With over 80% of consumers reporting that social media—especially influencer content—significantly impacts buying decisions, marketers across industries are driving the evolution of social media marketing (SMM) from a stand-alone tool to a multipronged source of marketing intelligence on an increasingly important—and growing—audience.
Within 18 years, from 2004 (when MySpace became the first social media site to reach one million users) to 2022, the dramatic growth of interactive digital channels took social media to levels that challenge even the reach of television and radio.
As the use of social media trends upward, marketers are perfecting strategies to capture the significant competitive advantage that engagement with this key audience can deliver even more rapidly and effectively than traditional marketing.
What Is Social Media Marketing (SMM)?
Social media marketing (SMM) (also known as digital marketing and e-marketing) is the use of social media—the platforms on which users build social networks and share information—to build a company’s brand, increase sales, and drive website traffic. In addition to providing companies with a way to engage with existing customers and reach new ones, social media marketing (SMM) has purpose-built data analytics that allow marketers to track the success of their efforts and identify even more ways to engage.
Why Is Social Media Marketing So Powerful?
The power of social media marketing (SMM) is driven by the unparalleled capacity of social media in three core marketing areas: connection, interaction, and customer data.
Connection: Not only does social media enable businesses to connect with customers in ways that were previously impossible, but there is also an extraordinary range of avenues to connect with target audiences—from content platforms (like YouTube) and social sites (like Facebook) to microblogging services (like Twitter).
Interaction: The dynamic nature of the interaction on social media—whether direct communication or passive “liking”—enables businesses to leverage free advertising opportunities from eWOM (electronic word-of-mouth) recommendations between existing and potential customers. Not only is the positive contagion effect from eWOM a valuable driver of consumer decisions, but the fact that these interactions happen on the social network makes them measurable. For example, businesses can measure their “social equity”—a term for the return on investment (ROI) from their social media marketing (SMM) campaigns.
Customer Data: A well-designed social media marketing (SMM) plan delivers another invaluable resource to boost marketing outcomes: customer data. Rather than being overwhelmed by the 3Vs of big data (volume, variety, and velocity), SMM tools have the capacity not only to extract customer data but also to turn this gold into actionable market analysis—or even to use the data to crowdsource new strategies.
How Social Media Marketing Works
As platforms like Facebook, Twitter, and Instagram took off, social media transformed not only the way we connect with one another but also the way businesses are able to influence consumer behavior—from promoting content that drives engagement to extracting geographic, demographic, and personal information that makes messaging resonate with users.
SMM Action Plan: The more targeted your social media marketing (SMM) strategy is, the more effective it will be. Hootsuite, a leading software provider in the social media management space, recommends the following action plan to build an SMM campaign that has an execution framework as well as performance metrics:
- Align SMM goals to clear business objectives
- Learn your target customer (age, location, income, job title, industry, interests)
- Conduct a competitive analysis of your competition (successes and failures)
- Audit your current SMM (successes and failures)
- Create a calendar for SMM content delivery
- Create best-in-class content
- Track performance and adjust SMM strategy as needed
Customer Relationship Management (CRM): Compared to traditional marketing, social media marketing has several distinct advantages, including the fact that SMM has two kinds of interaction that enables targeted customer relationship management (CRM) tools: both customer-to-customer and firm-to-customer. In other words, while traditional marketing tracks customer value primarily by capturing purchase activity, SMM can track customer value both directly (through purchases) and indirectly (through product referrals).
Shareable Content: Businesses can also convert the amplified interconnectedness of SMM into the creation of “sticky” content, the marketing term for attractive content that engages customers at first glance, gets them to purchase products, and then makes them want to share the content. This kind of word-of-mouth advertising not only reaches an otherwise inaccessible audience but also carries the implicit endorsement of someone the recipient knows and trusts—which makes the creation of shareable content one of the most important ways that social media marketing drives growth.
Earned Media: Social media marketing (SMM) is also the most efficient way for a business to reap the benefits of another kind of earned media (a term for brand exposure from any method other than paid advertising): customer-created product reviews and recommendations.
Viral Marketing: Another SMM strategy that relies on the audience to generate the message is viral marketing, a sales technique that attempts to trigger the rapid spread of word-of-mouth product information. Once a marketing message is shared with the general public far beyond the original target audience, it is considered viral—a very simple and inexpensive way to promote sales.
Customer Segmentation: Because customer segmentation is much more refined on social media marketing (SMM) than on traditional marketing channels, companies can ensure they focus their marketing resources on their exact target audiences.
Tracking Metrics
According to Sprout Social, the most important social media marketing (SMM) metrics to track are focused on the customer: engagement (likes, comments, shares, clicks); impressions (how many times a post shows up); reach/virality (how many unique views an SMM post has); share of voice (how far a brand reaches in the online sphere); referrals (how a user lands on a site); and conversions (when a user makes a purchase on a site). However, another very important metric is focused on the business: response rate/time (how often and how fast the business responds to customer messages).
When a business is trying to determine which metrics to track in the sea of data that social media generates, the rule is always to align each business goal to a relevant metric. If your business goal is to grow conversions from an SMM campaign by 15% within three months, then use a social media analytics tool that measures the effectiveness of your campaign against that specific target.
How Marketing Can Help You Attract Investors
Marketing is about identifying your target market, understanding the needs of people in that market, and communicating how your company can solve their problems. Typically, companies do this to find potential customers.
However, you can also use marketing skills with the end goal of convincing people or organizations to invest money in your company. Here are five steps to take if you want to market to investors.
- Discover investor needs.
The first step is finding out what potential investors need or want in a business investment. Investors tend to focus on a few crucial factors:
- Is the company profitable?
- Is the company in an industry on the upswing?
- Will the company’s executive team be able to take it to the next level?
- Is the company offering a unique product or service difficult for competitors to replicate?
Depending on your specific business, product, or industry, investors may look for additional factors, including strategic alliances, technical know-how, a critical mass customer base, or intellectual property.
Figure out what factors are most crucial to your potential investors.
- Ensure your business is strong in areas critical to investors.
When you’re ready to sell your house, you might enhance the landscaping and declutter the interior to make it more appealing to potential buyers. You’ll go through a similar exercise with your business when trying to secure private investors. Once you know what investors are looking for, it’s time to ensure your business is vital in those areas.
Follow these steps to shore up your business:
- Analyze your business performance. Make changes to strengthen your profit margin, build your customer base, and increase sales.
- Hire the experts you need. If you don’t already have the right expertise on your team, bring on people who can fill the gaps. For example, hire a digital marketing expert, social media manager, or bookkeeper if necessary.
- Protect your intellectual property. Take steps to protect your intellectual property with patents and trademarks, if applicable.
- Enhance your website. Ensure your website design is attractive and that the site functions well and is filled with quality content.
- Check your other marketing materials. Ensure your general and specialized marketing materials and strategies are effective. For example, ensure your email marketing campaigns are correctly targeted.
- Create investor-focused marketing materials.
Next, create a business plan detailing your organization’s specifics, why your company is a good investment, and what kind of investment you’re seeking. Create a PowerPoint presentation with some of this information for investors, and write and practice your investor elevator pitch.
Consider creating a one-page company overview that includes the main selling points for investors. All your marketing materials should be well-written and designed to look professional and attractive, portraying your business in the best possible light.
- Find and communicate with likely investors.
The next step is finding your ideal investors. This process is akin to advertising and participating in trade shows to find customers. There are two primary ways to find and interact with investors: online investing platforms and in-person events.
- Online investing platforms: These platforms exist to match investors with businesses. Some top platforms include SeedInvest, StartEngine, CircleUp, and Wefunder. Whether or not you end up getting investment money on these platforms, you can use them to attract attention and build awareness of your company among the investor community.
- In-person events: Various events allow business owners to pitch investors on their opportunities, including Money20/20 USA for fintech companies, TechCrunch for technology companies, and ACA for all kinds of companies.
Marketing Practices For Attracting The Right Investors
While the marketing best practices described above will help you identify and appeal to investors in general, you’ll need more than that to seal the deal. These marketing hacks will help you focus on your ideal investment partner.
- Identify investors within your niche.
One of the biggest mistakes budding entrepreneurs make is begging for funds from any investor that cares to listen. When desperate for capital, some business owners will market their businesses or ideas without identifying the type of investor they want.
Here are some tips for identifying investors in your niche:
- Understand your ideal investor. Before marketing your business to potential investors, determine your ideal investor. What niches do they invest in? Where do they invest? What’s their investment potential? If you’re planning to pitch to venture capital and private equity firms, learn about their individual decision-makers. For example, some investors are interested in companies’ social impact, while others only care about the financials. Find out if potential investors have any history or interest in your industry, product, or niche. After characterizing your ideal investor, you can start infusing your marketing plan with pertinent information.
- Make sure you and your investors are on the same page. As many growing companies learn down the line, the right business matched with the wrong investor or investment platform is almost always destined to fail. This is particularly true if ideological differences between the founder and the business’s investors play out.
- Redesign your PR strategy for maximum investor exposure.
Once you’ve determined what your ideal investor looks like, ensure your PR strategy is carefully coordinated and sends the right message about your business to potential investors.
To accomplish this, back your PR campaigns with a solid digital marketing strategy. According to an in-depth Aquare analysis, a well-managed content-amplification strategy designed to generate thousands of retweets, shares, and referral traffic is the only way to ensure PR campaigns achieve maximum reach and engagement.
Here are some tips for creating a PR strategy optimized for investor attention:
- Get the most for your PR dollar. Value doesn’t necessarily equate to how much you spend on a campaign – it’s all about measuring marketing ROI. An effective paid ad strategy on social media is vital, but approaching and using influencers in the right way is just as essential for organic reach. By covering all your bases – or, in this case, digital channels – your PR campaign has a higher chance of landing in front of the right investors interested in learning more.
- Show you’re at the leading edge. Your PR strategy must show potential investors within your industry that you’re ahead of the curve. Your press releases, newsletters, social media content, and speaking engagements should ideally focus on current and future trending topics within your industry. This focus establishes your business as a thought leader, setting you apart from the hundreds of startups and SMBs also seeking investors.
- Establish your expertise. Since investors want to invest in companies with expertise, innovation, and good management, use public relations to showcase these skills. For example, do an interview on a podcast or television show, give a presentation at an industry trade show, or write an article for an industry publication or blog. Focus on what problems your company solves and the unique ways it solves them. Make bold or provocative statements to create buzz. For maximum impact, capture all mentions, interviews, and content and feature them on your website and social media. You can even include copies of articles in the information you give to potential investors to provide additional credibility.
- Time it right. Remember to time your PR campaigns appropriately. Schedule press releases, emails, and other PR strategy elements appropriately in advance of seeking out funding to lay the groundwork for productive conversations.
