Many of you have no doubt purchased--or at least considered--a deal you've seen from Living Social or Groupon. The rate at which these companies have exploded is astounding. With that kind of success, isn't this a tactic your company should try?

The answer is, it depends--and you better get the answer right or you could be sorry. Recently a friend of ours who provides massage by the hour signed up with one of these companies and discounted her hourly rate by 50%. Keep in mind, she had to share that half of that with the company offering the deal.

More than 800 people bought it, which the online company considered a tremendous success. And it was...for them.

As for the masseuse, she's looking at more than 800 one-hour appointments at 25% of what she used to earn. If she worked seven days a week, 8 hours a day, that's three and a half months of working for $12 per hour. Not good.

Her experience was echoed today in an article by Ben Kunz at Digidaydaily.com who spells out the perils of this tactic for companies who would use it.

But can these services be useful for a business? Yes, but it depends on what you have to offer. If you owned an ice skating rink and you wanted to drive more traffic or spur trial, it's great. You have the capacity to put as many skaters on the ice as will fit. People can redeem their deal over the course of several days. You can sell them sodas and hotdogs while they're there. Mission accomplished.

If you're someone offering a single kind of service, especially one that requires an appointment and can only be performed by you, one client at a time, it's probably not a great deal. At least, not for you.

First, let us start by saying that social media has become a standard tactic for many SMG clients, particularly on the B2C side and increasingly in B2B. Our clients are reporting results with it and will continue to use it in the future. We're not social media bashers.

But we're not zealots either. The hype about it has grown so deafening that you would be tempted—as many companies and nonprofits are—to slash anything but social media from your marketing budget.

Here are a few reasons why you shouldn’t:

• 75% of people don’t trust the recommendations they get from friends and peers, according to a recent study (read about it here).
• While word of mouth is still the most powerful form of advertising, electronic word of mouth just isn’t (read this, this,and this too).
• According to a 2009 Harris poll, only 4% of people are using social media to gather information about purchases compared to 36% who report using a company website and 34% who use traditional advertising (print & broadcast). See story here.
• Only 4% of social media users report that their opinion of a product or brand changes because of its presence on social media sites (see survey here).
• 84% of web searches by digital influencers are prompted by traditional media. Digital influencers are defined as people who are most likely to pass along information online on things like Facebook (read the story here).
• Television viewership is up, not down, and consumers cite television ads as the most helpful kind (see here and here). Furthermore, less than 6% of viewing hours are Tivo’d (see study here).
• If anything, it's online reviews on retailers sites--not social media like Facebook and Twitter--that have a powerful effect on purchasing decisions (see here). In the same study, 83% of consumers cited TV as on the their "top three media with the most impact on their buying decisions."

Given all this, why even bother with social media?

Think about it in terms of ROI, not because the “R” is so high, but because the “I” is so low. Social media is cheap. And when it’s executed correctly in concert with other media, it’s an efficient way to engage and reward your company’s biggest fans and customers—obviously an important thing to do—as well as help you detect product problems and make improvements. It’s also a powerful PR tool if only because so many in the news media are heavy users. Look at what happened to the proposed beer tax and cuts to Idaho Public Television as local evidence.

Right now, there are some people out there selling social media as the solution to everything under the sun. This is because 1) it’s easy to sell and 2) they don’t have anything else to sell. In other words, they don’t have experience working in any of the traditional media they’re constantly selling against.

Like the man said, when all you have is a hammer, every problem looks like a nail.

A recent New Yorker magazine article does a good job of explaining why that's not such a smart idea. (Read the article here). The article points to studies done of companies in the recessions of 1921-22, 1981-82 and 1990-91. In every case, companies who maintained or increased the ad budgets during the recession came out on top when the economy came back.

As bad as things are reported to be, now is a great time to invest in your marketing. Media and printing have become much more affordable. And your competitors are in hiding, slashing their marketing budgets too. Right now, our clients who are advertising are seeing excellent returns. Shore Lodge occupancy is up 178% since they relaunched. United Way just announced the biggest fundraising total in its 82-year history--an increase of roughly $500,000 over last year. AIRE rafts' web site traffic has nearly doubled since launch. If you see the opportunity to leap ahead presented by the recession, we're ready to help.