Chris Simpson

Semper letteris mandate

What does Dell’s $3 million in sales through Twitter really mean?

When Dell announced they’d made $3 million in sales through their Twitter promotions it was lauded as a triumph for social media. The numbers, however, tell a far different story.

BY CHRISTOPHER SIMPSON

Dell Wallpapers 2Dell recently announced that over the past two years it has made $3 million in sales on Twitter, one-third of that during the last six months when the Twitter population grew by 1,000%.

Predictably, the news media and social network proponents are ecstatic. Sky news calls it “the latest example of how brands are generating profits from social media,” while Clive Maclean Consulting calls it “[a]nother social wakeup call for ad agencies.”

According to Dell, they created their own tracking software for the project, and issue six to ten Dell specials a day. That is a not-insubstantial allocation of resources being used for a following of 779,010 people — although the initial outlay for creating the software is a one-time cost. Upkeep, however, will be ongoing, and while it may not be terribly expensive, neither is it peanuts.

And what have they got? While three million sounds like a lot, their quarterly intake was $12.3 billion, which makes their two-year Twitter take equivalent to 0.024% of what they’ve made through three months of sales procured through the boring, traditional methods.

To put this in terms of profit-per-day, during one quarter, Dell makes $131,550,802 a day. That’s $131 million. During their two years on Twitter, however, they only made $4,109 a day. That’s $4  thousand. This is a daily profit of %0.003 — some of which must have been eaten up in the costs maintaining the program.

The social media boffins are declaring this minuscule profit a marketing breakthrough, but Dell itself is fully aware of the marginality of the experiment. While PC Magazine says that the Twitter sales figure “further bolsters Twitter’s case for charging businesses,” Dell is quick to disagree. “If it becomes complicated and costly,” the magazine quotes a Dell representative as saying, “our instinct would be to move elsewhere.”

Translation: “For free, we’ll be happy to pick up 0.003% of our daily sales through a social marketing ploy — but if we’ve got to put out any money, it ain’t worth it.”

Is it a failure? No. Dell is using Twitter the way another company might put up posters on telephone posts: it’s cheap, and any resulting sales are pretty much pure profit (aside from the cost of the guy putting up the posters). But Dell is not fooling themselves into believing that the experiment is worth any real outlay on their part. If Twitter collapsed tomorrow Dell would barely notice — although a couple of their employees might be yanked away from the Internet and have to go back to real work.

Clive Maclean suggests that Dell’s two-year involvement with Twitter probably “did not happen as a result of an agency recommendation,” by which he means to imply that an agency would not be forward-looking enough to suggest such a ploy.

Well, I certainly hope not — at least not as anything more than an extremely low-priority experiment. The real wakeup call here is for the clients, not the agencies: if your agency is pushing social marketing in a really big way — get another agency.

Don’t believe me? Just take a look at the latest social marketing “success” figures from Dell.

Originally published in the “Ad Nauseam” column, 2007.

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