Social Media Marketing Companies? Social Media Lines Are Being Drawn!
By: Abe Kasbo
Facebook stock began trading on May 18th. Not a Googlesque performance by any measure, the stock sputtered and continues to do so as of today. Yeah, it’s early, but Facebook’s stock seems to be exuberantly valued and trading at a premium, even today. We have not learned much. The gold rush in social media, head-fakes and hesitation dribbles are by no means over.
It seems that enthusiastic lines in the sand are being drawn between social networking professionals and its skeptics. In his is recent column in Marketing Land, Ciaran Norris decries GM for pulling out of Facebook pointing out that the global advertiser dedicated a puny $10 Million out of $1.8 Billion to Facebook. Apparently, GM did not like that Facebook would not let it advertise the way it wants to, using heavy banner ads. He points out, and we concur, that Cost Per Action rather than clicks is more valuable. “What TV does, better than almost anything, is to create brand connections, and emotional reactions that result in us choosing one product over the other. And Facebook is working to prove something similar — that social connections, not hugely flashy banners, can do the same,” said Norris.
Social media relevancy in our lives in undeniable, but still begs questions: what value does it deliver to advertisers? Ultimately does engagement the way it is defined in the social world pay off for an advertiser? The answer may be that no one truly knows…yet.
The main stream business media is awash with anecdotal evidence about how some business transformed itself from a sleepy enterprise to a top selling juggernaut using social media. Though empirical evidence over time is much harder to uncover – yes, of course, we only go back to 2004. Yet, if social media enthusiasts are willing to tout its exponential growth, they must be willing to address its gaps. If Dunkin Donuts is giving away donuts, they’re going to get a gazillion fans (6.3 million on Facebook and about 146,400 on Twitter), a small fraction of which seems to be or may be “engaged.” D&D’s social strategy is exceptional and thoughtful, but the value of social media outlets to business, we believe, cannot be sustained by major brands alone. The shift to mobile is a key reason why. Unless, businesses invest enough in creative campaigns to make it compelling for customers to engage in their brand. That’s no small investment by the way, so once again we’re back to the big guys.
Yet social media outlets recognize that user generated content drives their raison d’être. Its that content that keeps people interested and engaged. People showing interest in people and the things they love, and brands are certainly a big part of that. The Wall Street Journal recently ran a piece on how social media outlets are partnering with celebrities to drive traffic and interest. “We have a business model based on advertisements and as people spend more time on Facebook, we monetize that,” said Jason Osofsky, director of Media Partnerships for Facebook. The article cites celebrities like Ryan Seacrest, Shaquile O’Neil and Jessica Alba. Ms. Alba’s following includes 3.2 million on Twitter and 4.5 million on her Facebook page. “You have to have a social-media presence if you want to have a successful business, scalable business,” Ms. Alba says in the WSJ article. Yet one has to wonder that if Ms. Alba wasn’t a high profile celebrity, would she have those millions of followers?
The Los Angeles Times‘s story on why GM pulled out of Facebook quotes Chris Cedergren, president of Iceology, a West Los Angeles consulting and research firm that works with the auto industry, who said “social media has yet to be time tested as an advertising tool and that research has shown that ‘people don’t really pay attention to the advertisements.’” With network television viewership dwindling, the emergence of consumer generated video, which itself is highly fragmented, search appears to be a stronger and more reliable contender for advertiser dollars right now. At the risk of overstating the obvious, social media, as we are defining it today, is obviously still in its infancy and we believe it is right that people like GM demand more from it. Mass aggregation does not make a good case for advertisement. After all, Facebook is all about me and it’s my 15 minutes of fame. And, since I am paying attention to what interests me, mainly what I am sharing my friends and what my friends are sharing with me, the challenge for Facebook is to get me to pay attention in a meaningful way to its advertisers. How will Facebook and its advertisers distract users from their never-ending 15 minutes of fame? That coupled the staggering growth of mobile (iPhone, DROID) may prove more difficult for Facebook advertisers because the screens are smaller. Where do you place the advertising? If Facebook’s business model is about monetizing aggregation, how do you do that if a good chunk of the aggregation is happening on mobile devices?
The elephant in the room is the fact that social media has been with us way before we identified it as Facebook, Instagram or Twitter. One of the lessons here is that communities have always gathered online and off by interest putting more pressure on for Facebook and others in the space to produce meaningful results. Somini Sengupta reported in the New York Times that Facebook is turning “Likes” into Ads as one of the ways to monetize aggregation. Facebook is using links that people like or post as sponsored stories, with businesses like Amazon as the sponsors. Business will “pay Facebook to generate these automated ads when a user clicks to “like” their brands or references them in some other way. Facebook users agree to participate in the ads halfway through the site’s 4,000-word terms of service, which they consent to when they sign up,” said the story. Yet, Nick Bergus, the man who’s “like” Facebook turned into an ad was furious enough to want to delete his Facebook account, but didn’t. That kind of sentiment is exactly what Facebook and its advertisers fear of course, so as Facebook and its advertisers continue to learn about the platform, Facebook will be more under pressure more than ever before because of its place in the public markets. At the same time, both social media marketing companies and the platforms themselves understand the addictive nature and lure of the medium and its role in our daily lives. And that may just allow it the cushion it needs to experiment with monetizing its users while keeping advertisers interested.
Look, social media has been with us when the big names were no names at all. In healthcare, ObesityHelp.com, a resource site for obese people seeking information on weight loss surgery, claims 600,000 members since 1998 and currently claims 3 million page visits a week from people looking for help. Infertlityhope.com is another site that been successfully bringing people together about fertility related issues. Sailnet.com was launched in 1994 “as a resource where sailors could find everything they needed to support their own pursuit of the sailing lifestyle.” And, there are many other examples who are thriving as a business right now.
The onus is on the social world, like it is on television, print and other outlets, to prove its value in the market place. At the same time, businesses and agencies must rethink engagement and bring forth innovations of the intellectual and creative kind to drive campaigns. Although, regardless of how things shake out on the desktop with respect to social, mobile is the real game changer here folks, let’s pay careful attention and see how the social world responds to monetization of the audience in this space.