Brands spend billions of dollars a year on elaborate efforts to establish and maintain a social media presence.
Think of the live-streamed video of a man setting a world record by skydiving from 128,000 feet (Red Bull) and the strange tweets sent from a supposedly hacked Twitter account that in fact originated with the company itself (Chipotle).
Facebook is the preferred platform: 80% of Fortune 500 companies have active Facebook pages. Each day enormous amounts of brand-generated content—articles, photos, videos, and so on—appear on those pages and on other social media platforms, all designed to entice people to follow, engage with, and buy from brands. Even the U.S. State Department seems enamored of acquiring followers, having spent $630,000 from 2011 to 2013 to garner Facebook likes.
Marketers often justify these investments by arguing that attracting social media followers and increasing their exposure to a brand will ultimately increase sales. According to this logic, recruits who socially endorse a brand by, for example, liking it on Facebook will spend more money than they otherwise would, and their endorsements will cause their friends (and friends of friends) to shop—creating a cascade of new business.
At first glance the evidence seems to support this rationale: Many brands have discovered that customers who interact with them on social media do spend more money than other customers. A recent influential study by comScore and Facebook found that compared with the general population, people who liked Starbucks’s Facebook page or who had a Facebook friend who liked the page spent 8% more and transacted 11% more frequently over the course of a month.
Merely liking a brand on Facebook doesn’t change behavior or increase purchasing.
But that study and others like it contain a fatal logical flaw: They confuse cause and consequence. It’s possible that getting people to follow a brand on social media makes them buy more. But it’s also possible that those who already have positive feelings toward a brand are more likely to follow it in the first place, and that’s why they spend more than nonfollowers. In 23 experiments conducted over the past four years and involving more than 18,000 people, we used an A/B testing method to explore a crucial counterfactual: what followers would have done had they not followed a brand.
Given the millions of dollars in marketing budgets that flow to social media at many companies, the distinction is not trivial.
It has enormous implications for marketers’ resource allocations and for how they manage their brands’ social media presence.In our experiments, we gradually added complexity to test four increasingly interactive ways in which Facebook might affect customers’ behavior. First, we tested whether liking a brand—that is, passively following it—makes people more likely to purchase it. Second, we examined whether people’s likes affect their friends’ purchasing. Third, we examined whether liking affects things other than purchasing—for example, whether it can persuade people to engage in healthful behaviors. Finally, we tested whether boosting likes by paying Facebook to display branded content in followers’ news feeds increases the chances of meaningful behavior change. We chose to use Facebook in our experiments because it is the dominant social network, but we believe that our findings apply to other popular platforms as well.
The results were clear: Social media doesn’t work the way many marketers think it does.
The mere act of endorsing a brand does not affect a customer’s behavior or lead to increased purchasing, nor does it spur purchasing by friends. Supporting endorsements with branded content, however, can have significant results. And given that social media pages are gathering places for loyal customers, they can offer brands a unique source of customer intelligence and feedback from a crucial cohort. Armed with this knowledge, marketers can build new, more successful social media strategies.
Read all at Source: What’s the Value of a Like?