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TheStreet Open House

#DigitalSkeptic: Social Media Enters Pay-for-Play Era

NEW YORK (TheStreet) -- Social media is entering its AM radio phase: If marketers want to get that post or tweet into heavy rotation, Twitter, Facebook and LinkedIn now expect to get paid to do it.

"If you really want to get reach, you have to pay to get the word out," said Aaron Magness, vice president for marketing at Betabrand, the San Francisco crowdfunded retail clothing firm. "All those people who invested in a million-plus fans and then are relying on that organic reach for results are not seeing a lot of return right now."

Before Web hipsters roll their eyes that Magness is some sort of Internet marketing luddite, know this: His 51-person Betabrand is as sophisticated and intelligent a digital marketing engine as I've heard about over the past several months.

First off, Betabrand's entire business is based on harnessing the power of crowds frictionlessly using the Web to weigh in on the design and making of clothes. Part Kickstarter and part Quirky, Betabrand has built a line of about 200 items and styles based on direct design submissions from its pretty darn large community. More than 19,200 users submitted photos, for example, to be used in various company imagery. And if investors bother to look at hit products such as the Gray Dress Pant Sweatpants, Silver Reversible Disco Hoodies or Chakra Shell Tops, they'll see that Betabrand knows how to mold the gesture of the unruly digital mob into a real product that moves the bottom line.

"My job is to be the most efficient on the next marketing dollar spent as possible," he explained.

Managing that marketing spend is surprisingly straightforward, Magness said. Ten percent of net sales goes to the designer. Betabrand funds the rest of a product's development and sale, with roughly 20% of revenue going into various marketing efforts.

The trick to profitability turns out to be about converting the generic interest in clothing such as yoga pants or sweatshirts into real sales. "We track every inbound click and spend a lot of time testing what really drives a customer to buy," he said.

And Magness makes a point of not panicking when the process generates unexpected results. "We unequivocally found that shots of the mid-part of the body are what sell our clothes," he said."We tongue-in-cheek call it Crotch Commerce. But it works."

Paying the Social Media Freight
So what is this cutting-edge marketer's take on the role of social media, such as Twitter and Facebook, in his new retail sales model? There's not much to get excited about when it comes to merely posting and tweeting.

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