This is my current advice on social media to consumer brand owners. Use social media as research (into media), but you can’t justify it as part of your advertising budget.
Key to my position is that currently very little is known about the effectiveness of advertising using social media. There are a few success stories, but success stories always get a lot of attention (while the (many more) disappointing case studies are swept under the carpet) and many of the people promoting these have a vested interest. There are plenty of social media marketing zealots, who say ridiculous things like “TV advertising is dead”.
Just because successful companies are doing it does not make social media marketing effective. The Roman Army, which was very successful in its day, used to consult pecking chickens before deciding when to go into battle. My guess is that the way the chickens pecked had little or nothing to do with their success!
Also it’s worth noting that successful companies like Apple have practically no FaceBook presence – I guess Apple don’t see it as an advertising medium. Instead they use TV, print and outdoor.
Marketing science tells us that brands need to reach all category buyers over and over. This is what makes media like TV so valuable, it is vast and fast – delivering a lot of reach quickly, at low cost per contact. Also media like TV, radio and print offer us very reliable, trustworthy metrics.
When we carefully look at social media we see that it is highly fragmented (e.g. the typical tweet only reaches about a dozen people). It’s impossible for a campaign to be guaranteed reach. We just have to pray that we “go viral”. Few brands have more than 1 million Facebook ‘fans’ globally. The Sunday Mail, in Adelaide alone, can deliver that sort of audience! Or any moderately rating show on Australian TV.
Also we know very little about how viewers consume advertisements within Social Media. Do they even see them (when they are concentrating on talking to their friends) ?
So there is much research to be done – which we are doing in the Ehrenberg-Bass Institute.
I also encourage companies to do small experiments with social media, to learn something. That’s why I say it should be part of the research budget, not the media budget.
If we were looking at Social Media purely as an option for our advertising budget then most firms would conclude it is not a viable option. So it can only be justified from a business perspective if we are using it purely to learn about this new media – so that we know what it might be useful for our brand in the future (if at all).
Professor Byron Sharp (March 2011)
PS That means firms who are using social media need to have careful experimental designs in place. The expenditure should be planned by the research department (not the marketing team) and preferably with academic advice because it is really easy to muck up an experiment and waste money learning nothing.