The real cost of brand-building with Facebook
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I remain a social media sceptic. Although Facebook is an important and incredibly useful tool for many brands, its impact has been wildly overstated on three fronts.
First, the belief that social media somehow changes or even revolutionises the business of marketing communications. Second, the widespread promotion of social media as a relevant tool for all brands, in all situations. Third, the wild defence of social media by acolytes of the discipline who reject any and all criticism of it as the actions of out-of-touch dinosaurs rather than objective marketers keen to assess value through critical thinking.
As more and more brands pump ever greater proportions of their marketing budgets into social media, there has emerged a desire to prove that these investments are worthwhile.
Initially, therefore, there was a concerted attempt to show that driving the numbers of consumers that liked you on Facebook conferred immediate and inarguable financial advantages. In 2010, social measurement firm Syncapse put the revenue potential of each Facebook fan at an impressive (and highly unlikely) $138.38. More recently ChompOn assessed the value of each ’like’ as $8 per head, while Vitrue, another online firm, estimated their value at $3.60.
However, there was always a sense that these simplistic and rather arbitrary estimates were doing more harm than good. Indeed, more than one senior marketer has sat in stony silence at the end of a social media presentation unsure of whether what they have just seen is good, bad or something in between.
More complexity and brand-specific sensitivity was needed and, as a result, many critics welcomed the recent report from Facebook and comScore entitled ’The Power of Like’ as a more thoughtful and robust attempt to assess the value of Facebook fans.
The report highlights three brands and examines the behaviour of their fans compared with the general online population. In the case of Starbucks, for example, an analysis of in-store purchase behaviour during May 2011 revealed that Starbucks fans and friends of fans bought 11% more frequently and spent 8% more than other Starbucks customers.
In another case study, fans of the search engine Bing conducted 68% more searches on the site than other Bing users. And Southwest airlines’ Facebook fans visited the carrier’s website nearly five times more often than other internet users.
It all sounds impressive. And no doubt each of these brands has enjoyed some success thanks to their increased investment in social media. But there are a couple of snags with this kind of analysis that I would like to underline.
The first problem is selection. It’s great that big brands like Starbucks, Bing and Southwest Airlines have been selected for the report. But using what criteria? All three strike me as extremely switched on and very social mediasavvy companies. It would have perhaps been fairer to have selected some alternative and more representative brands to test the Power of Like. For example, it would have been great to see some banks and FMCG brands in the report, given both sectors are developing a reputation for big spending, low impact social media strategies.
The second problem is more severe. Even if we accept the three case studies, there is still the annoying issue of causality. Let me explain with an example from my own life. Occasionally I get drunk and when I get very drunk I inevitably fail to undress before I go to bed. When this happens, I invariably wake up in the morning fully clothed with an excruciating hangover. It would be all too simple for me to review these past experiences and infer some form of causality between sleeping in my clothes and developing a bad headache. In reality, there is what statisticians call a lurking variable that drives both of these outcomes booze.
In the same way, it is entirely feasible that the reason that a consumer spends more at Starbucks and becomes a fan of the brand on Facebook is because both actions are driven by a pre-existing love for the brand, and not by any actual causality between Facebook liking and purchase behaviour.
And finally, it’s worth recalling that Facebook and the other social media options are not the only games in town. Let us always remember the opportunity cost of embarking on social media namely the impact of not investing that money and time on other marketing options. Even if the brands chosen in the report were representative (and they weren’t) and the causality issue was not problematic (and it is), would the amount of time and money spent on Facebook get better results elsewhere?
These questions should worry marketers who have invested heavily in social media because I’d be starting to get a little worried if this report is the best defence that Facebook’s head of measurement research can come up with to justify your efforts to drive Facebook activity.
Mark Ritson is an associate professor of marketing, an award winning columnist, and a consultant to some of the world’s biggest brands
Readers' comments (8)
Ben McKee | Thu, 13 Oct 2011 2:19 pm
Not often I agree with Ritson, but spot-on. I am flabbergasted at the amount of super-bright people in so many organisations taken in by this flim-flam around social media.
If it was my DM agency offering this kind of flimsy evidence of "success" then they would be sacked immediately.
As a survivor of the last great dotcom crash (and social media is a bubble!) this is so eerily familiar - huge company valuations, new paradigms that will change the world forever, finger pointing at those that "don't get it". And this, just like then will end up nastily for many concerend.
Don't take leave of your senses, if you cannot measure the value like you would anything else - why do it?
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Bastien Eymery | Thu, 13 Oct 2011 2:36 pm
*Nods at the comments regarding causality* - a lot of marketers fall in that trap.
However, I would argue this is just due to general incompetence and lack of lateral, thinking, which could be applied to any campaign with any commercial value modelling, especially when looking at lifetime values.
This doesn't seem like anything specific to Facebook.
Such campaigns should be treated like any other BTL online campaign, with all the multi-touch attributions and pattern analysis they require.
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Jerome | Thu, 13 Oct 2011 4:29 pm
I am a social media sceptic as well, but I doubt the causality problem. A part of the likers on Facebook will have a pre-existing love for the brand, but don't you think the popularity will spread on the social network?
Non brand lovers will be exposed to a message on their wall that a friend likes the brand. Non brand lovers will develop a more favorable attitude towards the brand because of the exposure. Non lovers become lovers (in exaggerated sense) due to the like button.
The explanation for this phenomenon are theories like the Bass Diffusion Model and Social proof.
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Steve Abbott | Thu, 13 Oct 2011 5:33 pm
I have to agree with you Mark, it is just too easy for marketers to get excited and carried away by the latest 'new toy' Your comment on opportunity cost is bang on.
I was looking at the data from The British Marketing Survey which includes a section on what influences people to buy. The interesting thing that stuck out was that while anyone reading the Marketing Press would be forgiven for thinking that digital, and particularly Social Media and Mobile Commerce, are the only game in town, consumers are not there yet.
This is the first time I have seen data on how many people are actually influenced by these new media compared to the older ones such as good old Friends and Family, brand experience, in store offers, on pack, leaflets etc. It turns out that while there is a lot of talk of activity on Social Media, top of the influences list is still advice from family and friends (63%) followed closely by good experience in the past (54%). In store offers come third (35%) followed by TV and offers through the door. Advice from friends on Social Networks comes way down the list with only 3% of people saying that they are influenced by friends on things like Facebook and Twitter. It seems that there is a big difference between friends and ‘social network friends’!
I am not saying ignore social media, that would be daft but proper evaluation of it will take time to develop, in the meantime the important thing is to treat it as the experiment that it is.
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sky | Fri, 14 Oct 2011 10:54 am
We are a small company of the well known British baby brand and from our experience we do not see any benefit (£) from our Facebook page. We have a large number of Facebook likers, but none of these likers are our actual customers. And, what is more interesting most of our customers, all on the Facebook, are not the likers.
We used to update the page on daily basis, but now we try to do this 3 times a week which is ok. Nothing has changes
For us the Facebook is a 'Banana Republic'.
Great post!
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Anonymous | Fri, 14 Oct 2011 11:07 am
Much of this analysis is spot on.
There is a common thread here - Facebook analysis shows at the value of social media. Thinkbox the value of TV, NMA the value of newspapers, Google the value of paid search. Etc.
The smart people ought to take a step back look for some impartial analysis.
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Josh Parks | Fri, 14 Oct 2011 4:57 pm
I love it when two of my mentors and great thinkers are struggling with the same issue on the very same day. What about the news flow on Facebook? Ever miss something important because 'stuff' that you like but don't really care about got in the way.
Guy Kawasaki shared the following publicly on his Google Plus feed today -
Guy Kawasaki (via +Google): Useful analysis of the difficulty of comparing Google+, Facebook, and Twitter numbers. For example, Google says it has 40 million signups. Facebook says it has 800 million active users (used the service in the last thirty days).
http://searchengineland.com/why-you-cant-compare-google-user-figures-to-facebook-twitter-96822
Here's one more thought. When you post to Facebook, isn't it true that only 10-20% of your followers see the post based on the black magic called "Edgerank"? So doesn't this mean Facebook is effectively 80 to 160 million active users for marketing purposes?
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so endth Guy's comments.
Great work Mark!
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Cosmin | Tue, 13 Dec 2011 11:19 am
Great article! ..and on time!
I'm neither a social media sceptic nor an apostle. I think it has benefits in some aspects of the social life. As long as we have the right perspective and don't expect to do more than it should, it's great to have it. If we put all our bets on it and hope it solves this and that, brands and sells, well, we might find sooner or later it's not really what it can deliver...
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