A few weeks ago, Mark Cuban caught dissension from all over the Internet for calling Facebook a “Time Waster”. The purpose of this article is to point out the simple fact that for Businesses, he could not have been more correct. If you run a business, and you are looking to make money through driving people from Facebook to your products or services, Facebook is very likely not in any way worth the amount of time or expense required.
IBM has released a couple of reports that are positively devastating to the notion of Social Media as a platform for driving commerce. The IBM Digital Analytics Benchmarks Social Summary metrics for “Black Friday” and “Cyber Monday” should be enough to put to bed the misguided idea that advertising on Social Media platforms is an effective strategy for driving sales.
On this recent 2012 Black Friday, Online Sales grew 20.7% from last year. Online Sales on Cyber Monday grew by 30.3%. Those numbers represents HUGE growth in the Online space. Within those numbers however, Social Media overall was responsible for 0.34% of Online sales on Black Friday. Allow me rephrase this in case your glasses fogged over? Social Media was responsible for one third of 1% of Online sales on Black Friday. Do not despair however, because on the following Cyber Monday, Social Media represented a whopping 0.41% of Online sales, or less than half of 1% of overall Online sales.
Okay, so you say Social Media has not been around for a while and it will take time for Social Media to grow into a viable selling platform. Well, guess what, Bunkie? Those numbers I quoted above? For Black Friday, they represent a more than 35% DECREASE from last year. For Cyber Monday, the news is not as bad, but those numbers represent a more than 26% DECREASE from last year as well. It is an undeniable conclusion that sales via Social Media are in declinefrom already infinitesimal numbers, compared to other Online sales options.
UPDATE: Because of the overwhelming response to this article, we at TekPersona decided to conduct a discussion of this topic in a Google+ Hangout. If you have not read the article, please do, then watch the video, where we drill down on this topic with some of our TekPersona partners.
In 2011, Google, through its AdWords advertising service represented 9% of all Online ads on the Internet. CTR (Click Through Rates) on ads on Google resulted in sales revenue to the tune of 36.4 Billion Dollars. In 2011, Facebook represented 17.1% of Online Advertising. Facebook Ad revenue in 2011 returned 3.7 Billion dollars. Again, allow me to summarize. Facebook advertisements almost doubled those of Google in 2011. Facebook revenue from advertisements was barely one tenth that of Google.
So, why did Google make 10 times as much as Facebook last year on just over half as many advertisements? The answer is “Commercial Intent”. When people are shopping, they have what is called Commercial Intent, which means they are looking for something they want to purchase. It is no different from back in the days of searching through the Yellow Pages for a business that is selling what you are interested in buying. Your Commercial Intent is to find those who provide what you are looking for.
Commercial Intent does not exist on Social Media, because the overwhelming percentage of its users is not there for shopping. They are there for the purpose of conversation and interaction with others. Bradley Horowitz, the Google VP in charge of Google+ recently likened an advertisement on Facebook to a man wearing a Sandwich sign walking up to a couple of people having a conversation on a sidewalk. The advertisement is an unwelcome interruption.
Only on rare occasions will someone welcome something that interrupts him or her to the point of interest. It is usually an accidental reminder of Commercial Intent, not initiated by the potential buyer. Facebook and its advertisements have the burden of convincing, or reminding a viewer to the point of interest. When someone performs a search for an item on Google, the commercial intent already exists. Hence, ads placed next to high ranking sites which offer what the searcher is looking for have a much higher likelihood of influencing conversion of the searcher into a customer.
Facebook claims 500M active users per month out of a total user base of over 1 Billion people. These numbers are the reason that so many businesses are attracted to place ads on Facebook. The potential for reaching this size of an audience rarely exists. By comparison, in 2011 Google averaged 4.7 Billion search queries…PER DAY. (math is hard)
The largest potential audience for persons with Commercial Intent is obviously resident at Google. So, why are more ads purchased on Facebook, than on Google? One reason: the so-called “Social Media Expert”.
There are very few of these persons willing to discuss the efficacy of an ad placed on Facebook, and the likelihood of a customer conversion resulting from same. Make no mistake, there are many businesses making money from their Facebook presence, through a systematic approach of advertising to a curated audience of relevant Facebook friends.
The drawback to this approach, is that Facebook is now charging (some say penalizing) businesses to communicate with the very audiences they worked hard to build. Unless a business is willing to pay a fee based upon the number of followers, it is limited to communicating with between only 5 to 15% of their curated audience. Not only that, the members of that limited group are selected not by the business, but by Facebook. The algorithm for this determination is called “Edge Rank”. That’s right, businesses cannot relay customized messages to targeted segments they define themselves.
In my opinion, this practice represents a total “Bait and Switch” approach to Social Media, in addition to a conflict of Interest. A business on Facebook is no longer working only for their interests, but Facebook’s, in that the more users a business attracts, the more they must pay Facebook to communicate with that audience in full.
What the IBM report suggests, is what many of the so-called Social Media Experts claim (as opposed to actual Sales and Marketing professionals) about the efficacy for driving sales via Social Media is at best a misnomer, and at worst an excursion through a field of Bovine Excrement.
The true value of Social Media is in that it provides a very effective forum for both Corporate (business) and Personal Branding. Through a presence on forums like Facebook, Google+, Twitter and others, the opportunity exists to build trust, subject authority and a reputation for problem solving. This trusted reputation is the essence of a Brand. A positive review of a business posted on Social Media is more valuable than 100 advertisements. A posted endorsement from other trusted authorities is near priceless, for it cannot be purchased, but only earned.
One of the things we remind our clients at TekPersona, is that nobody buys anything of true value from a stranger, except for gasoline and gummi bears. Social Media serves the invaluable purpose of turning strangers into acquaintances, acquaintances into an audience and only THEN, an audience into potential customers. It takes time, it weeds out the phonies, and the fly by night hucksters, because audiences are perceptive enough over time to understand who are true SME’s (subject matter experts) are and who are not.
Almost every day, I hear from my own audiences on Social Media, of their growing frustration with maintaining a profitable presence on Facebook. Their audiences are unable to hear from them, unless they pay for what they used to be able to do at no cost. Not only that, the CTR from Facebook paid advertisements are dismal.
A WordStream Report published on Business Insider in May of 2012 reported that advertisements on Google have proven to be almost eight times more likely to result in a click-through than an advertisement on Facebook. The numbers do not lie. This year, the CRT for an advertisement on Facebook in Q1 averaged 0.051%. Did I stutter? Is there a planet in the universe where that number does NOT suck?
The first question to ask any so-called Social Media Expert advising a business to advertise on Facebook, is whether they are aware of the current CTR, and what benefit to their business is to be gained for paying for that level of performance. Make no mistake; we believe that most businesses can benefit from a presence on Facebook, but not for the purpose of conversion to sale advertisements. We believe that Facebook ads are a colossal waste of time and money, which would be better spent on a well-thought-out Google Adwords campaign.
At TekPersona, we believe that Google+ represents the best Branding opportunity for both businesses and individuals within the Social Media space. This is because every potential Branding benefit resident on Facebook is also on Google+, but Google+ provides value add for Branding that Facebook could never match. The #1 value proposition is that every public thread is indexed for the Google search engine in about 30 seconds. This provides an opportunity to provide valuable and relevant content to a potential audience inside and outside the forum. With the exception of limited Brand Page functionality, we love Google+.
Google+ is structured around an idea called “Circles” where people and businesses create interest groups related to particular subject matter. Businesses are not allowed to circle individuals from their Brand Pages, unless an individual or another business has circled them first. This provides a form of built-in screening and analytics of persons who through a circling, provide tacit permission to a business to communicate with them. Marketers, while Facebook makes it near impossible to direct customized messages to target segments, Google+ circles are not only a powerful means of defining and developing target segments but Google+ capability to engage with individual circles separately provides complete freedom to customize interactions with each group.
Google+ provides another advantage through “Authorship”, where authors of information relevant to their particular audience, can create content that connects back to their unique identity, with the author’s Google+ avatar image displayed alongside in SERPs (search engine results pages).
How often have you read an article that you might have already seen elsewhere under a different name? Google+ is taking steps to prevent plagiarists and screen scraper websites from taking credit for the work of others. The SEO (Search Engine Optimization) benefits to a Google+ user are too extensive to detail in this article, except to point out that they do not exist on Facebook.
When combined with the Social Media Killer App called Hangouts, where up to 15 people can hold an Online video conference from their desktops, laptops or wireless phone, from most anywhere in the world, for business meetings, presentations, training classes, or town hall meetings, you have a box of branding tools unmatched anywhere else on the Internet. Note: you can also include telephone-only participants with others who have video access.
In an interview conducted a couple of days ago, Bradley Horowitz of Google stopped just short of saying that advertisements would never exist upon the pages of Google+, pretty much for the reasons stated in this article.
If you are an advertiser of products or services from your business, it is my professional opinion that to place advertisements on Facebook, rather than Google Adwords is a waste of both time and money. Social Media Consultants are making a killing advising businesses to do just that. Some businesses make money, even enough for the fees attached to reaching their audiences are figured in. We believe this to be an unnecessary burden, when Google has proved to be more effective to a larger audience through search conducted from within a state of Commercial Intent.
Because it is 100% free for business to build and communicate with their audiences on Google+, while using tools better able to help a business establish and communicate information to a targeted audience under their own control, we believe that Facebook advertisements are a practice of the past, while the future of Google Adwords appears unlimited.