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Social media marketing and ROI. The debate continues…

Last week I read an interesting post from journalist and online commentator, Helen Leggatt, entitled ‘Is social media failing as a marketing medium?’. The report, which draws on a press release from Knowledge Networks, continues the ongoing debate about social media and concerns from many in business that it’s still failing to deliver a real return on investment (ROI).

The original press release and Helen’s report at first seems to have some pretty compelling evidence; under 5% of social media users refer to social media in making purchasing decisions across a number of purchase categories ranging from travel to banking. However, on closer inspection of the study there are a number of factors which make this report less substantial than it may at first appear.

‘Social Media Users’

Starting at the beginning, the report is based around a study conducted by Knowledge Networks as part of their Home Technology Monitor and draws on one specific question asked to just 418 respondents considered to be ‘social media users’. These users are defined for the purposes of this study as:

“those who ever use any of 27 pre-specified websites commonly categorized as social media sites, or those who have used social media features on other websites that are not primarily social media sites.”

Now this may seem like a fair definition of a ‘social media user’ in general, but looking at the list of 27 pre-specified websites it is clear that the majority of the sites named are more akin to ‘social networks’ than they are ‘social media’. And secondly categorising those ‘who have ever used’ those sites as ‘social media users’ seems a little weak at best.

Any company investing time and other resources to implementing a properly researched social media strategy will know that success in social media does not come from social networks alone. A lot of social media activities rely on engaging content which may be hosted across a series of websites or blogs. This content may not be immediately apparent as a form of ‘social media’ to the consumer; however, they are right there at the core of the social media activity being carried out.

Social media users come in all shapes and sizes. Some will be evangelists spending every waking moment connected to the web, whereas others just dabble with it, spending ten minutes a week corresponding with their friends. To lump all these groups together as one only serves to water down the research and skew the data.

‘Refer’ to Social Media

The question used to compile the research read as follows:

“How often do you refer to social media websites or features as a resource for information, reviews, or recommendations when in the market for [category]?” Categories on offer to participants included: Travel, Banking, Clothes, Groceries, Restaurants and Cars.

In both the original release and Helen’s report, they headlined with the fact that under 5% in each category, stated that they ‘regularly’ refer to ‘social media’ when making the decision. However, what they fail to highlight is that this number doubles for the answer ‘sometimes’ with percentages ranging between 10% for Prescription and OTC Drugs purchases and 24% for Travel and Travel Services.

What’s more, the question fails to recognise that many consumers may have been influenced by recommendations, reviews and information over social media in the days, weeks or months leading up to their decision. These consumers may not actively ‘refer’ to social media in making their decisions; however, there is still a link between social media and their purchase that needs consideration.

In the same way that many consumers will not make purchases off the back of one display ad alone, the brand awareness created by a series of ads and the company’s wider advertising or branding leads the consumer into making the all important purchase.

(Also, what about the benefits of increased traffic to the websites used to purchase products?)

The Results

Looking at the age banding and categories employed in the results, it seems a little odd that Knowledge Networks felt it best to display the results for one wide age category of 13-54 year olds.

Would it not have been more interesting to look for trends amongst particular age groups and particular categories? After all it would be natural to assume that younger ages would place more trust in friends’ recommendations over social networks than their older counterparts.

Would it also not be likely that some ages would use social media to differing degrees depending on the purchasing decision to be made, and furthermore that each age group in each category may behave differently? For example, younger people may look more to social media for clothes or shoe purchasing decisions, whereas older groups may prefer to review banking or travel arrangements.

By lumping all the data together in one set, Knowledge Networks have missed a real opportunity to understand how those using social media actually refer to social media in making their purchasing decisions. As such, we are left with some pretty bland and misleading figures.

Return on Investment?

In reality this study has very little to do with the return on investment from social media. It focuses on one very small element of the potential returns.

There are plenty of examples of companies who have used the platforms available to achieve tangible business success. Below are links to two great examples of social media ROI and the Groundswell Awards Winners list which includes a number of great case studies along the same lines.

Twitter Proves Its Worth as a Killer App for Local Businesses

Case Study: ROI of Social Media Campaign for SeaWorld San Antonio – A Year Later

2008 Forrester Groundswell Awards Winners

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About the Author

I’m fascinated by how a company or organisation can change its fortunes and even undergo a transformation by looking at a challenge in a different way and by behaving in different ways.

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