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Among other things, the study finds that less than 5% of social media users regularly turn to these social networks for "guidance on purchase decisions" in any of nine product and/or service categories (see table below), and that only 16% of social media users say they are more likely to buy from companies that advertise on social sites.
Based on the findings, Knowledge Networks categorizes the value of social media advertising "somewhere in the long tail" of marketing options, way below TV ads and personal, word-of-mouth recommendations.
"Obviously, a lot of people are using social media, but they are not explicitly turning to it for marketing purposes, or for finding out what products to buy. It's really about connecting with friends, or connecting with other people," says Dave Tice, vice president and group account director at Knowledge Networks, and the top analyst behind the report. "What we're seeing is that word-of-mouth is still the No. 1 most influential source, followed by TV. The influence of social media isn't at the bottom of the list, but it is somewhere in the long tail of marketing - about the same as print ads, or online [display] ads."
By category, social media's greatest influence so far has been for media-related products and services, especially music, TV programming, movies and books.
In fact, Tice suggests that some forms of social media - especially microblogging service Twitter - actually may be more of a media industry phenomenon then a genuine consumer groundswell. Knowledge Networks research finds that only about 1% of the online population uses Twitter weekly, and he suspects that has been concentrated among the media elite, even as celebrities such as Oprah Winfrey have begun using and promoting it.
"It's more of a media industry thing right now," notes Tice. "Very few people between New York, Los Angeles and San Francisco are using it."
In fact, Knowledge Networks goes so far as to compare Twitter to the hype surrounding digital video recording device TiVo a decade ago. Back then, Tice says, the media industry - especially Madison Avenue - became consumed by the anxiety that TiVo would destroy the television advertising business, because viewers would use the device to zap TV commercials. The reality, he says, was that very few people were subscribing to TiVo, and even thought DVRs have gained some critical mass as they've become embedded and integrated into digital set-top devices, the TV and advertising industries have figured out how to coexist, adopting Nielsen's so-called "C3" ratings, which account for time-shifting and commercial zapping, and TV remains the dominant advertising medium.
"For experienced media people, the hype surrounding Twitter this year is akin to that we saw around TiVo," reads the Knowledge Networks report. "Whereas TiVo dominated the conversation around television, we've seen Twitter dominate conversations around marketing. What is also similar is that both are examples of "flyover blindness": while popular topics among the urban digerati, neither - TiVo then or Twitter now - are significant in terms of usage among the general population across the country.
"In 2000, TiVo was very smart in creating buzz by seeding free units among key opinion shapers and industry leaders in the television and agency worlds. It also coincided with the height of the dot.com bubble that built huge expectations for all things digital, and benefited from evangelistic users. But in reality, by the end of 2000, fewer than 1% of TV homes owned a DVR, and it took until 2006 for ownership to exceed 10% of homes."
While tiny from a consumer penetration point-of-view, Tice acknowledges that Twitter is influencing the industry conversation in a larger-than-life way, and that, in turn, will end up influencing consumer perceptions about the microblogging service, as well as other forms of social media.
"While social media is still a minor part of the media and personal mix that consumers use to make decisions, Twitter and its progeny can certainly greatly influence the way the press covers a product or media property - what gets buzz and what doesn't," the Knowledge Networks report concludes. "Our advice to marketers is, in a tweet-size bite of 140 characters: Twitter is less a way to directly reach customers, and more a way to reach passionate voices who may influence perceptions of your brand."
| % of Users Who Turn To Social Media For Purchase Decisions | ||
|
| "Regularly" turn to social media | "Sometimes" turn to social media |
| Travel or travel services | 4% | 24% |
| Banks or financial services | 4% | 10% |
| Clothes or shoes | 3% | 23% |
| Eating out or restaurants | 3% | 21% |
| Cell/mobile phones/service | 2% | 21% |
| Personal care products | 3% | 15% |
| Cars or trucks | 2% | 15% |
| Groceries or food | 2% | 13% |
| Prescription or OTC drugs | 1% | 10% |
Source: Knowledge Networks' "How People Use Social Media." Percentage responding to the question: "How often do you refer to social media Web sites or features as a resource for information, reviews, or recommendations when in the market for [category]?" Base: 418 social media users.
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That said, I take issue with the fundamental premise of the research conducted in this study. To say that less than 5% of social media users regularly turn to these social networks for "guidance on purchase decisions" is to miss the fundamental point of how people use social networks. People simply don't use Twitter like they use ConsumerReports.com. They're not necessarily actively seeking out opinions via Twitter (though some are), but a much greater number of users are passively absorbing brand-related conversations in an incredibly ambient stream of opinions and conversations that makes up Twitter. For this reason, I don't view these statistics as particularly meaningful.
Regardless of whether the early adopters of Twitter have been media-savvy users from major metro areas, the reality is that Twitter is far more interesting than a tech innovation, because at it's core Twitter just enables human interaction (as old as time) in a new format. Whether Twitter lasts forever is secondary to the fact that people will always communicate using the tools they have at their disposal, and right now Twitter happens to be one of them. No, it's not a good place for advertising. But it's a great place for peer to peer conversation-- even if one of those peers happens to be a brand.
The social space in general is a place to build relationships, and as long as brands and research firms continue to approach Twitter as another marketing platform to disseminate a message and set the wrong targets and goals, we'll continue to miss those targets.
Alex http://www.twitter.com/alexgmorrison
There may be a missing ingredient, a catalyst. Like when someone posts a comment and then includes a link for support and there's a whole discussion there. If I'm buying a car I certainly want opinions. I want a look behind the curtain.
With regard to twitter, I'm still on the fence. Too much junk and the fad will fail. But if it's a condensed elevator pitch and takes you somewhere else via a link it could have value.
Thanks to you all for writing such amazing content--there's a great deal to chew over here. Isn't that of value?
Why is this hard? Seems like this debate is pretty much over, and what we should be concerning ourselves with, now, is what kind of messaging works to influence word of mouth in these environments, and how can these environments evolve to better satisfy both their users and their underwriting advertisers?
Social media technologies and sites are brilliant for engaging in the market conversation. The problem is, too many companies are just creating noise in social media spaces because they're trying to use it to "advertise." People want to connect, they don't want to be talked at--that's why the Do Not Call, spam filters, and junk mail delisting services emerged.
Asking people if they turn to social media when making purchase decisions seems a rather ridiculous question. We already know that very, very often, especially the larger the ticket price item, people turn to other people for purchase advice (as mentioned in the article word of mouth is #1.) How would you answer this question: "Do you turn to social media when making a purchase decision?" My answer: "No. I turn to people and communities I know and trust to give me purchase advice. Oh, but wait, I 'talk' with those people and communities often using social media, but the medium is not what I turn to, I turn to the people and communities and I just need to use the "tools"/mediums by which those people and communities converse."
1) People are interested in their wants and needs and how to fulfill those. They don't care about products. 2) People are using social media to connect with other people and a lot of the time that means they are talking about fulfilling wants and needs. 3) Sometimes people use social media as the "tool" to convey "word of mouth" (I wonder why Mr. Tice thinks WOM is a totally separate thing from social media? WOM means one person shares thoughts with another or group--the means by which they share thoughts could be face to face conversation, blog post, review on a website, Twitter, etc.)
Conversation marketing is working very well for many companies and it just so happens that many of the tools used in engaging in the market conversation are social media technologies.
Echoing thoughts here, I do believe the very definition of "marketing" no longer applies in the new media. However, to dismiss the revenue opportunity summarily is also quite premature.
In your post you mention in the first two paragraphs that “83% of the Internet population uses social media” and “only (sic) 16% of social media users say that they are more likely to buy from companies that advertise on social media sites”. Back-of-the-envelope, this basically means that 13% of all Internet users (an attractive demographic) base some of their purchase decision on the presence of social media advertising – which doesn't sound particularly dire.
Anyway, thanks very much, enjoyable piece.
What this is really about is the battle between communicating and marketing.
Just because brands and agencies want these technologies to become marketing or advertising channels doesn't necessarily mean they will. Many of these new technologies are now, and will continue to be, communications channels, not marketing or media channels.
What’s the difference? Well, sometimes not much, but sometimes a lot.
I’m reminded of the telephone which is a great communications device but not a great marketing channel (even if it had a moment as a sales tool before the backlash killed it). Has anyone figured out mobile marketing on a large scale yet? Nope. 20 years in, the cell phone is still a communications device, not a media device. (Although the similarities between the two are a constant doppelganger for us marketing types.)
The interesting thing about these new technologies is that forcing a marketing or advertising message through the pipeline usually kills the channel. Think MySpace which figured out how to monetize their audience vs. Facebook which hasn’t. Facebook should be really careful what they wish for vis-à-vis monetization. Consumers are notoriously fickle about brands intruding in places they aren’t welcome.
For Twitter, it’s looking like one of two things: If you Twitter to people you know, you’re group texting. If you Twitter to people you don’t know, you’re a blogger with ADD. Either way, you’re most likely communicating, not marketing. Ultimately, Twitter’s capability or acceptance as a media channel is dubious while it’s capability or acceptance as a communications channel is assured (at least until the next technology, application or brand replaces it).
Not to say that there won’t be niche instances where communications mediums are successfully used as media or marketing channels. Most likely, there will be acceptance among innovators / early adopters. But if the technology crosses the chasm and achieves adoption by early or late majority, it’ll be as a communications tool, not a marketing channel.
The interesting thing will be when one of these start-up companies comes up with a new technology and positions itself as a new communications tool rather than as a new marketing medium. And then has enough willpower and financing to withstand it when the popular media hijacks them into being a media or marketing tool. I mean, AT&T had a pretty good thing going for a long time before it tried to get sexy and failed miserably. ooVoo anyone?
That said, the horse may be out of the barn as most new (consumer) technologies have been forced to follow the “give it away and charge for content” model that eschews communications success (not sexy) for media success (sexy!).
Needless to say, it’ll be interesting to watch as these new technolgies wrestle with the challenge of how to drive adoption AND profitability rather than just one or the other.
Microblogging hooks people in 3 ways. 1) Easy of participation. 2) Instant gratification. 3) Constant flow of information. With all that going for it, which marketer wouldn't want to jump in?
This rush to tag Twitter as a fad reminds me of 7 years ago when I was turning up my nose at the first blogging platforms. I certainly learned my lesson!
Brands will evolve to becoming honest brokers with their customers, no longer having to throw silly parties, show commercials, or push a bunch of messages at them. Brands will need to sincerely get to know their acquaintances, build relationships, be of quality service to that customer, and remember that good relationship isn't based of a one thing (re: What brand can get consumer to buy from it)
I know that all CPGs think the old way.... as suggested by Forrester CEO George Colony, it may not be good business soon. Sooner. http://www.huffingtonpost.com/george-f-colony/beyond-the-gateway-recess_b_205458.html
Langston Richardson Chief Digital Brand Strategist, lazbro Twitter: @MATSNL65 @lazbro
Another Gem. Keep it up.
I see social media used very effectively in the automotive category, for one. Look at the discussion boards on edmunds.com for one. People are more than willing to comment, endorse, recommend and lend their own name and their own endorsement to the discussion. That's social.
http://tinyurl.com/orfhu7
As many studies have claimed, word-of-mouth is the #1 influencer. To not acknowledge how much that influence is magnified via social media, especially with millenials, is an oversight. Clearly paid ads in social networks and the obvious ways to market via them have not yet developed enough to be a powerful marketing medium but social media is far from hype. It has already reinvented the way many of us (including myself) communicate with our friends/colleagues/associates and there are certainly ways to leverage that power currently. Undoubtedly these changes in communications will continue and be ingrained into all marketing in years to come.
I suspect that the problem is in the wording of the question- specifically, forcing the respondent to definite what social media. Both Epsilon's and Guidance's ask questions about usage of online reviews, advice from "friends" on social networks, and reading blogs.
Every day people are struggling to define "social media", why put a question in the field that relies on a universal acceptance of a specific set of criteria? As a professor of mine loved to say, poor question design equals poorer conclusions.
Two people never have never participated in a real-time conversation over TV programs or ads. When was the last time you truly appreciated a telemarketing solicitation? When have you ever really said "Oh! Thanks!" to email spam ads? Whenever human conversation moves to a new communication medium, a bunch of opportunists rush to turn it into an advertising medium, sometime successfully, but usually not.
My point is that people have a 'marketing intrusion threshold' that defines over what media they are WILLING to accept brand messages. I LIKE the idea of LBS ads as I can block or accept them on my mobile device. I don't mind ads before a movie because I'm stuck in the theatre seat anyway and I've got nothing else to do. I don't mind seeing product placement in movies/shows, as long as it is cleverly and seamlessly done. I DON'T want an ad message to interrupt me in the middle of a phone call with a friend, no matter HOW relevant it is to me.
So while we're all debating the value of so-called 'social media', let's separate media with true advertising potential from those through which it would only be intrusive. Experimentation to uncover what people's acceptance threshold is is fine, but we should pay close attention to the results and, as an industry, build in the blocking tools to prevent another email spam phenomena from killing a potential golden goose, be it Facebook, or Twitter, or the next.
Some media have advertising potential, but a lot of others don't, and any medium that is 'social' in nature is likely NOT a channel ripe for 'push' marketing messages (think SecondLife). Sure, there are new places we can place branded messages and influence conversations, but I believe people will inform us, loudly and clearly, that MOST social media should be left to conversations alone. While I applaud some media for not becoming advertising channels, there are others that are merely missing an enormous opportunity, like Wikipedia. I don't think anyone would mind seeing banner ads relevant to the subject you are searching for there, but I could do with a lot fewer 'app invitations' on Facebook.
Just a thought. <<http://advertisingbusinessmodelredefined.blogspot.com/>>
"It's [social media] really about connecting with friends, or connecting with other people."
"What we're seeing is that word-of-mouth is still the No. 1 most influential source..."
Here's my question. Is social media having an impact on word-of-mouth marketing? And if so, to what extent? Is social media facilitating word-of-mouth marketing? Is that the true value of social media to marketing, that it provides an easier, more effective venue to talk about products and services?
These percentages for TV are in decline, and obviously word of mouth will ALWAYS be the most potent form of advertising.
This article seems to be reaching for a point that social media isn't what its hyped up to be, but the statistics aren't even made in comparison. I also agree with Lee in that the comparison to TiVo is not valid.
I guess it depends on how you define social media. Twitter is just a shiny object - not social media.
Take a look at this:
http://priuschat.com/forums/
50k members, >850k posts
These are only two out of HUNDREDS of large, active communities online. Believe me people are going there to make purchase decisions. It just isn't twitter or facebook.
TO'B
And this:
http://www.howardforums.com/
>900k members, >12 million posts
Is that social media? I think so - but it isn't twitter.
Good article. And as the CMO of a company that creates social marketing programs for big companies like Sony and Radioshack, I'm going to partially agree with you. To date, most brands have struggled to get any traction using social media, social networking and even online communities for marketing purposes. But here's where we differ. It's not the tools or the phenomenon that's failing them but rather the execution.
Companies that are using social wisely (take a look at Dell, who through its fledgling Twitter efforts, is already making $1 million/year in that channel) are seeing a pay off. In fact, our customers have seen as high as 60x return on investment on their social marketing programs (think expert content meets online community -- http://sony.com/learn as an example). One of the reasons these programs succeed is that we start with our clients' goals. By building programs around those goals and then managing and measuring these programs, we are able to see, AND improve, the impact they have on loyalty, retention, share of wallet and brand consideration.
To see some of the results that Sony is deriving from their "social" efforts, check out this recent case study that MarketingProfs conducted. http://is.gd/BG8X
One last point... while Twitter may or may not be the end-all-be-all (just like Tivo wasn't the ultimate answer in the world of video recording), it is likely an indicator of things to come. I believe DVR HH penetration has reached 60% in the US, even if it took 8+ years to get there. So too will a "Twitter-like" application that allows us to have many-to-many conversations not only with each other but also with big brands.
Thanks again for your thought provoking prose.
Best, Aaron | @aaronstrout
Mass Marketing as we know it has to change not social networking. I've seen and conducted several research examples of how people interact and pass along information within their networks.
Just because banner ads and advertisements don't get clicked on doesn't mean that social networks aren't stronger than other advertising medium. It means you are advertising and marketing the wrong way.
Be part of their conversation not an annoyance to it.
Also is your suggestion by this article, that we should ignore this revolution and hold tight to our newspaper and TV advertising? What do you suggest we do if Twitter is just Tivo?
BTW, I can't even watch commercials on TV anymore - my wife skips over all of them so if you are trying to reach me through that medium you can't. Neilsen may timeshift audiences but they can't stop my wife's FF finger.
I believe the report has made an incorrect and confusing comparison of Twitter to TiVo. While the adoption rates may be similar, that's where any similarity ends. The focus, functionality, and impact of Twitter and TiVo are completely different and completely unrelated from a marketing, advertising, and media consumption dimension. The comparison is an incorrect distraction.