With the rise of social media, business strategy in marketing departments followed the “like.” Endorsements on social media channels like Facebook was thought, axiomatically, to lead to increased sales. That’s one of the reasons that so many organizations have social media pages.
Social media engagement, so the theory goes, leads to more sales, both to “likers” and their social networks.
What Is the Value of a Thumbs-Up?
The exact value of a “like” or other social media approval, however, has been disputed for years. A roundup by Business Insider several years ago revealed that the values of likes was, on the whole, fairly negligible, ranging from $136.38 to $8.00. Some groups even said the value was $0 – it was all potential energy until a sale happened.
The most recent Harvard Business Review has weighed in with a study that says, essentially, that “likes” do not translate into either increased sales or ripple effect sales across an endorser’s social network.
The authors believe that the correlation between likes and sales dollars long held by marketing departments is false. Marketers are confusing cause and consequence. The sequence is not “like a product – then buy.” The more likely sequence is “favorably disposed toward a product, thus like. Because favorably disposed toward product in the first place, buy.”
This could be the explanation for why companies like Starbucks do see an impact. Endorsers of Starbucks are, data show, likely to spend 8% more than people who don’t “like” the company. Their transactions total 11% more.
It also likely (no pun intended) explains other data. While 80% of Fortune 500 companies have a Facebook page, other studies show that 80% of markets cannot quantify exactly the value social media contributes. A whopping 87% of chief marketing officers believe they can’t be sure that social media creates new customers.
HBR focused on Facebook but believes the consumer behavior is generalizable to other social media channels.
So what does this technology news mean for the future interaction of social media and business?
First, it means that likes do not necessarily influence buying or any other behavior. A like by itself is not a strong endorsement.
Second, it means that marketers should combine “push” and “pull” methods. Branded content and advertising are still important on social media, just as they are in other media like television. Likes can be used to create a target audience for branded content and advertising on the sites and elsewhere.
Third, it opens up new possibilities to use social media. Social media can be used as a way to gather information about a given company’s customer base. Lego, for example, uses its social media sites to get information about which of its products customers like the best. It also solicits ideas for new products.
Marketers should also remember that it is very important to have a metric to assess the success of social media channels, just as it is to assess the success of any other marketing activity. Is the goal to improve sales, brand recognition, penetration of a demographic?
Although data show that social media “likes” are not correlated with sales, targeted content and advertising campaigns should not be discarded. It’s important for companies to determine what their social media goals are, and define program metrics that are both measurable and have meaning for the business.