But it’s really only a matter of time before marketers begin to figure out the social media conundrum and actually make it pay off. And we might have those first glimmerings in the “State of Inbound Marketing report” released this week by HubSpot and reported by eMarketer.com.

HubSpot’s study indicates that lead generation spending is 60% less among companies that dedicate at least one-half of their budget to inbound marketing tactics like search, blogs and social media.

Now, this doesn’t surprise us—at least, not the part about search. We’ve had a lot of success using cost-effective AdWords campaigns leading dedicated landing pages to generate leads for clients. Pay-per-click ads and SEO strategies fell below or near the average cost-per-lead 65% or 83% of the time, respectively.

But we were a little surprised to find that 63% of companies rated lead generation through social media as below average in cost-per-lead. And being skeptical journalist types, we wondered about the quality of the leads (leads mean nothing unless they turn into customers, after all)—until we looked at the chart that showed that, for business-to-consumer businesses, seven out of 10 companies had found customers through Facebook. (For business-to-business companies, LinkedIn was the most effective social media customer acquisition tool.)

So, apparently, there’s hope for social media as a marketing tool. But the lessons we’ve learned along the way—that campaigns that can’t be measured against concrete business objectives aren’t worth the investment—still hold true. If you aren’t realizing a positive ROI from your online marketing—or if you aren’t tracking your ROI in the first place—you’re wasting money, regardless of whether you’re investing in PPC ads or Facebook fan pages.

Establishing such relationships is infinitely easier when interactions are face-to-face. But if you’re selling online, you may never meet your customers in person.

So how do you build enough rapport to make a sale when you can’t smile at someone or shake their hand?

One technique that direct-mail copywriters and subsequently internet marketers have used for decades is to give away valuable free content.

It eliminates barriers to response, demonstrates your expertise and starts a relationship on a firm footing.

And, as a new study shows, it lets you powerfully engage the rule of reciprocity.

Why you should give to get

Ever find yourself smiling back at a complete stranger, just because they smiled at you first?

Ever accepted a follow-up appointment with a door-to-door salesperson for a product you didn’t want in the first place?

Blame the rule of reciprocity.

In his book Influence: The Psychology of Persuasion, social psychologist Robert Cialdini explains  that we’re hard-wired to repay someone when we receive a gift.

Study after study has shown that this works in face-to-face interactions, which has obvious implications for marketing and sales.

But does it also work online, when nobody’s looking? For example, if someone downloads free content that you created, or takes you up on a free offer, are they equally obliged?

Researcher Jerry Burger and his colleagues from the Department of Psychology at Santa Clara University have shown that the answer is yes.

We’ll even repay a gift when we believe our response is anonymous.

It works when nobody’s watching

As recently reported, Burger asked participants to take part in a “personality and perception skills” test—a cover for the actual study testing the powers of reciprocity.

During the study, one of the research assistants, acting as a fellow study participant, gave certain participants an unexpected gift—a bottle of water.

In another instance, the research assistant didn’t hand out bottles of water to anyone.

At the end of test, Burger asked half the participants to complete a survey and return it a few days later. He also told them that the gift-giving participant would be present on that day.

The remaining half of participants were asked to leave the survey anonymously in a drop-off box.

The result? Hugely significant (especially to marketers).

Many more people who were given a bottle of water completed and returned the survey compared to the group that was not given a bottle of water (30% vs 5%).

And importantly, the people who believed their response would be anonymous were just as likely to return the survey as those who believed that their act of repayment would be witnessed.

How to use reciprocity online

So, how do you put these findings into practice?

Here’s how you can turn a free, valuable gift into an ongoing relationship and, ultimately, sales:

1. Offer prospects a gift that has value. If you’re selling car audio systems online, for example, offer a free e-book that reviews the top 10 products for the year.
2. Ask for your prospect’s name and email address in exchange for the gift. Because of reciprocity, they’ll be much more willing to give you their information. (Just remember to let them know they’re giving you permission to contact them in the future.)
3. Send your prospect a follow-up email to further establish rapport. Introduce yourself, use your prospect’s first name and write your message in a warm, friendly tone.
4. Continue to engage reciprocity and cement your relationship with your prospect by giving away tips, tools and advice.
5. Offer your prospect your product or service. Because you’ve established a relationship and engaged reciprocity, your prospect is more likely to become a happy customer.
6. Practice good content optimization and constantly test and tweak to improve your results.

And let us know: have you ever used reciprocity in your campaigns?

Leave a comment and tell us how well it worked!

So when people tell you to give stuff away for free, you might think they’re insane.

But successful internet marketers would disagree.

Leading them is Eben Pagan, whose concept of "moving the free line" has proven infectious.

The question is: How much free stuff is too much (or too little)?

Why free stuff puts cash in your pocket

Moving the free line may seem counterintuitive.

But when you understand how it works, it makes sense.

The thumbnail version goes like this:

1. You give away something valuable.
2. Your prospects see this and recognize you have the goods.
3. They feel more comfortable buying.
4. You enjoy more selling.

What Apple, detergent and your website have in common

The concept isn’t new.

Direct marketers have known for many decades that sampling drives sales.

(Ever get a bag of laundry detergent in the mail?)

Retailers like Apple know this also applies to product interaction in stores.

So it makes sense that internet marketers would follow suit.

Particularly since establishing credibility is essential to online sales.

And online, a great way to establish credibility is to demonstrate your expertise.

(Confession: That’s why we publish our Breakthrough Web Writing e-book and our online guide to web writing.)

Obliterate the competition with generosity (and steal their customers in the process)

But how much must you give away?

The answer, in part, depends on your niche’s competitiveness.

Use competitors as a gauge.

And if you really want to destroy them, give away more value than their paid products provide.

Think about it.

If they’re charging $50 for an e-book, create a better e-book and make it free (preferably to people who give you their contact information).

Your absence of cost creates a vacuum.

The cost of their paid programs drives prospects into your arms.

And then?

Create higher-value products for higher cost.

Who needs $50 for an e-book when you can charge $1,500 for a set of DVDs?