Digital advertising belongs in the mix, but not blindly

“Even Sexy Brands Struggle With Low Engagement on Facebook

Less Than 1% of Fans -- a Lot Less, in Most Cases -- Actually Do Something

By: Matthew Creamer Published: February 28, 2012

The common view that Facebook "likes" equate to brand engagement took a hit last month when the Ehrenberg-Bass Institute shared some interesting data with us. Researchers found that less than 1% of fans of the 200 biggest brands on Facebook actually engaged.

Their conclusion was based on a six-week study of Facebook's People Talking About This metric, with researchers considering the number as a proportion of fan bases. Only 0.45% of fans engaged, if you subtract likes to isolate for more meaningful activity, including shares and comments. This confirmed something many readers already suspected: Facebook fan bases and actual engagement aren't the same thing.

Not Many Fans Are Creating Content, But That Might Not Be a Bad Thing

One of the more interesting questions arising from the study is whether the findings apply to passion brands, like Nike or Harley-Davidson, as opposed to ubiquitous products that, loyal as their audiences might be, don't get folks lathered up at the mere sight of the logo. Though the short answer is that passion brands might get slightly more engagement, it's not enough to throw off the overall findings.

Looking at 10 passion brands -- including Nike, Old Spice, Harley-Davidson, Porsche, FordMustang, Jack Daniels and Tiffany & Co. -- the researchers found an average engagement of 0.66% The average engagement for the 10 brands with the largest fan bases was 0.36%.

I asked Senior Research Associate Karen Nelson-Field if that difference is statistically significant. In an email, she replied that it is -- because of the large sample sizes -- but that there's something more important.

"Only one brand of the entire 200 in the analysis got an engagement level of 2%. A few over 1%. Most under 1%," Ms. Nelson-Field wrote. "The significance here lies in the very tiny rate of engagement across all brands in a big sample. So, yes, we could say that Brand A (at 1%) gets twice as much engagement as Brand B (at 0.5%), but that's like saying, 'You have 50 cents, I have $1, so I am twice as rich as you.' "

The ultimate question is about the cost-effectiveness of engaging twice as many fans, Ms. Nelson-Field said. "Is the variation worth [the outlay], given the most you could expect is just over 1%?"”

“Digital Brand Advertising Spend to Outpace Direct Response

64% of brand marketers plan to increase their online brand advertising spending this year, compared to 49% who plan to increase their direct response budgets, according to [download page] a survey released in January 2012 by Digiday, sponsored by Vizu. In fact, 44% of brand respondents project their interactive brand ad spending to increase by more than 10%, and 22% put their planned increase at more than 20%. By contrast, just 20% plan a direct response advertising budget increase of more than 10%, and only 13% of more than 20%. Overall, 60% of brands indicate that they are allocating spending away from direct response to brand advertising initiatives.

Agencies provide a similar outlook, projecting 54% of digital ad dollars to be spent on brand advertising, with the remainder on direct response. Agencies were even more aggressive than brand marketers on growth, with 71% projecting an overall spending increase in brand advertising this year. And two-thirds of the media sellers surveyed indicated that the majority of their online ad dollars will be generated by brand advertising in the coming year, with a slight majority indicating that they expect brand advertising sales to grow, compared to 32% expecting sales growth in direct response advertising.

Brands Look to Mobile, Social Media

The most popular channels brands cited for growth in digital advertising were mobile (69%) and social media (63%). 57% of brand respondents also said they would increase their online video spending. Rich media advertising and standard display budgets were projected to remain flat by 57% and 60% of brand respondents, respectively.

Among agencies, mobile is also predicted to experience the greatest increase in digital ad spending, although agencies expect online video advertising growth to exceed that of social media.

Metrics Seen Biggest Hindrance

The top 3 improvements that brand respondents indicated would lead them to increase brand advertising spend were: improved clarity around ROI (68%); the ability to verify that their brand advertising created the desired result (56%); and the ability to use the same metrics to evaluate brand ad effectiveness online as are used offline (53%).

In fact, when asked for their preferred metrics to calculate ROI, 55% of brand marketers said they would prefer to use the exact same metrics used in the offline medium, with a few additional metrics specific to the online medium. Only 15% would prefer to target only metrics specific to the online medium. However, the vast majority (77%) of media sellers said they were most likely to report only metrics related to the online medium.”