Brands still reticent about jumping on social media bandwagon

22 Sep 20112 Shares

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While there’s a lot of money going into social media marketing, some traditional brands are still struggling with the question of how they are going to derive a viable return on their investments.

PricewaterhouseCoopers’ senior manager Bartley O’Connor said that for many brands, social is too big to ignore – Twitter has 100m members and Facebook has 750m members – but important questions remain over whether investing in it is about advertising or PR or whether they’ll derive value.

“Social is something you cannot afford to ignore,” he told Siliconrepublic.com. “However, the question is how do you leverage social media properly to get value for your business?

“Anyone can set up a Facebook page, but how do you deliver value? How do you translate that into transactions and money? It’s not just about having a presence. Social media for some companies can be a black-hole expense.

“Tweeting about everything you’re doing or putting pictures on Facebook for the feel-good factor may not make sense to most managing directors. And handing communications over to third parties for PR purposes could be a huge cost. It may seem all great and it puts the company name out there, but really, why are you doing it?

“Firms need to look at it through a financial lens and ask themselves are they going to make money out of it?”

The latest entertainment and media analysis from PwC shows, however, that for most media, digital is the only way forward. It found the internet will be the fastest-growing advertising segment during the next five years, overtaking newspapers in 2012 to become the second-largest advertising category behind television.

Television advertising will continue to benefit from viewing and its association with internet usage, and the major sporting events over the next couple of years, such as the London 2012 Olympics, will drive double-digit increases during this period.

In 2010, digital advertising accounted for 15.9pc of total global advertising and is projected to account for 22.5pc in 2015. Non-digital accounted for 84.1pc of total advertising in 2010 and is projected to account for 77.5pc in 2015.

Overall digital spending increased by 12.9pc in 2010 compared with a 2pc increase in non-digital spending. This pattern will continue and PwC project digital’s share to rise to 33.9pc by 2015. Digital spending will increase at a projected 11.5pc compound annual growth rate during the next five years, compared to compound annual growth of 3.3pc for non-digital spending. Accounting for just a quarter of the market, digital will generate 59pc of total E&M spending growth during the next five years.

Social media spending: is it advertising or is it PR?

O’Connor said that in the Irish marketplace, he is aware a lot of money is being invested by brands in social media campaigns. “But is it advertising money or is it PR money? Is it profile building or advertising based on getting sales?”

O’Connor said social is an undeniable force but firms should avoid the temptation of doing social for social media’s sake and if they do have a social media strategy, be very clear on its purpose and its likely return on investment.

“The question is what is the return that companies are getting for their investment and have they really thought it through?”

The bigger digital planet

Overall, O’Connor believes the digital media opportunity for Ireland will be enormous when you consider social alongside platforms like gaming and general internet.

“In the media world, you need to be asking yourself why are you limiting yourself to an Irish market if you can come up with a good online service? The world is your market if you do it properly.

“Ireland also has an opportunity to create a globalised digital media industry by providing services like copyright management, intellectual property and payment services and build an industry in the same way we did with the IFSC.

“It is important that agencies and the Government understand what digital is really about and in turn create new economy jobs that can’t be shipped off elsewhere.

“In the video-games sector, there are opportunities around deep analytics, telemetry and finance. How many Junior Cert students today realise that there are huge careers to be had in video games?

“On the console gaming side of things, Call of Duty: Black Ops made US$360m in the first 24 hours. In the casual gaming space, Rovio made US$20m in its first quarter. It’s a serious business,” he said.

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Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com