Social media marketing agency Blugrapes has announced it will sell Facebook ads to clients at cost price, saying it believes social media marketing is about the conversations instead of advertising.
The current agency billing models include an up to 15% agency service charge on top of the actual media budget. Blugrapes' new business model allows marketers to purchase social media advertising at cost, waiving the agency service charge.
The company believes this supports the industry's view of social media being one of the most accurately quantifiable marketing channels currently available, providing marketers inarguable impact and assured ROI on their social media spend.
"It is about time the social media marketing industry walks the talk. We challenge fellow agencies to follow us and take action in our common belief that social media is never just about advertising. Rather, it's always been about the content, connections, community, conversations and consistency." says Ryan Lim, business director of Blugrapes(pictured).
"We see this free media buying model as the future, to push boundaries and raise the overall level of effective social media marketing executions everywhere."
According to Lim, under a "Free Media Buying" model, agencies will have to generate revenues from services and solutions that are independent of the size of social media advertising budgets.
"These are usually expertise efforts that cover consulting, strategic planning, solution development (including technical development), and community management. Thus media buying is only one of the many activities that are required for a successful social media marketing deployment," added Lim.
One media agency Marketing spoke on condition of anonymity said that the model was already rampant in the industry.
Chester Tan, managing director, Singapore, Possible Worldwide said: "It seems to me that Blugrapes is offering a free model because they hope to recoup their investment in the form of social media engagement /conversation management services.
While Tan agrees with the fact that social media marketing is not about interruptive marketing ad units and more about being part of the conversation or user engagement, he feels the ad model for social media advertising is still somewhat immature.
"Static, size restricted banner ad's dictated by the world's largest social network do not give sufficiently good real estate for media agencies to monetize. Strictly from a media perspective it is possibly the worse real estate that you could get."
Tan agrees that Facebook has done the right thing by not allowing this intrusiveness to happen as it would have a detrimental effect on the user experience.
"I think that Facebook needs to evolve it's advertising model beyond just 'banner type' advertising to something more around sponsorships and content specific."