Social Media — The Marketing Team’s New North Star

Data is the new currency. As social media (SM) companies collect more data about us, whether it’s which school you went to or when you had your first child or where you currently work, this data has helped SM companies build a business empire.

Let’s look at Facebook (FB) and its primary revenue driver, advertisements. More than 80% of FB’s revenue comes from advertisement money paid by companies to run marketing campaigns. And as seen by the image below, this revenue is growing. What this means is that companies are spending a larger portion of their marketing budgets on social media.



Let’s take a closer look at how this high growth industry has transformed the way marketing is practiced in businesses.

  1. Companies can accurately measure the return on their marketing dollars


Unlike traditional channels like TV, where measurement is indirect and cumbersome, FB has tools for marketers that help them directly measure the return on a campaign. This means that companies can now get a true sense of how their marketing dollars convert. Questions like “What did it cost to acquire a new customer?” or “How many people saw an ad and of how many of them engaged with it?” can be quantitatively measured on the FB Ad console dashboard.

2. Companies can target like they have before


Lookalike audiences, demographic and even a customized list of people targeting options through social media ad networks are more focused. Lookalike for instance is a new addition of social media where companies can give FB a list of customers who have traditionally converted well and FB will find new customers who ‘look like’ those high converting customers based on common attributes. This basically puts the STP (Segmenting, targeting and positioning : the framework we all learnt in marketing) framework on steroids.

3. Companies have changed their organizational structure

To be successful in this new marketing paradigm, companies are changing their organizational structure. Companies are becoming more data driven. Analytics and metrics measurement have become the de facto job requirement for marketing managers. Agility is stressed on, as the process change and incremental cost of launching a new ad is low and success measurement is clear and accurate.

What’s fascinating is that all these changes in the industry are triggered by us, the consumers. Simple events like checking-in when you travel to a new location or updating your graduation status on FB, build a treasure trove of data. The next time you share a post on social media, you should step back and think how this seemingly innocuous action has such a massive impact on businesses all over.

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