Does Social Media Really Sell Products?

Despite the ubiquity of Twitter, Facebook and the like, there’s still hesitation in many businesses’ minds as to whether an investment in social media really offers a worthwhile return. Brian Morissey’s article on Adweek suggests that social media can play a huge part in indirect marketing by building a firm’s reputation, instead of necessarily generating direct sales. Click here to read the article on the Adweek site, or scroll down.

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For all the excitement about social media, there’s a specter hanging over its use by companies. Is all this tweeting, blogging and Facebooking paying off? For some proponents, the question is irrelevant. They agree with the view encapsulated in the social media bible The Cluetrain Manifesto — markets are conversations. Companies have to participate in the conversations where they’re happening, ROI be damned. Their dismissal of metrics is summed up in an oft-repeated question, “What’s the ROI of putting on your pants on in the morning?”

Those kind of pithy ripostes are music to the ears of the social-media faithful at conferences and on blogs, but they’re unlikely to impress budget-strapped CMOs who, while eager to find new ways to reach consumers, are under more pressure to prove their efforts are pushing the business forward. Measurement remains the single greatest challenge to social-media adoption by companies.

While digital channels and online interactions offer a plethora of data points, they don’t come with a set playbook for assigning value. Marketers have grown comfortable with formulas like gross ratings points and frequency, time-tested formulas for building brands in traditional media. Yet with social media, what’s a Facebook friend worth?

“The value of social media is it’s the richest data set that’s ever existed,” says Dan Neely, CEO of Networked Insights, a Wisconsin-based analytics company that uses social media to help clients make marketing decisions. “You can use this data for many things.”

The two sides of the social-media measurement debate are at the forefront as many marketers plan to ramp up their social-media budgets in 2010. According to an ExactTarget survey of 1,000 marketers, 70 percent said they plan to increase spending in social media, but less than 20 percent said they could effectively measure ROI. The seeming schizophrenia is because marketers using social media tend to blend “art and science” in their measurements, according to Morgan Stewart, ExactTarget’s director of strategy and research.

“ROI isn’t the thing that’s pushing people to social media,” says Stewart. “Companies using reputation as a measure of success are more likely to be shifting budget there. That tells you something about the mind-set.”

Here’s what three marketers well versed in social media are doing to measure their participation and justify new investments.

Pepsi: The Speed of Digital Culture

At a time when many brands are stuck in experimentation mode in social media, Pepsi is placing a staggeringly large bet on it. Pepsi was absent from the Super Bowl for the first time in 23 years, redirecting money to an ambitious social marketing-centered program called Refresh Everything that will direct $20 million to charities. According to Pepsi execs, the program is appealing because it rested on four big trends: crowdsourcing, doing good, sharing and transparency.

Refresh Everything is the culmination of years of social-media work done by Pepsi, the perpetual No. 2 behind Coca-Cola in the soft drink market. Pepsi’s still a big spender in traditional media — it spent $89 million in U.S. advertising on the brand in 2009 — but Coke outguns it by a 33 percent margin. Social media, offering a more level playing field, is where Pepsi is making its stand with one of the largest commitments to the space yet seen.

Yet Pepsi execs are at pains to point out that Refresh Everything is not a social-media campaign per se. Rather, it uses social media as glue to hold together a wider push that includes traditional elements like TV spots, says Bonin Bough, PepsiCo’s director of social media. It even includes a dash of Pepsi’s usual celebrity tie-ins with the inclusion of Hollywood stars Demi Moore and Kevin Bacon, and New Orleans Saints quarterback and Super Bowl hero Drew Brees.

When it comes to measurement, Bough’s team has developed a scorecard with different elements that tie back to brand health and relevance. It will gauge, via standard research methods, whether people’s perception of Pepsi changed.

Pepsi is using social monitoring tools to track share of voice and mentions in social media and traditional media, as well as harder engagement metrics like visits to the Refresh site, time spent, submissions and votes. It will try to gauge whether the program makes an impact in communities. The overall aim is to follow in the footsteps of decades of Pepsi marketing. “Our goal is to skate to the center of culture,” says Bough. “Right now, digital is culture.”

Pepsi has the advantage of experience to draw upon. It has launched several social-focused efforts for brands. Tropicana created the Trop50 community site with Blogher last year to reach women bloggers. Mountain Dew launched Dewmocracy, which designated to consumers its marketing plans. “We’ve already gone through the experimental phase,” notes Bough.

While Refresh Everything is a risk, Pepsi has drawn the notice of Coke. Soon after Pepsi announced Refresh Everything, Coke began a Facebook campaign and now donates $1 to the Boys and Girls Clubs of America for each visitor and every time a virtual gift is sent.

Dell: From Silent to IdeaStorm

In five years, Dell went from being the poster boy of ignoring the emerging social Web to becoming a model for how to orient a company around social media. Its journey began in 2005, when Facebook was barely beyond a dorm room project. Problems with Dell customer service percolated on blogs under the moniker “Dell Hell.” The company, founded by Michael Dell with a focus on customers, reoriented itself to be more responsive.

It’s gone on to become a social media star, ranked by Vitrue as one of the 10 social-media brands of 2009. It has built a strong social-media team that focuses on entwining those technologies within all aspects of its business, from customer service to marketing to research. Its activities include racking up $6.5 million in sales through Twitter, connecting with 3.5 million consumers on social sites and its own, and soliciting consumer input through sites like Dell IdeaStorm and Dell Tech Center.

“When we first jumped headfirst into this, we started with engaging and listening to consumers,” says Manish Mehta, vp of social media and community at Dell. “Hopefully that moved the needle. The business will at some point question how this is helping the P&L. That’s why taking a step back and finding the value drivers is so important.”

The company’s push into social channels left it with a conundrum: How could it evaluate efforts that were taking place all over the company to see if they were worth the investment? This fall, Dell’s social-media team mapped out a defined framework to guide those decisions. It identified a set of value drivers for the customer and for the business, looking for programs that overlapped the two sets. For consumers, Dell identified drivers like connections, recognition and advice. For its business, its drivers are things such as revenue, brand health, share of voice and customer sentiment.

“They are light years beyond what others are doing,” says Aaron Strout, CMO at social-media firm Powered in Austin, Texas. “They spend a lot of time thinking through how to translate that into real dollars. Quite frankly a lot of companies haven’t done a good job at that.”

Take the Dell Tech Center, one of the company’s less sexy social initiatives. The Tech Center is an online community for IT managers to go and connect directly with Dell engineers. Dell tracks it success based on fundamental metrics, like members, questions posed and answered, and traffic to the site. It also charts how many large-enterprise customers have interacted with the site through a post-purchase survey. Yet one of the key metrics is harder to define: evidence that it’s helping deals close quicker and stripping out costs.

“We’ve found our salespeople are referring prospects in there,” says Richard Binhammer, a senior manager on Dell’s social-media team. “It’s shortening the sales cycles.”

Binhammer and Mehta agree the key to pushing forward with social media at the company is a commitment at senior levels. As a tech company that sells most of its products online, this is easier at Dell, although there’s still work to do, Mehta admits.

“We want to make this be completely embedded into the fabric of the company,” he says.

H&R Block: Taxing Problems

When H&R Block launched an ambitious social-media outreach campaign in 2008, it followed some textbook advice: fish where the fish are. So it went on Twitter looking for frustrated taxpayers, offering them help. Instead, the company found reticence among potential customers who didn’t want to air their problems on Twitter.

This year, H&R Block changed course, abandoning one-on-one Twitter contact in favor of building a Q&A community site, Get It Right, which replaced a more standard blog the company did last year. The Get It Right site required H&R Block’s social-media team to recruit and train 1,000 tax pros to answer questions. It looked to local managers to nominate tax preparers to participate. Early results are promising: Get It Right has signed up 65,000 members and answered 50,000 questions, with the big tax push still to come.

“We’re outpacing where we thought we’d be,” says Zena Weist, director of social media at the company.

The challenge will be tracking these queries back to sales. H&R Block, after all, makes most of its money by getting people into its offices. Weist only recently joined the company. With few internal resources, the company has needed to pare back its social programs, emphasizing Twitter and Facebook less, for instance. The decision was hard but necessary, Weist says, since H&R Block can’t promise to answer tax questions posed on Facebook. Instead, it is using Twitter and Facebook mostly as broadcast vehicles, hoping customers who have come to Get It Right then tell their networks they were helped.

H&R Block is trying to steal a march on competitor TurboTax, from Intuit, which has a team of experts dubbed Team TurboTax answering questions on Twitter. “A community wants a one-to-one relationship where they can continue to come back,” Weist says. “That’s not what Twitter is. You don’t have continuous dialogue.”

To figure out if the strategy’s working, Weist is tracking visits, time spent, registrations and questions asked. The company will conduct Dynamic Logic surveys to gauge brand favorability changes in visitors. It’s also trolling social sites for the number of brand conversations in social media and their sentiment. There’s also value in knowing many of the people contacting the company online wouldn’t call in, thereby saving H&R Block money. The metrics can, at times, be “squishy,” Weist says, but the opportunity in social is worth the tradeoff.

“If your word of mouth isn’t positive, forget about brand awareness and consideration,” she says. “If word of mouth is bad, there is no consideration.”

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What do you think? Is building this sort of reputation worth the effort? Will it pay out in the long-run or are internet users just enjoying more and more freebies? Talk to us here!

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Tags: Adweek, Brian Morrissey, dell, Facebook, H&R Block, Pepsi, ROI, sales, social media, Twitter, Web 2.0

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