Everyone knows that companies are now in the media business.

But few actually live up to the hype.

Capturing attention is at the heart of marketing, because you can’t sell anything without it. And now that everyone has the ability to be a publisher, some brands are beginning to realize that it’s more cost effective to go direct to consumers and build your own media asset, instead of spending all your marketing dollars on advertising.

Here’s why Red Bull is using social media to get more customers, instead of only using advertising.

Image courtesy of luc legay

How Red Bull Acts Like a Publisher

Mashable recently highlighted some hot media trends, with “brands building publications and entertainment channels” coming in at number 6.

And they featured Red Bull, showing some examples of how their content marketing and social media functions:

Red Bull’s homepage, for example, looks like an action-sports news site. The company pumps out professional-grade news articles, feature stories and videos each day, pushing them to social marketing channels such as Facebook and Twitter. This fuels the company’s social media accounts with content and points followers back to Red Bull’s site, rather than elsewhere on the Internet.

Red Bull provides a perfect example of how content marketing can fuel your social media presence. But that sounds like a lot of work.

Why would they go to all that trouble when they could easily spend millions on advertising?

The Decline of Traditional Advertising

Advertising is a great way to build a business. It lets you reach audiences in any market, and can give you a steady stream of incoming customers.

But there’s a few problems.

Problem #1: Traditional advertising audiences are declining

Traditional advertising always relied on reaching the 10% of people who actually cared about the message to act. The math worked well because these audiences were so large.

But now that’s all changing. There are thousands of channels on TV, and even more options on the internet.

So people’s attention has become dispersed and distributed across the long-tail options. With traditional media audiences becoming smaller, the effectiveness of your advertising dollars has also fallen.

Problem #2: Advertising locks you in a fixed ratio

Advertising has a fixed ratio of expense to revenue.

So if you want to bring in the same number of customers next month, then you need to spend the same amount in advertising.

But that’s now how content marketing works…

Why Inbound Marketing Pays Off

Online, you don’t need a huge audience. You just need the right audience that will take action.

That’s why the definition of social media isn’t just community management, but also business development.

Inbound marketing (Content + Social + SEO) scales better than advertising, reaching more people for less money over time. So your marketing ROI increases dramatically.

And that’s why blog writers are so important. Instead of spending money on advertising, your company can invest in building a media asset that will attract customers and appreciate in value for years to come.

Now compare that to advertising. You have 30 seconds to make an impact, and then your spot is gone forever. Want to get another impression? Then you better run another ad.

Social media allows you to escape this trap of a fixed ratio between how much money you have to spend to reach new additional customers. And your cost per acquisition falls significantly.

Every business has a cost per acquisition for each new customer (even if you don’t spend money on “traditional advertising”). It could be the direct costs like running a promotion, or indirect costs like your employees and marketing/sales materials.

And because your inbound marketing and social media effort should gain value each year, it will cost you less over time to reach more new customers. That extra profit goes straight to the bottom line.

Conclusion

Marketing can’t start until you have people’s attention. That’s true no matter what business or industry you’re in.

So instead of relying on the audience of traditional media properties, savvy digital brands like Red Bull or American Express are building their own audiences.

Advertising is still a great way to reach new customers on a large scale, so big companies like Red Bull will continue to use it. But for those of us outside the Fortune 1000, the expense and ROI of traditional advertising is only getting worse.

So Red Bull is also making the conscious decision to invest in online platforms that will give them a better marketing ROI in the long run. And that’s true no matter how big or small you are.