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:
- 76% of retailers are spending more on social media marketing this year, yet the same survey suggests that whilst they do this, the most cost effective channel is email marketing.
- 89% of marketers believe social media marketing increases exposure and drives traffic but only 51% believe investing in social media improves sales.
- 48% of marketers say social media is the most difficult channel to get right.
- 90% of marketers believe social media is important but 92% do not know which social media management tactics are effective.
- 60% of consumers have concerns over social media channels being at risk of phishing attempts or fraudulent profiles.
- 43% of marketers questioned on their experience of investment in social media marketing said they “haven’t been able to show impact yet”. 38% claim to have a “good qualitative sense of the impact, but not a quantitative impact” while just 18.4% have proved the impact quantitatively.
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.
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: