Why It May Be Unwise to Rely on Your Facebook Friends for ROI

Do you think your Facebook fans are more valuable than your house list? If you do, you aren't like most marketers.

I’ve always been a bit skeptical about the value of social media relationships relative to direct mail and email house lists. Don’t get me wrong: I’m a big fan of social media marketing, and I think more companies should do it. Those that are doing it should do it better. But, online ambition should be tempered with a dose of reality every now and then. And, the latest from eMarketer will probably hit you like a cold shower.

According to Millward Brown & Dynamic Logic survey from back in July 2010, Facebook fans are good for a lot, but short-term spending is conspicuously absent. The respondents said that these folks are good as “a potential source of insight” (85 percent), “increased loyalty” (85 percent), advocacy (80 percent) and deeper levels of engagement (75 percent).

So, how did short-term revenue prospects fare? Not so well.

Only 15 percent of respondents indicated that Facebook relationships “increased short-term spend on our brand,” with 45 percent seeing “increased long-term spend on our brand.”

When you look at these numbers, Facebook marketing falls into the typical “brand play” pit, which does have the affect of alleviating pressure to generate returns. If you talk yourself into believing it’s about engagement and brand rather than conversion – and you can talk your boss into that, too – life gets a lot easier.

The path of least resistance, unfortunately, does not lead to ROI.

There is value to Facebook marketing, the responses suggest, but it’s from a supporting role. Given the action (and metrics) possible in Facebook, I suspect the problem isn’t opportunity. Rather, it’s execution. Perception leads to a self-fulfilling prophesy, and social media marketers need to make conversion more of a priority.

Brand is important, but it has to lead to revenue.

More results from the Millward Brown & Dynamic Logic survey show that marketers aren’t sure that the former will lead to the latter. Only 23 percent called the ROI on Facebook fans “good,” with 18 percent at average and 9 percent “poor.” A whopping half of respondents are not sure.

After thinking a bit through how social media marketing tends to be positioned – and how objectives are set – it’s clear to me that the results aren’t surprising. And, they need to change. Perception begets reality, and marketers need to commit to targets. That’s the only way to get results.

Additionally, the results suggest that taking the bold step to hold social media marketers accountable for revenue – or at least for filling the sales pipeline – can yield a significant competitive advantage. If other companies in your space are thinking about insights and engagement, they probably aren’t chasing business opportunities. Let them build a dialogue while you build a business. Set targets, and pursue them: this is how growth happens.

Avoid the temptation to use brand as a crunch, and you’ll be part of the 23 percent mentioned above. You’ll probably be at the upper end of it, as well.