Social Media

The right and wrong way to use social media: CEO

Social disorder in media land?

Companies that successfully use social media give their audiences valuable content and let their fans be the voice of the brand, the founder and CEO of TheAudience told CNBC on Monday.

What they don't do is market to them and tell them what's cool, Oliver Luckett said in a "Squawk Box" interview.

"You have to provide value to the system. You've got to provide decent content. You can't just be marketing on these platforms," said Luckett, whose company creates and post content for brands and Internet influencers.

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Luckett addressed growing skepticism over the influence of social media at a time when companies are making significant investments in the medium.

Last year, Ogilvy's social media arm reported that just 2 percent of posts from brands with more than 500,000 likes on Facebook reached their fans. Forrester Research found that less than 1 percent of those followers interact with those posts.

Luckett acknowledged those statistics and said the way to beat them is to "connect the dots."

One way to do that is to generate shareable content that gets used over and over, he said. He pointed to a simple infographic about the falling jobless rate theAudience created during the last presidential election that went viral.

"That's someone telling their message in their form and putting it out there in the world so that other people can use it," he said. "So it's really controlling your destiny in that effect."

In addition to creating a story, brands must also match it with the people to whom it matters, he said.

Luckett's firm recently began representing the Bitcoin Foundation and said one problem is people do not understand the digital currency on a basic level. To explain the utility of bitcoin, he said, theAudience could present its ability to improve remittance payments and create a story for a Filipinos living in America. The Philippines is one of the largest recipients of remittances from overseas.

"Think about how hard that would be on television or radio. But instead I can go and generate a story and go directly to those people in their feeds on their phones, on any medium I want to reach them. That's extraordinarily efficient," he said.

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Founded in 2011 to manage social media pages for celebrities, theAudience produces 6,000 pieces of content each month. By theAudience's measure, that activity reaches 1 billion people and generated about $30 million in revenue last year.

As for how Twitter can expand its monthly active users, Luckett said the company has been improving its products. He pointed specifically to its Amplify marketing tool, which allows companies to pay to deliver premade content whenever someone mentions its brand or a specific moment in its history.

That is effective because it feeds the social media ecosystem, he said. What doesn't work is entering a system such as Twitter and trying to haul traffic back to a brand's website, which Luckett called "parasitic behavior."

"You look at somebody like Twitter, they just need more people creating content in the platform with a reward structure around it," he said.

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CNBC's Katie Kramer contributed reporting to this story.