The Real Potential Costs of Social Networking

San Francisco-based consultancy SALT Branding has released "Trends in Branding 2009" and cautions brands that "befriending" customers on social networks like Twitter and Facebook "has a price." That price, according to SALT includes providing consumers with financial discounts, inside information, sneak previews, competitions or incentives. The question brands need to ask about that price, SALT declares, is: "How high is it?"

While there is a short term cost that needs to be factored into the equation, it is important to measure the lifetime value of the relationship discounting potential expenses. The potential discounting involved in social launches are relatively modest compared with the potential lifetime value of the relationship.

Plus, there is an opportunity to acquire new customers and the acquisition costs for these programs are fairly modest vis-à-vis traditional programs.

The real danger or potential cost is launching online initiatives that don’t fit into the culture of the brand or the channel. Simply having a Facebook page promoting a product and discounts only indicates a lack of understanding of social media. This will simply damage the value of a brand and create a negative image of the company.

As with most new initiatives, it pays to do a lot of homework. Companies must really understand the audience, channel and their product to ensure that new social initiatives engages customers and does not detract from the brand. Being perceived as out of touch with the audience and the channel is the real cost to worry about.