Research: ROI on social media has been dismal

A report from The Incyte Group on social media marketing that states “U.S. marketers spent $3.08 billion on Facebook brand pages and social media advertisements and the investment return has been dismal” .   The fact is, despite their reach, open social networks have not proven to be the most effective customer-acquisition or revenue-generation channels, and most businesses are still seeking to quantify the business value of their investments.

Companies have invested billions of dollars in two key areas:

  • Creating a strong digital presence in social networks—for example, via Facebook brand pages, Twitter handles, Pinboards, and Foursquare locations—and leveraging social marketing applications like Buddy Media.
  • Deploying technologies such as Hootsuite and Radian6 to facilitate responding to consumers in open social networks.

The question is, why? By “liking” brands on Facebook, Tweeting and blogging about them, and posting items on Pinterest, customers are clearly expressing a latent desire to connect with the brands they care about. So where are the higher sales? Where are soaring stats for stronger customer acquisition and retention? Clearly, there is something missing from the equation.

Key Findings:

1ne: Social networks are not the first place people go to research products and services. Google and brand websites are.

The study confirmed that the vast majority of U.S. adult Internet users are currently using open social networks. Company Websites are still the primary destinations for information to support a purchase decision.  When Incyte asked participants to name their primary destinations for researching products or seeking customer service via the Internet, their top choices were:

  • Visit company Website to make a purchase decision — 89.3%
  • Visit company Website for service/support questions — 68.8%
  • Contact the company via e-mail—43.5%
  • Use an Internet community dedicated to the product/service — 27.3%
  • Use a social network—21.2%

2wo: Consumers showed a strong preference for branded customer communities over open social networks for building relationships with brands.

When people are introduced to a new product, service, or brand through a social network and want to learn more about it, 81.1% said they would first visit the company Website, and 25.7% would visit a retail store. Only 19% would look at its Facebook page.   When asked how they assess the quality of content provided on company Websites when making a purchase decision, 49.8% of participants clearly show a preference for content that has been vetted as high-quality by other consumers, and 34.7% preferred content that has been provided by a consumer with a good reputation for providing strong content.  Consumers don’t want brand relationships to be a part of their open social networks; instead, they want company Websites to be more like their experiences with open social networks.

3hree: Relevant content is what drives consumers to prefer branded communities.

“Consumers are clearly saying that a primary value proposition of a customer community is that it allows them to quickly access information that is relevant and accurate–and they prefer it when that information is provided by other people like them.”

What attracts them to customer communities is the relevancy of the content to their needs presale, at the point of sale, and post-sale. When asked which of the following activities they would most likely participate in on these sites, results showed the following trends:

  • Read content—27.3%
  • Follow posts—18.8%
  • Share with social network—18.2% “Liking” — 8.9%
  • Posting replies and answers—8.3% Chatting — 5.9%

4our:   Consumers are very willing to become advocates for brands, products, and services they care about. Advocacy at scale is the untapped “holy grail” for marketers.

However, it’s more than just finding a brand or following them on Twitter.  Those do not always translate into conversions.  Brands should concentrate on building communities within their branded websites.

The Marketing Contrarians POV

OK, this report is not that bad, but we have to remember that it supports this agency’s business model so of course they are going to to suggest building communities.  The other issue is that how many communities can consumers join and which brands are worthy of consumers and communities ?  Again will people join the Philadelphia Creme Cheese community and if they do what’s in it for them ?

The bottom line you know what your community wants and can develop content around that you can bring them into your brand.


About richmeyer

Rich is a passionate marketer who is able to quickly understand what turns a prospect into a customer. He challenges the status quo and always asks "what can we do better"? He knows how to take analytics and turn them into opportunities and he is a great communicator.

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8 Comments on “Research: ROI on social media has been dismal”

  1. Very interesting article! As a brand consultant and creator of a brand development online coaching program, I am mulling over the implications of these findings. So from what I glean from this, building a community is the most important step I can take. So, since my passion is to reach families who want to build economic freedom into their lives by pursuing entrepreneurship, then I need to build a community for that. How does that look like? Is it a Facebook group, a forum on my website? This is something I am extremely interested in! Thanks for the good info!

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