Category Archives: Social Media

Does social media drive sales?

Published / by Simon Foster

The question of sales generation is a growing problem for social media. Despite all the hype, it’s almost impossible to find any conclusive cross-category evidence that social media drives sales.  Yes, there are some isolated examples of success; Dell’s Twitter pages announces some great deals and I’m sure ASOS can whip up a bit of extra demand by tweeting Axl Rose’s US flag shorts, but the reality for most brands is that they are going to struggle to make social media deliver measurable sales.  This view might not be flavour of the month, but the four experiences of social media listed below certainly give the “no sales” view a high degree of credibility.

  1. In 2010, Pepsi undertook a massive social media initiative called The Refresh Project which was designed to give $20m to good causes. According to Bob Hoffman, the AdContrarian, it delivered over 80 million votes, almost 3.5 million Facebook likes and nearly 60,000 Twitter followers. But there was just one big problem; it didn’t drive sales – despite the funding coming from Pepsi marketing budgets. Pepsi’s sales fell in the year the project ran and the brand lost 5% market share worth about $350m. To make matters worse, if that were possible, Pepsi slipped to third in brand share behind Coke and Diet Coke.
  2. In both 2012 and 2013 IBM used data from around 800 e-commerce sites to track social media’s contribution to sales. In 2012 it arrived at a figure of 0.34%. In 2013 it didn’t publish the number, but hinted that it was even less.
  3. In September 2012, one of the world’s leading digital research companies, Forrester Research reported that “Social tactics are not meaningful sales drivers. While the hype around social networks as a driver of influence in ecommerce continues to capture the attention of online executives, the truth is that social continues to struggle and registers as a barely negligible source of sales…”
  4. In March 2013, Mark Ritson, formerly a professor at London Business School observed in Marketing Week that “….marketers are finally beginning to apply some measures to assess the ROI of their [social media] efforts. Once they do that they can do the one thing the social media mavens have counselled against: compare the value of social media with other options, apples to apples. And, in many cases, they are discovering the hullaballoo drummed up by the marketing media and various industry events is not quite all it was cracked up to be.”

I think most people in social media are well aware of this “no sales” problem. And because social media can’t deliver sales, they’ve invented a snow-storm of flaky measures designed to obscure harsh commercial realities. These measures include: ‘likes’, ‘fans’, ‘followers’, ‘shares’, ‘retweets’, ‘pins’, ‘follows’, ‘friends’, ‘influence’, ‘amplification’, ‘forwards’, ‘mentions’, ‘tags’ and ‘reactions’. In a commercial context these are nothing more than diversionary measures. They might enable some positive looking PowerPoint charts but they don’t deliver positive looking sales. These are ROI potatoes, when everyone else is comparing apples.

Amazingly, when social media campaigns fail to deliver sales, social media experts almost always suggest that it was the company management who got it wrong rather admitting to any shortcoming of social media itself. Whilst this claim blames marketers and management, it also spawns a convenient stay of execution for social media’s “gurus”; failure brings an opportunity to “learn lessons”, to “revise approaches” and to “develop new strategies”. In other words social media failure provides a new opportunity for marketers to waste even more money on social media activity.

Marketers badly need a serious reality check on social media. Social media environments aren’t much more than an online version of a public waiting room. People drop in, take a seat, look around and leave. They may leave a bit of rubbish. They may take a bit of rubbish with them. But that, I’m afraid, is pretty much the long and short of it for most brands. Don’t spend too much time in there, nothing will come of it.

If this sounds old-fashioned, I make no apologies. Advertising exists to drive sales.  To have advertising that doesn’t drive sales is like going to a dentist who doesn’t look at your teeth, or a barber who doesn’t cut your hair, or a mechanic who won’t fix your car. If what you’re doing can’t be directly or indirectly linked to generating sales, you’re wasting precious budget.

Facebook ‘likes’ don’t increase brand preference or sales

Published / by Simon Foster

Here’s an iron for the fire: “Facebook ‘likes’ do not cause increased brand preference or increased sales so marketing campaigns designed to increase the number of ‘likes’ are unlikely to increase brand preference or sales.”

I was moved to develop and explore this hypothesis after reading an article on the real cost of brand building in social media by Mark Ritson who is a professor of marketing, formerly at London Business School. Ritson is renowned for injecting some good solid critical thinking into the often sloppy logic of marketing. Ritson argues that whilst there may be apparent relationships between brand preference, share or sales and Facebook ‘likes’, the relationship between these factors is unlikely to be causal.  Causality is important. It’s about understanding the the cause of relationships between variables in order to assess their significance; just because there is a relationship between two things, it doesn’t mean that one of them causes the other. To say with certainty that one factor drives the other, causality has to be proved.  Ritson argues that causality is being overlooked or even ignored in studies that set out to consider the value of Facebook likes in relation to brand performance.

There have been a number of studies which show that the most popular brands have the highest numbers of Facebook fans. but this shouldn’t come as a surprise to any marketer with more than a handful of brain cells.  Common sense tells us that the most popular brands are likely to have the most Facebook ‘likes’ because they have higher numbers of users and advocates.  But we need to remember that these  ‘likes’ are an expression of pre-existing brand preference and not a cause of it. Moreover, when studies try to assess the financial value of a Facebook ‘like’ they find that Facebook fans spend more on a product than Facebook users who are not fans.    One study found that Facebook likers of Starbucks coffee spent more in store than non-likers.  Well that shouldn’t come as a surprise either. Those consumers who prefer certain brands are likely to spend more money on those brands – after all isn’t that the whole purpose of consumer marketing and the process of building brands?

In both cases, there is a relationship between Facebook likes and brand performance but the relationship is caused by the strengths of the brand that almost certainly existed before the impact of Facebook. The Facebook like is not the cause of brand preference but simply a reflection of it.

If we use logic to extend these observations into prediction we can say that if likes do not cause brand preferences or increased sales, then strategies and campaigns that seek to increase the number of likes will not increase brand preference or sales. However, the predictive power of logic doesn’t stop there; brand owners developing social media strategies to grow likes risk creating “false-positive” brand advocates. These false-positives are consumers who have no genuine relationship with the brand or product but simply click the like because they are incentivised to do so. Corralling opportunistic consumers into Facebook fan pages may actually skew the brand’s Facebook page and community away from genuine fans. Worse still,  subsequent eCRM activity to develop these prospects may prove to be far less fruitful than initially anticipated.

Marketers, Ritson argues, would do well to remember the factors that really did build their brand preference.  These are likely to be product quality, availability, consumption experience and visual branding. They might also bear in mind the fact that research company TNS says that 61% of Britons do not want to engage with brands via social media and suggest that much of what is being build by brands in the social media space amounts to little more than “digital waste”. I wouldn’t go that far, but I would say that brands need to tread carefully when investing in these areas.

When we plan any social media activity at Teqtonic our objective is always to add new value to a brand in some way. That invariably involves strategies that take the consumer and the brand beyond the territory of the like. If you are going to have a meaningful social media strategy you need to think in CRM terms.  Some of your brand advocates may be gathering as a segment within certain social media environments. You need to be there to recognise and respond to their statement of loyalty and preference in a relevant way.  When you do meet up with them, make sure you give them something that reflects their commitment to you. And whatever you do, don’t mix these high value customers with competition chasers who’ll move as quickly to the next brand as they did to yours.

Social Media Metrics Made Simple: Focus on Sales and Customers

Published / by Simon Foster

I am amazed that so many people spend so much time defining and discussing social media metrics. Why? Because the answers marketers (and shareholders) want are very, very simple. Marketers want only one thing from marketing budget investment. Marketers want sales – sales are key; almost everything else is a proxy for some point on the journey to the sale. Make no mistake, companies and marketers are working to deliver sales. Sales are the elixir of life for commerce. Sales drive economies of scale and increase profitability. Sales are the business. In fact, sales are business. Period.  And despite this,  the ever expanding list of social media metrics contains virtually no hard commercial measures. Here is a list of 30 popular social media metrics I am aware of as of today:

  1. Active network size
  2. Amplification rate
  3. Applause rate
  5. Channel views
  7. Downloads / Installs
  8. Email subscribes
  9. Engagement
  10. Fans
  11. Favourites
  12. Feed subscribes (RSS)
  14. Following
  15. Forwards
  16. “Influence”
  17. Klout score
  19. Lists
  20. Mentions
  21. Reactions
  22. Re-Tweets
  23. Sentiment
  25. Subscribes
  26. Tags
  27. Tweets
  28. Tweet Reach
  29. Tweet Velocity ( I like this one!)
  30. Wall posts

There is a big problem here. Most of these metrics have little or no commercial meaning. What for example is the value of a “Like”? A like is no more than a mouse click on a web page. It requires no effort and takes a fraction of a second to perform.  A like requires no trade in information between the user and the item being liked. Anyone can do it and it signifies virtually nothing. Even the popular ‘email address for download’ exchange has limited value; I have downloaded a number of papers from companies it’s unlikely I’ll ever do business with – even though I am sufficiently interested in the content being provided to exchange my email address for it.

It’s ironic that whilst social media commentators and practitioners are busy churning out metrics with no real commercial meaning, traditional media is moving away from proxy data like coverage and frequency and into measuring and proving commercial behavioural change (fancy talk for sales) resulting from media activity.  It seems to me that social media evaluation has slipped into reverse gear and no none has noticed.  If social media is to advance its cause it needs to show either a direct or indirect link to more commercial measures like sales and customers. Is that possible? Well yes it is and it’s relatively straightforward.

All communication and media channels including digital media feed into sales funnels. Digital media traffic is the most measurable of these and can be tracked and measured in great detail from clicks to basket values.  This means it is possible to measure the commercial value of traffic generated by social media. If your Facebook page is generating traffic you can identify it in your inbound traffic logs. And if you can track the traffic through to sales baskets you can measure the sales generated by Facebook. And then you can start looking at your social media ROI numbers. If your Facebook page is referring 1,000 sales a month with a profit of £10 per sale, and costing only £1000 per month to manage and maintain, it’s making a valuable contribution to your business. If other hand it is producing 100 sales per month with £10 profit per sale and costs £10,000 per month to manage and maintain, then you are throwing money away.

The truth is that many social media variables only exist because of a strong supply side data push. Social media metrics are easy to produce; be they likes, friends, tweets, connections or channel subscribers they’re just descriptive data. At worst these metrics are a distraction for marketers. At best they are a rough proxy that needs to be calibrated with more meaningful commercial data. What marketers and business leaders want is sales, share, customers, customer value and profit. If social media sticks with likes, friends and subscribers sooner or later it will have to show what they mean.

Is Social Media CRM’s new platform?

Published / by Simon Foster

For many years CRM has been a “direct” channel delivering one way communications to customers. Now, with the advent and maturity of social media networks brands have the opportunity to engage in more balanced and cohesive discussion with customers and consumers. Social media with its wide accessibility and easy to use functionality offers brands a platform on which to engage with consumers on their terms. This in turn offers brands a sea change opportunity in the way they manage customer relationships.

CRM has never been perfect. Traditionally, the term CRM has meant email, direct mail, SMS and phone. These are ‘push’ communication channels. Brands push their message out to their customer base. Push communications have always had a problem; they are by nature interruptive, as such they risk being seen as intrusive or irrelevant at time of receipt. This is just one of the reasons why many forms of DM based CRM are still referred to as ‘junk mail’ by consumers. Other reasons for ‘junk’ status are that these communications are often not requested, they’re irrelevant, they’re not green, and they leave your customer with the feeling that you are trying to persuade them to do something they may not want to do. In short, people like being in control. By pushing your message into your customers’ lives you threaten that control and risk being ‘junked’.

The advent of social media offers us the opportunity to overcome these issues and move towards a more perfect world in CRM. With its ability to aggregate, assemble and cluster groups of like minded individuals social media allows us to address and overcome the junk issues listed above. Social media gives brands an opportunity for a radical re-think of what CRM is, how it works and how we deliver it. Let’s look more closely at the sources of “junk mail” categorisation and examine how social media may make CRM a more involving experience:

1) Lack of control: Junk mail is called junk mail because it’s not requested. In the social media world consumers control the dialogue; they do the requesting and they are in control. As a brand you are not imposing yourself on the customer. You are simply there for them when they want to engage with you. This is a different dynamic to traditional CRM. It puts the customer in control of the conversation and that’s where they want to be.

2) Irrelevance: Junk mail is called junk because it risks being irrelevant at the time of receipt. Here’s where social media really scores. If you allow the consumer to control the conversation then they are likely to contact you only when they have something important to say. Consumers will either like product, dislike a product or need more help with it. If you are dealing with these issues for customers at a time of their choosing then you are more likely to maximise the relevance of your communication.

3) Environmental issues: Junk mail is called junk because prospects and customers think it’s not green. The statistics around DM paper wastage are staggering and the DM industry should move forward from denial to recognition. It has been estimated that the UK is subject to more than 500,000 tonnes of waste paper through DM every year. Even if it’s recycled we should be thinking about the energy costs of this mammoth recycling task. Whilst all social media has some costs, they are minuscule compared to the environmental costs of paper manufacture, printing and recycling of millions of tonnes of DM. In 2011 brands must be seen to be environmentally aware and social media allows this to happen by reducing your dependence on less environmentally friendly paper-based forms of communication.

Social media gives us the opportunity to reverse the drive train in CRM. It’s time we used the internet to move from putting things into peoples’ homes to inviting people into our brands. It’s time we stopped trying to control the customer. It’s time we put the customer in control of us. It’s time we moved from push to pull. There nothing new here, marketing theory dictates that companies should be responsive to customer and consumer needs. The problem has been that until the advent of easy to use social media networks being open and responsive was easier to say than do.

By moving into social media CRM we open up our relationship with consumers. This sends positive signs. Companies that are prepared to openly discuss issues between themselves and their customer base will be perceived as accessible, caring and confident in the way they provide products and services. These are all valuable brand attributes.

Of course running CRM in social media where all comment can be seen by others requires marketers to have a high level of confidence in the brands and services they are delivering. But rather than being seen as a hurdle to be overcome, this should be seen as a useful litmus test of a company’s relationship with its markets. If as a brand you don’t feel confident enough to open up your CRM in the social media environment then that tells you something about the prevailing relationship you have with your customers. If thinking about social media raises negative issues then you should use this as an opportunity to clarify and address those issues.

And if you are confident that you can press the social media button now, then your openness can only serve to increase the confidence customers and consumers place in your brand.

On a clear day: Measuring ROI in Social Media

Published / by Simon Foster

Measuring ROI in social media is a big concern for marketers as they consider moving budget away from traditional media channels and into social media activity.  But before they can invest in social media, marketers need to get an idea of what it can contribute to their brand.  This has driven a debate about measurement in social media but unfortunately much of the discussion is focused on measuring social media for social media’s sake. What we should be asking is how do we measure the delivery of marketing objectives when we run activity across the social media platform. When we look at it this way we focus on measuring marketing outcomes versus marketing objectives and the answers become much clearer.

As a start point, everyone needs to recognise that social media is a media channel. It is not a marketing discipline. It is not a marketing objective. It is not a marketing strategy. So we might use the social media channel to raise brand awareness (objective) by targeting affluent new car buyers in social media (strategy), we might use social media to increase consideration (objective) by informing new car buyers about the unique benefits of the car we are selling (strategy) or we may use it to increase sales (objective) by communicating a last minute ‘walk-in’ trade-in deal (strategy). The metrics we use to measure social media should therefore relate directly to the objectives and strategies that we managing through the social media channel.

So, before we can measure social media we need to understand what we want social media to deliver from a marketing perspective. Only then can we select the right types of measurement and metrics to get the job done properly. Here are three examples of how we might measure social media activity against the delivery of three different marketing objectives:

  1. Objective: Raise Awareness: There are a number of good tools for measuring online brand awareness, ad awareness, product awareness and salience. Ad Index from Dynamic Logic allows you to play ‘spot the attitude difference’ between web users who have been exposed to your messaging and those who have not. You can ask exposed and non-exposed groups bespoke questions about your brand and campaign activity which allows you to contrast and compare the differences between the two groups. Brand sentiment can be measured using sentiment trackers like Sentiment Metrics; through without bespoke surveys these may include a range of external references to your brand, not just your own social media activity.
  2. Objective: New Customer Acquisition: If we want to use social media as a new customer acquisition tool then we should be using customer acquisition metrics. Microsoft’s Atlas can be used to track the online behaviour of your social media users across all touch points in the sales funnel. Bespoke tracking URLs in your social media pages can be used to identify visitors to your site originating in your social media pages. This type of tracking means you can ultimately relate customer value back to your social media activity.
  3. Objective: Increase Retention / Loyalty: Here we can combine online tracking, data collection and customer data analysis to understand the contribution of social media. We can collect prospect and customer data in social media pages or in pages that link directly to social media. Fusing data collection with online tracking means we can find the data source of known named customers and measure their progress and value in the sales funnel and through cross sell and up-sell. The results from this type of activity may not be instant; customer value from market source can take a year or more to establish, but once it’s in place you will be able to see how social media is building sales revenue for your business.

The message is that we can’t measure social media for social media’s sake. We should always be measuring how social media performs against a given marketing objective. If we are clear about this, the techniques and metrics for measuring and evaluating social media ROI become much easier to identify, select and implement.

Can marketing use social media networks for advertising?

Published / by Simon Foster

So the mighty P&G has spoken about social media. When these companies speak the marketing community has to listen. These guys think long and hard about the issues to cut straight through the hype. I know because I did it for Unilever. I worked directly with Unilever digital teams to help them understand the real value of digital media to their business. So, what was the basic message emanating from P&G? Well it’s that social media is not “media” and there’s no point in advertising around “someone breaking up with their girlfriend”.

I disagree slightly with the first part of this criticism. Social media is a form of media because it is space which carries content and delivers an audience that can be traded for money. From an advertising perspective these are the core characteristics of a “medium”. The big question comes when we try to explore what type of medium social media actually is.

In reality social media is not social media, it’s personal media. Social media is really comprised of groups of individuals sharing their personal communications. These social media communications are online versions of personal phone calls, text messages or letters. And whilst in some cases individuals may be prepared to publish these communications, it doesn’t follow that advertising placed in them will be effective. Such advertising is the equivalent of a radio ad in a phone call.

Advertising media planning is no longer about reach (and sites like Facebook certainly deliver reach). Twenty-first century media planning is about going deeper than reach, it’s about delivering mindsets, engagement and involvement. And it’s a fact that whilst an individual is deeply involved in a personal communication, like dumping their girlfriend, they are unlikely to engage with advertising in or around that communication. This notion was encapsulated by David Ogilvy who once observed that you’re more likely to get the best direct response from an ad placed in the afternoon movie repeat than in the latest episode of Dallas (The big hit drama of the day). In other words, advertising can’t win when competing with high value content.

A few months ago on I wrote “Advertising on social networks is a Web 1.0 technique in a Web 2.0 world. It may be the case that carrying ads is not a sustainable route for these networks or for advertisers.” I think this remains the case. It’s a problem for the likes of Facebook though, because if they cannot monetize their inventory their value will fall. So how might sites like Facebook monetize their inventory? I think their answer is to monetize the relationships they have with their users. But this isn’t an ad model. It’s something more akin to Seth Godin’s permission marketing and value exchange. Facebook has a brand franchise. It needs to provide added value to its users by teaming up with partners and offering deals to its users. Social media should be an enabler which allows companies and individuals to exchange value.