Measuring marketing success is like quantum mechanics:
How long is a piece of string?
I have borrowed this image of Alan Davies tackling that old physics chestnut, “How long is a piece of string?”, from an interesting site called BrainPickings.org, which I encourage you to check out for all kinds of reasons.
With the Facebook IPO in full swing, it’s not surprising that when GM said they were pulling $10 million worth of advertising spend on Facebook, the financial press took note. And of course there was no shortage of commentators ringing the alarm bells about the imminent demise of Facebook’s ability to monetize.
I can’t help but think of department store magnate John Wanamaker’s famous comment, circa 1912: “I know half my advertising dollars are wasted. I just don’t know which half.”
Marketing works.
It’s just sometimes hard to know how or why, and social media is no exception.
The worst part about working in marketing is that 2+2 almost never adds up to 4. Sometimes it adds up to 3, sometimes 10, sometimes a vivid shade of yellow. Anyone who tells you otherwise is either naive or the kind of person who calls themself an ‘SEO Ninja’ and thinks everything can be measured in clickthroughs.
And therein lies the problem.
Before the internet, we had to measure most advertising exposures in GRPs (gross ratings points), which is essentially a way to measure reach (how many people saw/heard your tv/radio ad, saw your billboard, etc.) and frequency (how many times they saw it). You might spend $1 million buying 400 GRPs for 8 weeks for your billboard campaign, but you really had no way to determine whether all those people speeding past your billboard on the highway were actually looking at your billboard, registering the message, and then making a purchasing decision based on it.
In the meantime, of course, you were probably spending money on other initiatives like tv ads, print ads, direct mail, promotions – all of which have varying degrees of measurability when it comes to purchasing decisions. The only way you could really know whether your efforts had been successful was to wait until the campaign was over and hope there’d been a demonstrable uptick in sales.
The people who say that social media marketing dollars are ‘wasted’ if they don’t generate the right clickthroughs – and there are lots of them – have forgotten that marketing success is generally a result of a complex alchemy that happens when you reach your target market in multiple ways, via multiple channels, over a (sometimes long) period of time.
Why GM’s decision isn’t that momentous
Though the GM’s announcement made headline news, it really isn’t that significant in terms of Facebook’s long-term prospects or GM’s overall strategy, and here’s why:
It’s a drop in the bucket
Worldwide, GM spends $1.7 billion dollars in advertising every year. They’re still spending $30 million on Facebook ‘marketing’ – they’re just not spending $10 million in paid ads. That sounds like a lot to us regular people, but it’s nothing for a big-budget advertiser like GM.
Clickthroughs aren’t everything
Much has been made of the stat that 83% of people say they don’t click through Facebook ads. I’d say the number is probably even higher, but it doesn’t matter: No one clicks through billboards or magazine ads, either, but that doesn’t mean they don’t drive brand awareness, equity or sales in the longer term.
You can’t get a ‘conversion rate’ on buying cars
People who advertise online like to talk about ‘conversion rates’: The percentage of people who clickthrough your ad, then make a purchase on your site. This can be an excellent measure of success if you’re trying to sell something on, say, Amazon. It’s never going to work for cars, because almost no one is going to buy a car via a website.
We don’t know enough about GM’s overall media mix
A senior marketing exec from McDonald’s once told me that it takes 4-7 ‘touchpoints’ (interactions with the brand via different channels) in order to get someone to buy an order of large fries. If that’s what it takes to generate a $2 purchase, imagine what it takes to generate a $35k purchase of a car.
GM themselves probably don’t entirely know what works
Once GM realized that its announcement had caused an uproar, they hastily released a statement about how they regularly review their marketing mix and make adjustments. I believe them: All large advertisers make changes to their media mix on an ongoing basis, based on new information or a change in focus or whatever. GM isn’t abandoning Facebook altogether, and plenty of other carmakers are still spending money on Facebook ads.
The bottom line
There’s a reason that advertisers are increasingly turning to neuroscience to understand buying behaviour: 95% of human decisions are made by the subconscious mind, so even when you ask people directly, they simply can’t tell you why they made a particular purchasing decision. GM’s decision to pull a very tiny fraction of their budget from Facebook tells us almost nothing about the true efficacy of Facebook advertising.