April 22, 2015

One Chart Demolishes Social Media Fantasy

If you're still a believer in the fantasy of social media marketing on Facebook, this chart may change your mind. It comes from Jay Baer at Convince&Convert.

While it is far from definitive, it offers us a microcosm of what is going on in social media marketing. And it suggests that the whole "conversational" theory of marketing is a cruel joke.

What the chart shows is that over a 5 month period, from October 2014 to February 2015, as Facebook's organic reach dropped dramatically, its share price increased dramatically.

I'll explain what this indicates in a second, but first let's clearly state the caveats:

1. Five months is a short period for drawing big conclusions.
2. Share price is a better indicator of market sentiment than it is of business success.

Having said that, if the chart is accurate, it strongly suggests that Facebook's success as a marketing tool is totally related to paid advertising and not at all related to "conversations about brands."

The first thing we need to understand is the meaning of "organic reach." It is the number of people who were served a post free. As you can see, according to Baer, in that 5 month period the average number of a brand's followers who were shown one of the brand's posts on Facebook dropped by half, from 12% to 6%.

Also according to Baer, that number is now often 1%. He goes on to say...
"...Facebook encouraged businesses to build and reach audiences for “free” on their platform (until that free ride ended)... Facebook has still been able to pull off the greatest Gillette scam ever (you give away the razor, and then sell the blades)."
Social media promised us "conversations" among our followers, and now only 1% of our followers are even seeing our Facebook posts.

During the same time period Facebook's share price rose almost 40%. Why? Because while clueless marketers still believe in the fantasy of Facebook social "engagement," Facebook has gone all-in on good, old-fashioned paid advertising.

By cutting organic reach to almost zero, they are not even pretending to be a social media marketing entity.

Is their conversion from a social medium to a paid advertising medium a good thing for marketers? Not according to the London School of Marketing which released a white paper this week that called marketing on Facebook "a lost cause."

According a piece on the Global Marketing Alliance website...
"...experts claim Facebook advertising is no longer a cost-effective option for marketers who are seeking to build new audiences or attract new customers...Facebook advertising has changed. For some, it has shifted from being every marketer’s dream to, quite frankly, a lost cause. "
Social media marketing is useful for ultra-high-interest products (movies, bands, celebrities) and some small brands in small categories.

For the rest of us -- as we have been saying here for years -- the idea that consumers are in love with our brands and want to have conversations or social interactions about our brands online is an infantile delusion.

The billion or so people engaged in social media want to engage with each other. Not ads, not brands, not you, not me.

Thanks to Plannersphere20 and Alistair MacLenan.

My new book -- "Marketers Are From Mars, Consumers Are From New Jersey" -- will be available at Amazon within a few weeks. Here's some promo hype.


Cecil B. DeMille said...

So I will no longer be shown a brand's post unless the brand pays Facebook for my attention. Anyone else think we should get a check once a month for actually looking at all this shit?

jaybaer said...

Thanks for the conversation, Bob. I'm not sure I fully support your conclusion, but there's no question that very few social outlets provide reliable reach to businesses in the way that email (for example) provides reliable reach. I define reliable reach as a scenario by which a business can deliver a message to a prospect or customer who has asked to hear from that business (in Facebook's case, via a "like"). We've been working with many of our corporate clients on reallocating resources from public social toward owned social where the reach is more reliable, and the interactions more fruitful. I published a slideshare about that shift yesterday: http://www.slideshare.net/jaybaer/its-time-to-own-your-social-community

bob hoffman said...

Thanks, Jay

Tim Orr said...

And then there's this, courtesy of Denny Hatch over at TargetMarketingMag.com: http://www.nytimes.com/2015/04/10/automobiles/the-gap-between-auto-dealers-and-social-media.html?_r=1 Apparently, it's costing some car dealers $275 a month and netting nuttin.

Alec Painter said...

So 1) we're supposed to directly correlate the Facebook stock price, which was growing anyways to organic reach? and 2) not at all take into account that Facebook is maybe penalizing people for fucking up their ecosystem the same way Google does (which has exponentially increased Adwords revenue)?

For someone who literally just posted about using good science, I really expected better.

bob hoffman said...

"... first let's clearly state the caveats:

1. Five months is a short period for drawing big conclusions.
2. Share price is a better indicator of market sentiment than it is of business success."

Alec Painter said...

Okay, caveat noted. I still take issue with our industry treating these updates from Facebook as putting screws to brands while the same updates from Google are lauded as a major improvement.

I see them in the same grain and sending marketers the message "If you're going to pump useless shite to our users, you're going to pay for it."

In the end, I agree with you re: conversations. Brands should be using this because they don't have a monopoly on creativity, not because they think people want to talk to them.

Mike Essex said...

Actually a ton of people see Google updates as "putting screws to brands" as you put it. Their latest update has been nicknamed "mobilegeddon" by the press. You don't get given a name like that by having updates that people love.

geoff said...

Wouldn't that be like getting a check from the post office for junk mail?
Facebook's point is that we now need to pay them to distribute our marketing. I'm not happy about this, but it's not radically different than paying my email service company to distribute my marketing blasts.

Peter W said...

I believe a great portion of the billion or so people engaged in social media don't even want to engage with each other. They want to pry on each other and mainly read what other people say, not engaging very much themselves.

john doe said...

Actually, what is happening is 1 billion people are talking and no one is listening.

PeterAndrewNolan said...

Hi Bob,
pleased to meet you. Someone sent me your presentation on linkedin.

Bob Hoffman - The Golden Age of Bullshit - Advertising Week Europe 2014

I have been building data warehouses for sales and marketing since 91. I was pleased to hear you talk about the science of advertising budgets. I basically specialise in the direct marketing area. Back in the day we were taking above the line ad money and putting it into direct mail.

Now we put it into email. Above the line advertising still has its place, as you say, it is never going away. But email is more effective. One of my projects is to build an email exchange for buyers and sellers so that we can aim emails much better.

Facebook direct ads seem to be getting better. Ads in the newsfeed seem to be getting reasonable responses but it is only a matter of time before facebook will have to give an "opt out" button that many people will press.

I look forward to catching up on your blogs. I liked your presentation because I am one of the "trouble makers" you say people should be looking for. But I can tell you this. Being a "trouble maker" brought me a lot of persecution from governments these last 7 years.

I am peter@peternolan.com if you want to talk to me directly.