Does Social Media Marketing Even Work?
I was pondering a post with a central hypothesis of “social media marketing only works on the margins”.
Essentially, if a company’s marketing comprises social media tactics (monitoring, joining and leading the “conversation”) it will make no bearing on customer’s choice to choose that organization; but when faced with a choice of choosing between two similar companies, one of which has adopted social media and the other that hasn’t, the customer, stakeholder, business partner, whatever will chose the one with a strong social media component.
However, doing some research proves this (initially) to be false.
I took Dell and HP, partly because they seem to do broadly the same thing and partly because I’m fairly sure neither of them are FH or iStudio clients. Dell, as is well known, has a strong social media element to its marketing after being hammered in the blogosphere. HP, while having a prominent blogger as a high-ranking executive, hasn’t seemed to have embraced social media as enthusiastically.
So I thought this would be a good comparison. I would also be able to use stock prices to compare which company was more “successful”.
Using the NASDAQ comparison tool, I found that HP’s stock had actually outperformed Dell’s by some margin over the past three years:
Hmmm, interesting. Maybe HP simply has its fingers in more pies, than Dell. But what about in searches. Dell is a consumer facing organization and therefore, with the amount of social media it touches, must outperform HP on searches. So I turned to Google Trends to validate this suspicion:
Again, hmmmmmm.
So, does marketing through social media work at all? This cursory, back-of-a-napkin experiment would imply not (although there are tonne of things I haven’t taken into account in this analysis).
So why are we getting all pent up over this sort of thing?
Sidebar: If Dell and HP don’t “compete” I’d be interested to hear who would be a fair comparison.
April 4, 2008 at 4:20 pm
Because social media marketing is in its infancy. I think the big word here is “potential”. While there’s no way social media marketing would have an ongoing influence on a company’s stock price today (or ever - as you mentioned, there’s many different factors that have to be taken into account. Just because someone blogs doesn’t mean your company’s stock is going to sky rocket…), it has the potential to have a much stronger influence somewhere down the road…..hence the marketers getting all ancy in their pantsy.
April 5, 2008 at 6:30 am
Interesting post, but I’m not sure it’s conclusive in the way you suggest. You can compare social media strategies, but you can’t isolate them in a manner that allows you to draw such broad conclusions. There are too many other factors that contribute to the results you’ve cited. I also believe you’ve compared successful companies that happen to go about achieving their success in different ways - ways consistent with their brands. For example, blogging isn’t for everyone no more than participation in an on-camera TV interview. Some have the ability and temperament to pull it off and others don’t. Companies have myriad tools today. They are smart to use those that play to their strengths.
April 5, 2008 at 7:54 am
I think Scott identified the problem with your analysis, Ed.
Stock price isn’t a measurement of your “relationship” with your clients or the health of your product portfolio.
If you want to measure the comparative strength of marketing tactics, you should measure across results: revenue, units shipped, market share divided across demographic and market segments, that sort of thing.
As well, your analysis falls victim to the common conceit that only social media tools are responsible for gains in “conversation”: what about the 1000s of B2B salespeople and systems consultants that actively seek out conversations and actually develop proposals to address customer problems?
April 7, 2008 at 5:39 pm
As noted by previous comments, too many variables.
I recently attended a 2.0 seminar put on by PR Newswire that attempted to put a monetary value to social media efforts. Post here: http://cparente.wordpress.com/2008/03/10/the-world-of-20-according-to-pr-newswire/
You mention Dell’s problems in the blogosphere. The presenter claimed that negative online comments declined 60% over one year after Dell started responding to every one with an email apologizing and offering some kind of redress. But this percentage wasn’t cited, so I didn’t include.
April 9, 2008 at 4:48 pm
Hi Ed,
Interesting comparison but I think it runs into several things that are not controlled for, making the cause and effect linkage a little difficult. For example, the majority of Dell’s revenue and business is providing hardware and services to other businesses. Our consumer market business is smaller and not as broad a product offering as HP (think cameras for example). Therefore, google search numbers could be skewed by this fact, in addition to the overall size of the HP business compared to Dell. Dell’s roots are in business-to-business markets, not consumer.
With respect to your hypothesis, I know of one or two situations where we lent a hand to bloggers having trouble with their HP machines and the individuals became Dell customers; you can search and find previously unhappy Dell customers who remained Dell customers because of our efforts; and, their are various individual stories on the web of people buying Dell because of our involvement in social media. However, that doesn’t put together the macro hypothesis you are looking for, I suspect.
Chris, just to clarify we do not respond to blog comments with email, we are listening activley to people using social media and join conversations if we think we can bring value and contribute. I think the commentary % you are referencing is that when we started our engagement with bloggers we found that 49% of the conversations were negative and a year later that was down to the low 20% range.
Hope that helps
April 21, 2008 at 9:27 am
Ed, I applaud you for taking some sort of analytical look at this stuff vs. just all the “join the conversation” wankery that goes on. While I’m no MBA, I’m not going to disagree with any of the points made by the commenters before me, but I will point out that if these graphs went in Dell’s favour, there’d be a whole bunch of people who’d use those lines as a proxy for social media success.