Making sense of investing in social media marketing

Social media engages around 2.2 billion people globally and as a consequence, there is great potential to target mass numbers of people through advertising with an accuracy that has never been seen before. Advertising on social media in the United Kingdom has reached £500 million per annum and is set to rise at a strong rate. Compare this however to the United States and £500 million is the amount which is predicted to be spent by the Presidential candidates on social media campaigning alone.

These are all promising figures which would suggest that social media is providing a healthy return on investment for companies but this is not true and there is currently no proof that social media creates any investment benefit at all. In fact, platforms like Facebook are beginning to experience a saturation point. So why is business putting so much of their money and resources into something from which they aren’t going to benefit?

Social media platforms have provided a stage from which companies can engage with their customers either to deal with customer relation issues (complaints/problems) or to engage in conversation. Lots of companies now devote teams of their staff to monitoring social media channels so that they can respond to anyone mentioning their brand with immediacy. This is clearly an instance where social media can benefit business and is often a cost free.

Paying for social media advertising has become big business in recent years and has fuelled strong development and innovation in the ways in which platforms such as Facebook and Twitter engage with their audiences.

In 2010, drinks manufacturer Pepsi announced the bold move of moving all their advertising content over to social media. The result of this was a very high following of the brand on social media channels but a 5% drop in revenue across the group. The problem was that Pepsi was advertising to existing customers. Very few people would go out and buy a can of soft drink if they had just seen an advert on television, but it is at the point when they are next shopping and they recognise the brand on the shelf that makes the advert work. Subsequently, Pepsi dropped its social media campaign and reverted back to television.

Five years ago Pepsi opted to direct much of its marketing towards social media (image courtesy of Pepsico)

This highlights a wider problem with social media advertising compared to television. The most popular TV adverts barely mention the brand they are advertising and as a consequence, the consumer does not feel like they are being sold to. Advertising on social media however feels targeted and deliberate, not a tactic that is going to draw in new customers. Despite television being on the whole indiscriminate in its audience focus, it has the ability to reach millions of people in a matter of seconds, leaving it undisturbed as the most profitable form of advertising.

We can say with certainty that 2015 has been a record year for investing in activities on social media and it is a fairly safe assumption that 2016 will be even bigger: trends are all rising. Whether the driving force behind this rise is commercial judgement, or fear of being left behind generated by the consultancy and agency hype is still remains unanswered.

Going into 2016, there are insights and actions that should be taken into account when considering your business’s social media strategy:



James Hammersley is the co-author of Leading Digital Strategy a guide to eCommerce strategy published by Kogan Page. He is a founding partner and director of Good Growth, a digital change consultancy which has worked with organisations such as The Economist, The Co-operative, O2 and Manchester United.