In the fall of 2004 when I was a senior at Marquette University in Milwaukee, Wisconsin I joined The Facebook (that’s what it was called then) and uploaded my first ever profile picture. Upside down. “Might want to try rotating that picture, dumba**,” wrote my younger brother on my Wall. He was a sophomore at the University of Wisconsin at the time and had been on Facebook for a good six months before people from my school were allowed to have profiles. Because back in the day, you had to have a .edu email address to join The Facebook.
Fast-forward to 2012 and it’s obvious that times have changed. Today, anyone can join Facebook. You can even own a piece of it. What started as a niche social network modeled on Friendster (remember that?) is now a publicly traded company worth billions of dollars.
Hard to believe, I know. Especially when you read this 2004 article from the Harvard Crimson that says “Zuckerberg . . . did not create the website with the intention of generating revenue.” In 2011, what’s now known simply as “Facebook” made $3.7 billion – the majority of which – 85% - came from advertisers.
So I imagine the executives over at Facebook were probably really wishing there was a “Dislike” button when news broke earlier this week that General Motors, the third-largest advertiser in the U.S., decided to stop running paid ads on Facebook. According to the Wall Street Journal, GM determined that “paid ads . . . have little impact on consumers’ car purchases.”
Elaborating further, GM spokesman Pat Morrissey told Detroit Free Press Reporter Nathan Bomey, “I’m not an ad expert, but you look at the clicks, you look at the views, you look at the consideration, we were getting a lot out of our content — a lot out of our Facebook pages and brands — but we didn’t feel we were getting the ROI on the advertising part of it,”
Then came the drama. The Ford Motor Company, a long-time GM competitor, used this development as an opportunity to take a jab at GM via Twitter, implying that good execution makes Facebook advertising successful. It’s apparent that the two auto giants’ strategies are diverging, but who really knows if Facebook ads influence people to buy a particular brand of car, visit dealerships, or recommend certain makes and models to their friends?
I would argue that if, as an advertiser, all you’re looking at is clickthroughs and page views to determine ROI, you’ll never have all the information you need to understand what’s truly influencing your customers, because the only way you’ll ever really know what influences your customers is to ask them.
At ForeSee, we’ve pioneered something we call the Social Media Value Calculation, which allows companies to understand the true impact of social media on visitors to websites and even shoppers in retail locations.
In a recent study, we evaluated 188 websites and over 295,000 responses from individual consumers just in one month. As our CEO Larry Freed shared in a recent article on the subject, we found that only 1% of site visitors came directly from a social platform via referring url. Yet 9% said social media was their primary influence for visiting, and 18% said social media played some kind of role in influencing their visit.
We also found that those who reported being influenced by social media had a higher average order size. But when we examined the purchase behavior of those who said they were driven to a site directly from a social network via a referring url, we saw those visitors generally had a lower average order size than the rest of the purchasers. That might sound strange at first, but the reality is those visitors were often being driven to the site by an advertised discount or promotion.
The findings of our study are just averages and aggregates. They may not mean much to an individual retailer or auto manufacturer, just like average American body weights don’t have much relevance to an individual American’s weight. But the point isn’t really whether Facebook ads are or aren’t working to drive business and loyalty and recognition for GM or Ford or any other company advertising on Facebook. Whether a company spends $10 a day or $100k a day, the point is that the only way to find out what’s influencing your customers is to ask them.
You can’t rely solely on behavioral data to determine ROI. You have to add attitudinal data into the mix – and what you find may surprise you and will definitely help you to improve the overall customer experience.
Despite suspending their paid advertisements on Facebook, it’s been reported that GM will still put $30 million into its Facebook efforts this year in content creation and app development. Obviously GM understands Facebook (and other popular social platforms) provide value for companies.
You just need to get the facts from your customers, not your clickstream.