Social Media Marketing: Miracle or Mirage?

Stephen DeAngelis

July 24, 2014

There is no doubt that social media has been phenomenally successful. It is a rare individual who has never heard of Facebook or Twitter. When it comes to using social media platforms for marketing, however, the opinions about how effective they are vary. Analysts from Frost & Sullivan believe that social media marketing has become essential. “Recent analysis from Frost & Sullivan, From Mass Marketing to Social Marketing, finds that social media is helping businesses transform their unidirectional marketing approach to a bidirectional customer engagement model. Social media has become a viable targeted-marketing channel, enabling businesses to gather customers’ self-reported personal information and use the data in personalized campaigns and offers.” [“Social Media Has Evolved into an Essential Mainstream Marketing Tool, Finds Frost & Sullivan,” PR Newswire, The Wall Street Journal, 27 June 2014] On the other hand, the Wall Street Journal reports, “A majority of consumers say they are not influenced by Facebook [or] Twitter.” [“The Myth of Social Media,” 11 June 2014] The latter conclusion was drawn from a Gallup survey. So who’s correct? Is social media an essential marketing channel or are companies wasting time and money on such marketing efforts? Frost & Sullivan analysts insist:

“Businesses across various industries have altered their marketing focus from traditional mass marketing to targeted marketing, to increase response rates and drive sales. Customers have control of their corporate relationships through social media and as a result companies are now driven to find ways to enable customer engagement on a customized basis. Consequently, social media has rapidly emerged as an ideal marketing tool.”

Brendan Read, a Contact Centers Industry analyst at Frost & Sullivan, stated in the PR Newswire press release, “Businesses are no longer satisfied with simply being present on popular social media sites and are now striving to gain an edge through social media marketing. Therefore, they are evolving their social marketing focus from brand awareness to customer engagement and lead generation. This is exemplified by the widespread use of hashtags and popular social site logos in every medium.” The Wall Street Journal/Gallup article admits that “the statistics surrounding social media are dizzying.” To prove that point Gallup offers a few statistics about a single day’s activities on social media:

• Facebook users post 4.75 billion items of content
• Twitter users send 400 million tweets
• Instagram users “like” 1.2 billion photos
• YouTube users watch 4 billion videos

“Millions of consumers across all demographic groups are spending considerable time on social media sites. A Gallup survey reveals that 72% of U.S. adults use these channels, with the majority saying they use them several times a day.”

Even though consumers insist they aren’t influenced by what they find on social media, the Wall Street Journal/Gallup article concludes, “Naturally, companies want to be in the same social media space as these consumers.” So why does the paper conclude that social media marketing is a myth? “Most consumers aren’t visiting social media sites to engage with brands,” the article concludes, “they are there to interact with people they know.” The article continues:

“According to Gallup research, the vast majority of consumers (94%) who use Facebook, Twitter, and other social networking channels do so to connect with family and friends. They are far less interested in learning about companies and/or their products, which implies that many companies have social media strategies in place that may be largely misdirected. … Social media are not the powerful and persuasive marketing force many companies hoped they would be. When Gallup asked more than 18,000 consumers about the influence of social media on their buying decisions, 62% said they had no influence at all. Even among millennials (those born after 1980), whom companies often think of as the core social media audience, 48% said these sites were not a factor in their decision-making.”

The question remains: How can two respected organizations reach apparently opposite conclusions about the value of social media? I believe this conundrum can be rationally addressed. When an individual likes something on Facebook or pins something on Pinterest or tweets something on Twitter, their opinions are pretty well formed. In other words, individuals use social media to express preferences rather than to be influenced. If I’m correct, then there really is no conundrum; both conclusions can be correct. In fact, the Frost & Sullivan press release indicates that its analysis agrees with some of the conclusions noted in the Gallup survey:

“With the proliferation of social sites tailored to niche interests, customers expect a high degree of content relevancy, authenticity and quality from companies that market to them. However, many firms do not budget adequate resources to execute suitable social media marketing programs. Some attempt to cut corners by limiting the number of sites they monitor and avoiding newer sites despite the evident relevancy they may have to their customers. Although a business may successfully obtain a large user base and strong social community activity, this does not necessarily translate to sales. Despite establishing customer loyalty and satisfaction, these results cannot be directly correlated to their social media investments. A resolution to this issue can be addressed by connecting social media with the appropriate sales channels, which will in turn allow businesses to define, bolster and track return on investment.”

The purpose of marketing, of course, is to increase brand awareness and make sales. The two studies seem to agree that social media helps marketers meet the first objective even if it has yet to prove its value in making sales. Jeff Elder (@JeffElder) reports, “In May 2013, Ritz-Carlton Hotel Co. bought ads to promote its brand page on Facebook. After a few days, unhappy executives halted the campaign — but not because they weren’t gaining enough fans. Rather, they were gaining too many, too fast.” [“Social Media Fail to Live Up to Early Marketing Hype,” The Wall Street Journal, 23 June 2014] That may sound counterintuitive, but Ritz-Carlton executives were concerned that engagement and connection with its historical community of consumers was dropping as the fan base grew. Elder reports:

“Rather than try to keep pace, Ritz-Carlton spends time analyzing its social-media conversations, to see what guests like and don’t like. It also reaches out to people who have never stayed at its hotels and express concern about the cost. Ritz-Carlton illustrates a shift in corporate social-media strategies. After years of chasing Facebook fans and Twitter followers, many companies now stress quality over quantity. They are tracking mentions of their brand, then using the information to help the business.”

That observation is in line with what Frost & Sullivan recommends. Brendon Read stated, “With social media presenting a large, fast-changing stream of unstructured data, companies must employ analytics to pick up the most pertinent posts that can be used to shape and refine marketing programs. As short social conversations may not tell the entire story, analytics can be deployed to source other relevant social and off-line data.” The press release concluded: “Creating customized, high-quality and relevant content, as well as enhancing social site monitoring, tracking, analysis and engagement will help businesses leverage social media in the quest for marketing success.” Elder adds, “Gallup says brands assumed incorrectly that consumers would welcome them into their social lives. Then they delivered a hard sell that turned off many people.”

So what are marketers to make of this analysis? Should they spend precious marketing dollars on social media or not? Elder reports that most companies have opted to stay with social media. “While companies are adjusting their social-media strategies,” he reports, “they continue to advertise on Facebook.” In the long-run, it looks like companies should be more interested in generating social media chatter about their brands than in trying to win friends. Social media may not be the miracle that marketers hoped for; but, social media benefits are not a mirage.