Our research team at Good Growth Ltd has spent the last 18 months reviewing all the evidence on the commercial effectiveness of investing in social media marketing.  

My agency did this because our experience with our clients suggested that social media traffic, specifically that from Facebook and Twitter, performed significantly worse in comparison to any other source. Indeed many of our clients found that stopping investment in such traffic improved conversion significantly and improved ROI for acquisition investment as a whole.

[Editor's note: This post is written by a guest blogger and doesn't necessarily reflect Econsultancy's views, nor does it refer to Econsultancy's research team.]

We publish a six-monthly update that covers the research published over the period and despite our continuing search there is still no empirical link between money spent and commercial outcome gained that suggests performance levels to compete with other digital channels. 

In fact, the reports that have been published in the last nine months have if anything started to suggest that, rather like Hans Christian Andersen’s Emperor, we may well be spending on a carefully woven story stitched together by social media platforms looking to justify their valuations and agencies looking to retain their fees. Is it time we challenged ourselves to stop drinking the Kool-Aid?

Emperor's new clothes

Why do we think it’s time to stop and reflect? Just look at these outcomes from recent third party reports: 

That’s not to say that there haven’t been reports of a commercial impact:

  • 68% of respondents to one survey said Facebook ads increased sales
  • Sony announced in February that through Twitter it had earned an extra £1m in sales and Dell announced in June last year that its presence on Twitter accounted for $3m dollars increase in sales.
  • And one survey suggested that investment in social by B2B marketers can drive sales upwards of £50,000 per month.

The reports on B2C success are far fewer in number and both those quoted above fail to meet a core test about reliability in that they don’t benchmark this performance in terms of ROI. They also do not give a sense of scale. For example, the uplifts quoted for Sony and Dell would be lost in the rounding compared to their monthly sales, let alone their annual totals. 

Of all the B2C channels, Pinterest looks the most promising but the latest report isn’t independently verified and there is no value data as opposed to activity data. So the jury is out, but the more direct link available between product and purchase suggests Pinterest could have a better ROI.

B2B is much more interesting. There is an emerging argument for a commercial link in B2B activity on LinkedIn and an opinion poll reported here reinforces that story, although doesn’t add to the evidence base. In my agency's own experience however, social advertising has a poor ROI and even sponsored posts, whilst garnering Likes, fail to deliver an acceptable ROI compared to other sales channels.  

However using LinkedIn as a relationship sales channel (sometimes called linked selling) has proven a successful way to build an ‘opted in’ marketing database and generate leads. We have met a number of professional service firms who use this channel to drive their outbound new business activity but to date we can find no published research to quantify effectiveness. 

Lies and stats

It was Disraeli who said there are lies, damned lies and statistics. In reality, both sets of numbers we have quoted here are unverifiable. They are either opinion or an incomplete ‘fact’ put into the public domain.  

Many are placed into the market by an interested party (the channel or an agency) and for those of us who are driven by data this suggests that they all need to be covered by a health warning.  

One of the consequences of this lack of transparency is that some in our industry are developing a narrative that undermines the claim of digital to be the ‘measurable’ marketing channel and introducing the concept of ‘dark social’. We’ve come across some choice pieces of digital jargon over the years but this one should make us all worry – it's best defined as the digital equivalent of the ‘missing link’, providing a justification for continuing investment in social media on the basis of belief rather than transparently valid data.

In summary...

I admit it, we are obsessed by commercial value and there may well be ‘above the line’ marketing benefits of brand and product awareness that this type of investment generates. There is very little evidence however that can justify investment on the basis of an ROI that can compete with AdWords, email, digital display or re-marketing.

If your concern is ROI and optimising performance of your marketing funds then my advice is to put value over inputs. After all, more poor quality traffic reduces overall effectiveness and wastes scarce resources, no matter how many other marketers are walking around with no clothes on!

[Editor's note: Just to reiterate, this post is written by a guest blogger and doesn't necessarily reflect Econsultancy's views, nor does it refer to Econsultancy's research team.]

For more on this topic, check out these Econsultancy resources:

James Hammersley

Published 24 May, 2017 by James Hammersley

James Hammersley is CEO and co-founder at Good Growth Ltd and a contributor to Econsultancy. You can connect with him via LinkedIn.

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Pete Austin

Pete Austin, CINO at Fresh Relevance

Good article and nice website. Favorite is how you've linked the entire surface of your report PDF. Minor niggle: the text on the cookie OK button is unreadable.

TL;DR - Seems there's hope for B2B on LinkedIn. While other social channels generate low ROI and may even lose money once you factor in the opportunity cost of handling the leads. We don't yet have our own good data, but this agrees with my prejudices.

6 months ago

Lee Branch

Lee Branch, Digital Strategist at Itineris

Or in other words:

1. Doing our own research is hard and costs money
2. We don't do social media very well

I'm not going to get into the value of social but I disagree with you and many of our clients would too. Was at a Google Partners event yesterday and other agencies I talked to are also having a different experience to yours.

My main gripe is that I was looking forward to some original work, as you state at the top that your research team spent 18 months looking into the value of social.

A year and a half of expert research? Gotta get me some of that!

So I filled your form to get the awesome, and what I actually got was a summary of other people's research studies/blog posts.

I assume most of these would be biased, as someone is usually pitching an angle when they commission research.

And whilst I get "curation", this is recommending strategy based on someone else's blog posts. Your lead magnet worked, but it left a bad taste.

Expect a bit more from Econsultancy TBH.

</rant>

6 months ago

Olly Rzysko

Olly Rzysko, Head of Digital Comms at Primark

Bad social media doesn't deliver value. That is the problem.

6 months ago

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Matt Huntingford, Client Director at Carat

Of course ROI can be poor, as it can be for any channel, but it depends on your objectives and how you evaluate it.

If you are you just looking at short-term ROI, and especially if you are using simplistic measurement techniques, of course it is likely to be poor vs lower-funnel channels like PPC.

The longer-term value of social as a brand channel is much harder (and more expensive) to determine which means it tends to get missed, one of the main reasons so much advertising is so response-focused, poorly planned and damaging to long-term brand value.

6 months ago

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Chris Turner, Owner and Principal at Bright Blue Kite

Bad use of ANY media does not deliver value. We are still at the very early stages of understanding how to use social well (18 months ago Snapchat was only just beginning to gain traction) and the platforms have significant differences.

Its actually a bit of a nonsense to lump all social media under one heading. Pinterest seems to work well for retail, LinkedIn is the most effective B2B network but there is much more of this road to be travelled. As it happens, I wrote this about social ROI a few weeks ago: http://www.brightbluekite.io/2017/03/29/social-roi-good-bad-ugly/

I was once party to a decision to spend £100k with ITV on a single 30-second spot in the half time break of an England football match. Good ROI? I don't think so.

6 months ago

Joe Hawkes

Joe Hawkes, Senior Digital Marketing Executive at Charles Russell Speechlys

For a lot of marketing departments it's very easy to spend a lot of money on shiny new social tools, expecting them to be a magic bullet to a good social media presence. In reality the time, effort and money would be better spent on educating employees on how to use social channels effectively.

Through instilling good behaviours in a company, you can achieve a lot with social with very little spend at all. So I think the title of this article should be 'If you want to improve your marketing ROI, spend more carefully on social media'.

6 months ago

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Luca Massaro, Chief Executive at WePlay

To start with, I'm quite annoyed at this article and the fact that eConsultancy have published it. The headline is actually ridiculous. You don't need to be sensationalist to capture attention in today's world. I saw the title and wondered if we were back in 2009 when social was being called a 'fad'.

Now, I haven't downloaded your research. I read the article, with the wild headline and then read the comments. Lee Branch summed up the research enough for me to be clear that it wasn't worth downloading.

I won't rant, I'll just speak from a first-hand perspective with the facts from our clients. We're a digital marketing agency, operating performance campaigns for 18 clients, each of which operates paid media across search, programmatic (prospecting and retargeting) and social.

What we see, is the complete opposite to this piece. Facebook, in particular, is actually the top performer of conversions and CPA's across every campaign.

What do I mean as a 'very high performer'? I mean it delivers excellent measured ROI. So on reading this piece, I was surprised by some of the statements. It reads like someone talking without any first-hand experience or with an actual agenda to push.

You also mention things like a 'lack of transparency', which is true in some cases. The platforms do inflate their numbers, their reach, their video views etc. But that doesn't matter to me. All I care about is money in > money out. When you use tracking and conversion pixels to track and validate your spend, it's easy to see how effective your spend is at delivering an ROI because you have the data to prove it.

Now, across other platforms, we have had challenges. With Twitter, the ad platform simply isn't as sophisticated as Facebook's and the CPA's tend to be much higher. With Instagram, there is a lot of potential when marketing to a younger audience - which you'd expect, however, the CPA's are higher also. But both these channels still serve a purpose in capturing attention, as opposed to simply delivering the conversion.

'There is very little evidence however that can justify the investment on the basis of an ROI that can compete with AdWords, email, digital display or re-marketing.'

This final statement is completely misleading. There's plenty of evidence to justify an investment into social, and as a practitioner, you would know that.

I'd summarise by saying if anyone is reading this and is concerned about social and if it can deliver a healthy ROI, drop us a line - hello@weplay.co and we'll be more than happy to share with you first-hand results of our campaigns on social media and the ROI they delivered.

6 months ago

Andrew Smith

Andrew Smith, Director at eschermanSmall Business

I'm always wary of absolutist claims that one channel or another isn't any good. It clearly depends on objectives and the role played by a channel in respect of a given audience (and what you want them to do). Things like social and PR tend to be assistive mediums - unless you are properly set up to look at attribution analysis, then social will probably fail as a last click contributor. At the same time, unless you are diligent in use of things like UTM tracking, etc, then you probably aren't accounting for all of your socially generated traffic. Facebook and Google Analytics numbers never agree. And that leaves out the use of social media as a customer service channel. In short, a blanket assertion that social media never delivers ROI just isn't true.

6 months ago

Greg Randall

Greg Randall, Director at Econsultancy Guest Access TRAININGSmall Business Multi-user

Hi James,

You are getting hit hard with some of the above comments. I would like to thank you for posting this article, it is stimulating great debate.

My views on Social ROI comes from my direct experiences in creating/leading digital strategies for my clients (broad mix of retail, B2B, Finance, and Telco's).

The performance and value delivered to businesses from social channels is not a reflection of the channel itself but of the conduct and quality of content being submitted to these channels.

Social is all about engagement. Filling these channels with product and sales promotions is not the answer. If you know your customer and what motivates them (a big challenge for many marketers), give them content that aligns to their needs, passions and interests.

The "Social currency" should be less about direct ROI and more about the engagement that comes from it. If a brand becomes more authentic in its desire to drive engagement, ROI will come.

6 months ago

James Hammersley

James Hammersley, CEO and Co-Founder at Good Growth

Thank you for all the comments. We are interested in all research around the subject of return on investment in marketing. Clearly, there are a range of views about the value of social media! If you can share evidence-based research on the commercial value of social media investments - I will ensure our future posts and publications present the insight. You can contact me through the usual channels.

6 months ago

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