Does social media drive sales?

The question of sales generation is a growing problem for social media. Despite all the hype, it’s almost impossible to find any conclusive cross-category evidence that social media drives sales.  Yes, there are some isolated examples of success; Dell’s Twitter pages announces some great deals and I’m sure ASOS can whip up a bit of extra demand by tweeting Axl Rose’s US flag shorts, but the reality for most brands is that they are going to struggle to make social media deliver measurable sales.  This view might not be flavour of the month, but the four experiences of social media listed below certainly give the “no sales” view a high degree of credibility.

1. In 2010, Pepsi undertook a massive social media initiative called The Refresh Project which was designed to give $20m to good causes. According to Bob Hoffman, the AdContrarian, it delivered over 80 million votes, almost 3.5 million Facebook likes and nearly 60,000 Twitter followers. But there was just one big problem; it didn’t drive sales – despite the funding coming from Pepsi marketing budgets. Pepsi’s sales fell in the year the project ran and the brand lost 5% market share worth about $350m. To make matters worse, if that were possible, Pepsi slipped to third in brand share behind Coke and Diet Coke.
2. In both 2012 and 2013 IBM used data from around 800 e-commerce sites to track social media’s contribution to sales. In 2012 it arrived at a figure of 0.34%. In 2013 it didn’t publish the number, but hinted that it was even less.
3. In September 2012, one of the world’s leading digital research companies, Forrester Research reported that “Social tactics are not meaningful sales drivers. While the hype around social networks as a driver of influence in ecommerce continues to capture the attention of online executives, the truth is that social continues to struggle and registers as a barely negligible source of sales…”
4. In March 2013, Mark Ritson, formerly a professor at London Business School observed in Marketing Week that “….marketers are finally beginning to apply some measures to assess the ROI of their [social media] efforts. Once they do that they can do the one thing the social media mavens have counselled against: compare the value of social media with other options, apples to apples. And, in many cases, they are discovering the hullaballoo drummed up by the marketing media and various industry events is not quite all it was cracked up to be.”

I think most people in social media are well aware of this “no sales” problem. And because social media can’t deliver sales, they’ve invented a snow-storm of flaky measures designed to obscure harsh commercial realities. These measures include: ‘likes’, ‘fans’, ‘followers’, ‘shares’, ‘retweets’, ‘pins’, ‘follows’, ‘friends’, ‘influence’, ‘amplification’, ‘forwards’, ‘mentions’, ‘tags’ and ‘reactions’. In a commercial context these are nothing more than diversionary measures. They might enable some positive looking PowerPoint charts but they don’t deliver positive looking sales. These are ROI potatoes, when everyone else is comparing apples.

Amazingly, when social media campaigns fail to deliver sales, social media experts almost always suggest that it was the company management who got it wrong rather admitting to any shortcoming of social media itself. Whilst this claim blames marketers and management, it also spawns a convenient stay of execution for social media’s “gurus”; failure brings an opportunity to “learn lessons”, to “revise approaches” and to “develop new strategies”. In other words social media failure provides a new opportunity for marketers to waste even more money on social media activity.

Marketers badly need a serious reality check on social media. Social media environments aren’t much more than an online version of a public waiting room. People drop in, take a seat, look around and leave. They may leave a bit of rubbish. They may take a bit of rubbish with them. But that, I’m afraid, is pretty much the long and short of it for most brands. Don’t spend too much time in there, nothing will come of it.

If this sounds old-fashioned, I make no apologies. Advertising exists to drive sales.  To have advertising that doesn’t drive sales is like going to a dentist who doesn’t look at your teeth, or a barber who doesn’t cut your hair, or a mechanic who won’t fix your car. If what you’re doing can’t be directly or indirectly linked to generating sales, you’re wasting precious budget.