Can social media show you the money?

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1 July 2012 BRANDGYM RESEARCH PAPER 6 By David Taylor Managing Partner Can social media show you the money?

2 Can social media show you the money? About the research In this, our 6th global survey, we ask Can Social Media Show you the Money?. The first part of the research was with over 100 senior marketing professionals across Europe, Africa, Asia, the USA and Latin America, covering a broad range of sectors. In addition, we did research with 1000 consumers each in the UK and USA, to compare their actual use of social media* with how marketers think they use it. Read on to see how wrong most marketers are! We have brought to life the findings with examples from our work on brandgym projects, and through interesting case studies we have come across in our blogging and book writing. * To clarify, this study focuses on the creation of content using social media (e.g. Facebook pages, Twitter feeds) and not online advertising on social media sites. Introduction The brandgym partners Social media is a red-hot topic today. Social media is sexy, shiny and new. And it s also a bit scary, with headlines screaming that the whole world of marketing is changing, and that old media like TV advertising is dead. However, data on the brand and business building effects of social media is thin on the ground. We felt it was time to cut through the hype and hysteria around social media, to better understand the role it can play. We wanted to find out: Can social media show you the money? In this paper we look at the following areas: Why social media is hot: what are the key drivers of social media usage by marketing teams? The limitations of social media: why social media has a limited role and is far from replacing old media. How social is your brand?: accepting the limitations of social media, what role can it play for your brand? What consumers really want: the real reasons for consumers using social media from brands are not what marketers think. Key platforms : Which social media channels to focus on, and why. Hype SOCIAL MEDIA MARKETING Even More Hype More Hype 1 JULY 2012 BRANDGYM RESEARCH PAPER 6

3 Part 1: Why social media is hot It s what cool brands do: The research confirms our belief that the key driver of social media usage by brands today is fashion, not facts. Keeping up with trends was by far the main reason given by marketing directors for their use of social media. This scored much higher than any hard evidence, or even gut feel, on the business building effect of social media. Main driver for companies use of social media 19% 59% 21% Evidence of tangible business benefits Gut feel on business benefits Keeping up with latest marketing trends It s good for business (we hope): Given the lack of evidence, a surprisingly high 58% of marketing directors believed social media was a driver of business growth, although most of these saw it having a minor role (33%) rather than a major one (25%). Role played by social media 9% 25% Key driver of business growth 32% Minor driver of business growth Helps with brand image No impact on brand or business Action point: Cut through the hype and refuse to be a follower of fashion. Base your use of social media where possible on hard facts about what it can do for your business and brand. 2 JULY 2012 BRANDGYM RESEARCH PAPER 6 33%

4 Part 2: The limitations of social media Sensationalist, scare-mongering messages about the demise of TV advertising and the rise of social media are popular headline-grabbers. In reality, social media has a limited role to play, and conventional media is far from dead. Social media has limited reach The key driver of brand growth is penetration: having as many people as possible using you at least once a year. Loyalty measures, such as frequency of purchase, are actually similar between brands in a given category. Therefore, the key to growth is reaching as many people as possible, especially light and non-users, to drive penetration. And this is where social media has serious limitations. Our consumer research shows that over 80% of people were already using a brand before they started interacting with it on social media, with less than 20% new users. This means social media has a limited role in driving penetration of your brand as you re talking mainly to existing users. And if you think you can make them more loyal, you are fighting the facts of brand growth: loyalty levels across brands are similar in a given category. This means that trying to grow share by Increasing loyalty is a losing game. US GB Impact of social media on brand use (% of people who say staying in touch with brands is important) 83% 17% 86% 14% Already buying brand before using its social media Started buying brand after using its social media 0% 20% 40% 60% 80% 100% The limited reach of social media is shown by Coca-Cola. Its Facebook following of c.40 million fans seems huge. However, the following shows this is not quite true: based on our research above, this means a potential 3 JULY 2012 BRANDGYM RESEARCH PAPER 6

5 Part 2: The limitations of social media Advertising is far from dead Advertising, especially on TV, is far from dead. Old media still has the central role to play for most brands, for several reasons: advertising has the reach you need to drive penetration. TV advertising has the highest ROI of any medium, according to econometric research by Thinkbox. And this ROI is actually up +22% in the last five years, owing to growing commercial TV viewing and lower costs. conventional advertising allows you to plan the size and targeting of your audience In contrast, social media is a lottery. Its impossible to predict how many people of what target will like your Facebook page or watch your YouTube video. most viral online success stories were originally driven by TV advertising. For example, Old Spice s The man your man could smell like the most conventional form of old media there is: a TV advert in the Superbowl. What about word-of-mouth? Word-of-mouth is often portrayed as a key reason for brands to be active on social media. In reality, 90% of word-of-mouth conversations about brands still take place offline, primarily face-to-face, according to research by Ed Keller and Brad Fay. As they say, Online social networks are far from the Holy Grail of marketing. A far bigger and more powerful force is real world, faceto-face conversation. Action point: Ignore the hype about the demise of old fashioned marketing, it still has a key role to play for most brands. In reality, social media has a supporting role in amplifying your marketing, given its limited reach and the inability to plan the size and nature of the audience. 4 JULY 2012 BRANDGYM RESEARCH PAPER 6

6 Part 3: How social is your brand? Accepting the limitations of social media, what role can it play for your brand? To start with, you need to get real about the role of brands in general in peoples day to day lives. Only 7% of UK people saw social media as being very important for staying in touch and interacting with (39%/50% in the UK/US). These results help explain why people like on average only 9 brands on Facebook, compared to an average of 200+ friends. How social is your brand? Even within this minor role for brands, not all brands are equal. In the league table of brands liked on Facebook, consumer goods products come rock bottom (8%), in research by DDB. At the top were brands from media (55%), These results reflect the fact that most brands are just not that social. If social media is a virtual pub or cafe where conversations happen, would people talk about your brand? Would people want to read your brand s weekly magazine, or watch its daily TV show? If your brand is closer to pasta sauce than Prada, then the answer is probably a resounding no. How young is your brand? A further point to bear in mind is how important younger people are to your brand, given their higher usage of social media. If you are a brand like Axe, Nike or Levi s where this a key audience, social media will play a bigger role. 60% 50% 40% 30% 20% 10% 0% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Use social media to stay in touch/interact with... (% Very Important) 39% 50% Friends/Family 9% 16% Hobbies Social media usage in P4Weeks 7% 14% Everyday products/services TOT GB US GB USA 5 JULY 2012 BRANDGYM RESEARCH PAPER 6

7 Part 3: How social is your brand? Can you sell online? A final factor to determine the role social media can play for your brand is the link to selling more stuff. If online is a key sales channel for your brand, then social media can be a revenue driver, not just a communication medium. An example of a brand like this is The X-Factor, a reality TV singing contest, similar to Idols in other markets. The brand s UK Facebook page had a whopping 3.7million fans and it helped generate online revenue by people buying itunes tracks of the week s songs and by encouraging mobile phone voting for who stays on the show. In contrast, for consumer goods brands the link to selling more of the core is much more in-direct. The best an FMCG brand can do is link to an online shopping site, but this is still a niche channel, accounting for only 3% of the grocery market. Beermat business plan: questions posed in this section. In this highly sophisticated media model, the total score is the % of your budget to spend on social media, as shown in the example on the right. The score for Kellogg s is in line with our survey, with 2/3 saying they are allocating less than 5% of their budget or less to social media. The % of team time allocated is higher, with half allocating 5%+ to social media, confirming the labour-intensive nature of creating a stream of content. How social /10? How online /10? How young /10? TOTAL /30 = %Budget 70% 60% 50% 40% 30% 20% 10% 0% % of time/budget allocated to social media 3% 0% 9% 47% X-Factor / Idols TV show Lynx / Axe Kellogg s % % % 60% 1-5% 32% 17% 5-10% 5% 7% 10-15% 13% % Team % Budget 7% 15%+ Action point: Don t spend more than 5-10% on Social Media, unless you are a social brand, selling online. Evaluate how social your brand is and the importance of online sales. For most everyday brands this will show that social media should take up no more 6 JULY2012 BRANDGYM RESEARCH PAPER 6

8 Part 4: What consumers want Consumers DON T want a conversation with brands Assuming you are going to allocate some time and money to social media, how best to use this? What do consumers want from your brand? Well, here Marketing directors seem to be out of touch. expectations about how involved consumers want to be in creating content themselves. In reality, a mere 5% of consumers said they used brands social media for this reason. In contrast, desire for useful information and deals is much higher than marketers think. This means you need a stream of distinctive, relevant content and attractive promotional offers to be active on social media. Why consumers use social media from brands 45% 40% 41% 35% 30% 25% 29% 29% 27% 25% 32% 20% What Consumers Do (GB/US) What Marketers Think 15% 12% 10% 5% 5% 0% Useful, helpful info on brands Getting deals/ promotions Interesting, entertaining brand-created content 2-way conversation with brands 99% of consumers don t interact The low interest in 2-way dialogue is confirmed by data on the top 200 brands on Facebook, done interacting with it, based on the metric People Talking About This (total likes, posts, comments, tags, shares). In other words, 99% of people were on the brand s Facebook page to consume content, not create it. 7 JULY 2012 BRANDGYM RESEARCH PAPER 6

9 Part 4: What consumers want Content is king Brands need to create a stream of distinctive, relevant content on social media, and this has several implications. First, this needs a new skill-set. You may need someone with writing or journalistic experience to lead the creation of brand content, either in your team or an agency partner. And, like a newsroom, you have to react on the spot to important events and consumer comments. Marks & Spencer work on a 2-hour response time to comments in social media, for example. Content creation, talent and speed were all seen as being difficult for over ½ of our marketing directors, topped only by the challenge of proving ROI. The key challenge for a newsroom is to have a stream of interesting, impactful news that can make headlines. This is where brands with large ranges of products and services, such as retailers, have an advantage of more to talk about than the limited offer of most product brands. 100% Social media challenges The Gatorade newsroom - monitoring social media in real time. 90% 80% 70% 60% 54% 18% Extremely difficult Difficult 50% 40% 25% 13% 10% 30% 20% 37% 49% 34% 39% 34% 10% 0% Proving ROI Right talent to create content Creating relevant content linked to my brand Quick response to consumers Which social media channels to focus on Action point: Content is king - hire an editor You need an editor to lead content creation: you may have to hire in or sub-contract to someone with writing or journalistic experience. 8 JULY 2012 BRANDGYM RESEARCH PAPER 6

10 Part 5: Which social media platform? With a better understanding of what consumers want from social media, where should you focus your limited time and money? After all, social media enthusiasts like to scare us by showing an ever expanding plethora of platforms. Our marketing director survey confirmed our belief in a focus on Facebook and a supporting role for Twitter and YouTube. Brands own websites also came out as being extremely important. Extremely important social media platforms: Marketing Directors has by far the biggest audience (900 million) and give more ability for brands to create interesting content. The key challenge on Facebook is creating bite-sized bits of compelling content, given that 90% of people consume brand content as part of their news feed, not on the brand s Facebook page as you might expect. You have to stand out amongst the news from a person s c.200 friends to be seen. has a much smaller role to play, given its even more limited reach. It has fewer is a new-age helpline, most relevant for complex service brands, and following celebrity CEOs. For example, the CEO of US retailer Zappos, Tony Hseieh, has 2.4 million followers, almost 200 times the following of Zappos.com. Whilst every marketing director dreams of a YouTube sensation that goes viral, we suggest that viral success should be seen as a bonus to your conventional media plan, not the main objective. Firstly, the key drivers of virality seem to be sex, humour and spectacle, and these my not fit with your brand. And more importantly, YouTube success is a lottery. For every viral success, many more films fail to fly. Action point: Focus your effort on the platform that has the biggest reach with your consumers For most brands that s likely to be facebook. 9 JULY 2012 BRANDGYM RESEARCH PAPER 6

11 Part 6: Beyond social media What s our digital strategy? is the wrong question Social media is only one aspect of the digital world brands operate in today. In fact, What s our digital strategy? is the wrong question. A better question is What s our strategy for a digital world, as this opens up opportunities beyond social media. For example, we worked with the Carling Black Label brand in South Africa on a digitally-empowered activation called Be the Coach. This allowed soccer fans to vote via mobile phones to actually pick the teams for a special cup match between South Africa s top 2 teams, the Kaiser Chiefs and The Orlando Pirates. has helped improve brand imagery, most often used and volume. During the match fans could vote via SMS for the player they wanted to substitute. Conclusions Action point: Think beyond social media Other examples of digitally enabled brand activity include the Nike+ alliance with Apple that allows you to track your runs with your ipod or iphone, and Gillette s launch of an online subscription service for getting re-fill razor blades. Bigger In response opportunities to the question may Can come social by looking media show beyond you social the money, media the to jury other is still digitally out. On empowered the upside, ideas. social media can amplify the rest of your marketing mix with limited extra budget, though you need to invest in people to create great content. However, you need to cut through the hype to understand exactly what role it can play, and avoid feeling pressurised to just do it to keep up with marketing fashion. Specifically: given its limited reach, social media is far from replacing old media and is rather there to amplify the rest of your mix. if your brand is closer to pasta sauce than Prada, social media should probably use less than 10% of your budget. most consumers want interesting content, not interaction, and you need a new team to create this. it has the biggest audience and opportunity for creating content. Twitter is tiny. And YouTube viral videos are a lottery. there may be other, bigger digitally-powered opportunities to build your brand and business. 10 JULY 2012 BRANDGYM RESEARCH PAPER 6

12 Brand Leadership Coaching 6 senior brand coaches helping companies gain and retain brand leadership. Turbo Marketing approach helps teams develop effective marketing plans including relevant social media and other digitally empowered opportunities: Use fresh insight fuel as inspiration Create a series of integrated chapters of your brand story Build brand properties to boost marketing effectiveness Follow the money approach anchors plans on business issues Build team energy and alignment through a collaborative, cross-functional process Brand Vision to Action and Brand-led Innovation 6 books on brand leadership including the updated version of the brandgym, Amazon s best-selling management book track record with leading companies includes SAB Miller, Sainsbury s, LVMH, Danone and Kraft. David Taylor (Managing Partner) M: + 44 (0) E: Anne Charbonneau (Benelux/France) M: E: David Nichols (Managing Partner) M: +44 (0) E: Silvina Moronta (Latin America) M: +54 (9) E: Diego Kerner (Latin America) M: + 54 (9) E: Prasad Narasimhan (Asia) M: E: 11 JULY 2012 BRANDGYM RESEARCH PAPER 6 DESIGNED BY SwaG

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