Tag: Acquisition

Seven New Social Media Studies You Probably Won’t Hear About at SXSW

This week is the annual SXSW Interactive conference, where social media elite descend on Austin to party on Sixth Street, post selfies with people who have higher Klout scores and pick up the mad schwag liberally distributed by startups. A few may even wander into conference halls to see some presentations, although that is far from certain.

This will be my third year staying home, and while I will miss the chats and parties, I will not miss the general sense that SXSW is a missed opportunity for the social media industry. All the best and most experienced minds in the business gather in one spot, but few find themselves in sane, sober and expansive conversations because it is hard to focus on serious topics when one is screaming over an indie band or dashing from the Convention Center to South Commerce to West 6th for events.

Although SXSW Interactive has tended to feature more hype than criticism, perhaps 2015 will be the year when reality sets in. At last fall’s Social Shake-Up, I was pleasantly surprised at the candor at which people were discussing declining reach, difficult social metrics and social media marketing obstacles. It will be interesting to see whether the predominant buzz from this year’s SXSW is about social media marketing difficulties or the more typical chatter about the next hot new app.

If SXSW Interactive gets serious about substance over hype, here are seven recent studies that should be mentioned from stages in Austin. All challenge assumptions about the value of social media marketing and offer the sorts of data that should guide tough decisions about investments and strategies in the social channel this year:

  • Bounce Exchange find poor organic social acquisition and conversion:  In 2014, Bounce Exchange analyzed more than $1 billion of e-commerce revenue. Their research found that organic traffic from these companies’ social media channels accounted for only 1.2% of clients’ overall revenue. Moreover, conversion was 1.3%, less than half of their clients’ overall average. (Source)
      
  • The Center for Marketing Research at the University of Massachusetts Dartmouth finds fewer companies optimistic about tracking sales through social media: In interviews with executives at Inc. 500 firms, the UMASS study found a drop in companies tracking sales through social media, from 36% in 2013 to 32% in 2014. Even more telling, at a time when marketers are spending more on social media and should be improving their metrics, the number of executives who do not know if social is driving sales increased seven points, from 11% to 18% (and another 44% believe it accounts for less than one percent of sales).

    Finally, the UMASS study found that Inc. 500 executives are losing faith that social has the potential to increase sales in the next year–the percentage of executives who indicate social is the tactic with the most potential to drive sales dropped from 16% in 2013 to 13% in 2014. That puts social media well below online advertising, less than business directory listings and equal to traditional print/broadcast media. (Source)
      
  • Custora finds social drives small fraction of sales compared to organic search, PPC and email: Custora tracked 100 million anonymized shoppers, $40B in e-commerce revenue, and 100+ online retailers in January 2015. It found that social media delivers just 2% of ecommerce sales. This figure is 91% less than organic search, 88% less than CPC and 87% less than email. Custora’s data was no different over the holiday period. In its E-Commerce Pulse 2014 Recap, the company notes, “Similar to the trends last holiday season, and throughout 2014, social media (including Facebook, Twitter, Instagram, and Pinterest) is still not driving a substantial share of e-commerce transactions. Through the holiday season (November – December 2014), social media drove only 1.9% of all e-commerce orders – a similar share to holiday 2013, when it drove 2.3%.” (Source and source)
     
  • Webmarketing123 finds that, when it comes to social media investment decisions, marketers are using assumptions rather than hard metrics:  A November 2014 study by Webmarketing123 found that that “many marketers still relied on ‘gut instinct’ when determining which channels to use for marketing campaigns, as the most-used weren’t always the most-measured.” The report called social media “one of the biggest pain points for respondents.” While 87% of B2B marketers used social media, just 17% were able to prove its ROI—that is the lowest percentage among channels used. As for B2C marketers, social is now the most commonly used channel, with 87% of B2Cs using social, but only 27% could calculate ROI. (Source)
      
  • MaritzCX finds that social media is not an influential information source for car buyers: MartizCX surveyed 60,000 people and found that social networks (Facebook, Google+ and Linked) were the 19th most influential information source when customers under the age of 35 research a new vehicle. While “Family/friend/word of mouth” ranked second at 18.8%, online social channels were much less significant, with “Chat rooms/blogs/forums” at 1.5%, online videos at 1.3%, social networks at 0.4% and Twitter (dead last) at 0.2%. Beating digital social channels at influencing car purchases are very traditional channels such as salespeople at dealerships (the top influencer at 21.5%), newspaper/magazine reviews (4.7%), TV ads (3.6%) and manufacturer’s brochures (2.8%). (Source)
      
  • The CMO Survey finds that marketers continue to use the least powerful social media metrics: It is amazing that the two most common social media metrics used by marketers this far into the social era are still Hits/Visits/Page Views and Number of Followers or Friends. We are well past thinking that top-of-the funnel metrics are a good way to measure any digital marketing tactic, much less social media. Less than a third of marketers evaluate social media based on conversion rates, and fewer than one in seven use customer acquisition cost.

    Even more concerning, there has been a decrease since 2010 in the number of marketers using bottom-of-funnel social media metrics such as Sales Levels, Revenue per Customer and Profits per Customer. Marketers are ignoring the most powerful metrics in order to focus on the ones that are easiest to collect (and to manipulate). (Source)
      
  • Marin Software finds social advertising significantly lags search and display: The Marin Software Performance Marketer’s Benchmark Report is expansive, covering over $6 billion worth of ad spend from advertisers and agencies with budgets in excess of $1 million annually on paid-search, display, social, and mobile. First the good news for social media: The clickthrough rate for social ads is better than for display ads–social CTR was double that of banners on desktop and 50% greater on smartphones. However, while social ad clickthrough may beat display, it still pales in comparison to search, which has a 425% better CTR on desktop and 383% greater on smartphones.

    Once the folks who click on those ads arrive on your site, social conversion rates are downright dismal. Compared to social ads, display advertising’s conversion rates are 255% greater on mobile and 900% more on smartphones. Social advertising conversions fare even worse against search ads; search ads deliver conversion rates 818% higher on desktops and 2100% greater on smartphones versus social ads.

    While social advertising offers the lowest cost per click (CPC), advertisers (at least those whose goal is conversion) are over-paying for social ads. Desktop social ads offer a CPC 82% less than desktop search ads but return a conversion rate 89% less than desktop search, making social advertising’s cost per conversion around 65% greater on desktop. On mobile, social advertising has a cost per click that is 80% less than search ads but experience conversion rates 95% less than search, resulting in a cost per conversion that is more than four times greater in social than search. (source)

Will data like this get attention, discussion and consideration at SXSW, or will this year’s conference continue its history of celebrating consumer adoption and the rare but unrepeatable successful case study? If SXSW attendees buzz about the growth of “dark social” and Audi’s Super Bowl Snapchat success rather than explore what we have learned from our experience on the social networks that have been around for eight years, then we will simply see brands repeat the same mistakes on Snapchat, LINE and WhatsApp that they made on Facebook and Twitter.

For those attending SXSW Interactive, my wish is that you have more challenging, sober and enlightening discussions than you do drinks and that you leave Austin with more hard data than promo items. 

Stop Social Media Marketing

Today, I gave a keynote address at the PR + Social Media Summit in my hometown of Milwaukee. My presentation was entitled “Stop Social Media Marketing (Unless),” and I have embedded the deck at the end of this blog post.

I predict that many CMOs will diminish their support for social media, content and earned media marketing in the next year or two, and when they do, careers will be adversely impacted. If your career relies on Marketing Department support for content or social media marketing, now is the time to take stock of the trends and consider some actions to protect your career. It is possible that you work for the right sort of company for which social media is well aligned for Marketing Department expectations—that’s the “Unless” part of the title–but, as you will see, I believe this is the exception and not the rule.

What is (and is not) Social Media Marketing?

Before we explore where social media marketing works and where it does not, let’s first be clear that the definition of “social media marketing” does not include paid media on social networks. Go ahead and invest in advertising on Facebook and Twitter, just do not call it “social.” The most popular forms of advertising on Facebook today are retargeting and custom audiences, neither of which are remotely social, and less than one in six ad dollars use social data.

I suggest a better definition of Social Media Marketing is this: Content authored or encouraged by the brand and shared by Word of Mouth that creates earned media and delivers on Marketing objectives. This definition excludes a couple of things, such as advertising (which is not social) and consumer content not coaxed by a marketing program (which is not marketing). It also excludes social media programs that fail to deliver on key marketing metrics, and therein is the problem for most brands.

The Earned Media Venn Diagram

A simple Venn diagram explains what works and what does not in Social Media Marketing. The first circle includes what your brand can say to move consumers closer. This does not mean retweets and likes–the fool’s gold of social media marketing–but rather changes in consumer attitude or behavior such as greater awareness, consideration and purchase intent.

The second circle in the Venn diagram is what consumers want to hear from your brand. For years, we have acted as if consumers crave branded content, but the data on this clear; a 2014 Kentico study found that 68% of US consumers “mostly” or “always” ignore brand posts on every social network. The situation is much worse for some categories than others–a 2014 Scratch/Viacom study found that 71% of Millennials would rather go to the dentist than listen to what their banks are saying! If people would rather get a cavity filled than listen to your brand, it’s a good bet your content and social media marketing faces a profound uphill challenge.

Where Social Media Marketing Works

Some brands have an overlap between these two circles of the Earned Media Venn Diagram; most do not. There are three types of companies that have this “magic intersection” between content that helps the brand and that consumers want:

  • Brands in select verticals:  Some categories have built-in consumer interest. For example, sports brands can easily post content that drives engagement and also increases demand for team attire and products. TV shows and movies have an easy time offering content fans will share that also increases ratings and box office receipts. Style brands are another example–in the same way that women eagerly purchase the September issue of Vogue with its 631(!) pages of ads, so too will style-conscious women pay attention to and share the latest pins and posts from their favorite fashion brands. Brands in select verticals enjoy a magic intersection between the content consumers want and the content that drives consideration and sales.
      
  • Brands with purpose:  Consumers may have little interest in what banks have to say, but that does not stop USAA from delivering great engagement and inbound traffic with its posts. This is because USAA has created a brand with a purpose that resonates with its audience. Another example is Chipotle, which has outperformed other brands in the restaurant industry by promoting its commitment to more locally- and organically-sourced ingredients. (Just last quarter, Chipotle delivered a same-store sales increase of 17% in a vertical where almost no brands are able to achieve half that.)
      
  • Brands with better products and services:  Of course, there is always the old-fashioned way of encouraging attention from consumers: Be better than the competition! Apple has no official company profile on either Facebook or Twitter, yet it still beats Samsung when it comes to building buzz. Both companies had product unveilings in early September (Samsung for the new Note and Apple for the iPhone 6), yet despite the fact Samsung has 2,350% more fans, followers and subscribers on Facebook, Twitter and YouTube, Apple still delivered far more Word of Mouth about their event and product. Apple does not need social profiles and content to drive WOM; it just needs to continue producing interesting, innovative products that get fans talking.
      

Some companies can publish content that consumers want and delivers on marketing goals, but most brands simply do not have that same opportunity–they have no “magic intersection.” This does not stop them from trying, of course, which is why so many brands stumble with unwelcome, heavy-handed, embarrassing, brand-damaging posts on Facebook and Twitter. 

We entered the social media era suggesting that brands with something to say could use social media to say it; instead, we today have brands with little to say that nonetheless post 4.3 times per day because some consultant told them this was a best practice. Desperate for attention and relevance, these companies continue to invest in content that is delivering neither the scale marketers need nor the content consumers want.

Ironically, even for the best companies, earned media may wither and die in the coming years. In just six months, organic reach on Facebook was halved, and many expect that zero organic reach will soon be the rule on the social network that collects 57% of all social visits. The organic reach game has gotten so tough that Coca-Cola, one of the strongest brands in the world, only earns engagement with 1 in 100,000 of its fans on Facebook. The situation on Twitter is no better; a recent Forrester report notes that the average engagement rate with brand posts on Twitter is just 0.03%–75% less than banner ad clickthough rates today!

Earned media could soon be a thing of the past. What happens to your social media marketing strategies if the content you create and post reaches no one?

Social Media Marketing’s Inability to Deliver Trust, Acquisition or Purchase Conversions

If the prospect of organic reach crumbling to nothing is not enough to worry about, social media marketing has a variety of other problems that marketers have been ignoring: 

  • Trust: Forrester’s 2014 data reveals that people trust brand social media posts 40% less than they do information on brand websites (and, of course, 70% less than recommendations from family and friends). Adobe’s 2013 research found the same–just 2% of US consumers found company social media page best for credibility compared to 17% for company web sites (and 59% for friends, family and coworkers.)
      
  • Acquisition of prospects: Although many marketers continue to view fans and followers as prospects, the Adobe study found that consumers are three times more likely to follow brands from which they already buy than brands from which they aspire to buy. An even more damning study comes from Custora: Studying data from 86 retailers and 72 million customers, Custora found that Facebook and Twitter deliver essentially zero acquisition. While acquisition is best delivered by organic search (16%), CPC (10%) and email (7%), Facebook and Twitter account for just 0.2% and 0.01% respectively. Furthermore, the Customer Lifetime Value delivered by those acquired through Facebook was just average while Twitter was 23% below average.
      
  • Purchase: An IBM study of the online sales generated by 800 retailer websites the week before Black Friday 2013 found that a mere 1% of those sales were generated from social media traffic, essentially unchanged from the year prior. And Monetate recently published its Q2 Ecommerce Quarterly based on 7 billion online shopping experiences–it found that social delivers an add-to-cart rate of just 0.6% (70% less than search), a minuscule conversion rate of 0.12% (70% lower than search) and an average revenue per session of $0.14 (yes, 70% less than search.)

If social media is so poorly equipped to deliver trust, traffic, acquisition and purchases–and is facing declining organic reach–why are marketers increasing their investment in the channel? These are, after all, the metrics that most marketers care about. In a 2013 study by Ascend2, both B2B and B2C marketers reported their top three most common performance metrics are website traffic, quantity of sales leads and conversions–goals against which social media does not deliver. Meanwhile, fewer than half of B2B and B2C marketers measure customer retention, awareness or reputation, which are metrics that align well to social media strategy.

But if social media is poorly matched to Marketing Department objectives, it remains a powerful opportunity for others in the enterprise who do not need to rely on reach and scale to deliver on their goals.  For example, The PR/Corporate Communications function can be successful if it uses social media to create relationships with a few dozen influencers, both traditional ones (journalists) and the new variety (bloggers). Product Development does not need to collaborate with tens of thousands of customers but can work collaboratively to develop new products and services with much smaller subsets of customers and vendors. And Customer Care can achieve success by answering the questions and complaints of a few hundred people in social channels. (Compare that to the average marketing campaign, which would be considered a dismal failure if it only engaged a few hundred people.)

Social Media Marketing on a Collision Course with C-Suite Expectations

For now, CMOs seem to have confidence in social media, but I believe this will change in the next year or two. Social media and content marketing is on a collision course with the C suite.

Recent research by the Fournaise Marketing Group, which was conducted with 1200 CEOs and CMOs, found that 80% of CEOs claim they have lost trust in their marketers. One of the reasons is that “74% of CEOs think Marketers focus too much on the latest marketing trends such as social media – but can rarely demonstrate how these trends will help them generate more business for the company.”

This criticism is, sadly, entirely fair. In just-released data from the 2014 CMO Survey, derived from 351 top US marketers, a mere 15% of CMOs say they have proven the impact of social media quantitatively. Another 40% “have a good qualitative sense of the impact, but not a quantitative impact” and a whopping 45% have “not been able to show the impact yet.” Despite this, CMOs expect to increase social media marketing spending 128% in the next five years. 

If you wonder why the tenure of CMOs is so short compared to the rest of the C-suite, the answer is right there. Less than one in six CMOs know if their social media investments are paying off, yet they still intend to rapidly double that investment!

I predict that increase will not happen. The falling organic reach, low acquisition, microscopic purchase conversion and inability to measure quantitative success will come crashing headlong into the growing pressure on the Marketing Department to demonstrate results. When this collision occurs, will you be the one holding the social media marketing bag? If your career depends on the success of social media or content marketing, now is the time to consider the data, trends and future.

How to Protect Your Social Media Marketing Career

For those in the social media marketing profession, I believe the time has come for a candid assessment. Protect your career by asking three questions:

  • Does your brand have a “magic intersection”? Are you in one of those categories–such as entertainment, sports and style–that has built-in consumer demand for branded content? Or has your company won high levels of loyalty and advocacy with its sense of purpose or by producing products and services that are leaps and bounds better than your competitors? If so, then social media marketing can be an effective channel for the Marketing Department, but if not, then ask…
     
  • Does your firm evaluate its Marketing spend based on reputation and loyalty? When marketing leaders furnish updates, do they lead with Net Promoter Score and measures of repurchase and reputation? Or do they lead with sales, conversions, acquisition and traffic data?  If the former, then social is well aligned to what the organization most cares about, but if it is the latter, then ask one last question….
      
  • Can you control the paid media budget for social? If you can control the ad budget and are really held more accountable for delivering paid media than earned media, then your job is secure (provided you are doing it well). If, however, the ad budget is controlled elsewhere and your job is dedicated solely to content and earned media, I would suggest you have career challenges ahead. It may time to consider one of three options:
  • Redirect: If your social media scorecard is full of non-marketing metrics such as likes, retweets and number of fans, then the time has come for you to lead a change. Do not wait until Marketing leadership begins to question how those useless social metrics tie to Marketing objectives; take the lead and start that conversation today. You may be able to change the conversation and redirect expectations toward the sorts of metrics on which social can realistically deliver.
      
  • Detour: It may be time to consider social media opportunities outside of the Marketing Department. While social may not deliver on typical marketing goals, it certainly aligns well to the needs and expectations of Public Relations, Customer Care, Product Development, Sales and others parts of the organization.
     
  • Exit: Or perhaps it is time to exit social media altogether and consider other career paths where your experience in customer-centricity and innovation can be of great value. In recent years, I have seen social media professionals successfully shift into new careers in Customer Experience, mobile and customer care, for example.

Of course, if your career is in social media marketing, you could choose the fourth option and bury your head into the sand. I hope you will not, because the data is consistent, the trends are in place and the questions about social media marketing effectiveness are only going to rise.

Below is my deck. I welcome your feedback, questions and challenges. 

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