First, the decline in sales in the sugary soft drink industry is only remotely connected to their social media advertising. It is a widely reported phenomena that is usually attributed to a more health-conscious society and a widening array of beverage choices.
Second, Pepsi's intention in offering contributions to non-profits based on social media recommendations was probably seen as a way to boost corporate image in a domain far beyond potential soda drinkers. It probably was meant to influence investors, journalists, regulators, and people like Mayor Bloomberg in New York who would portray soft drink vendors as an evil in our society. When you are a big as Pepsi, directly influencing buyers is only part of your advertising outreach.
Still, I agree with the article's overall conclusion. Social media advertising is typically not a very efficient way to convert advertising dollars to revenue. But it can be. With any advertising method, you have to devise a way to measure the results of a campaign, whatever your goals are. Otherwise, you are just throwing money in the air, hoping it lands somewhere useful.
Big companies and brands often lose sight of what social media is really about: namely, sharing things with friends. Grouping with people based on shared affinity for certain topics, things, events, etc. People are there for the friends first; all other considerations -- including content consumption -- are secondary.
It's incredibly hard to convince people to hang out on a soft drink's social page. What's the benefit? Where is the natural, social use case? If I want a Pepsi, I'll go buy one. When I don't, why the heck would I spend time reading about Pepsi, or talking with friends about Pepsi? Who actually does that? I submit that anyone who does is highly abnormal. Maybe even crazy. Regardless, they're the kind of person whose social feed I'll ignore.
As for the Pepsi Refresh campaign, they put the cart before the horse. People care about the cause first and the money second. If I want to raise money to fight breast cancer, for instance, I'll start with the people who care about breast cancer, building out from that passionate early adopter base. I don't just wave a giant paycheck around in front of a highly heterogeneous set of people, asking them to tell me where to spend it. It's a statistically irrational approach to marketing. But more important, there's no heart or soul in that. There's no grassroots need inherent to that. People don't want to vote on a cause. People have causes. Pepsi should have started with a specific cause, and then made waves by offering to match (or even triple) a crowdsourced fundraising campaign.
An example: for all its flaws, that infamous "Kony 2012" video went uberviral. The video didn't start by asking the question, "Hey, who's the most despicable African warlord we should try to depose? Vote here!" It started by informing people about a specific evildoer, educating them about him, and then asking them to do something about it.
Pepsi could have generated a lot more authentic goodwill by offering to match or exceed an existing campaign, hashtagging into it. They could have spared themselves the millions of dollars creating a page for their campaign, branding it, and acquiring fans for it.
I find it hard to believe that television or other advertising for a product like Coke or Pepsi makes a big difference in sales. I'm already aware of the products, I already have my opinions on them, and they aren't going to change them.
If these companies stopped advertising tomorrow I don't think there would be an immediate effect on consumer behavior.
For a while I was a heavy drinker of low carb Monster. One day I saw the can, thought I'd try it, decided I liked it, and then I bought it frequently.
I hadn't seen a single ad (or promo) for Monster until years after I'd gotten sick of it.
What would happen is that the channels they sell through would notice that they weren't being so aggressive about marketing. The channels might think they are less serious and then they wouldn't work so hard to promote those products.
I know somebody who sells newspaper advertisements and when people ask the question "For what a postage stamp sized ad costs in the paper for a year I could rent a storefront or hire an employee so why do I need to spend money on you?" he gives them the answer that people who are used to seeing your ad in the newspaper might think you went out of business if the advertisements stop.
That's how sick the advertising business is in 2013.
I feel the same way about beer. I love beer commercials... they are usually absolutely hilarious, and I often literally LOL at them. During football season, when I'm hanging with my friends at the sports bar watching the Dolphins play, I look forward to the commercials so we can have a group laugh over the latest ads from Budweiser, Coors, Michelob, etc.
But... 2 minutes after a given ad airs, I could not tell you if it was an ad for Coors, Michelob, Budweiser or "other". Well, ok, the Keystone ones do stand out a bit in my mind. But in any case, NONE of them give me the slightest inclination to drink their respective brand of beer. I already regard all mainstream, mass-market American beers as being roughly equivalent to stale horse piss, and all the funny commercials in the world aren't going to change that.
My staple beer is Sam Adams, which I usually drink unless a given bar has a microbrew I happen to like. And I was drinking Sam before I ever remember seeing a commercial for it. How'd I find it? A bartender recommended it to me once, I tried it, liked it, and that was it.
This is the angle social media attempts to replicate. Leveraging respect levels between you and your social "circle". Sometimes it works with great effectiveness, but a majority of the time, I believe this approach fails.
Companies don't engage in the marketing bombardment of certain brands to remind you that they exist or to change your opinion. For 'commoditized' consumer products like cola or light beer, there is a premium placed on being 'top of mind.' https://en.wikipedia.org/wiki/Top_of_mind
I am not a frequent consumer of soda or light beer. However, on occasion, when I 'have to' purchase it (for a party, picnic, barbeque, etc.), I find myself subconsciously steered towards certain brands. which I believe is the result of years of 'conditioning' from constant immersion in uqiquitous marketing.
>>If these companies stopped advertising tomorrow I don't think there would be an immediate effect on consumer behavior.
Not immediately, but in due time absolutely. Why else would Coca-Cola spend $11 billion on marketing last year? http://beta.fool.com/stockcroc1/2012/04/13/coca-colas-new-co...
But for smaller companies, at the very least, social media is a much frictionless way of disseminating updates and news, compared to email signups and expecting people to go to your company blog. And upstart companies may (initially) be seen in a more positive light for their seemingly underground/non-pretentious way of communicating to their fans/followers. I'd say that's hardly "worthless"
Pepsi is falling way faster than the other major players though. Last year, Dr Pepper was down 0.5% , Coke down 1%, Pepsi down 2.5%. Pepsi's share fell 0.4. This has been the (general) trend ever since they started pulling dollars from TV and began spending big on viral marketing, social media, giveaways and rebranding in 2008
As anecdotal evidence, both of my late-teen/young adult sons have started using Old Spice deodorant since that campaign started.
Edit: I think Barak Obama's campaign would be another example of well-spent social media dollars.
Outside of that, well, um.... er...
EDIT: Further thought would suggest, Facebook, G+, Twitter, etc. That seems to hint that maybe the main business of social media is: spreading social media. Ruh oh.
It seems to be a self-perpetuating cycle from social media "gurus". Audi's manager of social media says "Today the equation to measure that doesn't exist" when asked about measurable results. So he (and much of the industry) claim that they just don't know, but it's probably doing something, and it can't hurt, right? So their clients/supervisors are scared of missing out and they continue to approve these gimmicks that, in my opinion, aren't very effective.
Twitter is perfect for raising brand awareness, dropping hints about the benefits of membership to non-members, and quickly resolving issues members are having.
We also use social media to position ourselves as being at the forefront of our industry by being the first to break news, RT things people wouldn't have spotted, provide practical advice and create debate via our blog, etc.
Works for us.
Fashion brands - yes, if it's a brand name that people are excited about sharing, and again regular purchases helps - people want to keep checking back for what's new
It's tough; I work with a lot of different retailers, everyone wants to believe that social media is going to be good for them, but it depends on both their business and their customers.
I see agencies pitch the miracles of social media and it often just doesn't pan out.
For example, consider a washing machine repair service, it's somebody you are going to use infrequently (hopefully!) and even though you might give a recommendation to your friends, it's not something that you'd associate with and steer your friends towards. In fact it's not really that helpful as it's highly unlikely that they would need those service right now.
Now think of a clothing boutique. It's a brand that's "cool", you want to let people know you go there. You go frequently, you want to tell you friends that you saw X and thought it was neat, or you bought Y. You share these events and other updates with your group, you are providing useful information and showing your tastes to your friends.
I'm not sure if there's a distinct work/not-work axis, but there's definitely categories of businesses and customers that work better than others.
Want to know the result? My money goes elsewhere.
Also any money invested in SEO, as in building good content vs. SEO "tricks", usually has a bigger payoff than paid advertising.
I've literally stopped my SEO efforts.. most are just price checking anyways, looking for 'the lowest price'... I tend to find building a relationship and educating my potential clients better than trying to get a sale from SEO window shoppers
1. If Coca-cola starts a social media campaign (and gets 1million likes) and Pepsi doesn't (0 likes), Coca-cola has a stronger brand position. Is this easy to calculate in real terms? No. But then again, Coca-cola nor Pepsi actually bottle their own products so they are measured on brand awareness anyways.
2. A friend of mine just started making custom bicycle wheels. He's gotten 3 new customers literally from our triathlon facebook group alone. Also, I would guess at least 5 people (probably way more) have had massages from a sports massage therapist in our club, simply because they posted on our group "I'm in need of a sports massage who knows a good one?"
"Social media" isn't necessarily a new way of driving business, but rather it's a new platform for capturing something that has been happening for decades - word of mouth - and then trying to position yourself (at scale) to exploit that word of mouth.
Though they use the Facebook pages, not ads, and the ones I know of that are doing great post stuff for women mostly :) (clothes, bags, nail accessories, beauty stuff, home decor).
Many generate 100% of their sales through Facebook.
Social networks are for connecting with friends, and I'm not friends with LucidChart or Coca-Cola, or any other brand for that matter. Some brands I respect because of the value they offer, but I would never consider them to be my friends. Hence it grates on me when companies try to use social media to connect with me as if they are my friends instead of just providers of quality goods and services, which is what I really want from them.
We engage in social media because our business is a service business. Our customers are paying us every month to continue to serve them. It's therefore important to stay in communication with them and stay engaged with them.
We don't see social media as a major traffic source, let alone sales source, but it is useful for engaging our current customers and communicating with them.
We do also use it as an opportunity to spread the word about ourselves and have more presence but we don't expect, and don't see it as a major source of traffic or sales. That's ok because the purpose of those pages is not to be a sales source.
I think if the point of this article is; don't sink tons of money into social media expecting an immediate boost in sales, I'd say that's a solid point.
But if the point of this article is abandon all social media ye who enter here, that's probably silly. It's not that hard to keep up a Facebook page, Twitter account and even Google+ page.
Then comparing to Coke is just goofy. Without even discussing the merits of what Coke's SM strategy looked like, there's no useful comparison between a tiny web company and a century-old international beverage conglomerate.
* Search engines: how does your product become highly ranked and easily findable?
* Partner websites: ditto, how do people find those?
* Friend: how do those friends communicate about stuff like Lucidchart in 2013? This one is not even funny anymore...
* Co-worker: ditto. A lot off our conversations not directly about the work at hand happen either during lunch via social media. "Have you seen this cool app?"
* Other: seriously?
I could go on, but social media clearly plays a major role in transferring this information. It's impossible to calculate to what extend these other channels would dry up if you would take social media out of the equation.
It's pretty much the same argument as it used to be about advertising in the pre-clickthrough era: it could not possible be measured in direct revenue. Doesn't make it worthless.
Like I wrote, we won't be abandoning our social media efforts anytime soon. But we are taking another look at how much time & effort we invest in those channels.
You're essentially asking for proof of a negative, i.e. prove that social media does not matter. This is as you stated impossible. This is also why the burden of proof is always on the person making the claim.
If companies are going to spend money on something, there should be proof that it has value.
Of course social media results will suck if you’re doing it wrong.
Most people have no idea how to optimize their social marketing efforts; that timing can drastically effect the ROI of a tweet; that topics and geographies should be optimized differently.
Here’s an example: https://www.dropbox.com/s/5clvhpib0drqv8s/social_infographic...
In addition, we just built http://www.rewardrkt.com to integrate our API with the http://rewardstyle.com API.
According to rewardStyle, approximately 80% of their publishers are earning revenue directly from social media. Some publishers, generating $20-30k per month in revenue, see 60%+ of their revenue from social channels.
We all know there are successful social marketing campaigns - so why shift the blame on social media and not those responsible for the failed Pepsi campaign?
Social media for businesses is not simply about marketing but offering people a way to directly interact with their favorite brands - which really has never been available until social media. For example, and in my opinion one of the most successful companies at using social media is the UFC, who first uses social media to interact with fans of the brand (they have bonuses for fighters who use twitter), second as a form of customer service (when people tweet their PPV went out, UFC responds in real-time sending service people out to fix the PPV); and lastly marketing/promotion is an after thought (don't miss tonight's fights #UFC) - probably not a whole lot of measurable ROI but no arguing it is immeasurably increasing brand loyalty.
A lot of these huge companies market very differently than startups (those that do market) and small businesses. They focus more on branding. So, any result they get does not translate to you.
Both musicians and magazines are businesses selling something.
Just today I discovered Microsoft's Infer.Net for probabilistic computations. It's not a commercial product but it's a product nonetheless, and it's a tweet that made me read their documentation.
Social media is definitely not inefficient, if done properly.
Social media is just a small part of my company, we offer it as a service but only to companies who specifically request it, and then we ask that they provide expected KPIs up front which we can hit, and that KPIs should be related to the platform (e.g. likes, reach on Facebook), not related to sales - this way it is up to them to decide whether the spend is worth it or not, all we do is ensure that we deliver what they want from us. We've never pushed anyone to increase spend on social media (from a company point of view, we'd far rather they spend marketing budget with us away from social media...)
Despite this, despite the fact that we don't push it at all, our biggest social account spends $500k/year on Facebook with us, purely on community building. So sure, maybe some companies are being sold on it by salesmen, but plenty are making their own choices here.
Essentially, SEO can really work against you if Google doesn't see your business the way you see your business. Google rarely gives anyone special treatment and once the algorithm makes up its mind, it's very slow to adapt unless you do something drastic (what I did last night) like take down entire domains that aren't getting the queries you want.
Part of my comment on the blog:
You'll change your tune when Google changes its algorithm.
You have one big point of failure on the left side of your chart. And let's be real, I bet Google is 98 percent of your "search engine" traffic. That you have no control over. Risky! Even worse if "partner website" is on the Google gravy train too.
Take it from me, someone who received millions of clicks from Google. Now I'm lucky to get 100 queries/day from them.
Some kind of social media presence is a hygiene factor. Also it's a given your SEO is working due to positive social signals.
Pepsi's also a bad example, it's a 100-year-old behemoth of a company and it would be difficult to point to any single thing as responsible for a loss in revenue, especially a social media campaign. Pepsi also isn't especially sexy from a social media perspective, if you check their twitter it's a lot of "Hey, anyone drinking a Pepsi right now?" which to me at least isn't particularly compelling.
Social media can be extremely effective, local businesses especially can get a lot from not a ton of investment. Bars and restaurants can post specials, parties, pictures from past events, do ticket giveaways, etc. In SF at least a lot of nightlife promotion and engagement happens on Facebook, and you only really need a person or two per venue or production house to make that happen effectively.
I agree it would certainly make sense for Google to do it (and I imagine they are, and giving favor to G+), but I haven't seen any compelling evidence myself.
The fact is, many business are making a lot of money with their social media efforts.
My little company has tripled revenues since implementing an effective social media strategy. Nearly all of that increase is directly trackable back to the social media marketing we are doing.
Social media marketing can be hard. It requires different strategies than most people are implementing. But that doesn't mean it's worthless, it means that some strategies are worthless, while others are very, very, valuable.
The case for Pepsi is completely different - anyone can drink it, and just about everyone already knows about it, so social media is largely brand marketing.
I'd like to see comparative analysis of different social media campaigns broken down by what the existing ad spend is intended for, and also broken down by the main pre-campaign marketing channels.
We begin talking about users as "users" (a metric) instead of users (people). Likewise the same happens to a variety of the other attributes (i.e. interactions, etc). ROI this, reward plans, etc.
The best social media plans are the ones that don't lose the core component to any real marketing:
Let the current 20-somethings become decision makers and my kids become consumers and it'll be a whole different story. And I'll be cursing from my rocking chair in the retirement home, maybe I'll even be sending incendiary tweets at that point.
I thought I could just spam people's Facebook walls and get rich. What gives?
No social media campaign in the world can save a shrinking business.
That said, I think the real answer is "it's complicated". I'm pretty some businesses benefit from Social Media, but I expect there are a lot of variables that affect how much value they derive from it.
It also depends on how, exactly, you define "social media". It's become a bit of a catch-all term these days, and to the extent that it's been very generalized, I'd argue that the answer to the posed question is even more "No".
Anyway, FWIW, one more anecdote for you... so far the vast majority of the traffic to our blog and our website is traffic from links submitted here at HN, on Reddit, through Tweets, posted on G+, Facebook and LinkedIn, etc. We spend essentially nothing (other than a little bit of my time) on this, but I believe it is increasing our exposure and brand awareness. Social Media activity also seems to contribute to generating backlinks, which improve our positioning with the search engines.
We're still "pre revenue" so it doesn't make sense to talk about the ROI of our social media efforts yet, but my impression is that it's a valuable part of our effort to get the word out, without spending a pile of money.
If you're in third place... you have to make it a choice until you're first
A campaign that generates a million likes probably got most of those likes from existing customers.
EDIT - I stand corrected:
PS: I don't think @apple belongs to them
Are cars bad?
Is meat good for us?
Will the world end tomorrow?
Are you a racist?
What's in my pocket?