In this guest post from SXSW, Douglas Nicol says that for all the hype around social media, too few people are asking the hard questions.
It was a slightly awkward moment. We are assembled at SXSW, arguably the worlds leading interactive conference and birthplace of Twitter and Foursquare. We are listening to top social media marketers from some of the biggest brands in the country: PepsiCo, General Mills and Samsung. There is standing room only.
The session is called ‘Marketing budgets have gone social – is it working?’ The marketers spent most of the session talking about what they do rather than the ‘is it working?’ topic. There was some mutual backslapping around the fact that social media budgets have grown on average 30% this year. Then someone goes and spoils the fun and asks how they all measure the sales impact of their activities.
There was lots of shuffling of papers and anecdotes but then an admission that they don’t know. That’s right – by and large they don’t know if social media is driving sales for their brand. They think it is.
The problem is that social media has become a sort of crack cocaine habit for some marketers – with an obsessive focus on pushing random consumers to rack up as many Like’s and Followers for their brands as possible.
Building Followers on Twitter is not difficult – you just buy them through promoted tweet or trends. But is that where the social media strategy ends? For the majority of brands that’s precisely where it ends. And many senior marketers are happy with this, because size seems to be the only thing that counts in social media.
One of the speakers, Julie Hamp, Senior VP of marketing at PepsiCo believes that “if you don’t have social media scar tissue, you probably aren’t trying hard enough”. In other words go out and make some mistakes. She is responsible for the high profile ‘Pepsi Refresh’ social media program.
In 2010, Pepsi Refresh gave out more than a million dollars in grants each month, for great, ‘refreshing’ ideas in categories like Arts & Music, Communities, and Education. Ideas are posted on the site and Americans vote on which ideas they like best. Voting happens through all the major social media platforms to decide how the grants are distributed – in 2010 some 87 million votes were cast. No evidence was offered as to how the program moved brand preference or sales.
Sometimes the evangelists claim that social media ROI comes through listening and understanding customers better –a kind of new age research group with unfiltered feedback. This idea is seriously on the nose at this years’ SXSW. The problem is that the typical social media sample is massively biased to extreme lovers or haters of a brand whereas in fact marketing opportunity lies in understanding the middle ground of consumers who feel neutral about a brand.
The clearest real world evidence of social media ROI sits outside the marketing department in customer service – US brands like Comcast have reduced costs and improved customer access using platforms like twitter.
Many marketers now have a smart looking social media dashboard report, jam-packed with engagement metrics but few that link to sales. Part of the problem is allocating a meaningful dollar value to a given engagement – a vote, a recommendation or feedback. The other part is tracking the consumer through to sale.
Recent US research from Altimeter shows that in the US, 66% of marketers only use social media engagement metrics to measure the success of social media investment. Just 22% measure actual conversion to sales (typically because this type of sale is linked to an on line transaction such as an e commerce purchase).
If social media is about building relationships we need to move beyond one off engagement metrics to a more holistic measure of how social media grows the customer relationship. There are some potential solutions like using the Net Promoter Score system or better integration with CRM systems, both of which create a link back to company revenue and sales
It is clear that despite all the hype (and there is plenty at SXSW) marketers continue to struggle with social media ROI, relying on anecdote and case studies rather than real data.
Social media is out of the incubator in 2011 and if we don’t crack the code with a more ambitious ROI measure soon, we will never move beyond fluff and puffery.