A Blog by Jonathan Low


Jun 24, 2014

Unfollow? Companies Reconsider Digital Strategies as Social Media Fail to Deliver Marketing Impact

It was never clear that people wanted to have an intimate relationship with their deodorant or their toothpaste or their auto insurer.

That was a vision hyped by a veritable army of consultants hoping that social would be a Next Big Thing and might, therefore, actually create a job or at least an income stream.

And you have to admit that as far as that goes, it worked. No one has yet counted the number of professionals who now have business cards with the words 'digital strategist' emblazoned on them, but we'd hate to think what their elimination could do to the job numbers.

The issue is not that there is no economic value in social media, but that we are still trying to figure out how it might work, here in its first decade of existence. It is not going to supplant the TV or even the radio as a commercial delivery system, at least not until a couple of crucial problems get solved.

The first is that despite all the attempts to make advertising part of the conversation, the data suggest that people tend to think of social as a personal communications channel which they want to use to connect with people they know or hope to get to know. Advertising is an interruption, and, increasingly, an unwelcome one. And on top of that, people may love, admire and respect their family and friends, but that does not mean they will rely on their choices or opinions to guide their own.

In addition, mobile, by which we mean smartphones and tablets with their teensy screens and teensier buttons continue to pose a challenge to an aging population attempting to read or even see whatever is flashing across those screens as they jaywalk, drive, exercise or indulge in a dozen other distracting activities that make attention shatter, let alone wonder.

The initial hype may have been misplaced, as the following article explains, but that is an opportunity for those who want to devote serious effort to learn from the early experience and then build on it. JL

Jeff Elder reports in the Wall Street Journal:

Gallup says 62% of the more than 18,000 U.S. consumers it polled said social media had no influence on their buying decisions.
In May 2013, Ritz-Carlton Hotel Co. bought ads to promote its brand page on Facebook. After a few days, unhappy executives halted the campaign—but not because they weren't gaining enough fans. Rather, they were gaining too many, too fast
"We were fearful our engagement and connection with our community was dropping" as the fan base grew, says Allison Sitch, Ritz-Carlton's vice president of global public relations.
Today, the hotel operator has about 498,000 Facebook fans; some rivals have several times as many. Rather than try to keep pace, Ritz-Carlton spends time analyzing its social-media conversations, to see what guests like and don't like. It also reaches out to people who have never stayed at its hotels and express concern about the cost.
Ritz-Carlton illustrates a shift in corporate social-media strategies. After years of chasing Facebook fans and Twitter  followers, many companies now stress quality over quantity. They are tracking mentions of their brand, then using the information to help the business.
"Fans and follower counts are over. Now it's about what is social doing for you and real business objectives," says Jan Rezab, chief executive of Socialbakers AS, a social-media metrics company based in Prague.
When many companies joined Facebook in the late 2000s, they used it as another brand website where they provided links, contact information and monitored consumer gripes. Then, they got caught up in the numbers game, trying to rack up raw masses of fans and followers, believing they were building a solid marketing channel. But that often wasn't the case.
"Social media are not the powerful and persuasive marketing force many companies hoped they would be," concludes Gallup Inc., which on Monday is releasing a report that examines the subject.
Gallup says 62% of the more than 18,000 U.S. consumers it polled said social media had no influence on their buying decisions. Another 30% said it had some influence. U.S. companies spent $5.1 billion on social-media advertising in 2013, but Gallup says "consumers are highly adept at tuning out brand-related Facebook and Twitter content." (Gallup's survey was conducted via the Web and mail from December 2012 to January 2013. The survey has a margin of error of plus or minus 1 percentage point.)
In a study last year, Nielsen Holdings NV found that global consumers trusted ads on television, print, radio, billboards and movie trailers more than social-media ads.
Gallup says brands assumed incorrectly that consumers would welcome them into their social lives. Then they delivered a hard sell that turned off many people.
More recently, changes in how Facebook manages users' news feeds have hindered brands' ability to reach their fans. Rather than a largely chronological stream, Facebook now manages the news feed to feature items it thinks users will want to see.
The result: Brands reached 6.5% of their fans with Facebook posts in March, down from 16% in February 2012, according to EdgeRank Checker, a social-media analytics firm recently acquired by Socialbakers.
Indian Road Cafe in New York City estimates it spent about $5,000 on Facebook ads, and its page now has about 13,000 fans. "But the return is really disappointing," says co-owner Jason Minter. "Unless you spend to boost a post, you only reach 300 to 400 people. I've certainly noticed the loss of organic reach. You spend all this time, and unfortunately, the return is not there." Mr. Minter says the restaurant still uses Facebook, but in a more targeted way, and is looking to a new website and other digital marketing approaches rather than building up the Facebook audience.
A spokesman for Facebook Inc. says companies need to adjust their priorities. "The way brands should think about this is changing," he says. "Fans should be a means to positive business outcomes—not the end themselves." The spokesman says Facebook has been honest with companies about the diminishing reach of their posts.
Brands reached 6.5% of their fans with Facebook posts in March, down from 16% in February 2012, according to EdgeRank Checker.8 Reuters
Companies reach more nonfans than fans on Facebook, as friends share content, which pushes posts higher in Facebook's ranking system, according to Socialbakers. That puts a premium on conversation, rather than just posting content.
Another reason companies are looking beyond fan numbers is that the numbers are easily gamed. Researchers say many fans are fake, or automated, accounts designed to inflate numbers.
Italian security researcher Andrea Stroppa says he found a new breed of sites offering Facebook fans or Twitter followers for pennies. In experiments, Mr. Stroppa paid 42 cents for 700 retweets and seven cents for 100 likes on a Facebook post.
While companies are adjusting their social-media strategies, they continue to advertise on Facebook. First-quarter net income nearly tripled at the social-network on a 72% increase in revenue.
Twitter Inc. says companies can have big followings as well as meaningful conversations with users. "Engagement is key and is something that can in turn further grow your audience," says Ross Hoffman, Twitter's director of brand strategy. "The onus of good content is on the marketer, and we are working with brands and agencies to hone this skill."
Indeed, some brands value a large social-media community. "We want to reach a very large audience," says Ben Blatt, executive director of digital strategy at Walt Disney Co. 's ABC Television. The Facebook page for "Dancing with the Stars" has 5.2 million likes. Mr. Blatt says such a large fan base can be useful in tracking how popular one theme or episode is compared with others.
Cable and media company Comcast Corp.  monitors social media extensively and analyzes data from 11 different sources, including which consumers click its links, engage with its social content or discuss its products and services. Those tools help Comcast see trends about the quality of service nationally or regionally, or ideas for new features, says Robin Dagostino, who runs social media for Comcast.
The NBA has 23 million Facebook fans. But executives are less concerned by the numbers than capitalizing on the social chatter. The NBA's social team monitors conversation across a variety of social networks during games and posts video highlights of games in real time, hoping to prompt people to tune in to television. Employees monitor comments on social media to see what fans thought of a commercial, or when might be the best time to sell a jersey.
"We want to give them more of what they're talking about," says Melissa Rosenthal Brenner, the league's senior vice president of digital media.


Unknown said...

How long does it take a brand fan in social media to become a brand purchaser? Traditional TVC is direct and hard sale - you watch TV at home and recall the commercial in the store. But in digital age, how long does the soft sales work?

Jon Low said...

There is no one answer across products, services, providers, countries, etc. Also, time is only one of the factors. Conversion rate matters a lot as does the potential for repeat business. Amazon does this really well. A lot of others do not. That there is a debate suggests that the observer to purchaser ratio has been disappointing based on both expenditures and expectations.

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