There’s been a debate raging about the value of social media activity for brands in the past couple of weeks.

The spark was some recent findings by TNS, the research body responsible for Digital Life, a global survey into the online behaviour of some 72,000 consumers across 60 countries.

TNS found that the majority of consumers in digital markets did not want to engage with brands via social media and that reticence to engage was at it’s highest in the UK, where 61% of consumers stated that they did not see social media as a place to interact with brands.

The survey also dealt an apparent blow to those contemplating a F-Commerce presence, with just 1/4 of respondents in developing countries seeing social networks as a place to buy products.

TNS’s own conclusion was summed up by it Chief Development Office, Matthew Froggatt:

 ’Many brands…are failing to understand that these spaces belong to the consumer and brand presence needs to be proportionate and justified….Misguided digital strategies are generating mountains of digital waste, from friendless Facebook accounts to blogs no-one reads.’

Additional research conducted by Edge Rank Checker seemed to drive another nail into the coffin of the notion that social media was an effective tool for marketers.  The study, conducted across 5,500 Facebook pages with more than 100,000 fans in October of this year, found that the average CTR of links shared by brands was 0.14% – that’s 1 click for every 714 impressions.  This may be a lot better than Facebook advertising and slightly better than online advertising, but is rather disappointing considering that Facebook fans should be more of a qualified audience given that fact they’ve opted in to receive those posts.

So are marketers wasting their time by trying to engage with customers and prospects via social media? We don’t think so, and it’s worth going back to the research to discover some of the reasons why.

For example, going back to TNS’s Digital Life research, 61% of consumers who don’t want to interact with brands via social media implies 39% that do – and 39% of the UK’s social media users is a pretty vast potential audience. And as more brands become involved in social media and offer consumers incentives for them to engage with them in this environment, that 39% is only going to increase.

The paltry CTR’s reported also tell only part of the story. Just because a post link isn’t being clicked on doesn’t mean it isn’t making an impression, in the same way that CTR is a poor way of measuring the effectiveness of online advertising.  And links are likely to get less clicks on Facebook because it’s users usually reticent to leave the social network.

However, where these studies do add value is to inject a dose of much needed realism into the social media debate.

Marketing is about identifying relevant target audiences and then selecting the channels that are most appropriate for the audience and the brand’s message.  Some brands seem to be throwing that thinking out of the window and taking a ‘channel first’ approach, deciding that they’re going to build a large following on twitter or Facebook without thinking whether the channel is appropriate for their message or whether their genuine prospects and customers are using that channel.

The danger is that brands can build followings who aren’t really in their target market, or are communicating via a channel which is not the best for what they’re trying to achieve.

Brands also need to realise that social media isn’t free – the time their staff spend posting and replying costs money too. Although social media is an emerging channel which surely has much unrealised potential in terms of RoI, no sensible debate can be had about its value to brands unless brands acknowledge the true investment they’re making in it.

The interactive nature of social media does present brands with an opportunity to build dialogue and advocacy with a proportion of their customers and prospects. But it is not the best solution for all customers and all tasks. Brands that realise this and use it with a balanced view of what it can achieve for their organisation are those likely to get the most out of it.

By: Carla Burgess

Posted in Online, Social Networking | No Comments »

A recent report published by econsultancy found that 79% of UK companies were planning to increase their investment in social media over the next year. Similar findings were reported in a survey conducted by Duke University and the American Marketing Association in the US, where CMOs were found to be planning to increase their social media spend from an average of 7% of their marketing budgets to an average of 10% over the next 12 months.

However, justification for these increases in social media investment in terms of tangible effect on the bottom line was hard to find – 41% of respondents to econsultancy’s survey reported that they did not have an RoI figure for any of the money they spent on social media.  Just 8% could report an RoI figure for all of their social media spending.

In the US survey, quantitative metrics were still found to be the norm and, in fact, were growing in importance. Traffic (as measured by visits and/or page views), repeat visits and number of friends/followers topped the list. Financial metrics such as sales, revenue per customer and profits were towards the bottom and had actually waned in popularity over the past 12 months.

Taken at face value, it appears that marketers in both the UK and US are escalating their social media budgets on little more than a hunch.

But when you analyse the situation more closely, you can understand their dilemma – the impact of social media is a very tricky thing to measure.

Of course, your Finance Director would beg to differ. Simply measure traffic driven to your site and either track that traffic directly through to online transactions, or apply the site’s standard ‘look-to-book’ ratio for a proxy for actual sales.  From there it would be straightfoward to measure an RoI by comparing gross profit with the investment in social media, both in terms of direct investment in social media campaigns and platforms and the time spent by members of staff spend managing social media channels.

But there are several problems with this approach.

Firstly, just because brands are engaging with consumers online via social media channels doesn’t mean those transactions are necessarily going to take place online. Measuring online transactions only is likely to be measuring the tip of the iceberg only, dependent on the proportion of transactions that take place online vs. those that take place offline.

But that iceberg grows even bigger when one considers that most social media influenced sales are going to be generated ‘post impression’.

Social media is not search where consumers have a specific need they’re looking for a solution to.  Social media followers/consumers may well be influenced by their interaction with a brand on Facebook, Twitter or via a corporate blog, but it’s unlikely that influence is going to turn into immediate action by clicking through to the brand site from that specific piece of content.

Of course, this depends on the nature of the content, the nature of the consumer and the nature of the product.  A time specific discount/incentive posted to an existing loyal customer for a low involvement product is more likely to result in immediate action than content of a different nature posted to a first time purchaser for a high involvement purchase.

However, one of social media’s strengths is that it can extend a brand’s influence further down the purchase funnel, by stimulating consumers with ideas that prompt purchase journeys or providing useful information during the research phase. That influence is likely to shape brand preference and loyalty and manifest itself in other ways further down the purchase funnel – such as a greater volume of branded searches, a higher CTR on existing search ads and better site conversion.

Of course, these effects are extremely difficult and expensive to quantify so it’s no surprise that marketers often opt for simple, quantitative measures to gauge the effectiveness of their social media efforts.

In many ways, social media is a victim of its ‘newness’ – other more established marketing disciplines, such as PR, are pursued without a similar fixation on what RoI they’re delivering.

However, for marketers seeking to understand the effectiveness of their social media efforts, and without the budgets to completely understand the effect their activity is having on the purchase journey, we’d recommend a range of metrics to at least imperfectly understand what influence their activity is having.

So measuring fans/follower is worthwhile, but marketers need to understand that this represents only the potential that exists at the top end of the funnel. And measuring visits and sales is fine too, although marketers need to explain to their Finance Directors that this only represents a fraction of the true impact of social media.

However, perhaps most importantly, marketers need to measure the actions that are indicative that their content is having an impact on brand preference and advocacy. Hence measuring any and all interactions – be that post likes, comments, forum participation, reviews and ratings and shares – is key.

By focusing on the activities that drive increased engagement, marketers will then be opimising their social media activity to help more prospects along the purchase funnel.

By: Graham Painter

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Understanding the link between social media activity and purchase remains the holy grail for many premium and luxury marketers. At present, many are participating because they feel they should have a presence in a space where their consumers are spending so much of their time rather than because they’ve been able to demonstrate a positive return on investment.

But some new research from sister agencies M Booth and Beyond aims to sheds at least a little more light into this area by examining in depth the role social media plays in the purchase process.

The study, which drew responses from over 3000 consumers in both the US and UK, discovered 2 key factors which determined the importance of social media in the purchase process – the type of product and the type of consumer.

As regards the former, products were split into 2 clear categories – high involvement and low involvement.

High involvement products were those that were more costly, less frequently purchased and required more time and effort in the research phase. By contrast, low involvement products were those that were purchased more frequently, were less costly and required the minimum of thought and effort.  Cars and kitchen appliances were typical products that fitted into the high involvement category: fashion and beauty were typical of the low involvement category.

For high involvement products, the greater research involved meant that information heavy channels predominated – so consumers were more likely to use search, brand websites, user review sites and consult friends and family for word of mouth recommendations. For low involvement purchases, the research phase was more likely to be skipped, hence the sources of ‘hearing’ about products initially, such as Facebook and Twitter, become more important and influential in the final purchase decision.

That’s not to say that Facebook et al don’t play a part in the purchase of high involvement products. They could still play a crucial role in making consumers aware of products – whether that be via hearing directly from a contact or via all the search benefits that content creation brings. And the research also found that the more important fashion and image were to the final purchase decision, the greater the role that social networks played.

But, of course, the type of product wasn’t the only influential factor identified by the research, the type of consumer played a part too, and here the key distinction was between high and low sharers.

Higher sharers were those that were more prolific creators of content than their low sharing counterparts – be that social media posts, photos or reviews. They were found to be less populous amongst online consumers (20% vs. 80%) but crucial for brands as they were found to be brand loyal and 3 times more likely to recommend a brand than low sharers.

High sharers were found to be, almost by definition, more heavily involved in social media channels, so places like Facebook could be a key recruiting ground.  And, of course, once recruited, high sharers were more likely to create and share content across a wide range of social channels – crucial for the success of both high and low involvement products.

In summary, the lower involvement the product, the greater the role that image and look played in its purchase, and the ‘higher sharing’ the consumer, the more influential that social networks become in the purchase process.

Of course, the report just looks at social media’s part in the purchase decision – not the role it can play in customer re-purchase via community building or how it can resolve customer service issues.

However, the study suggests that those promoting low involvement, fashion-led products should rest assured their social media efforts are not in vain. Those luxury marketers at the higher involvement end of the scale should not see their efforts as wasted but should focus their attention on how social media can support their search efforts, and help them to recruit and nurture the advocates which are crucial to their business success going forward.

By: Graham Painter

Posted in Online, Social Networking | No Comments »