Now here's a surprise: Social media does not matter.
“What?! How can that be? But we have shifted our entire marketing strategy to focus on social media! Are you saying we are wrong? Are you crazy?”
Many of the marketers reading this right now are probably saying (or at least thinking) some of these things. Bear with me.
So -- social media really does matter, but perhaps not as much as we are led to believe. And it certainly should not be a stand-alone strategy or the only thing you hang your marketing plan on. Here’s why.
In today’s connected economy much buzz has been created about the importance of social media, causing many, if not most, marketers to move significant portions of their advertising budgets into social media platforms. Subsequently, they ask of those spends: “What is the return on investment?” Not only is this question one that marketers struggle to answer about their traditional media investments, but it is even more complicated to answer because of the newness of social media.
Let’s separate wheat from chaff. First, the chaff. Most marketers are calculating return on investment using historical models that project sales depending on how much spend they allocate to certain marketing vehicles. This is all well and good, but oftentimes this requires years of spend and sales data to provide acceptable accuracy. Given the short-term existence of many social media formats, historical models suggest that the spend on social media platforms is more productive than other more traditional media because of some deeper type of engagement. While that conversation rages, both sides of the argument miss the underlying effect that matters, which is the social network -- the wheat in our story.
Let me clarify. Social media and social networks are different things. Social media pertains to the online channels used to create and share user-generated content. Social networks are much broader. Social networks refer to the social structure of individuals, their connections to one another, and how information is relayed across those connections. Yes -- online channels are a part of that, but they are only one piece of the puzzle.
Network theory has been studied in a variety of fields and most notably made plain in the book “Linked” by Albert-Laszlo Barabisi. In his book, he describes how networks are formed and how a few people have many connections and many people have a few connections. This is important for marketing because the net effect of spend is influenced by the impact of marketing in stimulating activity of social networks. Activity (talking, emailing friends, texting) among individuals earns “free” media that accelerates or decelerates a brand’s ability to convince people to buy it.
Understanding the difference between media and networks allows marketers to reshape their calculations to go beyond the main effect of who clicked on ad -- or saw a TV spot -- to include the interactive effects of how an ad shaped perceptions along the social network.
So as I mentioned earlier, it is not that social media does not matter -- but that it only matters in the context of the brand’s total environment. The thing that should matter to marketers is the social network. Why? Because social networks consider all touchpoints of a brand and provide a more realistic view of how consumers interact with that brand and its competitors. TV, radio, Facebook, etc. all have a cost and a likely influence on sales.
We can begin to understand how pulling one lever at one channel may have an effect on other channels (or even help your competitors if you aren’t careful!). The key is not to focus on the ROI of one single channel. Rather, it is to understand how the response across the social network makes one brand’s performance more productive than the others. Knowing this will help you make smarter and more efficient decisions when it comes to allocating a marketing budget or making recommendations for your overall brand strategy.