunately, when it comes to traffic and sales, the news is good for you. In a study done earlier this year by HubSpot, they discovered that blogs with at least 51 posts see 53% more traffic than blogs with fewer than 50, but more than 20 posts.

Furthermore, you’ll see three times the traffic if your blog has over 100 posts. Two hundred or more posts? You’ll see almost 4.5 times the result.

So, your first step to monetizing your blog is to drive adequate traffic to it, which as the HubSpot report showed comes down to consistently producing good content, whether it is interviews, podcasts or useful copy on a daily basis.

Step 2: Build audience engagement

Social media is all about conversation. Companies who think that the conversation is one-sided and do nothing but pump out sales promotions tend to look at social media as a necessary evil. In addition, they don’t tend to be as profitable, which just re-enforces their bad attitudes about social media.

But running an effective social media campaign is all about creating engagement with your audience. If you don’t have that engagement, then trying to monetize it will not work.

One company who is doing social media right is PETCO. They have a really strong presence on the social web with their Facebook page and YouTube Channel. Both these channels generate a lot of comments and discussions.

PETCO is generating all of this engagement by asking their audience specific questions about their pets, their pets’ diets and other concerns pet owners might have. Why are they going through all this effort to engage their audience?

Well, as you get to know your audience, you can start to give them more of the content they care about. As you give them the content they want they become more engaged. And it’s a whole lot easier to promote a product to an audience that is engaged.

Step 3: Monetize with online advertising

Once you’ve built consistent traffic to social media sites and built up your brand and credibility through meaningful conversations, you can start thinking about making money with advertising.

The most basic form of advertising is simply to put ads on your website. According to the 2011 Technorati State of the Blogosphere, of the bloggers who put advertising on their blogs, 60% use self-serve tools, while 50% have affiliate advertising links on their site.

Want an example of what this looks like? This is the Problogger sidebar:

If you don’t like the idea of displaying an ad across your website or blog, you could offer an advertiser a page devoted to their product or service.

Still another way you could make money is to charge for a membership into a teaching series, club or software, like SEOMoz and Copyblogger do.

Or do it like Darren Rowse does and create information products that people buy, like his popular 31 Days to Build a Better Blog.

Of course these options only work if you have highly engaged, consistent traffic coming to your site, so don’t jump the gun. Get the traffic first, the trust second, and then sell your audience something.

Step 4: Monetize with applications

Another monetization, traffic-building trick is to offer apps.

Some people generate income through their social sites by building software apps to sell. But if you think about, providing free apps is a great way to drive traffic to your blog or Facebook page.

The best apps are those that have a purpose or solve a need. For example, ROI calculators and keyword research tools are popular apps that solve meaningful problems. People will come to your site to use them.

A lot of well-known companies use apps to interact with their loyal customers. For instance, through Gucci Connect loyal customers used their smart phones and tablets to see a Milan fashion show from the comfort of their homes. They could watch runway footage live and behind-the-scenes videos. Live chats were included through Facebook and Twitter. Throughout these experiences Gucci exposed its audience to offers, making money off of all that traffic.

Wordstream uses its AdWords Performance Grader application to drive traffic to their site and capture leads. This app promises a week’s worth of analysis in less than 60 seconds. The goal is to get you to come to their site, use the free tool and then consider buying their PPC management software.

You can also give away basic plans for applications to drive traffic and capture leads, like Survey Monkey and KISSinsights do. These limited plans drive traffic to their sites through social media, leading to future sales as they send promotions to these users.

So whether you give away the app to build traffic that can lead to sales from other products or sell the app itself, software applications offer you the opportunity to monetize your social media. Let’s look at another example.

Step 5: Offer special promotions

Some companies monetize social media traffic by tweeting deals to their audience. An operator of luxury hotels in California called Joie De Vivre  tweets exclusive deals every week to their Twitter. These followers only have a few hours to act on these deals. How well does Joie De Vivre do with this strategy? They typically books about 1,000 rooms that might remain vacant.

Even large companies like Virgin use social media effectively. For example, the fourth-highest sales day for Virgin America came when they tweeted, “$5 donated to KIPP Schools for every flight booked today.”

Offering special discounts is really easy to do. Here are some ideas:

• Post on Twitter and Facebook that you’ve dropped the price on your ebook to 99 cents for the weekend.
• Go on a guest posting spree teaching people how to use web analytics … offering half your consultations fee in your byline.
• Build an email newsletter list that promises special discounts on the products that you sell to subscribers.

Can you think of any other ways to share special promotions via social media?

Step 6: Retain customers through social media

Finally, while social media is really easy to monetize once you’ve got the engaged audience, don’t forget that you should also use social media as a customer service tool. Just because you’ve closed the deal doesn’t mean your job selling is done.

See, it’s also about keeping all those people who are buying your products happy after the purchase. It’s about keeping them loyal … and you do that by retaining and increasing mind share of your brand through good customer service.

In fact, notice the top three interactions users want from social media are incentives, solutions to their product problems and to give their feedback on your business:

In other words, people expect you to use social media to answer customer service questions.  In fact, according to Debbie Hemley and Heidi Cohen, you can actually enhance your customer service through social media in 12 ways:

1. give business a human face
2. listen to what customers are saying
3. proactively engage with prospects and customers
4. provide additional product-related content
5. answer product-related questions
6. supply alternative contact channel
7. give customers a channel to talk to each other
8. share customer feedback
9. celebrate your customers
10. show customers behind the scenes
11. make special offers
12. create new purchase options

When you provide an excellent customer service experience through social media, you will continue to build traffic to those sites as people go from being prospects to customers to rabid fans. Monetizing your social media will only get easier.

Conclusion

In the end, you can make money from social media when you have an integrated strategy that includes building traffic to your site, developing your brand, choosing the right products and advertising channels, offering promotions and enhancing your customer service.

What methods and tools are you using to make money with social media?

Neil Patel is the co-founder of KISSmetrics and blogs at Quick Sprout.