This will be my third year staying home, and while I will miss the chats and parties, I will not miss the general sense that SXSW is a missed opportunity for the social media industry. All the best and most experienced minds in the business gather in one spot, but few find themselves in sane, sober and expansive conversations because it is hard to focus on serious topics when one is screaming over an indie band or dashing from the Convention Center to South Commerce to West 6th for events.
Although SXSW Interactive has tended to feature more hype than criticism, perhaps 2015 will be the year when reality sets in. At last fall's Social Shake-Up, I was pleasantly surprised at the candor at which people were discussing declining reach, difficult social metrics and social media marketing obstacles. It will be interesting to see whether the predominant buzz from this year's SXSW is about social media marketing difficulties or the more typical chatter about the next hot new app.
If SXSW Interactive gets serious about substance over hype, here are seven recent studies that should be mentioned from stages in Austin. All challenge assumptions about the value of social media marketing and offer the sorts of data that should guide tough decisions about investments and strategies in the social channel this year:
- Bounce Exchange find poor organic social acquisition and conversion: In 2014, Bounce Exchange analyzed more than $1 billion of e-commerce revenue. Their research found that organic traffic from these companies’ social media channels accounted for only 1.2% of clients’ overall revenue. Moreover, conversion was 1.3%, less than half of their clients’ overall average. (Source)
- The Center for Marketing Research at the University of Massachusetts Dartmouth finds fewer companies optimistic about tracking sales through social media: In interviews with executives at Inc. 500 firms, the UMASS study found a drop in companies tracking sales through social media, from 36% in 2013 to 32% in 2014. Even more telling, at a time when marketers are spending more on social media and should be improving their metrics, the number of executives who do not know if social is driving sales increased seven points, from 11% to 18% (and another 44% believe it accounts for less than one percent of sales).
Finally, the UMASS study found that Inc. 500 executives are losing faith that social has the potential to increase sales in the next year--the percentage of executives who indicate social is the tactic with the most potential to drive sales dropped from 16% in 2013 to 13% in 2014. That puts social media well below online advertising, less than business directory listings and equal to traditional print/broadcast media. (Source)
Source: Custora E-Commerce Pulse
- Webmarketing123 finds that, when it comes to social media investment decisions, marketers are using assumptions rather than hard metrics: A November 2014 study by Webmarketing123 found that that "many marketers still relied on 'gut instinct' when determining which channels to use for marketing campaigns, as the most-used weren’t always the most-measured." The report called social media "one of the biggest pain points for respondents." While 87% of B2B marketers used social media, just 17% were able to prove its ROI—that is the lowest percentage among channels used. As for B2C marketers, social is now the most commonly used channel, with 87% of B2Cs using social, but only 27% could calculate ROI. (Source)
- MaritzCX finds that social media is not an influential information source for car buyers: MartizCX surveyed 60,000 people and found that social networks (Facebook, Google+ and Linked) were the 19th most influential information source when customers under the age of 35 research a new vehicle. While "Family/friend/word of mouth" ranked second at 18.8%, online social channels were much less significant, with "Chat rooms/blogs/forums" at 1.5%, online videos at 1.3%, social networks at 0.4% and Twitter (dead last) at 0.2%. Beating digital social channels at influencing car purchases are very traditional channels such as salespeople at dealerships (the top influencer at 21.5%), newspaper/magazine reviews (4.7%), TV ads (3.6%) and manufacturer's brochures (2.8%). (Source)
Source: CMO Survey
Even more concerning, there has been a decrease since 2010 in the number of marketers using bottom-of-funnel social media metrics such as Sales Levels, Revenue per Customer and Profits per Customer. Marketers are ignoring the most powerful metrics in order to focus on the ones that are easiest to collect (and to manipulate). (Source)
Source: Marin Software
Once the folks who click on those ads arrive on your site, social conversion rates are downright dismal. Compared to social ads, display advertising's conversion rates are 255% greater on mobile and 900% more on smartphones. Social advertising conversions fare even worse against search ads; search ads deliver conversion rates 818% higher on desktops and 2100% greater on smartphones versus social ads.
While social advertising offers the lowest cost per click (CPC), advertisers (at least those whose goal is conversion) are over-paying for social ads. Desktop social ads offer a CPC 82% less than desktop search ads but return a conversion rate 89% less than desktop search, making social advertising's cost per conversion around 65% greater on desktop. On mobile, social advertising has a cost per click that is 80% less than search ads but experience conversion rates 95% less than search, resulting in a cost per conversion that is more than four times greater in social than search. (source)
|Source: The Center for Marketing Research at the |
University of Massachusetts Dartmouth
Will data like this get attention, discussion and consideration at SXSW, or will this year's conference continue its history of celebrating consumer adoption and the rare but unrepeatable successful case study? If SXSW attendees buzz about the growth of "dark social" and Audi's Super Bowl Snapchat success rather than explore what we have learned from our experience on the social networks that have been around for eight years, then we will simply see brands repeat the same mistakes on Snapchat, LINE and WhatsApp that they made on Facebook and Twitter.
For those attending SXSW Interactive, my wish is that you have more challenging, sober and enlightening discussions than you do drinks and that you leave Austin with more hard data than promo items.