Dec 11, 2012

How To Monetize Social Media Communities

A question I get all the time, “How do I monetize a social media community?”

It’s an inevitable question. Rarely do businesses invest in and grow online communities for the greater good. They’re looking for some kind of return on their investment, whether it’s sales leads, increased brand awareness or brand reputation.

The ultimate return on investment is cash. Many organizations are looking to monetize their social media investments beyond marketing metrics.

There are 4 primary ways to monetize an online community.

Advertising and Sponsorship

The most obvious route to monetization is advertising. Ads come in many forms: display or banner ads, sponsored posts, or search advertising with Google AdSense.

The primary premise of advertising is treating your community like a media platform. Members of the community are exposed to sponsored content, because they fit a buying profile for specific products and services.

Advertising can be very effective for large communities with a niche focus like consumer electronics or fashion, and have over 10,000 email subscribers or 50,000 unique website visitors per month. Volume is key for this option.

Affiliate Marketing and Recommendations

Affiliate marketing is a form of commission-based marketing. A great example of this is the Amazon Associates program. Amazon will provide a referral fee up to 10% for products that you sponsor or advertise on your site.

For example, if you reference a book in your blog or newsletter, you can share a specific link through the Amazon Associates program. Amazon will pay you a commission for anyone who clicks through the link and purchases the product.

Affiliate marketing is great for any online community that makes referrals or recommendations. The options here are endless: music, books, consumer electronics, fashion, apparel, cooking products, you name it. Almost any referral can be monetized.

The key is partnering with the targeted manufacturers or suppliers, and implementing an effective tracking system so you receive credit for the referrals.

Events and Experiences

I’ve long held the belief that content is free, but experiences are not. It’s very hard, if not impossible, to charge for an article or a video. But people will pay for experiences.

An example of monetizing experiences is the TED Conferences. You can watch virtually every TED Talk online for free, but if you want to see the speakers at a live event you’re going to invest upwards of $7,500 plus your personal expenses.

Building events and experiences is usually my starting point when monetizing a community, because they honor the community. Rather than marketing to the community, the experience builds upon the values and interests of its members. It draws people together, and provides an experience they are happy to invest time and money in.

Loyalty Programs

The ultimate option for monetizing a community is to build a loyalty program. Loyalty programs require a shift in thinking from implementing a monetization tactic to building a business model.

The principles of a loyalty program are simple: purposefully connect community members with brands and retailers (or suppliers). Community members get products, services and experiences they want. Brands get to participate with passionate, interested customers. Retailers experience greater foot traffic and consumer engagement. Everyone benefits.

Loyalty programs are extremely powerful, but require more investment in research, strategy and software. Essentially you’re combining all the monetization options into one program, and coupling it with a database that tracks member profiles and behaviors. But for all the investment, loyalty programs deliver the highest return on investment.

It starts with a strategy

No matter which route you take to monetize your community, it always starts with a strategy:

  1. What are you trying to achieve?
  2. How will the program be authentic and honor the values of your community?
  3. What are the desired results?
  4. And is it worth the effort?

If you know what you’re trying to achieve, selecting the right options to monetize your community become much easier.

Did I miss any options?

Are there any other options or methods to monetize a community?

(Image credit: Jeremy Brooks)

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