Tag: Data

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. 

What if Everything You Know About Social Media Marketing is Wrong?

What if everything you “know” about social media marketing is wrong? What would this mean to your upcoming and current social marketing programs? Better yet, what might it mean to your job?

If you are employed in social media marketing, it is time for a healthy dose of reality followed by some serious soul searching and career planning. Some of you are lucky enough to work in the rare companies that create advocates with great products, service and mission and thus are equipped to leverage social media for marketing gain; most work at companies that have inflated their opportunities in the medium and are floundering with their social media marketing and content strategies.
Here’s the way a large number of social media professionals today go about justifying their programs, along with some recent data that may (and should) scare the hell out of you if you work in social media marketing:

  • Consumers welcome brands’ social media marketing. Untrue: A recent study by Kentico found that 68% of US consumers “mostly” or “always” ignore brand posts on every social network. A recent study of US college students by Concentric found that “nearly half stated they didn’t believe brands should be on social media or they didn’t personally follow brands” and “nearly 70% report following three or fewer brand across all social media.” A 2013 YouGov survey found that “most social media users feel negatively towards marketing strategies by companies on social media sites, with 35% saying that they often hide companies’ updates if they update too often.” And a global research study commissioned by Pitney Bowes recently found that 83% of consumers have had a bad experience with social media marketing.
     
  • Consumers find trustworthy the information shared by brands in social media. Untrue: In 2013, an Adobe study found that just 2% of US consumers felt that company social media pages were best for credibility, a figure almost 90% lower than the credibility of company websites or traditional advertising. Forrester’s recent data demonstrates that just 15% of US consumers trust the social media posts of brands, half the rate at which consumers trust information on company websites. Likewise, Nielsen recently found that ads on social networks were among the least trusted form of advertising, significantly lower than trust in ads viewed in traditional media.
  • Consumers who follow brands are interested prospects, making social an acquisition channel for brands. Untrue: The 2013 Adobe study found that more than half of consumers indicate they like brands because they already purchase from them while just than one in six US consumers indicate they like brands on Facebook because they aspire to buy from those brands. A 2013 YouGov study of UK consumers found that “the followers / likers of companies are most likely to be current customers (33%) whose primary motivation is a desire to get something in return (34%).” Digital consultancy L2 studied nearly 250 prestige brands and found that over four years, less than 0.25% of new customers had been acquired through Facebook and less than .01% from Twitter; this compares to almost 10% for paid search and 7% for email marketing. Moreover, L2 found that “customers acquired via social channels register lower lifetime value than customers acquired via search.”
      
  • Every fan and follower has value, because they reflect brand affinity and are a leading indicator of future success.  Untrue: There is no social media sacred cow more hallowed than this, yet this belief remains largely unstudied. I’ve tackled the issue twice. In 2012, I evaluated the 40 companies with the greatest Facebook fan counts that were both tracked by the American Customer Satisfaction Index (ACSI) and publicly traded. I found a modest negative correlation (-0.3) between Facebook fans and customer satisfaction and no correlation (-0.1) between Facebook fans and stock performance. I repeated a similar evaluation last month, studying the stock performance of the companies with the top 50 brand accounts on Twitter; I found the average performance of these companies was no better than the NASDAQ index and their median performance was significantly below the NASDAQ index.

    This data is supported by plenty of empirical evidence; for example, Lady Gaga’s ARTPOP saw disappointing sales despite the fact she heavily promoted the release via her Twitter profile, the fourth most popular profile on the service. Blackberry has collapsed, despite being one of the most popular brands on Twitter with 4 million followers. Dippin’ Dots declared bankruptcy mere days after collecting its 5 millionth Facebook fan. And Facebook likes were found to have little to no correlation to election results in the 2010 gubernatorial and House races. I continue to believe that fans earned authentically with the right brand purpose, products and services deliver value, but so many companies have “bought” meaningless fans with deals, discounts, sweepstakes and freebies that there is no correlation to be found between fans/followers and business outcomes.
      
  • Social Media content increases purchase intent. Untrue: While some social media content can deliver sales (see the mention of @DellOutlet in yesterday’s post), there is no evidence that the vast majority of brand content leads to any demonstrable increase in purchase behavior. The Kentico study found that 72% “never” or “hardly ever” purchase a product after hearing about it on a social network. A 2013 PwC study found that only 18% purchased a product as a result of information obtained through a social media site. This finding is similar to YouGov’s finding that just 13% of all social media users have bought something as a result of reading something on social media sites.

    None of these self-reported data points are very encouraging, but the measured data on social driving purchases is even worse. IBM tracked purchases across 800 retail sites and reported that social media drove just 1% of last year’s Black Friday online purchases. Meanwhile, Experian reports that social media sites, despite being the most popular sites on the Web, account for a mere 7.7% of all traffic to retail Websites (and Pinterest drives more traffic than either Facebook or Twitter).
       
  • Earned media is a growing way to reach consumers. Untrue: Facebook remains by leaps and bounds the place where consumers do most of their socializing (capturing 57% of all social visits according to Experian and consuming more than twice as much time as any other social site per Nielsen), but earned media on Facebook is dying. Social@Ogilvy has found that brands have suffered a 50% decline in reach in the past six months, and Facebook is warning marketers to expect further declines. Ogilvy predicts “the end of organic reach” is coming. Perhaps other social platforms will furnish better reach, but with the marketers pushing large quantities of brand content at consumers with little interest in seeing marketing in their social feeds, the recipe for success does not look encouraging. 

The time has come to start preparing for a marketing reassessment of the value of social media and earned media. While it was acceptable to experiment and make assumptions five years ago when social media was young, it is no longer tolerable (nor is it wise to your career) to believe and repeat the same tired, unfounded and incorrect notions.

Why do so many marketers believe things about social media marketing that are not supported by the data? In part, it is because an entire social media marketing industry has blossomed in the last seven years, and it is far more lucrative for this army of agencies, consultants, authors and speakers to sell marketers on earned media and content strategies than to acknowledge the woeful data or track record. As Upton Sinclair once said, “It is difficult to get a man to understand something when his salary depends on his not understanding it.”

Also, marketers tend to make the mistake of thinking their own behaviors and that of consumers are alike, but they are not. Exact Target’s 2013 study “Marketers from Mars” found that marketers were 50% more likely than consumers to like a brand on Facebook, 400% more likely to follow brands on Twitter, 100% more likely to make a purchase as a result of seeing something on Facebook and 150% more likely to have completed a purchase as a result of a tweet. Marketers have done a better job of selling themselves on the value of social media marketing than they have of selling social media users on the value of their products and services.

Not only are marketers’ social behaviors vastly different than consumers’, they also have much greater confidence in content than do consumers. In the same study, marketers and consumers were asked where their favorite companies should invest more of their marketing time and resources to improve customer loyalty. Marketers were almost 80% more likely to cite content about products and 280% more likely to see content about related topics as a driver of consumer preference.

So, is it time for marketers to dismantle their social teams and abandon their social strategies? I’ve suggested as much in the past (and I’m hardly alone in this), but I’d like to close this blog post on a (slightly) more positive note. Rather than treating the title of this post–“What if Everything You Know About Social Media Marketing is Wrong?”– as if it is rhetorical, let’s instead answer the question.

The secret to successful social media marketing–and to protecting your job–is not to bury your head in the sand, ignore the data and continue building strategies based on deeply flawed assumptions. Instead, toss out all the faulty suppositions and start from scratch.  The key to success is not to assume that social media is a marketing channel but to assume it isn’t. Watch what happens if we take that same list of unsupported beliefs and turn them on their head:

  • Consumers DO NOT welcome brands’ social media marketing:  My brand must approach customers and prospects with great respect for their time and intelligence. We should stop posting silly “like this if you’re glad it’s Friday” and “Happy National Bubble Week” posts and instead provide content and functions that are worthy of people’s time and attention.
      
  • Consumers DO NOT find trustworthy the information shared by brands in social media.  We cannot take it as a matter of fact that anything our brand shares will be found credible. Instead of investing so much in content that our brand broadcasts in social media, we should strive to give our customers a greater voice–after all, people believe each other, not brands.
      
  • Consumers who follow brands ARE NOT interested prospects, and social is a WEAK acquisition channel for brands.  My fans and followers are not prospects but are, for the most part, existing customers. Our strategies should not focus on filling the top of the funnel but on loyalty, repurchase and advocacy.
      
  • Every fan and follower DOES NOT have value, and merely having fans IS NOT a leading indicator of future success.  Our brand should not try to collect the largest fan or follower base but should target a smaller set of the right people. Rather than attract people interested in contests and sweepstakes, we should strive to engage with customers interested in our company, its mission and its products and services. A smaller fan base of more valuable consumers trumps a large fan base of disinterested people who hide, ignore or do not see our posts.
      
  • Social Media content DOES NOT increase purchase intent. A funny viral video or clever Vine may accumulate lots of likes, but if it does not drive meaningful consideration or increased purchase intent, then it is worthless marketing. We must stop settling for content that we think keeps our brands “top of mind” and instead work harder to change minds! Even more vital is that we must reconsider our metrics–social media is a relationship medium, not a direct marketing channel. Unless we care to measure results in long-term metrics such as consideration, NPS, preference and the like, we have poor alignment between our marketing investments and objectives.
      
  • Earned media IS NOT a growing way to reach consumers. In the early days of the social era, we all had high hopes for earned media, but just as consumers avoid and ignore ads in other media, so too are they escaping the reach of organic marketing content in social media. Social media marketing requires an investment in paid media, and that means we have to get much better at knowing what content and interactions deliver value (and are worth putting money behind) and what do not. 

Tossing out all the baseless assumptions makes the job of social media marketing much more difficult, but it also forces us to build stronger, better strategies from the ground up. Too many social media marketers have fallen into ruts, and this has resulted in brands vomiting a useless flow of jokey, unmemorable, indistinct and unpersuasive posts and tweets. We have to stop posting content for content’s sake and start developing strategies designed to succeed. 

The investment in social media marketing has risen over the course of years, and so have the expectations. Either we change how we approach social media strategy, or CMOs will soon change the people responsible for those strategies. 

If you assume social media is a marketing channel full of interested consumers hungry for our content and ready to purchase, then any strategy makes sense (and will almost certainly fail.) This is the path to career pain.

Social media is not a marketing channel. If you can build social strategies that are designed to triumph despite that fact, then you are on your way to securing your career in social media marketing.

But take heed: The goal of this difficult process should not merely be to determine what your brand’s marketing strategies ought to be in social media but if it should even be trying. By starting with clearheaded and factual knowledge about the difficulties, the investments required and the long-term metrics that are best aligned to social media strategies, it may lead you to determine social media is best left to others in the organization.

Whatever your decision, just make sure it is one supported in facts and not naive myths and false promises. Your brand’s future and your career depends on it. 

Four Recent Studies on the Rapid Adoption of Social Media by Financial Advisors and Investors

In the Financial Services vertical, you can still find some who think that social media is not that important–that wealthy investors and licensed financial professionals are too busy and too serious to pay attention to (much less create) tweets and posts. The time has come to look at the data and discard groundless and dangerous beliefs about social media. Here are four recent studies that demonstrate social media has a key place in FinServ strategies:

Forrester Finds a Strong Correlation Between Social Communications and Financial Advisor Payments

In his July 2012 report, “Collaborative Advice: Using Digital Touchpoints To Enhance Advisor-Client Relationships,” Forrester Vice President Bill Doyle shared data about affluent investors’ digital interactions with advisors. The study demonstrated a strong correlation between the number of times these investors interact with financial advisors in social networks and the investors’ payments for advisors’ services. The correlation between advisor payments and the number of social media interactions (0.461) was almost twice as strong as the correlation with the number of interactions in person (0.234) or by phone (0.246).

It is important to point out that correlation is not causation. Doyle’s data does not suggest that social media interactions are twice as powerful as in-person or phone interactions but that frequent interactions between affluent investors and advisors in social media are associated with greater revenue for advisors. While an advisor can interact with just one client at a time on the phone or in person, social media provides a way for advisors to reach and interact with many clients simultaneously. This study demonstrates the power of social media scale and social network relationships to financial professionals.

Accenture Finds Social Media Helps Financial Advisors Retain Clients and Increase Assets Under Management

Last Fall, Accenture surveyed 400 U.S. Financial Advisors and published “Closing the Gap: How Tech-Savvy Advisors Can Regain Investor Trust.” The research found that digital and social tools “offer Financial Advisors unprecedented opportunities for more frequent interactions with their clients, helping them forge deeper, stronger relationships.”

Among the Financial Advisors surveyed:

  • 60% have daily contact with clients through social media
  • 77% affirm that social media helps with client retention
  • 74% agree that social media helps them increase assets under management 
  • 73% say it has led to an overall increase in client interactions
  • 40% indicate they have gotten new clients through Facebook
  • 25% have developed new clients through LinkedIn
  • 21% have earned new clients through Twitter

Brunswick Group Finds Social Media Drives Investment Recommendations and Research

In its 2012 survey of 476 investment professionals (including both buy-side investors and sell-side analysts), Brunswick Group found considerable adoption of social media compared to its earlier 2010 survey. More importantly, the study found that investors are using social media to drive investment recommendations and research.

Among the findings:

  • 52% read business information postings on blogs (up from 47% in 2010) and 24% have made an investment decision or recommendation after initially sourcing information from blogs.
      
  • 30% read business information postings on micro-blog services (up from 11% in 2010); 12% of investors have made an investment decision or recommendation after sourcing information from micro-blog services (an increase of 200% since 2010).
      
  • 24% read business information postings on social networks (up from 17% in 2010), and 9% have made an investment decision or recommendation after initially sourcing info from a social network.
      
  • Investment professionals are increasingly posting and not just consuming information in social channels. In 2012, 11% said they post investment information to blogs (more than doubling since 2009), 8% post investment info to microblogs (up 50% since 2010) and 10% post investment information to social networks (doubling since 2010).
      
  • Overall, 56% of investment professionals say the role of digital and social media in the investment decision process is increasing compared to 6% who felt it was decreasing.

2012 Brunswick Investor Use of Digital and Social Media Survey from Brunswick Group

Cogent Research Finds Many Wealthy Investors Use Social Media for Finance and Investing 

In a survey of 4,000 US investors with more than $100,000 in investable assets, Cogent Research found that a growing number of affluent investors use social media specifically to help inform their personal finance and investment decisions. Among the findings:

  • About 34% of affluent investors specifically use social media such as Facebook, LinkedIn, Twitter and company blogs for personal finance and actual investing
     
  • Another 41% said they use social media and sometimes come across investment information even though that wasn’t the specific reason they went to those sites
      
  • About 36% said social-media research has caused them to reach out to their advisers to ask questions
      
  • Seven out of ten wealthy investors who use social media for investment research (which is 24% of all investors) have either have changed their relationship with an investment provider or reallocated actual investments because of something they read on social media
      
  • Even for high net worth individuals with more than $1 million in investable assets, 25% seek investment advice from social media.

While many firms are proceeding slowly and cautiously into social media, it seems many of our licensed financial professionals and our wealthy customers are adopting social media with more haste. In fact, the Accenture report notes that so many financial advisors are using social media that many are “likely flouting their firms’ current policies against this type of activity.”

Forget keeping up with the competition. Financial Service firms ought to worry more about keeping up with their own sales networks, employees and customers.

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