It is time to check in on the battle between Facebook and Twitter for dominance of the social media world. Until now it has been a one-sided, Facebook-dominated fight, but is the tide changing?
While we are at it, let's take a look at the "holy grail" of social media, answering the "return on investment" (ROI) question. It would be hard to argue that any major social media company has proven that a dollar invested in their advertising consistently returns at least that dollar plus even a penny more, but is anybody getting close?
I am asking these questions for a few reasons. First, with so many social media platforms to choose from these days, most small companies or entrepreneurs only have the resources to manage one social media site well. I want to help them pick which one that should be. Also and somewhat related, at the end of the day Twitter and Facebook are both in business to make money. How do they make most of their money? Advertising! People are willing to bet on the outcome, but if the advertising does not work, or if it cannot be proven that it does work, then eventually people will stop spending money on it and the company will go out of business. It is just basic economics.
We will start with Facebook.
Last week Fox News reported that the United States Department of State spent $630,000 over 2 years ending in March 2013 on Facebook advertising to increase the number of Facebook "likes" from 100,000 to 2 million. According to a report released by the agency's Inspector General, many agency employees were appalled by what they considered to be a waste of money. Another statistic cited in the case against the spending was that the four pages only averaged an engagement rate of around 2 percent.
$630,000 to get 1.9 million new Facebook "likes" is 33 cents/each. If you have done much Facebook advertising, you know that that is a pretty good spend rate per "like". Also, across all of Facebook, the average engagement rate is somewhere between 1 and 2 percent. So, on at least two measurements, the campaign was a success. I do not know exactly who did the advertising for the Department of State's pages, but kudos to them. They did a great job with a tough account.
So what is the problem? The problem is that most people do not understand social media and the value that is inherently there in a community of this size. Instead those criticizing this campaign could not get beyond the "ROI" argument. They felt that there should be an immediate and quantifiable return for an investment of this size. They deemed this campaign a fail. If the public, the people Facebook advertising is targeted to reach, see it as a fail, this cannot be a good sign.
One 'perceived' strike against Facebook!
I thought last year when General Motors famously pulled their entire $10 million+ Facebook advertising budget and said they advertising was ineffective, that they just did not know how to measure or what to look for or perhaps they hired the wrong social media agency. I still believe this to be the case. So many businesses are looking for an immediate ROI that they are not looking beyond this to the real value of building a connected community through the power of social media.
Two 'perceived' data points against Facebook. Why is this a big deal?
Try this yourself. Do a Google search for "Facebook advertising success stories" and see what you come up with. The first several results are pieces from Facebook themselves that are, quite frankly, not that impressive and inconclusive at best. Then there is a story in Inc. titled "A Facebook Ad Campaign That Actually Works" (liked they are shocked to find one). It is about a company that is in the obstacle course administration business and uses Facebook advertising successfully. After that, my very unscientific polling showed roughly 90 percent of the stories being about Facebook advertising failing, not succeeding.
Again a perceived strike against Facebook advertising!
Note to Facebook: Get your content writers, media partners, affiliates and SEO team filling up organic search listings with positive, inspiring Facebook advertising success stories ASAP!
I am not suggesting that Facebook advertising does not work. Trust me, I am not. I am just worried. Here is why. On May 1st, Facebook reported their first quarter earnings. Revenue went from $1.058 billion to $1.458 billion Q1, year-over-year, an increase of almost 38 percent. Not bad right? Well, when you read the footnotes you will see that $1.25 billion of that revenue came from advertising, a full 85 percent of the company's total gross revenues. Even more alarming, that was a 43 percent INCREASE from the year before. Bottom line, Facebook is "betting the farm" that their advertising works. By "working" I mean clearly establishing that it is a good investment, an investment with a positive ROI. In other words, Facebook must find and prove they have the "holy grail" or work, in conjunction, with other social media leaders to educate companies on what true social media ROI is. If they cannot, then those advertising dollars will stop moving their way very quickly.
I am not calling strike three yet, but let's just say the count is full and it is not looking very good for the home team.
So, that leaves us with Twitter. Forget the fact that I LOVE Twitter for just a minute, and that it is my #1 source of traffic. Even though it has been around since March 2006, it still had a 44 percent increase in its user base during the last half of 2012. Also, the quickest growing segment on Twitter is people aged 55-64.
I like to refer to that demographic sometimes as "the people who have the money".
A full 95 percent of television-related conversation happens on Twitter. Half of all Super Bowl commercials had hashtags in them. Twitter also has successfully launched real-time, dual-screen sponsorships with ESPN and Ford. Turner Sports, AT&T, Taco Bell, Sony and Sprint are on board as partners and working to find creative ways to weave Twitter into their branding, messaging and advertising mix.
Twitter is still private, so they do not have to give me their earnings reports. Darn! I would bet there are at least a few people around the executive lunch room at the Twitter headquarters smiling when thinking about the direction the company is heading, though.
Where does that leave us in the battle between Facebook and Twitter? Facebook is still winning, for now. If I was a betting person, I would place a pretty strong wager that a couple of years from now the verdict might be quite different.
I like Twitter's chances of getting there with the "corporate relationship" model they are building over Facebook's "let's hope they keep wanting likes" approach.
Am I missing anything? Did I get it right, get it wrong or neither? I would love to hear your thoughts.