As someone who has spent a few decades in top marketing roles at Fortune 500 firms, Facebook’s first-quarter earnings, along with the heated discussions around how much control they have on advertising and marketing, sure made me stop and reflect. The sheer amount of advertising that was spent on the platform – nearly 80% of its $5.38 billion revenue – clearly shows that for Facebook, the strategy to become the world’s largest advertising outlet is working. But what does this tell us about brands and their marketing strategies?
Reach and engagement rates are on the decline across platforms, while brands have no direct access to the data about the very people they interact with. Building a compelling social media presence seems nearly impossible in this cat and mouse game where marketers have no insight into the platforms’ ever-changing algorithms, which are supposedly designed to determine user preferences. Yet, as ad spend continues to grow, it leads me to a conclusion that brands today are throwing money at anything and everything in the social media realm, hoping something sticks.
If this system isn’t working for brands, and it isn’t working for users – who increasingly complain that they are getting bombarded with irrelevant ads and content they don’t want to see – then why are we not changing it? Today’s marketplace is ripe for platforms, which instead of existing for the purpose of driving and growing advertising revenue, serve as ecosystems that facilitate two-way conversations and connect brands and users in a true, authentic way.
In the early days, social media was thought to be the world’s greatest gift to marketers. It was seen as a new (and practically free) way for brands to connect with huge numbers of people in just a few clicks, as well a means to keep a finger on the pulse of what consumers want, in real time.
Far from that initial promise, it evolved into an industry unto itself. Instead of encouraging organic engagement between brands and users, it ushered in an arms race between marketers where social media managers, professionally produced content and paid ad space became the necessary tools to compete in an increasingly, and insanely, crowded space.
To make matters worse, the decision to move from a reverse chronological feed to an algorithm-based feed on many platforms – most recently Instagram – took another jab at how brands and users connect. As it stands now, organic reach – meaning people who actually see non-sponsored posts – is quite low, with a study by social analysis firm Locowise placing it at an average of just 2.6% in 2015 across platforms. On Facebook, this reach is below 2%. When it comes to engagement rates, posts on Instagram only capture 3.31% users and mere 0.07% users on Twitter, while the consensus is that algorithm-based feeds will continue to deliver diminishing returns on each brand’s time, effort and money, whilefrustrating and turning the users away.
In this environment, brands are only left with two, extremely costly, engagement options – buying promoted posts, or partnering with influencers to push their content in front of their audience. While these strategies may draw more attention to the posts, they don’t guarantee viewability or engagement, and they don’t fix the fundamental issue that exists between brands and social media platforms.
Even more importantly, social media marketers don’t have access to what is perhaps the digital era’s most precious gift – data. When brands buy an ad on Facebook or Instagram, the platform is harnessing the power of customer data to sell them ad space in front of a selected audience – this is at the core of their business strategy. These data sets are not necessarily tied back to the brands’ actual consumers, and marketers have no control over the way they interact with their fans or over the data that interactions brings.
While the stranglehold of Facebook, Snapchat, Instagram and Twitter may seem insurmountable, marketers need to stop blindly spending money in the hopes that this social media “strategy” will work, and instead turn to platforms that are designed to connect brands and users in a more organic way. Digital systems that are purpose-built for brands to engage with their followers on their own terms are already emerging. Their strategy is not designed around keeping data under lock and key in order to sell advertising; rather it’s focused on allowing users to follow and engage with their favorite brands and influencers, while brands and influencers have access to data that can be customized, analyzed and segmented to offer the most relevant content to the most passionate fans and users. This setup gives marketers the control over the content they post, as well as who sees it, while users have control over who they follow and how.
The vast social media changes over the past few years have kept marketers on edge that their strategies will be rendered obsolete as platforms continue to turn the game in their own favor. But once these emerging platforms become more established within our digital ecosystem, brands will be able to call their own shots, unchained to current platforms’ unfavorable ad-based business models.