The Cost of Engagement

I stumbled across some data about Facebook engagement rates the other day. Apparently Michael Leander has been analyzing how Facebook fans react to brand posts based on how big a following that brand has on Facebook. It’s made me wonder – If we know engagement rates, and we know how much it costs to acquire a Facebook like, we should be able to calculate the cost of fan engagement. How much does it cost? And is it really worth it?

Leander found that the rate of people who like or comment on a post starts at less than 1% for a brand of 10,000 Facebook followers and then plummets the larger the audience. Here are his statistics:

Number Of Fans/Likes	Average Engagement Rate
10,000	0,96 %
20,000	0,29 %
50,000	0,21 %
100,000	0,19 %
200,000	0,16 %
500,000	0,13 %
1,000,000	0,11 %
1,500,000	0,09 %

Compared with banner ad engagement rates, those numbers might look good. I’m also starting to wonder what the cost of all this is. For the sake of simplicity, I’m not going to calculate the cost of what it takes to manage the Facebook channel or to create all of that content people are engaging or not engaging with.

Instead, I’m going to look at the cost of attaining those fans and calculating what the cost per interaction is.

Let’s take one year. I’m going to assume that brands might reasonably attain 10,000 fans without buying any likes (a leap, I know, but bear with me). For each number above 10,000, I’m going to assume that 1/3 of those total fans were purchased. That is, brands spent money on Facebook ads to get people to “Like” them.

According to a WebTrends report in 2011, the average cost for a Facebook Like acquisition was $1.07. Maybe that’s gone up or down since then, but let’s use that as a starting point.

Let’s also assume that, on average, a brand posts on Facebook once a day, or a total of 250 posts per year. With that, the cost per interaction for a smaller Facebook brand starts at $0.49/interaction over the year. For a big brand, the cost jumps to $1.59/interaction for a year. 

Fans	Bought Fans	Cost	Posts Per Year	Total Interactions	Cost Per Interaction
10,000			250	24,000
20,000	6,667	$7,133	250	14,500	$0.49
50,000	16,667	$17,833	250	26,250	$0.68
100,000	33,333	$35,667	250	47,500	$0.75
200,000	66,667	$71,333	250	80,000	$0.89
500,000	166,667	$178,333	250	162,500	$1.10
1,000,000	333,333	$356,667	250	275,000	$1.30
1,500,000	500,000	$535,000	250	337,500	$1.59

 

Remember, that’s not covering the cost of managing the channel or creating content. That’s just the interaction cost. Of course this is only for a year, if you spread that over 2 years it gets a little cheaper.

 The number of interactions isn’t terribly impressive either. But it starts putting things into perspective, such as:

• What is the real impact of an engagement?
• If people engage more with emotional imagery, say of kittens, is it worth the cost to the brand?
• None of this starts connecting interactions to real business goals. Does that matter?
• Is it really worth it to purchase fans on Facebook?

Actually, it’s that last question that’s important. Based on this calculation, however imprecise, I’d say no.

What do you think?

Are you buying what Facebook is selling?

My favorite social media profile these days is one called Condescending Corporate Branding. It satires how major brands manage their Facebook pages. The philosophy is simple: In social media, brands treat people like they’re idiots, and most people don’t seem to mind. 

The beauty of Condescending Corporate Brand is how they share photos posted by major multinational brands. Of course none of these posts has anything remotely in common with what the the brand sells. Which is why they’re so absurd.

The bigger question in all of this is: why are brands doing this? The reason is simple. Brands on social media have chosen to measure their success through metrics that have nothing to do with the brand or its business.

Brands on Facebook focus on “engagement.” That means that you want as many people responding to your posts as possible. The solution for doing that is formulaic

1. Get as many followers on Facebook by any means possible.
2. Post anything that will get likes or comments. Pictures of cats, for example.

Now, this strategy might be smart if you’re Pet Food Warehouse. But for anything else, it seems like a complete waste of energy. I’m waiting for the data that shows that liking stupid stock photography increases sales. 

I think brands do this for a number of reasons. Truly integrating your business into social media is hard. It takes work and internal change is very difficult. Finding pictures of cats or waterfalls on Shutterstock is easy (and cheaper).  Getting lots of likes and interactions looks good on monthly reports. When you show the marketing director and senior management those numbers, they fell pleased, even proud, that they’ve been so smart to approve the social initiative.

Smarter brands, though, are looking more closely at how social impacts the business. For example, American Eagle added a Like button next to every product on its site and found that Facebook referred visitors spent and average of 57% more money than non-Facebook referred visitors. I’m betting the referral wasn’t a cute picture of a Mom and a kid.

One of the biggest drivers for brands missing the focus and opportunity here is that Facebook itself is the biggest influencer in promoting Likes and Engagement. That’s really the main currency Facebook has; when it sells itself to brands, it’s selling Likes and Engagement metrics. Unsophisticated consumers that they are, brands and marketers snap this up faster than TV viewers snap up Sham Wows.

The other big driver, in my opinion, is the reliance on social media agencies to run big brands social presences. The outside agency will never have the internal, on the ground intelligence that you get from working within a company. The relationship itself makes it impossible for the vendor to push for meaningful social business inside the company. Instead, social agencies take the easy way out, getting clients hooked on Likes and Engagement and then feeding that habit through fill in the blank posts and word puzzles.

Someone once said: to change your vision of success, change what you measure.

That’s why every social marketer should be watching Condescending Corporate Branding Facebook page. All social marketers should pledge to do the opposite of what you're seeing there.

What If You Don’t Have What Customers Want?

Graphic From Marketing Profs

A recent Exact Target study on Facebook Likes revealed that most people who like brands on Facebook want something tangible in return. For the majority, they want payback in terms of product discounts or sales. That makes sense. Just like brands, people are looking out for Number One.

But what about all of the companies that don’t sell products? What do all of the service brands do where discounting is, well, odd. Ever see a sale or a coupon for a lawyer, doctor or accountant? If so, post them here.

How about banks, electric utilities or even, ahem, ad agencies? Nope, nope, nope. No sales or discounts there. If most people want deals, and service organizations don’t offer deals, should they even be on Facebook or social media?

When I look at that top line (and I’m not even bothering with the data below those two top lines) the word “exclusive” jumps out at me. People don’t say they want sales; they want exclusive sales. They want to feel special. They want companies to treat them specially.

Now that sounds pretty smart and very doable. Most companies should treat their customers as special people. The challenge is creating something exclusive for them. Although when I think of exclusive, it means that you can give someone access first, before anyone else.

The service industry can do that. They can offer special reports or insights to their customers, first, to help them get smarter. They can invite them to special customer only events to meet with industry experts. They can simply throw parties or give away branded shwag.

The problem with that: It’s extra work. Creating a sale or a coupon isn’t that much work compared with creating content or events. So most companies balk at doing so. I ran across this statistic a few months back that puts this extra work into perspective, though:

Increasing your customer satisfaction by 5% can increase profits by as much as 95%. 

So the question for the service industry becomes: Is it worth the effort to increase your profits by up to 95%?

If you answer no, maybe it’s time to shut down your Facebook page. For the rest of you, it may not seem like you can offer customers what they really want, but you can. You just need to treat them a little better than everyone else.

Does Location Based Marketing Bring Out the Dog in Us?

When I was a kid, my best friend had a very hyper dog-named Herald (my friend was pretty hyper too). We used to get a kick out of the fact that Herald peed on everything, everywhere. Actually, as 10-year-old boys, we were impressed he could actually pee that much! The dog was actually marking: his territory, new things, or even old things. Herald actually gave me my first lesson in location-based marketing.

Fast forward to Foursquare, Gowalla and Facebook Places. I love using Foursquare and I’ve read over and over again how brands will use these tools to reward customers. In the mean time, most of the reward comes in the form of becoming “mayor” of different locations.

But if rewards are key to location based marketing, why do people still do it if they have no chance of attaining those rewards? Even though I’ve lost mayorships of some places, I still check in when I go there, as do most of the people I know. The only place I’ve actually used a reward from was the Ben & Jerry’s scoop shop on Church Street in Burlington.

I think there's more to it than that: I think services like Foursquare, Gowalla and Facebook Places bring out a reptilian need in us to leave our mark. We mark our territory (“I’m the Mayor!”) or we mark as messages (“Hey everyone, that’s me you smell”) or we mark when we find something new (“Check out this great restaurant”).

In short, we use location based services in the same way dogs use their urine.

Web MD has this description on its Web page:

“Social Triggers

Exciting social situations can trigger urine marking. Some male dogs only urine mark when in the presence of female dogs (especially if they’re in heat), and some urine mark only when interacting with other male dogs. Some dogs only urine mark when visiting homes where other dogs have urine marked before. Other dogs only urine mark when they become highly aroused and over stimulated in social situations. These dogs often mark nearby objects, people or other dogs.”

Now just replace dogs with the word people and urine mark with check in.

It makes sense doesn’t it? And just so you don't think I'm getting sexist on you here, it turns out that female dogs have the same marking instincts as male dogs.

Woof.

Art by Dug Nap, click here for more of Dug's work.

Airlines of Facebook: Beyond Promotions

Airlines have soared into Facebook with great energy. JetBlue recently ran its “All You Can Jet” promotion in a Facebook tab, while SouthWest promotes its “Bags Fly Free” campaign.

Two others have taken this to greater heights. Lufthansa just launched a virtual site within Facebook including a booking tool. In doing so, they’re playing catch up with Delta, which created its own Ticket Window app, allowing you to book at trip without ever leaving Facebook.

Kudos to both companies: they integrated their most popular Web tools and functionality into social media, where people can use these easily. But there is a big difference in their approaches.

For Lufthansa, the booking tool, like all of the its features, links you over to the Lufthansa site. Now, it does link you to specific pages, so you don’t waste time finding things. But in doing so, it acts more like a huge, online display ad more than anything else.

Delta’s approach is the opposite. It keeps you on Facebook through the entire booking process. This is smart for a couple of reasons:

• It reduces the risk. By keeping it on Facebook, Delta asks for much less of a browsing commitment from its friends. You know you can quickly and easily get back to your real friends’ stream in click.
• It encourages imagination. People talk about trips and vacation all the time on Facebook. By including the app right in the social site, Delta lets people take a simple step from fantasizing about a trip to actually checking on real travel dates and costs. It’s easy to go from thinking to doing.
• Flight tools are about planning. It’s rare that you book a trip the first time you check it online. Usually people check out multiple trips. By including the flight-booking tool within Facebook, Delta has given people an easy first planning experience and first is sometimes strongest.

I find it a little mind-boggling that more airlines aren’t doing this, but I checked most of the major ones and came up empty. 

Delta wins this dogfight, this time. They show a great example of how to integrate online business tools right into the social experience.

5 Reasons You Shouldn't Have a Facebook Contest

I talk with a lot of brands, companies and organizations that have just started a social media program.  It seems as if every one who's just launched its Facebook page wants to immediately have a Facebook contest. Somehow the idea of the contest carries this glorious idea of a huge rush of passionate fans that will participate and then keep hanging around. 

Facebook contests can be fun and successful, but they're not a panacea. Here are some reasons why you shouldn't hold a Facebook contest, at least not right away.

1. It's not a good way to build fans - Most of the time, new brands on Facebook want to rush to a contest as a way of building up a fan base on Facebook. The intrinsic problem is that most of them use their social media channels, all of which have low volume, to drive traffic to the contest. Usually, these contests don't see a lot of activity.

Having a contest on social media usually won't get people to line up to your Facebook page. If you have a big email list, or generate lots of traffic to your site, you could use those to promote the contest. But if you have those, you've probably used those to announce that you have a Facebook page in the first place. And if that hasn't worked to drive traffic, a contest gimmick usually won't either.

If you can convince someone to come and fan you just because of the contest, you need to ask yourself if that's the right type of fan you want.

2. The contest itself isn't that fun - There are a ton of "send us your picture" contests out there today. While that might be easy, it's not very interesting. Yes, you've created a low barrier for participation, but the content you've gathered isn't really worth talking about. Remember, popular contests gain attention when the user-generated content gets talked about or passed around. One of the driving ideas about contests is that people will spread the word about them, allowing you to grow your fan base.

If you're not asking for something interesting or even a little odd, chances are people will be less inclined to talk about it and perhaps less inclined to actually participate in the contest itself.

A contest is not a substitute for a good idea. 

 3. The payoff is insignificant - If the contest isn't fun, let's hope there's a big prize. Usually there isn't one. Remember, if you're using this to build your fan base, then a big honking prize might go a long way. If your prize is nice, but not that great, or if winning it requires you to spend money on something else (I'm thinking travel here), there's not much of an incentive to play. Again, it gets to the idea of word of mouth as well. If you can have a cool prize that people will talk about, you could have a winner on your hand.

Usually, though, the prize isn't really something special. Instead it's something that's easy for the brand to procure. 

 4. You're not talking to people who are passionate - Holding a contest for the large group of people who are passionate about your brand could be a good thing. Most Facebook contests, especially for new brands, hope to attract people who either know little about them or who haven't moved into the loyal customer fold. Without the emotional connection to you, a contest is just another thing and it's difficult to ask people to use your brand in their user-generated content. 

The other mistake is not talking about something people are actually passionate about. People are passionate about their pets, their cars (sometimes) and lots of other things. At least some people are. Most aren't though. If you're talking about cars to people who aren't passionate about theirs, you're wasting your time.

But finding out what people are passionate about, and who those people are takes time. And contests are usually shortcuts.

5. The cost/benefit is too high - A number of Facebook contests now use apps that ask for access to your personal information. Most of these are fairly benign - they want you to be able to use your Facebook photos, to tell your friends when you've participated in the contest, and to be able to update you regularly.

The problem is that if someone doesn't already have a trusted relationship with your brand, you're asking a lot of them upfront before you've delivered anything. Remember that your Facebook contest is supposed to feel as if it's a benefit to them, even if you get more out of it. Once you step over that invisible line, people will flee.

It's the same with the information you ask for from your participants. If you ask for too much, and the gain is too little, people will back off. Asking for access to people's Facebook information is a little like asking them if you can read a few pages of their diaries.

When you come right down to it, a contest is not a substitute for hard work. If you're looking to build a loyal base of Facebook fans, you still need to prove your value to the people you want to communicate with. Once you've created that value, that's when you could start thinking about a contest.

Want a good example of a Facebook contest? When Starbucks launched its Via instant coffee, they let people create a coffee mug with a photo from Facebook. When they entered into the contest, they received a $1 coupon to try the new product. It was fun (creating a mug with your mug on it), easy, and had an instant reward. It helped that Starbucks already had a huge group of passionate fans too.

You don't have to be Starbucks, though, to be successful. You just need to think through why you're doing the contest in the first place.

One Infinite Facebook Loop

I've started to notice a trend on brands' Facebook pages. Rather than landing on the Wall as the start page, you land on a special page with a branded image that includes links back to the brands' Web site.s This image map usually provides links back to the home page and a few other special pages. It's doesn't provide much more but is certainly more graphical than the normal Facebook stream.

Of course, if you visit those brands' home page, you'll see a link asking you to "like" them on Facebook as the brands try to build their social media following. When you click on that link, you land on that graphical Facebook page with a link back to the page you just came from.

I can imagine some unsuspecting (or merely bored) person clicking back and forth in this infinite loop, only to emerge when their broadband connection goes down.

What we're witnessing here are brands jumping into social media, and especially Facebook, without a clear strategy. The graphical landing pages are nothing more than another bad, static banner ad at best, or a circa 1996 Web site at worst. While I can understand the desire to drive Web traffic from Facebook and to grow the number of social media followers online, these brands have fallen into some common traps

No social marketing strategy - Brands who lead with graphical links back to a Web site don't understand Facebook. In social media you fish where the fish are. If you're on Facebook, do something on Facebook.

The biggest mistake these brands make is that they still want to make their Web site the one and only destination, rather than de-centralizing their marketing. Facebook becomes instead another road leading back to Rome.

There are a number of brands that use Facebook for interaction, conversation and business. Those who do understand that they need to provide value on Facebook itself, rather than trying to bring people somewhere else. Just look how Pizza Hut allows you to order pizza right from Facebook, or how 1-800-Flowers allows you do ecommerce without leaving the site. Brands like Adidas, Coke and Victoria's Secrets have moved their site marketing to Facebook itself.

For smart brands, it doesn't matter where you interact with them or do business, as long as you do it in a place that benefits you and the brand. Brands leading with graphical links back to their site show that they don't have a strategy for social media marketing.

Focusing on the wrong numbers - Infinite loops also show a misguided focus on certain numbers, and often the wrong numbers. By focusing on traffic from Facebook and number of followers, brands award quantity over quality. It doesn't matter how many fans you have if they're not helping your brand grow. The same is true of Web traffic.

The problem is that valuable numbers around interaction, conversation and value are harder to measure. It can sometimes take much longer to show how these increase growth. Lately, firms have developed a media value to fans and interactions on Facebook, showing a dollar value based on the number of "likes." This will only encourage a quantitative focus rather than a qualitative.

While it's a good thing that brands recognize the value of social networks like Facebook, they need to go beyond a picture with links. Here are a couple of things to think about:

1. It's not about pretty - Even if you can't make things graphically beautiful, people will still like you in social media. Don't worry so much about how you look, worry instead about how you act and how interesting others find you.
2. What's the Do? - You have a chance to let people do things. What do you want them to do? What can you offer them on your social networks that will entertain and delight them so they'll want to do it again and tell others about it?
3. Move your marketing - Start thinking about how you can move your marketing to social, rather than keeping it all on your site. Things like microsites have started migrating to Facebook. What could you move?

You might never end up with a following like Victoria's Secrets but that doesn't mean you should give up either. Start developing your social strategy and take time to move slowly and deliberately so you get it right.

Remember, infinity is a very long time.

Facebook is Not a Strategy

I was reading SEO.com's post about the Top 10 Internet Marketing Strategies of 2009 the other day and they repeated something I see a lot of these days. They mixed up strategies and tactics. Number two on their list includes channels like Facebook, Twitter and LinkedIn. Having a Facebook page is not a strategy.

One challenge I find with clients interested in increasing their digital marketing, especially with social media, is that they, like SEO.com, equate a digital strategy with  having a Facebook page. The intent is good but the thought process needs help.

Are you looking to allow people a better way to connect with your brand? Would you like to get more first hand feedback? Do you want to find ways you can help people spread word of mouth for your brand? Would you like a fairly inexpensive way to reward your customers with coupons, specials, or deals?

If so, then Facebook might be a good idea for you.

Do you have very vocal anti-brand groups? Are you afraid of negative criticism or have no internal mechanism for dealing with it? Does your company not really have that much to share, except for sales promotions? Do you have a lengthy and complicated response procedure?

If so, then Facebook might not be a good idea for you.

All of the tactics listed in the MarketingVox article could work great, if they match up well with your brand's objectives and strategies. If they don't match up and you move ahead without putting at least a little thought into what you're doing, you may spend too much time putting out internal and external fires and not enough time building the right kind of relationships.

We all want action, now. Usually, and especially when you spend marketing dollars, it's worth creating a thoughtful strategy first.

1-800-Flowers is no Shrinking Violet

The best thing I've seen on social media in a while happened this last week when 1-800-Flowers revolutionized its Facebook pages with e-commerce. Remember when the hot thing on Facebook was sending virtual flowers, beer and ice cream? Business sprouted up to take advantage of this new Fad.

1-800-Flowers has instead turned the virtual real. It's trying to realize the true promise of social media by letting people do anything from their comfortable social media homes. Isn't that the true promise of what everyone's attempting to do? Find where your customer are and go there, instead of inviting them to go somewhere else?

I think this is a game changer.  What do you think?