In his continuing expose into social media for BRW magazine, Professor Mark Ritson looks at what the big players are doing.

If you follow the “Top Social Sites” lists and there are dozens of them, you’ll know that the packaged goods manufacturers have sunk mountains of shareholder funds into social media, in the hope of getting a profitable ROI from Fans, Followers and Likes.

To quote from Mark’s article: “Coke and Unilever were both in the vanguard of big social-media spending and both have discovered that once you compare social versus other tools, apples to apples, it often proves disappointing.”

Brands are moving budgets away from social media to traditional channels

Brands are moving budgets away from social media to traditional channels

“Unilever’s return on investment from in-store promotions can be as much as 50% higher than campaigns run across Facebook and Twitter, according to sources close to the company.”

As you’ll see in my last post – the reason people Like or Follow has to do with pre-existing brand loyalty. It’s why people join ‘loyalty’ clubs – even those as simple as the coffee cards we carry in our wallets and purses. It’s rare for people to become a fan of a brand they’ve never used, so obviously the majority of people who Like or Follow you are your existing customers.

These are the customers that smart marketers already have on a mailing list with such contact details as mailing address, email address and phone number. They are also the ones you don’t want to be offering lots of discounts to, unless you want to drastically reduce their lifetime value to you – and reduce your bottom line.

According to Mark’s article, here’s what Coca Cola found when they applied ROI metrics to their social media:

When Coke put its social buzz data through the same complex analytical tool that it use to measure the ROI of its other marketing activities, the company ‘didn’t see any statistically significant relationship between our buzz and our short-term sales

Social media is not helping sales

Social media is not helping sales

It seems the humble sales promotion gets better results than the same promotion conducted in social channels. Certainly those promotions that force customers to enter via Facebook lose enormous numbers of entrants because of the resistance by people to do so. 101 Marketing says make it as easy as possible to enter a competition. If you create additional barriers to entry you reduce the number of possible participants.

Proctor & Gamble’s campaign for Old Spice has won numerous awards in social media circles. However sales of Old Spice shower stuff decreased. And apparently the sales that did occur were at the expense of other shower wash stuff in the P&G stable.

This often happens with sales promotions – they create a short-term, boost in sales and pack-storing in the pantry. This is followed by a short-term decline in sales of the promoted brand or of others in the stable of brands owned by the promoter.

The Old Spice campaign was just a new twist on an (excuse the pun) old sales promotion technique. The only difference was the media channel. I still don’t know what red-blooded Old Spice male would use shower wash instead of soap, but that’s another discussion.

Interestingly I was looking at a social media slide presentation from AdSchool in Oz. Now I didn’t have the privilege of the associated commentary. But in 100 slides there was one slide that said ‘CPA industry average is $1.70’ – I’m not sure what was being acquired. The only other slide that had anything to do with metrics said “Ask the client what metrics are important to them. Build reports around them.” There’s some insight for you – ask the client.

Otherwise in 100 slides there is nothing about ROI – apart from some sentiment analysis. Maybe it’s in another slide show, the commentary that accompanied the presentation, or I missed it? Though given the 100 slides there isn’t much else you could teach about social media. It is an enthusiastic presentation though.