Was it Milton Friedman that said that there are four types of spending?

1. Spend your money on you.

This makes the spender cautious–interested in acheiving an individual ratio of cost versus value. You want a nice car that you like to drive but that doesn’t break your budget in gas bills. This is where the consumer gets the best ROI, return on investment, because the consumer dictates the value of a purchased good or service.

2. Spend other people’s money on you.

Now the spender can be a bit less concerned with price and more concerned with quality (or status). You can blow a bit more cash on a nice car if your parents promise to cover the insurance. Not such great ROI for the spender, but a lot of fun (or at least less cost anxiety) for the person that ultimately consumes the purchase.

3. Spend your money on other people.

Do you buy Grandma a piece of jewelry or a nice sweater? What if it’s for your girlfriend? For Valentine’s Day? After a fight? The logistics involved in this question merit a certain amount of cost/value math modified for the person on whom you’re spending the money as well as the reason why. ROI can be hard to judge here. As a consumer, Grandma may get a lot more satisfaction out of a sweater than a diamond ring, but the ROI on a ring for your girlfriend may make you, the spender, happier.

4. Spend other people’s money on other people.

This is where a spender generally wastes the most money and gets the worst returns. This is why a lot of government spending is notorious-there is too much cash with not enough accountability or consumer satisfaction. If, as some studies suggest, the United States economy spends close to 11.3 billion dollars on health care yet some 47 million Americans, 16 percent of the population and growing, are uninsured and unable to access satisfactory, much less appropriate care, one has to wonder where the money is going.

Number 4 is also where marketers get stuck. They spend corporate cash on campaigns geared towards nebulous customer niches. Measuring the returns on some of this marketing can be difficult. Are consumers happier because they are consuming more? Or is a brand better off because consumers are more appreciative of the corporation’s reputation and sense of civic sponsorship? How to tell?

Measure online buzz.

Most online communities attract like-minded individuals. These communities congregate around topics, ideas, events and even brands that interest them. They talk about these initial community interests, but they also discuss other issues of importance to them.

For example, an online community built on interests in individual health and lifestyle will inevitably discuss favoured lifestyle trends and diets. Measuring and monitoring the buzz produced by these communities allows producers to anticipate the needs and desires of their customer niches. It lets them measure the possible returns on marketing before launching a campaign, identify where to launch the campaign and attract the most relevant and most reactive consumer audience. Lastly, after launching a campaign, monitoring and measuring online buzz can demonstrate how the buzz picks up and reacts to the campaign.

Listening to buzz lets a marketer know whether Grandma would buy herself a sweater if she had the cash or a diamond ring. It lets a marketer know not only whenand why the girlfriend wants the ring, but how big, how many carats, and with what setting. Online buzz puts a marketer as close to the market as s/he can be by letting the consumer dictate the best way to spend corporate cash and get real, measurable reactions (and returns) from consumers.

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