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Coca-Cola, one of the most iconic consumer brands in the world, is not surprisingly one of the most popular and active brands on social media. In fact, with more than 62m 'likes' on Facebook, it's the most popular brand on the world's largest social network.

But in looking at the online chatter that takes place on social networks, Coca-Cola has come to a startling conclusion: there's essentially no impact on sales.

According to Eric Schmidt, Coca-Cola's senior manager of marketing strategy and insights: "We didn't see any statistically significant relationship between our buzz and our short-term sales." Ouch.

Game over for social media?

Skepticism over social media ROI isn't new. At least some of that skepticism has been driven by the difficulties associated with measuring social media ROI in the first place.

But despite the challenges created by a medium that doesn't lend itself to the same kind of last-click analysis afforded by, say, search ads, brands have continued to pour money into social media, buoying the fortunes of companies like Facebook and Twitter. The general consensus: even if we aren't sure about the ROI, there is significant value in social channels and thus they're too important to ignore.

But Coca-Cola's newly published research could renew the debate over just how effective social initiatives are. After all, if the world's largest brand says that social buzz had a measly 0.01% impact on its sales, why would any other business, large or small, expect more from the medium?

Putting social in its place

Schmidt cautions against such conclusions: "This is one study on a set of brands in a particular company within a certain segment of the consumer-packaged-goods industry. It is by no means a generalized result that applies to all industries."

Even though social isn't moving the needle for the iconic brand, Coca-Cola doesn't have any plans to scale back its social efforts. Social media marketing's most ardent supporters will note that Coca-Cola's research didn't look at the impact of sharing or social video views, and they'll suggest that the long-term effects of social media are far more important than short-term sales.

Those are fair considerations, but the question for other businesses, particularly those with marketing budgets far smaller than Coca-Cola's, is just how prominent a role social should play in the marketing mix going forward if it turns out social generally doesn't drive sales within a relatively short period of time. After all, many businesses simply can't afford to trade $0 in sales today for the hope that a popular Facebook Page or Twitter account will eventually pay dividends.

At the end of the day, Coca-Cola's research should at the very least serve as a wake-up call for businesses that have been investing heavily in social campaigns and staffing, particularly those that have been investing largely on blind faith that there's something here. Worth considering: many assumptions about social media buzz and sales have been wrong and if that is the case, it's time for companies to rethink how they justify (or don't justify) their social investments.

Patricio Robles

Published 20 March, 2013 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2380 more posts from this author

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David Quaid

I've been saying this for years - fair play to coke for realising it. Didn't Pepsi have a similar disaster with their Social Media a few years ago?

Even with 61 million fans they tend to get just 18k - 20k likes on posts - that's a tiny fraction of a % !

over 3 years ago

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Jenny Brown

This is really interesting research especially as it comes from Coca-Cola who has such a large social reach. In my experience while social channels don't often directly lead to sales, when used to create new direct connections with relevant people within your industry and potential customers, it's still a faster and more effective way to do this then almost any other channel.

over 3 years ago

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harry hawk

First social media needs to exist for a clear business reason and not just a box you "check" off as part of your marketing plan.

Clearly, Coke needs to be in the "Listening" business since they need to respond to consumers.

Then, you have to consider their huge paid media budget, that has to be fairly effective (given they are selling sugar water); what more could social media do that 100's of Millions in TV ads can't do? Building awareness for one of the world's most Iconic brands isn't something that they need; they already have awareness.

Social media works, and it works for businesses of all sizes but it isn't a magic bean.

over 3 years ago

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Stephen Tamlin

Can Coke relate it's TV advertising budget to sales? Or it's print or digital - All far less measurable than Social Media.

Social Media can work for any company if used with content marketing. Give those that find you online the right information at each stage of the purchasing cycle to push them along that 'lead funnel' and you'll be able to increase sales.

over 3 years ago

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Nicole Fortunaso

They are not terminating the social program though... I think that if they stopped the social media they might see a decrease in sales. I definitely think Schmidt is right in saying that "It is by no means a generalized result that applies to all industries."

over 3 years ago

Peter Meinertzhagen

Peter Meinertzhagen, Digital Marketing Manager at Zest Digital

It's good to see Schmidt saying that "this is just one study... no means a generalized result that applies to all industries."

Perhaps much of this is down to them already being such a big brand in the first place. I have personally found social media incredibly effective for brands that are not already well known. Social media is amazing for increasing awareness and bringing brands such as this to greater attention. And this is also not counting the utility offered by social media, as a customer service tool for example.

over 3 years ago

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Barnaby Wynter

Eric Schmidt's polite damnation 'that this is just one study' belies their own facts. Social Media does not work to create sales. Neither does simply raising awareness lead to a sale either. Worked when brands had something to say that was new and unique. Now brands have to create engagement by saying things in an engaging and new way. The internet can be a great way of engaging with people but using Social Media as a broadcast tool is simply nonsense. We receive thousands of brand messages everyday on every surface around us. A tweet, facebook post, online ad is just one of them and at best limited in visual impact and often surrounded by a huge amount of noise. I hope Coke's entry to the fray gives brand owners the confidence to ignore the social media owners who are the only people making money from their art and we can at last use these great internet tools strategically. No money in that though for so called 'social' media owners and agencies! Sorry.

over 3 years ago

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Mark Etingchap

One thing that must be faced here, chaps, is that Coca-Cola's social media output (at least on Twitter) is far from normal. Nearly 98% of all tweets sent from @CocaCola are replies. I use this as an example for clients of an iconic brand engaging with users, but it's hardly a strategy I would endorse.

over 3 years ago

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Ashley

For Coca-cola and their immense advertising budget social is just but another advertising impression. While they aren't gaining from social media, they aren't losing as well. I just don't know whether big brands will ever figure out social, or there just isn't anything to figure.

over 3 years ago

Sylvain Querné

Sylvain Querné, Head of Digital Marketing at Nokia

Isn't coca cola losing sales on soda drinks in the US? At this point no impact is better than negative impact...

over 3 years ago

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Richard Hussey

Sylvain, I suspect you have hit the nail on the head. Social media and content marketing give smaller brands the opportunity to compete on a more equal basis with companies with big marketing budgets. The unanswerable question is what would happen to their market share if they were not engaged with social media? Perhaps defending their market share is reason enough to participate.

over 3 years ago

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Tom Neal

Much of Social Media is brand awareness, Coca Cola is the arguably the biggest brand in the world and can be included in the most widely understood English terms which kind of makes it anomaly. It is so engrained fast food culture and even Christmas (changed Santa red). It would be interesting to see how the efforts of lesser known drinks brands are increasing their sales and market share off the back of social media.

over 3 years ago

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Robert Howells, Website Manager at Elsevier

I think thier problem is they don't have a deliverable product or online service so there's no call to action that results in a sale. The same could be said for their website a dacade ago. For products like these the web is just a series of expensive brand adverts whereas other retailers can make far better use by having offers/deals etc.

over 3 years ago

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Peter Drakes, Business Analyst at Session Digital Ltd

I am often reminded of the old joke about Pepsi and Coca-Cola...

£50m a year on marketing for this:

Guy walks into a bar and asks for a whiskey & coke, barman says 'we got pepsi'. Guy says 'fine'..

Of course ROI for Coke is not realised as it is a totally saturated market. It is a 50-50 toss up if someone doesn't drink a coke (that usually would) if they drink from a Coca-Cola company brand or a Pepsi brand.

As someone pointed out Coke still advertise on TV, magazines, radio, etc, etc, this is just another content channel for them.

Social (and digital) have a place for every company and brand and person - as with traditional marketing (which everyone seems to forget) it depends on the style

For a new business or start-up social is a great form of low-cost 'advertising'.

For more established companies it is a way of developing thought leadership etc

over 3 years ago

Joseph Griffiths-Barrasso

Joseph Griffiths-Barrasso, Digtial Marketing Executive at Bauer Media

Has anyone looked at Facebook's decline? I'm wondering if Far East growth is masking Western drop out's? Is there any evidence that new users are hanging on less and if established users are exiting? Is there anything that relfects the average users length of time on Facebook (new vs established) and levels of engagement over time declining for those established? In particular in the context of brands rather than personal family contact/engagement...we see a fair amount of churn on our fan base - its all very well looking at growth, but unliking is also equally consistent, at some point we will go into decline (pending our content/conversation strategy). Cheers JoeGB

over 3 years ago

Fi Dunphy

Fi Dunphy, Social Media Strategist at Branded3

Thought-provoking article Patricio, thanks.

I tend to agree with you, Peter and Richard - a behemoth like Coca Cola would need to consider its use of social media very differently to the way a much smaller brand will, so this revelation by no means settles anything in the social media vs ROI debate.

It's natural that different sizes of brand, in different industries, that operate in different locations and on different scales will each need to use social media very differently, and should be prepared to expect different benefits.

For example, a global brand like Coca Cola would use social media as more of a tool for image reinforcement, whereas a burgeoning national brand might use it to disseminate special offers, build an identity and drum up awareness.

I would argue that the benefits of social media activity perhaps become more and more intangible the larger and better-known a brand is - so let the debate continue...

over 3 years ago

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Drew

There are plenty of studies that link long term emotionally driven marketing communication activities with long term sales growth while to demonstrate sales growth over shorter time horizons then rational sales promotion activity has to be used. This study seems to confuse one type of media ie social with the type of activity.
It's likely Coca-cola (as a brand with offline sales channels) are primarily using social media for emotional marcoms so should not expect any short-term sales uplift

over 3 years ago

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Drew

There are plenty of studies that link long term emotionally driven marketing communication activities with long term sales growth while to demonstrate sales growth over shorter time horizons then rational sales promotion activity has to be used. This study seems to confuse one type of media ie social with the type of activity.
It's likely Coca-cola (as a brand with offline sales channels) are primarily using social media for emotional marcoms so should not expect any short-term sales uplift

over 3 years ago

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Tina Rothery

Social media may not be 'doing it' for the big brands that already had the spotlight with huge advertising and PR budgets - but for other businesses and particularly SMEs it is proving a cost effective way to be found, discussed and promoted.

It is challenging to measure in the traditional ways, the effectiveness of SMM but for the businesses we work amongst, it is highly effective at raising profiles. Although the internet is global it is also very good at allowing marketers to micro-market to specific groups, types, locations etc.

over 3 years ago

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Umer Mahasin

That's what I have asked in my previous comment on Cadbury post but it was deleted (Don't know why). Anyways, Social Media can't really help big brands who already have billions of fans in real world.

But It's not an end, Social Media works very fine for small businesses and brands. It's all about finding new customers not finding old ones on social media.

over 3 years ago

Fi Dunphy

Fi Dunphy, Social Media Strategist at Branded3

I was also thinking after my last comment that the last stat in the very first comment on this post is pretty irrelevant (sorry David!):

"Even with 61 million fans they tend to get just 18k - 20k likes on posts - that's a tiny fraction of a % !"

On Facebook, people often Like huge brands' Pages just because they like the brand/product (just as they might the Pages of, say, their favourite bands) - not because they've seen content from them that they've been compelled to engage with.

I would suggest that because Coca Cola is such a well-established household name, far more people Like it than bother to actually engage with it, just because they inherently like to drink Coca Cola.

... So this is where Facebook's EdgeRank algorithm comes into play, resulting in the fact that lots of Coca Cola's fans aren't even going to see Coca Cola's posts in their News Feed, whether they would otherwise engage with them or not.

I would also imagine that we'd probably find the same trend when examining other FB Pages of brands of a similar standing (e.g. Cadbury, Amazon).

I think that this is a perfectly logical explanation as to why Coke's engagement levels are relatively low, which means brings us back to the point of what a brand should be expecting from its investment into social media.

over 3 years ago

Chris Thompson

Chris Thompson, Creative Technologist at Cogent Elliott

"Coca-Cola's research didn't look at the impact of sharing"! Is that not the very essence of social? Don't tell me it was actually all last-click based.

over 3 years ago

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Peter Drakes, Business Analyst at Session Digital Ltd

Actually Fi, that is a good point and raises more - how much of a %age of marketing spend is social media to Coke?

61m fans for 20k likes... Perhaps the FB content they post is poor / un-engaging?

Before we accept their sweeping statement that social 'doesn't increase sales' lets analyse:

How frequent are their posts?
How engaging are their social team?
Or is is just brand messages being sent out (I saw 98% of tweets were responses, but what about FB?)
Like-for-like with other large / mega-brands how is their activity?

Do people join Coke social pages for freebies rather than the 'badge of honour' that applies more to luxury brands?

Has any behavioural research been done into the Coke customers and what they are expecting to what they are receiving on social?

over 3 years ago

Fi Dunphy

Fi Dunphy, Social Media Strategist at Branded3

Really excellent questions, Peter. All of which we need answers to in order to form a more well-rounded conclusion.

It's risky to see this news as proof that social doesn't work - there are just way too many variables from each of the three sides of social media marketing - social media (platform, content, application), the business itself (size, industry suitability etc.) and then the audience.

Would love to see a really in-depth report on this!

over 3 years ago

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Nick Stamoulis

I actually just read this great post about this study (http://www.searchengineguide.com/jennifer-cario/social-media-works-precicely-because-con.php) and that the author made a great point. Coca Cola might not see a significant impact on the umbrella brand, but what about all the smaller brands that Coca Cola owns---social could be working awesome for those products! When you're a brand as large as Coca Cola it's harder to find those "big wind."

over 3 years ago

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Chris Wood

Drew, you are spot on. the consumer purchase decision for a brand like Coca Cola is generally an emotionally driven one. What the brand wants to do is build emotional loyalty ( the concept behind Love Brands) that makes consumers prefer it over a competitor. As a result, all its activity is with that end in mind.Its about consumers attitudes to the brand and re-inforcing behaviours to sustain high levels of brand loyalty - not a direct selling message. Social happens to also provide a great tool for measuring sentiment towards a brand and tracking trends / sentiments that might need changing via engagement.

over 3 years ago

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Peter Drakes, Business Analyst at Session Digital Ltd

I love that link Nick, sums up pretty much all of our comments are reflected there.. thank you for sharing.

over 3 years ago

Nathan Levi

Nathan Levi, Head of Performance Marketing at TotallyMoney.comSmall Business Multi-user

Surely the question should be "why would coca cola see an increase in sales from social media?" It's not like the brand is starting from a low base, with a measly media budget, low awareness and poor distribution. I've always been a sceptic with all things social but I'm not sure this proves anything. I'd like to see the same study done for Cadburys who are prolific in social media and seem to be doing great things.

over 3 years ago

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Jeff

A few thoughts:

Buzz incresed sales by .01%? Coke had $48 billion in in sales for 2012, so .01% works out to be $4.8 million in sales. A drop in the bottle for Coke, but big money for businesses who don't have bottom lines in the billions.

How much US growth does Coke have left? (they have FB pages for their other products, but this story seems to focus on Coke's page). I thought Coke said a couple of years ago that their current markets were saturated and thier focus was going to be on emerging foreign markets and product acquisition?

I feel their Facebook fans are the die hard people already buying a ton of Coke products. People drinking a 6 to 8 Cokes a day can only drink so much more.

I feel that social media can increase sales, but you first have to have goals. Generating buzz is great if you are celebrity or a music group, but you need more to drive sales of a product.

over 3 years ago

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mark

Oh. Does Coke...or McDonalds or Sears...expect people to jump off their couch when they see a television ad and run to the store and make a purchase?

Coke doesn't do social media marketing well, imo. But that's another matter. The point is, not all marketing has the purpose of providing an immediate lift in sales.

There are other benefits to social marketing beyond immediate sales impact.

over 3 years ago

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Jun Quintana

Is there a copy of the methodology employed in their study? For one, how did they operationalize "buzz?" Was it overall mentions? Or was it just POSITIVE mentions? If buzz was defined as overall mentions, then .01% impact would not be surprising. Mindshare is not always equal to market share. However, if buzz was positive buzz and it STILL did not impact sales, then that's a more worrisome outcome.

Outside this, I think Coke is a brand that is a tad older than Planet Earth. It's brand is etched in all corners of the world. I would not expect a product that lacks novelty will suddenly have a surge of sales because people are talking about it online (or offline for that matter).

over 3 years ago

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Sara Ataie

I honestly disagree on this one... You can't compare a brand like "Coke" that's an icon born years before Social Media! Brands that are launched with the use of SM only do great with strategies are well implemented.

over 3 years ago

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tomba

i would like to see what coke sees on any form of marketing.

over 3 years ago

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