Will the social media bubble burst for brands?

Will the social media bubble burst for brands?

People's use of social platforms is maturing, yet brands are still struggling to establish how to make their presence pay, writes David Benady.

Ever since social media emerged and a significant number of consumers turned to it as a means of communication, brand-owners have worried about how they should use it. Facebook and Twitter have become the standout platforms, but for marketers the conundrum has been how much of their budgets they should dedicate to them. Is social a promotional tool, a way of building brands or simply a place where you can manage your brand reputation?

Add to this the more recent concerns about the sort of user-generated content alongside which ads are appearing, and brands are doing some hard thinking about how they use these platforms.

Now, a 10-year study into the way brands use social media has found that it "may not be the mass-marketing tool they had hoped for". Indeed, the research suggests social media could actually be damaging for many brands.

Researchers Don E Schultz and Martin Block at Northwestern University in the US used marketing surveys created by Prosper International to analyse brand and consumer behaviour over 10 years.

Only 10% of consumers said they shared content on the web, while even fewer admitted to ever mentioning brands on social media. When asked about brand preferences, the answer consumers gave most frequently was "no brand preference"; most brands have preference scores in single figures. More worryingly, those most likely to express no preference are the heaviest users of social media.

The findings raise several questions, as Schultz highlights: "Is social media really a powerful mass media, which can be leveraged to build and maintain brands, or just another niche media form, which specifically appeals to a limited audience?"

He believes social media could be making the situation worse for brands by commoditising them through wide-scale access and distribution. Also, by detracting from traditional media, social media may be undermining brands’ cultural status, built up through TV and print. He contends that social media might be best suited to promoting niche brands by disseminating information to a small band of aficionados.

Bubble to burst?

Alongside such devastating findings are sceptics who believe social media has created an advertising bubble that will inevitably burst. They argue that it has failed to provide brands with a platform for growth, and that brand-owners have been taken in by a form of confidence trick, having swallowed the hype and misguidedly invested big chunks of their budgets in an unproven medium.

These doubters claim that there is a well of disaffection among brand-owners about social media. Marketing consultant Peter Field, who has studied the effects of creativity on brand success and analysed social-media campaigns in depth, is damning in his attack on the channel.

"Social media is a huge bubble waiting to be burst," he says. "Marketers feel exposed if they don’t have a social-media strategy in place. They don’t stop and think ‘Is it right for my brand and situation?’ It has been ludicrously overhyped. Companies such as Facebook are desperate to monetise their business and are always looking for new ways to turn a coin and squeeze money out of marketers. They have an obsession with increasing revenue, rather than meeting the needs of those who keep them afloat – brands."

Social media is used too much as a short-term promotional tool, building databases rather than engagement.

Field adds that TV advertisers have found creativity and entertainment are key to successful brand communications. "That lesson is yet to be learned by social media. It is used too much as a short-term promotional tool, building databases rather than engagement."

However, for James Quarles, Facebook’s regional director for Europe, such views betray a lack of understanding about the social network’s offer and the power of recommendation and word of mouth that social has opened up for brands. He rails against "the idea that this has become some fanciful distraction".

"Facebook is a brilliant brand-building medium," says Quarles. "The more front-foot and proactive brands are using it as a place to have a dialogue. If you become as interesting as people’s friends in the role that you can play in people’s lives as a brand, that is a big evolution from interruptive advertising. When it is done well, it has very real business impact. We don’t measure that impact in ‘likes’ or ‘fans’ or retweets, we measure it in brand health and brand equity and people’s interest in going to purchase that brand."

Facebook supports these claims with quotes from marketers backing its services. For example, Sarah Mansfield, media dir­ector for marketing services at Unilever UK and Ireland, says: "Facebook’s news feed gives us a great way to continue to keep the Cornetto brand at the front of people’s minds when they are more likely to be out and about. We recently became the first brand in the world to use a Newsfeed Reach Block to [get to] 21m consumers in just one day wherever they were."

However, critics contend that people are not receptive to brand messages in their news feeds, as they are socialising rather than in the mood for messaging – unlike TV, where they are often cued up to receive advertising by the programmes they are watching.

Facebook, Twitter and other social-media sites may be adding users quickly, but as people become more accustomed to social, they are becoming more picky about how they use it and what they expect from it. Concerns about privacy and whether users want everybody who follows or links in to them to know their personal business are driving people to look for different ways of using the sites. As "trolls" have run amok and the balance between free speech and exploitation becomes less easy to achieve, the appeal of these platforms is diminishing for some. Alternative platforms – from Tumblr to Pinterest, WhatsApp and Kik – are attracting new social-media users and changing the game.

Some see the more established platforms trying to boost ad revenues before the bottom falls out of their markets. As one advertising source says: "Look at the mania of Google and Facebook to sell into agencies. They want to get into brands’ media plans because they know that these social spaces are not places people want to see ads. A brand has to wonder why they should spend £500,000 of their £3m advertising budget on social media when people don’t want brand messages in their news feeds."

However, Quarles argues that the combination of a TV campaign with a social-media push is one of the most powerful forms of marketing available, as each medium bolsters the other.

Nonetheless, a serious concern for brand-owners is the context in which their brands appear. When, earlier this year, brand messages ran next to content that promoted violence against women, it pushed to the forefront the dangers of this type of platform. Some pulled their ads until Facebook could assure them they would not appear alongside such contentious material, and the site said it would redouble efforts to ensure that content was suitable. More recently, controversy over the monitoring of cyberbullying on ask.fm led brands to pull their ads from that site.

Neil Hughston, founder of ad agency Johnny Fearless, says: "I can imagine more brand-owners wanting greater transparency and regulation [to prevent] stuff turning up next to unpalatable content."

However, he says that social media is here to stay and brands need to ensure they have the most engaging ideas to succeed in social.

Effective vs active

According to Twitter sales director Bruce Daisley, the idea that brands are playing in dangerous territory when they enter the social space has been sensationalised in the media. "We have hundreds of brands active on Twitter and I have never heard that as a reason for not increasing their spend," he says.

Even so, Daisley accepts that questions about the effectiveness of social media as a brand-promotion tool are fair. "Brands have been on Twitter since day one, using it for profit before we had an advertising model. The effective use of Twitter came before we were in the business of selling that to brands," he adds.

Daisley points to research from Deloitte measuring the effectiveness of Twitter against other forms of advertising. "Deloitte found that, looking at the computer-games sector for top titles, Twitter was four times as effective as spending more money on non-Twitter advertising."

While some working in traditional advertising agencies are wary of social media, others see it as a useful way of amplifying messages. "We are getting to a place where people have to recognise that social media is engendering a greater level of engagement than other broadcast media allow you to have," says Russ Lidstone, chief executive of Havas Worldwide London.

Still, there is an argument to be made that there is a tech bubble in social media, following the IPOs of Facebook and LinkedIn, says Jamie Kenny, head of strategy at Jam Social. He has some sympathy with the view that too many brands have spent money on social media without necessarily seeing great results. "I’ve seen a lot of hot air about big numbers in social media – they can be misleading."

Kenny points out though that marketers are becoming more adept at measuring the effectiveness of social and demonstrating the ROI, although it takes time to construct an advanced analysis.

As with any bubble, its existence often becomes apparent only once it has burst. Whether it becomes clear before then either that social media has been overhyped or is a game-changer in the way in which brands interact with consumers remains in the balance.

Brands and the bubble: friends and followers

By Rob Norman Chief digital officer global, GroupM

Facebook has more than 1bn registered users; 700m are active every day; 10m Kenyans and 80m Indians use it. More than 200m of us tweet; more than 200m of us are ‘LinkedIn’. We post more than 50m photographs a day on Instagram; we upload three days’ worth of video every minute to YouTube and many of us Tumbl (sic). This is no fad; it has become part of the daily diet of human behaviour. There’s no room left for social deniers.

As for brands, they tend to follow eyeballs. Advertisers abhor blank space like nature abhors a vacuum; they buy ads, of course, and do so more and more, but many brands go deeper and attempt to become of the platform as well as on the platform. They embrace these opportunities with vigour and build their own social islands within these increasingly massive macro social platforms.

This is no fad. There’s no room left for social deniers.

For most, this translates into the pursuit of friends and followers to develop, especially in an era of increased attention to privacy, a ‘soft opt-in’ community, or even a customer annuity that has agreed to allow brand messaging into their stream. This is Sim City for brands. The calculus is simple; build the community, engage it, nourish it with valuable, shareable assets and extend the reach of those assets through organic sharing and accelerated (paid) distribution, with the expectation that the community will grow and yield the fruit of more sales and advocacy.

Engagement and nourishment are becoming the central challenge of social-media marketing. Each platform is driven by a relevance algorithm. This exists to promote content that is most valuable to an individual and, by extension, welcomed (or at least tolerated) in their stream or feed. Relevance is broadly defined as that with which you most frequently interact; the margin between success and failure is considerable. Sometimes, to their surprise, ‘but I thought you were all my friends’ brands reach as few as 5% or as many as 40% of their friends with any given post, depending on the frequency of interaction. If your brand is at the low end of the scale, you have a problem – either the wrong voice, the wrong assets, the wrong publishing cadence or, heaven forbid, a cohort of fans that you bought who simply don’t care about you.

Successful brands use communities for long- and short-term marketing goals. They build relationships and long-term social relevance, and drive sales. Correlative work by Facebook with Datalogix suggests that the investment is paying off. It’s doing so best for those brands that have communities growing organically as a consequence of the value they create for users, and that most consistently publish assets worthy of amplification. Value is a function of rational benefit, responsive customer service and creativity that will be kept, used and shared – because that’s what real communities like to do.

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