December 30, 2014

2014's Most Popular Post

Continuing our blessed vacation from blogging, today is the last post of 2014. It was the most popular post (by viewership) of the past year. It was a two part post entitled "The Slow Painful Collapse Of The Social Media Fantasy."

Part 1

It was going to change business forever. It was going to make traditional advertising irrelevant. It was going to revolutionize marketing.

It was social media marketing. And it's been the biggest disappointment since the NFL hired referees.

While advocates for social media still cling to the wreckage of "the conversation" and continue to hound us with apocryphal tales of social media magic, dispassionate observers are starting to realize what a delusion the whole theory of social media marketing has been.

The idea that consumers were enthusiastic about having conversations about brands online, and they would activate their network of friends and followers to share their enthusiasms and create a socially transmitted tsunami of sales has proven to be deeply fanciful.

It turns out that the average consumer has a lot more on her mind than conducting online conversations about fabric softener. And the ones that do seem to have no ability to generate enthusiasm in others.

While people with a financial or ideological stake in social media continue to propagate the fantasy, those annoying, troublesome things called facts keep popping up to undermine their careless assertions.

The first crack in the wall came in 2011 when the largest, boldest experiment in social media marketing ever attempted -- the Pepsi Refresh Project -- was exposed as a nasty failure that seems to have cost the brand 5% of its market share, which it has never recovered.

Then in September of 2012, Forrester Research reported that...
"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..."
A few months later, a story in The Wall Street Journal reported on a study IBM had done on the effect of social media on Black Friday sales. While sales were great, the social media contribution to sales were essentially nonexistent.

IBM reported...
Shoppers referred from Social Networks such as Facebook, Twitter, LinkedIn and YouTube generated .34 percent of all online sales on Black Friday, a decrease of more than 35 percent from 2011.
The Journal commented...
"...there’s one notable under-performer in the online shopping frenzy: social media."
But perhaps the most damning report on the negligible influence that social media marketing has on sales was issued a few days ago by McKinsey & Company.

This sentence from the report says it all:
“Email remains a more effective way to acquire customers than social media - nearly 40 times that of Facebook and Twitter combined."
We're talking about email here, not the Super Bowl. Email 40 times more effective than Facebook and Twitter combined? Now that's frightening.

The social media fantasy is in a death spiral. Social media marketing is no longer taken seriously as a sales builder by anyone with a functioning cortex.

Social media marketing will continue to be strangely popular and sporadically effective in some small niche categories.

But when it comes to serious brands, in the vast majority of cases it is evolving into just another cost of doing business.

Part 2

It seems like only yesterday we couldn’t turn on the TV, open a magazine, or go to a website without someone exhorting us to “join the conversation.”

“The conversation” was the physical manifestation of the marketing industry’s fascination with social media. The idea was that people were highly interested in our brands and would be eager to chat and share their enthusiasms on line with other people.

The philosophical seeds of this conviction were planted in the mid-1990’s when it was postulated that the “interruption model” of advertising had run its course. 

The theory went something like this: consumers were no longer responsive to advertising messages like TV spots, radio spots, and magazine ads which interrupted their activities. Instead, marketing was transitioning into a period in which the “permission model” would dominate.

The “permission model” posited that in order to be effective, marketers had to stop bothering people with advertising, and instead gain their permission to market to them.

The way you got permission was to engage consumers with useful, interesting messages (currently known as “content”) that gave consumers value instead of sales pitches. If you did this, they would trust you, like you better, and permit you to market directly to them. In marketing terminology, they would “opt in” to your marketing programs.

Best of all, they would share their passion for your brand with their network of friends and followers who would, likewise, share with their network. A multiplier effect would be born.

There was only one problem with this wonderful proposition. It misinterpreted consumer behavior by substantially overestimating consumers’ fervor for brands, and concomitantly misjudging consumers’ inclination to share their presumed fervor.

Believers in this ideology assumed that a person's use of a product was a demonstration of enthusiasm for the brand. Sadly, in the vast majority of cases, it is merely an indication of habit, convenience, or mild satisfaction. It is not proof of devotion or enthusiasm.
Regardless of the time, energy and money we spend “differentiating” our brands, most people see very little difference between our brand and our closest competitors. While there are some brands that people do have great loyalty to, and some categories that people are truly interested in, these are the rare exceptions. In most cases people will change brands with very little bother if it turns out to be convenient or otherwise beneficial.

Most people will gladly switch from Skippy to Jif if they can save a buck or two. If the ballpark doesn’t serve Coke, most people will happily return to their seats with a Pepsi. 

The idea that social media would become a channel in which consumers would share their strong enthusiasms by having “conversations about brands” has turned out to be largely a delusion.

Most brands are finding that their social media programs are more time-consuming, more expensive, and less capable of driving sales growth than was promised. Consequently, they are abandoning the “permission model” and reverting to the “interruption model” in their online advertising.

You can see this most clearly on Facebook. Facebook calls itself a social medium, but its advertising model is good old-fashioned paid advertising plastered all over the page. Compare the number of paid ads you see on your Facebook page with the number of "conversations about brands." 

YouTube calls itself a social medium but it sticks pre-roll (mostly recycled TV spots) everywhere it can. 

The reason is clear: marketers are finding that they can get more value out of these websites by treating them as avenues for advertising, not conversations.
And, just a reminder, Facebook, YouTube, Twitter, etc., don't make money from us having conversations about yogurt. They make money the old-fashioned way -- they sell ad space.

Social media are quickly evolving into just another channel for delivering traditional interruptive advertising.

It is also not surprising that the social media lobby has learned another lesson from traditional paid advertising. When you point out to them that they're not very good at generating sales, they default to the universal excuse for failed advertising -- it's not about sales, it's about branding. Whatever the hell that means. 

Social media is not going to die or go away. It will continue to grow. But the fantasy of consumers having conversations about brands and sharing their passion for brands -- and the claim that this will replace or surpass traditional paid advertising -- is simply collapsing as the evidence rolls in.

The “conversation” was a nice idea. It would be lovely if consumers were as eager to share their enthusiasm for our brands as we are. Sadly, they have other things on their minds.

It turns out that “the conversation” has been mostly a monologue.


Ed said...

Social media embodies everything that is wrong about some marketing directors; the unshakable belief that people (or consumers as they call us) give the smallest f*ck about their brand of butter or whatever...and nothing, other than free stuff, is going to get them to 'like' it. Puke puke puke.

mikejames said...

A round of applause for your post.Much thanks again. Will read on...

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