I think the Pepsi example really doesn't work for two reasons:
First, the decline in sales in the sugary soft drink industry is only remotely connected to their social media advertising. It is a widely reported phenomena that is usually attributed to a more health-conscious society and a widening array of beverage choices.
Second, Pepsi's intention in offering contributions to non-profits based on social media recommendations was probably seen as a way to boost corporate image in a domain far beyond potential soda drinkers. It probably was meant to influence investors, journalists, regulators, and people like Mayor Bloomberg in New York who would portray soft drink vendors as an evil in our society. When you are a big as Pepsi, directly influencing buyers is only part of your advertising outreach.
Still, I agree with the article's overall conclusion. Social media advertising is typically not a very efficient way to convert advertising dollars to revenue. But it can be. With any advertising method, you have to devise a way to measure the results of a campaign, whatever your goals are. Otherwise, you are just throwing money in the air, hoping it lands somewhere useful.
The answer is actually pretty simple: Pepsi failed at social because Pepsi didn't think socially. It was trying to create new, artificial human behavioral patterns instead of tapping into natural, existing human behavior.
Big companies and brands often lose sight of what social media is really about: namely, sharing things with friends. Grouping with people based on shared affinity for certain topics, things, events, etc. People are there for the friends first; all other considerations -- including content consumption -- are secondary.
It's incredibly hard to convince people to hang out on a soft drink's social page. What's the benefit? Where is the natural, social use case? If I want a Pepsi, I'll go buy one. When I don't, why the heck would I spend time reading about Pepsi, or talking with friends about Pepsi? Who actually does that? I submit that anyone who does is highly abnormal. Maybe even crazy. Regardless, they're the kind of person whose social feed I'll ignore.
As for the Pepsi Refresh campaign, they put the cart before the horse. People care about the cause first and the money second. If I want to raise money to fight breast cancer, for instance, I'll start with the people who care about breast cancer, building out from that passionate early adopter base. I don't just wave a giant paycheck around in front of a highly heterogeneous set of people, asking them to tell me where to spend it. It's a statistically irrational approach to marketing. But more important, there's no heart or soul in that. There's no grassroots need inherent to that. People don't want to vote on a cause. People have causes. Pepsi should have started with a specific cause, and then made waves by offering to match (or even triple) a crowdsourced fundraising campaign.
An example: for all its flaws, that infamous "Kony 2012" video went uberviral. The video didn't start by asking the question, "Hey, who's the most despicable African warlord we should try to depose? Vote here!" It started by informing people about a specific evildoer, educating them about him, and then asking them to do something about it.
Pepsi could have generated a lot more authentic goodwill by offering to match or exceed an existing campaign, hashtagging into it. They could have spared themselves the millions of dollars creating a page for their campaign, branding it, and acquiring fans for it.
Pepsi is an interesting case for the ineffectiveness of advertising in general.
I find it hard to believe that television or other advertising for a product like Coke or Pepsi makes a big difference in sales. I'm already aware of the products, I already have my opinions on them, and they aren't going to change them.
If these companies stopped advertising tomorrow I don't think there would be an immediate effect on consumer behavior.
For a while I was a heavy drinker of low carb Monster. One day I saw the can, thought I'd try it, decided I liked it, and then I bought it frequently.
I hadn't seen a single ad (or promo) for Monster until years after I'd gotten sick of it.
What would happen is that the channels they sell through would notice that they weren't being so aggressive about marketing. The channels might think they are less serious and then they wouldn't work so hard to promote those products.
I know somebody who sells newspaper advertisements and when people ask the question "For what a postage stamp sized ad costs in the paper for a year I could rent a storefront or hire an employee so why do I need to spend money on you?" he gives them the answer that people who are used to seeing your ad in the newspaper might think you went out of business if the advertisements stop.
That's how sick the advertising business is in 2013.
An interesting anecdote...when I was in middle school, an account exec for McDonald's came to speak to our class. He told us that in our local market, McDonald's Corp wasn't convinced that the TV and radio ads were having a significant effect on buying behavior. So for one day, they pulled the ads in that market. They found that sales absolutely plummeted in that day, so they scrambled to reinstate their regular ads and all was well. Of course this is anecdotal evidence, but it made a big impact on my middle-school mind :) Everyone thinks they're not affected by advertising.
I find it hard to believe that television or other advertising for a product like Coke or Pepsi makes a big difference in sales. I'm already aware of the products, I already have my opinions on them, and they aren't going to change them.
I feel the same way about beer. I love beer commercials... they are usually absolutely hilarious, and I often literally LOL at them. During football season, when I'm hanging with my friends at the sports bar watching the Dolphins play, I look forward to the commercials so we can have a group laugh over the latest ads from Budweiser, Coors, Michelob, etc.
But... 2 minutes after a given ad airs, I could not tell you if it was an ad for Coors, Michelob, Budweiser or "other". Well, ok, the Keystone ones do stand out a bit in my mind. But in any case, NONE of them give me the slightest inclination to drink their respective brand of beer. I already regard all mainstream, mass-market American beers as being roughly equivalent to stale horse piss, and all the funny commercials in the world aren't going to change that.
My staple beer is Sam Adams, which I usually drink unless a given bar has a microbrew I happen to like. And I was drinking Sam before I ever remember seeing a commercial for it. How'd I find it? A bartender recommended it to me once, I tried it, liked it, and that was it.
>>>>> How'd I find it? A bartender recommended it to me once, I tried it, liked it, and that was it.
This is the angle social media attempts to replicate. Leveraging respect levels between you and your social "circle". Sometimes it works with great effectiveness, but a majority of the time, I believe this approach fails.
>>I find it hard to believe that television or other advertising for a product like Coke or Pepsi makes a big difference in sales. I'm already aware of the products, I already have my opinions on them, and they aren't going to change them.
Companies don't engage in the marketing bombardment of certain brands to remind you that they exist or to change your opinion. For 'commoditized' consumer products like cola or light beer, there is a premium placed on being 'top of mind.' https://en.wikipedia.org/wiki/Top_of_mind
I am not a frequent consumer of soda or light beer. However, on occasion, when I 'have to' purchase it (for a party, picnic, barbeque, etc.), I find myself subconsciously steered towards certain brands. which I believe is the result of years of 'conditioning' from constant immersion in uqiquitous marketing.
>>If these companies stopped advertising tomorrow I don't think there would be an immediate effect on consumer behavior.
Completely agree, and I'd also argue that social media's worth varies quite widely based on a brand's current market penetration. Pepsi and Coke are so ingrained in our consciousness due to other ad buys that their social media outreach may be automatically be resented as "corporation is invading my Facebook".
But for smaller companies, at the very least, social media is a much frictionless way of disseminating updates and news, compared to email signups and expecting people to go to your company blog. And upstart companies may (initially) be seen in a more positive light for their seemingly underground/non-pretentious way of communicating to their fans/followers. I'd say that's hardly "worthless"
>First, the decline in sales in the sugary soft drink industry is only remotely connected to their social media advertising. It is a widely reported phenomena that is usually attributed to a more health-conscious society and a widening array of beverage choices.
Pepsi is falling way faster than the other major players though. Last year, Dr Pepper was down 0.5% , Coke down 1%, Pepsi down 2.5%. Pepsi's share fell 0.4. This has been the (general) trend ever since they started pulling dollars from TV and began spending big on viral marketing, social media, giveaways and rebranding in 2008
Thought the exact same thing when the article didn't give the overall market growth number for the same time frame. It also didn't give the growth rate of the generic store brand cola products, which could have easily been replacing brand-name colas for budget-conscious buyers.
Indeed, social media isn't as efficient at directly converting advertising dollars to revenue as paid search. But it is a very important way to do branding, and branding can be a very powerful way to indirectly convert advertising dollars to revenue.
First, the decline in sales in the sugary soft drink industry is only remotely connected to their social media advertising. It is a widely reported phenomena that is usually attributed to a more health-conscious society and a widening array of beverage choices.
Second, Pepsi's intention in offering contributions to non-profits based on social media recommendations was probably seen as a way to boost corporate image in a domain far beyond potential soda drinkers. It probably was meant to influence investors, journalists, regulators, and people like Mayor Bloomberg in New York who would portray soft drink vendors as an evil in our society. When you are a big as Pepsi, directly influencing buyers is only part of your advertising outreach.
Still, I agree with the article's overall conclusion. Social media advertising is typically not a very efficient way to convert advertising dollars to revenue. But it can be. With any advertising method, you have to devise a way to measure the results of a campaign, whatever your goals are. Otherwise, you are just throwing money in the air, hoping it lands somewhere useful.