Mark Ritson Columnist

Mark is an Associate Professor of Marketing at Melbourne Business School and is recognised as one of the world's leading experts on brand strategy. His clients have included McKinsey, PepsiCo, Donna Karan, Johnson & Johnson, Dom Perignon, Baxter, De Beers, Krug, Ericsson and WD40.

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Social media: get ready to be underwhelmed

Published 10 April 2013 07:32, Updated 17 April 2013 07:24

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Social media: get ready to be underwhelmed

It’s worth wondering why so many people believed social media was so awesome for so long. Photo: AFP

Over the next three weeks I’d like to share some unfortunate truths about social media. Let’s begin with a simple statement: although social media presents us with wonderful new communication options, they are not as valuable a corporate tool as you might believe. That might surprise you, given 17 per cent of Australians use Twitter and 51 per cent patronise Facebook.

But delve a little deeper and it starts to get rocky, fast.

This week, I look at why Facebook and Twitter aren’t all they are cracked up to be. Next week, I will examine how social media has been over-represented and oversold to our nation’s executives. And finally, we will look at the tide turning against social media superiority and what marketers are doing to restore balance and sanity within their marketing mix.

If you take Interbrand’s recently published list of Australia’s top 10 retail brands and then add up all the followers on Twitter of these 10 brands, you get a grand total of 59,000 Australians – or significantly less than the attendance at the MCG last week for the season opener between Carlton and Richmond.

Not too impressive and it gets worse. Unlike Twitter users, the spectators at the G last week were paying attention. The average click-through rate for a branded Twitter page is only about 0.5 per cent. That means that even one of Australia’s biggest retail brands like Coles, which has 4600 followers on Twitter, will only get about 23 people to actually open its next tweet. That’s a slightly smaller audience than the actual number of players who were on the field last week for the Carlton Richmond game. Coles would literally be better off opening a window at their Hawthorn HQ and yelling at passers-by on the street than using Twitter.

Facebook, to be fair, has a much bigger reach than Twitter and if we again look at Australia’s 10 largest retail brands we do see much bigger audiences. Woolworths, for example, is typical with 489,000 likes on Facebook.

It’s an impressive figure until you appreciate that it’s less than 4 per cent of the 13 million people who shopped at Woolworths last week.

And even 4 per cent is over-generous. Consumers might have “Liked” a brand three years ago and never returned to that Facebook page. That’s why most brands look at engagement rate, the number of people who have more recently interacted with a brand’s Facebook site. This rate is indicated by the number of consumers listed on a Facebook page who are “talking about this” under the Likes number.

Once again, the numbers are underwhelming. The average engagement ratio for a big brand on Facebook is usually somewhere between 1 per cent and 5 per cent of total Likes. In Woolworths’ case 15,000 people, or about 3 per cent of their Facebook following, have recently engaged with the brand. That’s roughly the same number that will visit a single, big Woolworths store next weekend. Only another 749 stores to go . . .

This lack of interest in engaging with brands on social media mean that despite gigantic potential audiences, Facebook’s value as an advertising medium is also overstated. Its current CPM in Australia (the cost to reach 1000 customers) is about 24¢. Not bad, and significantly better than the CPM for a quarter page ad in traditional print advertising. But the general apathy from consumers mean that Facebook’s click through rate for its advertising and its average CPC (cost per click) are rarely superior to more standard search media like Google Adwords.

These numbers are underwhelming because most Australians exclusively use social media to interact with each other, not brands. Of the total Australian population that use social media, 69 per cent don’t follow any brands or companies of any kind. The enormous dollar signs that sprang up in the eyes of marketers five years ago with the arrival of a billion people on social media has blinded them to a harsh reality. It’s called “social media” for a reason: most Australians use it to connect with people not companies.

How else do you explain the fact that a has-been Aussie pop star like Peter Andre has more likes and more engagement than any of the top 10 Australian brands? Or that a relatively unknown marketing professor like me can have more followers on Twitter than Bunnings, Big W, Target and K-Mart. Combined.

As we approach the end of round 1 you should be increasingly struck with two thoughts. First, neither Facebook nor Twitter should seem that amazing any more from a reach, value or impact perspective. Second, you might now be wondering why so many people believed they were so awesome for so long.

Next week in round II: “How Australian executives lost the collective plot with social media”, I’ll explain everything . . .

Next week in Part II: “How Australian executives lost the collective plot with social media.” I’ll explain everything . . . .

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