Social media, social media marketing, and social networking have been the subject of much hype, buzz and marketing budget disruption for big and small business alike.
Most businesses entered into social media marketing as a defensive strategy because they were afraid of losing out to competitors who were quicker to adapt and leverage this new platform.
Buoyed up by a seemingly endless cavalcade of social marketing experts demonstrating how their own social marketing success was evidence of how social media marketing would work for each and every business, if only they invested cash, time and effort.
Businesses bought into social marketing wholesale. Huge marketing budgets were allocated for social marketing campaigns intended to catapult the marketing reach and social influence of that business into huge, untapped online markets.
Business has now invested several solid years in social marketing. It's been a wild ride. Stories abound of incredible marketing successes, dismal social media failures, and everything in between.
But what is the bottom line?
According to research by Forrester:
"Social tactics are not meaningful sales drivers"
They arrived at this conclusion after analyzing the primary sales drivers for eCommerce and found that less than 1% was driven by social media.
But this was prior to Black Friday and Cyber Monday of 2012. Surely, several years of investment into social media marketing would have paid dividends on over the biggest online shopping frenzy of the year?
According to IBM Smarter Commerce, which tracks sales for 500 of the top retail sites, social media made up less than 1% of Black Friday sales.
FaceBook, LinkedIn and YouTube combined contributed a dismal 0.34% to Black Friday sales.
Twitter, contributed 0%.
Many proponents of social media marketing will point out that social media has less tangible benefits. It's quite reasonable to assume that someone who sees your brand on FaceBook may not necessarily buy there and then, but may make a purchase further down the line.
Yes, of course, this is absolutely true. There's no debate about whether or not it's productive to have people talking about your company, brand or product on the social networks. Generating buzz, and building social influence do have value.
But let's go back to the bottom line. Consider what your business has invested into all things social in the last few years. In tangible benefits, social media marketing has contributed less than 1% of your revenue.
So, has this provided you with a positive ROI? If the answer is yes, then there is no further debate and you can continue happily with your social media marketing strategies and campaigns.
If the answer is no, then you need to consider the value of the intangible benefits of social media marketing.
Let's be generous. Let's assume that the intangible benefits of social media marketing offer an entire order of magnitude more revenue than the direct revenue. This would mean that social media brings in slightly under 10% of your online revenue.
Compare this to how much you have invested in social media. Do you like what you see?
Social media marketing has been driven by businesses' fear of losing competitiveness. This is not the same as adopting a new marketing platform because it has proven itself time and again.
The one thing that social media has actually marketed very well is itself! This is because social media has a vested interest in social media.
But why doesn't it work for business?
Businesses' underlying error in judgement is this:
Business mistakenly views social media as the connection with customers. It's not. Social media is a tool to connect with customers.
In other words, that connection with customers that will make them ready to buy is not sufficiently met by social media. Social media is a great tool for reaching out to customers, but it's not the whole equation.
That's why so many businesses are able to obtain fine looking social media marketing metrics (i.e. plenty of likes, lots of "engagement"), but completely fail to convert it to revenue.
Here's what you do to fix the problem:
In other words, start looking at social media marketing as a link in the chain, instead of the whole chain itself.
How you take your engagement with potential customers that have been reached via social media marketing is up to you. It depends on the type of business you are, the type of products and services you offer, and a whole host of other things.
If you can't think of ways to do it, pay someone who can. The great thing about this type of problem, being directly tied to revenue, is that you can offer an expert an incentivized pay structure, so that you only fork out the big bucks if the strategies they put in place generate big bucks.
What are your thoughts on this analysis of social media marketing? If you disagree, why? How do you explain the dismal failure of social media to drive sales? If you do agree, what are you going to do to improve conversions and drive sales online?