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25 March 2013 - 4:18pm | posted by | 9 comments

Why the social media sceptics are right, and why the ROI debate needs to change

Coke's legions of Facebook fans 'do little to drive short-term sales'Coke's legions of Facebook fans 'do little to drive short-term sales'

According to Coca Cola marketer Eric Schmidt, Coke's giant community of 60+ million Facebook fans does little to drive short-term sales.

A German study says that holiday makers use online tools such as Opodo and Expedia just before booking their trips, but don't consult social networks.

Meanwhile according to Forrester, brand marketing messages pumped out via social media rank low on the trust and high on the annoyance scale.

All fuel for the social media sceptics' fire. And guess what? They are right.

No, Coke's posting of a Facebook message doesn't cause fans to drop whatever they are doing and head to the nearest supermarket. While yes, people don't like seeing sales messages appear on their Instagram or Twitter feed.

Actually, these studies do us a favour. The fact that they are even news illustrates the groundhog day nature of the social media / ROI debate. A sensible discussion of what social media can and cannot do for brands is long overdue.

So here's what social media can't do for your brand:

With some exceptions (see for example US airline JetBlue's @jetbluecheeps Twitter feed), social media is not a direct sales tool.

Instead, it does this:

1 - Social media provides the right 'mood music' for a sale to occur

Nielsen's global trust in advertising study involving 28,000 consumers across 56 countries tells us that consumer opinions online, very often from complete strangers, have the second highest trust factor behind word of mouth recommendations, and ahead of editorial coverage.

The Forrester study I mention above makes the same point: Word of mouth endorsements persuade people to spend money. That word mouth of communication course often happens via Facebook et al.

2 - Social media builds you a community of advocates who will aid the sales process

Being exposed to a brand's social media feed won't make you go out and buy on the spot, but it will over time make you spend more - 20%+ more according to Bain & Company.

And if you are really engaged, you end up becoming almost an unofficial sales agent for a brand. Taking care of your most engaged followers makes commercial sense. According to Napkin Labs, one super fan is worth 75 'normal' fans in generating likes, comments and engagement on your behalf.

3 - Social media is an exceptionally good customer retention tool

A piece by Neuromarketer Roger Dooley cites evidence to show that simply responding to a negative comment online will cause 1/5 to revise their opinion and actually become loyal customer.

What brand wouldn't welcome a cost effective and proven way of turning detractors into brand advocates? As Roger Dooley's article illustrates, social media does exactly that.

Shifting from first to last click attribution

Like everyone else who works in marketing, we are in the business of spending other people's money. That means the onus is on us to show what we can deliver, and as an industry we could sometimes be less opaque in demonstrating returns and KPIs.

However, by getting ourselves into contortions to prove a direct line between tweet and sale, we're setting ourselves up for a fall and also grossly underestimating the value we provide.

To quote one more study, Adobe says that by measuring social media by 'last click' rather than 'first click' attribution, we're underestimating its traffic share to websites by up to 100%+.

Or in other words, your tweet or post will cause Joe or Jane Consumer to do a number of things online before finally visiting your online store to buy. Social media has a role to play throughout the whole customer journey.

One final point: few of us who work in social media live in a digital vacuum. And here the for the last word, it's back to Coke.

Facebook marketing has produced above average results, says Wendy Clark in a blog post. But it is a "combination of the owned, earned, shared and paid media connection - with social playing a crucial role at the heart of our activations - that creates marketplace impact."

Social media works. It produces some excellent long term results. But it works best when it's not used in isolation.

Dirk Singer is CEO at social media agency Rabbit


26 Mar 2013 - 07:49
emali15019's picture

What about how it protects reputation? The brand online? Here in the MENA region - this is something that I believe very strongly Coca-Cola needs to look at as here they are not the market leading brand. Pepsi is. Protecting and managing social reputation is vital to the overall propensity to buy. This is a critical part of the mix that is constantly overlooked by those wanting to focus purely on investment rather than influence as a useful metric.

26 Mar 2013 - 21:20

@emali15019 I'd definitely agree - I tried to tackle the sales argument in particular, but for sure social media has a huge part to play when it comes to reputation management.

26 Mar 2013 - 09:25

Nothing new here. I nice summary article nevertheless though.

26 Mar 2013 - 10:31

Nice piece Dirk. I don't think this list is comprehensive but agree that, usually, social media doesn't work well as a direct sales channel.

26 Mar 2013 - 21:22

@DannyWhatmough No indeed, there is plenty more that could be said, sadly was limited by space so I tackled the sales angle in particular but there's definitely more on the reputation management angle

26 Mar 2013 - 13:33
Ogilvy's picture

The reason Social Media Marketers want to move the debate on from ROI is that social media doesn't deliver any.

26 Mar 2013 - 16:11
chris16302's picture

ROI works when it's actual social commerce vs social advertising. Actual social commerce closes the loop on attribution. All the metrics that we've seen have been based on this simple error of confusing advertising with commerce. Social advertising drives little ROI, but true in-stream social commerce absolutely does. We've proven this, and are the only company enabling in-stream actual social commerce for top tier brands.

26 Mar 2013 - 21:27

@chris16302 some good points and an interesting link - I particularly liked the cupcake analogy

7 Apr 2013 - 04:50
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