October 25, 2012

Social Media Effect: "Barely Negligible"

If you're in the business of selling stuff, according to one big-time research firm social media marketing is a waste of your time and money.

Forrester Research has released a report recently that concludes...
"Social tactics are not meaningful sales drivers. While the hype around social networks as a driver of influence in eCommerce continues to capture the attention of online executives, the truth is that social continues to struggle and registers as a barely negligible source of sales for either new or repeat buyers. In fact, fewer than 1% of transactions for both new and repeat shoppers could be traced back to trackable social links." 
Now think about this for a minute. This study is about the influence of online social media on online sales. If the influence on online sales is "barely negligible" can you imagine the influence on traditional retail sales (which account for about 94% of everything sold?) What's below barely negligible? Strongly negligible?

The study goes on to say...
 “The reality is that even the most popular social image-sharing sites (like Pinterest) have failed to move the needle with respect to sales for most retail sites.” 
To tell you the truth, even I was a little shocked reading about this study. There aren't too many people in the ad world who are more skeptical about the magical power of social media marketing than I am. But I thought the truth probably fell somewhere between "magic" and "barely negligible."

According to a piece about this study in Marketing...
As a direct source of sales, web marketing mainstays of search and email continue to be the most fruitful... 
Hmmm...seems to me I've read something like this somewhere before. Oh yeah, it was in The Ad Contrarian over two years ago...
"It is true that there's data to support the effectiveness of two types of online advertising: search and email. But is that it?"
It's starting to look more and more like the answer is... yes. That's about it.


Geoff said...

Let me start by saying that after being bitchy about your Google/sneakiness posts, I really appreciate this post.

But a thought has been provoked.

I think the research measured the wrong thing. "Trackable social links" would mean they clicked on a link in Pinterest and bought something.

Isn't that a bit like measuring the number of people who bring a magazine ad into JC Penney and say "Gimme this outfit"?

To create a level playing field when measuring the efficacy of the marketing, you'd need to measure awareness.

Thiago Carvalho said...

Hello, Bob, and compliments from a reader from Brazil. I've just read this article about another dirty move from facebook and thought you might like it.

Amazes me how desperate these guys are to make money since FB's IPO.

Cheers and congratulations on the blog.

Chuck Nyren said...

Great last two posts.

I've been screaming about it all since 1995 when the whole Word-of-Mouth marketing B.S. was beginning. Citizen Marketers. What happened to them?

From a 2006 post:

When it all comes out in the wash, WOMM will be the best thing to happen to (silly retronym ahead) traditional advertising. Pretty soon, consumers won't believe anybody - even their best friends. They'll realize that they receive the most honest and straightforward information about a product or service from a TV commercial, print ad, or product web site. At least we don't lie about who we are and why we're saying what we're saying.

Anonymous said...


wtf is awareness and how do you measure it?

HiSpekShop24 Online Shopping said...

WONDERFUL Post. Thanks for sharing.

Geoff said...

OK, I got a different way to phrase my question:

Why is the Red Bull sponsorship of Felix Baumgartner parachute drop seen as brilliant marketing but sharing images on pinterest seen as a failure? They both had 0.0% immediate trackable sales.

The Czar Dictates said...

@Geoff: Who says that the Red Bull sponsorship of Baumgartner is "brilliant marketing"? Personally I was transfixed by his jump, have followed his preparations for years, and watched the live broadcast. But it didn't do anything for my likelihood of buying (or recommending) Red Bull, which I never drink and probably never will. It also did nothing for my "awareness" of Red Bull: I'm as "aware" of it as I can possibly be, thanks to its ubiquitous TV ads and its sponsorship of an F1 team. So not to be rude, but I'm going to need to see evidence that it was, or was even "seen as" brilliant marketing.

Geoff said...

@Carl: If we run the risk of being so cynical we trust nothing but absolute measurable results, we'd all be soul dead and in direct marketing running AB splits.

Pick another sponsorship if you don't like this one. NASCAR cars with logos. GoPro skiing videos. Who cares?

The point is this: things have been done for years in order to generate awareness.

It's only social media that's getting the stink eye on this blog for not being measurably direct sales oriented.

So I think it's being held to a different standard.

Terry said...

@Geoff - social media is pretending to hold itself to a different standard...one it doesn't deserve. C'mon dude.

Jeremy said...

Totally agreeing with geoff on this one.
Social media platforms are not buying platforms, they don't drive sales directly. And they never defined themselves like this (except Pinterest maybe). They are like others media. Using interruption to offers time for brands to get into consumer life. The question is how to do it properly on those new spaces.

This is the real problem to solve. Maybe you can start to think about it and give us some of your insights instead of telling us what you already know for 2 years. Don't you think?


Anonymous said...

again wtf is awearness

And they never defined themselves like this

yes they did.

red bull on a guy jumping out of space good marketing really? no.

Jeremy said...

well, as i see it awareness is a kpi for "reach and frequency" advertising models. I may be wrong.

And i don't think Facebook, in its core value proposition for users, ever define themselves as a buying platform. Ok, they've tried at one point (f-commerce). And they failed. And yeah maybe the advertising guy at facebook, because he didn't know what else to sell, may have foolishly tried, at one point, to sell you its platform as a mean for interacting and buying (your problem if you believed him).
BUT, at core, the platform has ALWAYS been a communication and information one.

I actually think there is Facebook specificity in the "how to fail with banners" plot. It doesn't work because it's banners, not because it is on Facebook.

Facebook specificity is, in my point of view, that it may be the platform where we can find, and where we are currently, and finally finding a new model for global "demand creation" online advertising. I'm not talking about the silly banners you (don't) see on the right column. But i'm talking about the native advertising stories they're pushing to you in your newsfeed. You know, this new feature they had to create for mobile advertising.
And what actually is this new model? Well it's just an interruption-based advertising model for an information/communication media. Pretty similar to the tv one actually. The type of content is just different. (facebook stories vs film)
I don't know if this thing will last, and if at one point we will have learned (as for banners) to avoid watching and seeing those "stories". But still i think the model is pretty much redifining what has to be "demand creation" online advertising in general.
One more thing is that those facebook native stories are socially contextualized. Clearly a big advantage for creating impact and capture, at least for one moment, the consumer's attention.

As for Redbull, well, i think they're were pretty good at building awareness for their brand and product? don't you think? We should at least wait for the sales data before saying that the campaign was brillant or not?