Social Media: The Power of Compound Interest and the Law of Social Media Success
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Written By Noah Mallin | July 9, 2009 | Share This
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According to Wikipedia (and they are unfailingly accurate, right?), had the Native American tribe “…that accepted goods worth 60 guilders for the sale of Manhattan in 1626…invested the money in a Dutch bank at 6.5% interest, compounded annually, then in 2005 their investment would be worth over €700 billion (around USD1 trillion), more than the assessed value of the real estate in all five boroughs of New York City.”
Aside from being one of the only parts of the entry on “Compound Interest” I was able to comprehend, this illustration also finds a neat parallel in the world of social media engagement. How so?
Simply put, the more ongoing, successful activity you engage in within social media platforms, the more your success level grows. I like to call this The Law of Social Media Success.
Social Media is an Investment
Just like any investment, you can’t expect a payoff immediately. As you build a community of followers or fans and interact with them your results snowball – compound interest.
Many marketers make the mistake of believing they have to be “in” social media without understanding why. Most often they end up basing their engagement around a specific marketing initiative that has a discrete beginning and endpoint.
Mazda took this approach when they tied their Twitter outreach to an online game called 33 Keys, designed to spark interest in the launch of the Mazda 3. By doing this they got the Law of Social Media Success completely backwards. Once the specific event ended, Mazda had an event-specific profile with a bunch of followers that was allowed to drift off into dead space with no new updates.
For their next launch they have to start building a network from scratch again. Even if they were to try activating the people who followed the 33 Keys profiles, it’s likely those folks will have stopped paying attention.
Return on Your Investment
Had Mazda looked at social media as an ongoing investment with an exponentially growing return, they would still have been able to tie social media like Twitter and Facebook to specific launches. What would have been different is that they would already have a base of interested users (provided they laid the groundwork properly) ready to spread the word and information to their friends and followers and in turn, attracting new acolytes to Mazda.
If you tie your social media outreach and interactions to your big picture, long-term strategy, it makes your tactical moves resonate far beyond where they might ordinarily. And that’s the power of compound interest.
Topics: Social Media, Wikipedia |
It is a lot like growing a plant. Once you plant the seed you need to water it every few days until it grows into something beautiful.
True, and you can take the analogy further - that plant can yield seeds that grow into other plants. Suddenly I feel like Chauncey Gardiner from Being There…