By: Steve Goldner, Senior Director of Social Media
So, you are tired of reading about Facebook this past week. From the controversy with GM pulling its $10M Facebook ad program to the Facebook IPO. And then the surprise wedding of Facebook founder Mark Zuckerberg to his longtime girlfriend one day after the IPO. And in all this coverage, no one put the real Facebook issue on the table.
Everyone is asking if Facebook ads provide a winning ROI. Frankly, that is the wrong question.
Facebook should not be your social media program. It should be part of your social media program, but social media is bigger. And for that matter, social media is only a part of marketing (and other important business functions as well like customer support). To look at every slice of a marketing program and see if there is an ROI does not make sense. I’ll explain why shortly.
Before I explain the ROI issue, let me first rewind the tape from last week’s events. I was asked to provide comments and answer some questions for a number of publications. As is always the case, my comments were taken out of context. I was asked about GM publicizing that it was pulling its Facebook ads and my thoughts on that. Here was my complete response …
“WSJ reports that General Motors plans to stop advertising on Facebook as GM marketing chief Joel Ewanick said the auto maker ‘is definitely reassessing our advertising on Facebook, although the content is effective and important.’
“The news could not come at a worse time for Facebook, but states some strong commentary on both Facebook and GM.
“First GM … this is the same company that went before Congress looking for hand-outs to save their fledging company. Was Ford in front of Congress? No. Is it a coincidence that Ford has an extremely productive social media program that is fully integrated into other marketing programs? No. What Ford does, that is absent from GMs social media effort, is that they have a strategy, plan, execution, and metrics that integrate ALL owned, earned, and PAID media endeavors. They do not have an isolated Facebook paid media program. Furthermore, I question if Ewanick understands that, on average, only 16% of brand postings on Facebook reach their ‘like’s’ newsfeed as revealed at the fMC on 2/29/11. He should look at Facebook’s reach generator (paid offering from Facebook) with regards to “content (being) effective and important.” The fact is that GM does not know how to integrate social media into a winning business strategy. The issue is not Facebook ads.
“As for Facebook … this news is very detrimental for Facebook right before their IPO. It paints a picture that a struggling company cannot rely on Facebook to help turn them around, but the same could be said about any pure-play marketing advertisement program. The reality is that Facebook advertisement, by itself, is not a great use of precious marketing dollars. Facebook has done a poor job positioning and describing how their platform drives quantifiable business results. Facebook is not the equivalent of having a social media strategy and it is time for Facebook to communicate how they are PART of a winning solution and stop making ill-advised marketers believe they are THE social media solution.”
I was also asked what I thought Facebook going public would mean to the company and marketers using Facebook as one of their marketing channels. I provided some brief comments, as I will have an article in eContentMag.com this coming week covering this topic. Here are the snippets I provided:
- As Forrester’s Josh Bernoff, SVP of idea development, tweeted this past week, “Buying Facebook shares? The original investors took their risks & will now get their rewards. Now the risk is passed on to you.” But investors are not the only ones taking on risk; marketers now have added risk with Facebook if they put all their social eggs solely in the Facebook basket.
- The fact that Facebook is now a public company means Zuckerberg and team need to answer to quarterly results.
- While Zuckerberg may continue to talk about the importance of sharing what’s going on with your connections, there will be deeper focus on revenue generation. The real question is whether Facebook can carry off both sides successfully.
- As Facebook feels increased revenue pressure, I see a potential user conflict.
- As Facebook introduces more ad and revenue tactics (such as the recently announced reach generator) it will be interesting to see how users react. It will be a delicate balance for Facebook to keep usage high while introducing greater revenue generation.
- Keeping Wall Street, brand advertisers, and users all happy and content at the same time will be one massive effort.
Here are the various places that published edited versions of my perspective and point of view:
- USA Today — GM to stop buying ads on Facebook
- MediaPost — Facebook Ads Need Traditional Measurement Tools To Determine ROI
- MediaBistro — GM’s Decision Not to Advertise On Facebook Not Such a Big Deal After All
- Business Insider — What Everyone On Madison Avenue Is Saying About Facebook
- New York Post — Social downshift: GM slashes $10M in Facebook ads
The real issues facing marketers is not Facebook ROI. Let’s start by looking at consumer buying behavior. Today, there are many components and influences that in totality lead to a purchase. For a moment, let’s just concentrate on digital use. We need to understand the plight of the consumer. They may hear about a product from a friend on a social community or in an email. They may look for the product or product category on Google or other search platforms. Seeing an ad on Facebook or other websites may work to remind them of their consideration. They may look for reviews online. A promotional ad may trigger an action. All of these things contribute to the purchase path and are important elements. Are we simply going to give “the last click” the credit for the conversion? Can we measure other contributing factors?
You see this gets complicated in the digital world we live in. I did not even mention offline marketing activities. They contribute to the purchase decision as well and make this ROI discussion even more difficult.
Thus, it is not an issue whether Facebook ads have an ROI for marketers, but rather there is a need for marketers to use digital display ads (Facebook and others) integrated in digital strategy. A digital strategy that includes owned, earned and paid media. If you look at consumer digital behavior, they do not just go one place and make a purchase decision. They are using different tools (search, ads, social, reviews, etc.) to make purchase decisions.
“Marketing ROI” is what should be measured. We should not try to place an ROI on each element of marketing. Yes, we should measure variables that show success (or lack thereof), but ROI is not a realistic measurement of Facebook ads. There are key performance indicators (KPIs) that should be measured such as click-throughs and impressions. Once again, these are attributes that “build up” to a sales conversion, but they should not be specific to the ROI equation.
It is time for marketers to have a much greater degree of knowledge and understanding of customer behavior and how they are using digital in their purchase decisions. Marketers must develop a marketing strategy and plan that integrates the digital channels their target market uses. Marketers must determine how they will measure each of the piece of their strategy, but ROI should be left as a metric for evaluation of the entire marketing program.