After a company has created a strategic plan for social media, the next move is tactical execution. And while the tools are free, it costs money to use them. A company may need to hire someone internally to run their social media activities, which could cost $50,000 to $75,000 depending on the program being implemented and how much experience may be required to do the job.
Another option is outsourcing social media tactics by hiring a contractor or public relations agency. Here's where the economics of social media start to get complicated and more interesting.
Let's assume that you need someone to put in at least two to three hours/day to be engaged on social media and create content. At $40/hour, this works out to $1600 to $2500/month, which is probably a reasonable investment given it provides social media coverage without the need to hire a full-time employee.
The other scenario is hiring a PR agency. The biggest and immediate sticking point is $40/hour for a PR agency would be dirt cheap - something that doesn't work within the current economic of the public relations agency.
For now, PR agencies are charging $75 to $150/hour to do social media tactics. This means a company needs to spend $3000 to $6000/month, which is pretty hefty investment, particularly for companies just starting to get into social media. For PR agencies, however, social media tactics is currently a high-margin service that is filling the void as traditional PR activities such as creating and distributing press releases starts to disappear. As a result, PR agencies are reluctant to do anything to kill the golden social media goose.
The problem, however, is they may no choice but to eventually align themselves to the new economic reality. If $40 to $50/hour become the standard to do social media tactics, then PR agencies will have to drop their prices. This means they will need to adopt a new approach that doesn't see them charging $75 to $150/hour. It could mean hiring younger and cheaper employees to do social media tactics. It may become a low-margin business, which could mean that the money comes from offering creative and content services.
I do not expect this economic reality to hit home soon but it's coming. As companies get more familiar social media, they are going to weigh the benefits of hiring someone internally for $50,000 to $75,000, or hire an external partner. Unless outsourcing PR offers tangible and significant economic advantages, it makes complete to sense to hire someone who drinks the corporate Kool-Aid every day.