“Social media provides 3:1 return on investment”. Really???

Anyone who knows me knows better than to discuss their awesome amount of “Likes” on their business Facebook page.  I always smile and say something like “likes have never been proven to make the cash register ring.”

So I was REALLY intrigued by this headline at the marketingmagazine.co.uk website, about the ROI (return on investment) effect of social media. The article was based on a study done by the Internet Advertising Bureau (IAB) on three FMCG (fast moving consumer goods) brands.   Keep in mind that this is a British publication so the results are on brands and goods in the UK and the dollars are pounds.

Does the study really show that social media delivers £3 for every £1 invested?  Well, not really.

The IAB study

The research looked at the social media activity of Heinz, Kettle and Twinings over an eight-week period. It compared responses from consumers exposed to social media to those who weren’t. The key findings were as follows:

- Four out of five consumers would be more inclined to buy a brand more often in the future after being exposed to its social media presence

- 83% of consumers exposed to social media said they would ‘trial’ a brand’s product

- There was a 20% uplift in “sentiment” when exposed to the brands’ social media presence

The IAB’s Kristin Brewe commented, “Social media is the only channel where it’s possible for brands and consumers to have meaningful two-way conversations, making the strength of connections that much stronger.”

So, let’s cut the crap.

Problem 1: No sales data

First, and most importantly, none of this data proves a 3:1 ROI, as far as I can see. This is a massive over-claim. The research looked at what consumers claimed they would do. Whereas,  to prove ROI you would need to look at actual sales data.

Problem 2: focus on frequency, not penetration

Even the question asked about purchase intention was flawed, as it asked about purchase frequency (“4 out of 5 would be more inclined to buy more often“). However,  market share depends not on frequency, which is pretty similar across brands, but rather on penetration.

Furthermore, other research has shown that 80%+ of people ‘liking’ a brand on Facebook were already buying the brand before they liked it. So, social media is connecting mainly with people already buying the brand, not driving penetration of new users

Problem 3: limited reach

Let’s assume for a second that some of the people exposed to social media would buy the brand more. However, this positive effect will likely have a limited impact owing to the very limited reach of social media for the brands in question. Looking at the Facebook likes of the three brands in the study shows they have between 130,000 (Twinings and Kettle) and 240,000 followers (Heinz Beanz). This means a reach of between 0.25% and 0.5% of the UK adult population.

Problem 4: most of us don’t want to talk to a tea bag.  At least, I don’t.

The quote from the IAB is another example of misunderstanding what most people want from social media, especially when it comes to everyday consumer goods brands. Ms. Brewe said “social media helps create meaningful 2-way conversations.” However, as I have already written, research has shown that while 32% of marketing directors thought this is what people want from social media, only 5% of consumers agreed.

And, a look at the actual Facebook data of the brands studied in this report shows that 95%+ of people don’t, thank God, want to talk to tea bags, converse with chips, or blab to a baked bean. This is shown by the low levels of people actually interacting with the Facebook pages of the three brands.  Based on the numbers “talking about this”:

Twinings UK: 6,000 talking about this, out of 129,000 likes = 4.6%

Kettle Chips UK: 2,000 talking about this, out of 136,000 likes = 1.5%

Heinz Beanz UK: 12,000 talking about this, out of 247,000 likes = 4.5%

So… the IAB study seems to be another example of social media hype and over-claim. Thumbs up for trying to get some data, and comparing users and non-users of social media, and for doing it on everday consumer goods brands. But thumbs down for making outrageous ROI claims based on purchase intention, not sales data, and for again over stating the interest in 2-way conversations with brands.

When is the last time you’ve engaged in a lively debate about your business, product, or service?  It requires audacity and an openness to new ideas and thoughts.

Big ideas don’t come out of thin air. They come from top-notch research, valuable customer insight, and talented people working with you to exceed your expectations.

It begins with a call, a conversation to discuss your business—where it’s headed and where you want it to go. I leave you with one thought: whatever problems your business faces now, others have faced the same problems before—and overcome them.

Let’s talk about your business, your concerns, your goals and ambition, and together we will build a roadmap of effective marketing to get you there.

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One Response to ““Social media provides 3:1 return on investment”. Really???”

  1. Patricia Durkin says:

    I agree with your article. “Likes” don’t mean crap. They make people feel good that they are liked. Successful people at times are not liked but that doesn’t make them a bad person either. Bottom line in business for success is what is in the bank after all bills are paid and can you pay yourself a wage to earn a living.

    Purchase intention…. really, people use this to forecast their budgets!? I think I would be inclined to purchase a trip to the moon. Will that make rocket ship airports start popping up?

    Loved the article. Patti Durkin

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