Why Facebook's Naysayers Are Dead Wrong

Like All New Digital Mediums, It Will Take Time to Sort Out ROI For Social

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A chorus of critics have come out of the woodwork recently to proclaim the ineffectiveness of social marketing. Their reason is Ehrenberg-Bass' latest research on the before and after of Facebook's EdgeRank algorithm changes, which noted a decrease in overall reach to users seeing organic posts on Facebook from a brand they "like" but suggested that Facebook engagement rates are still just north of 1%. As I read comment after comment, there's only one thing that kept running through my head.

We've been here before.

The skeptics scoffed at digital, and they wound up being wrong. The people naysaying social should know better by now. We learned with digital that it takes time to resolve fundamental questions of ROI and attribution. The tools to measure, attribute and understand the value of engagement are only just now being invented. But rest assured, we'll find our way there. Moreover, no one can doubt the enormous shifts in the way media is produced and consumed and thus the way brands are built.

You don't build brands at people, you build brands with them.

In the meantime, some skepticism is healthy and encourages rigor, but there are glaring issues with the Ehrenberg-Bass research that must be addressed lest people fall into old traps and make decisions informed by flawed data.

The Ehrenberg-Bass critique of social engagement is built on the misguided belief that an engagement rate of 1.4% with a brand's owned media postings to Facebook is too low to deliver significant benefits to brands. The report denigrates engagement by saying its value lies solely in the direct clicks associated with a piece of brand content. This click-through-rate mentality for measuring the value of engagement is dead wrong.

Others say the value of social lies solely in the masses of direct impressions a brand generates by posting and promoting content. This is a reach and frequency oriented mentality—and it too is wrong.

The response to both camps is quite simply this: you're measuring the wrong thing. The real power to influence pre-purchase intent for brands lies in the trusted, public impressions generated by user engagement with brand content.

Here are two good reasons why – trust and money:

The uniquely public nature of brand engagement in social platforms is the key to its value as a marketing medium. Numerous studies have independently determined that observing a friend interacting with a brand in social has a powerful influence on pre-purchase intent for that brand. In fact, when comScore ran the numbers last June they reported that Starbucks consumers exposed to branded earned media from a friend were 38% more likely to make an in-store purchase than those who did not. Similarly, a study conducted by the E-Tailing Group in 2009 found that 67% of individuals spent more online after recommendations from their peers in online communities.

We recently conducted an analysis of Red Bull's highly talked about Stratos campaign to assess the potency of social engagement as a generator of trusted impressions (we call them 'Leveraged Impressions'). And the results were overwhelming.

According to data from our social and campaign monitor tools, the campaign generated nearly 55 million impressions for Red Bull as a result of consumers engaging with Stratos content. Take into account the comScore data for impact on in-store purchase incidence (again, a 38% increase) and you can begin to understand the potential impact for Red Bull sales in future quarters as a result of the engagement surrounding this campaign.

Looking at our data, the power of social engagement to influence brand-oriented business outcomes is crystal clear. Brand marketing via social engagement is the only path to scalably delivering Red Bull Stratos-type results, and so it should come as no surprise that social engagement is fundamentally transforming brand marketing.

All in all, the skepticism we are seeing is not unexpected. We've seen this show before. Regardless of Facebook's EdgeRank algorithm changes or how well social ad units, or 'likes' or 'follows' perform in their current incarnations, in the face of such a profound and fundamental shift in the marketing landscape, skepticism about social engagement as a brand builder is foolhardy. The digital revolution continues and the optimization of social marketing will prove to have a bigger impact, and be more effective at brand building, than the digital marketing we know of today or the traditional marketing we've seen over the past 20 years.

If anything, the last few years have shown us that we are experiencing the largest shift in the communications landscape in the history of mankind. Companies that embrace the value of engaging with their customers to build brands will out-perform those that follow the rigid dogma of reach and frequency. They will thrive in a world that has moved on from mass communications to a mass of communicators.

Jeff Dachis is an entrepreneur and currently the CEO, chairman, and founder of Dachis Group. Jeff is the co-founder, former CEO, and former chairman of Razorfish, the worlds largest digital marketing solutions firm.
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