Spending on social media currently accounts for about 9 percent of marketing budgets, according to a recent survey of CMOs by McKinsey & Company and Duke University, and that spending is expected to increase 128 percent during the next five years. At the same time, traditional advertising budgets are expected to decline by 3.6 percent in 2015.
That likely comes as little surprise to most marketers. After all, social media is an increasingly important messaging platform, whose “network effect” only grows with each passing year. Even so, retailers planning their 2015 marketing and advertising budgets may want to think twice about how they are using social media and what return can be expected, particularly if the intended ROI is directly connected to increasing sales.
That’s because, despite the tremendous number of Americans using social media institutions to stay connected, a clear majority of U.S. social media users say Facebook and Twitter, among other social sites and apps, have no influence on their decisions to purchase products. Indeed, only 5 percent of users say social media have “a great deal of influence,” according to a Gallup survey, while another 30 percent say these channels have “some influence.”
“While social media may have more influence than some Americans realize or will admit, these data show that relatively few consumers consciously take into account what they learn from social media when making purchases,” says the survey company.
Even among millennials – a generation that most regard as a key social media audience – just 7 percent see social media as greatly influencing purchase decisions. What’s more, a separate study from research firm Geometry Global found that more than half of U.S. social media users see no point in “friending” a brand online.
“There is not a real rejection of brands using social channels to communicate with [consumers],” said Cesar Montes, a Geometry chief strategy officer. “The rejection is about brands using social as if they were my friends in the typical way that Facebook users would use [social].”
So while an overwhelming 94 percent of social media users say they use these channels to connect with friends and family, a far less 29 percent say they use social media to follow trends and find product reviews and information, while 20 percent say they visit social networking sites to comment on what’s new or write product reviews. Even among the small portion of American consumers who “like” or follow a company on Facebook or Twitter, a third say that social media have no influence at all on their buying decisions, and Gallup reveals that consumers who engage with brands often do so only when they are already attached to a product or service.
“When it comes to making purchasing decisions, consumers are much more likely to turn to friends, in-store displays, television commercials, and even mail catalogs and magazines than to consult a company-sponsored Facebook page or Twitter feed,” said Gallup researchers.
Retailers, however, can use social media to engage and boost their customer base, suggest Gallup’s findings. Consumers appreciate the highly personal and conversational nature of social media sites, but they prefer interacting in an open dialogue as opposed to receiving a hard sell. And a retailer’s use of social media to provide timely responses to questions and complaints accelerates brand loyalty, said Gallup.
“When it comes to social media efforts,” the report concludes, “businesses stand to benefit when they utilize a more service-focused approach rather than one dedicated to simply pushing their products.” –MV
