Facebook: Like it. Or not...
Strand Consult’s new research note says mobile operators waste millions investing in the just-floated social network.
You can’t read the press these days without an article telling how fantastic Facebook is. Indeed with 900 million members, it’s one of the world’s largest countries. Facebook has milked its IPO to full effect. It’s as if the world is infected with a “Facebook fever”.
But our job here at Strand Consult is to look beyond the hype and to help mobile operators be more profitable. Operators have started to ask us, what should we do about Facebook? How much of our marketing budget should we invest in it?
From our dialogue with operators around the world, we see that they are in a race to get ‘Likes’ on their Facebook pages. They hold competitions inside their companies for different teams to get the most Likes. Facebook has upped the stakes by adding a new measure of ‘People Talking About This’, as if to provide a real-time finger on the pulse of what’s hot.
Strand Consult has made an in depth study of how mobile operators use Facebook. We have yet to find the definitive link between Likes and profitability. The main reason is there is no inherent value in a Like. There are a variety of schemes and trick that companies can do to get Likes, such as free and discount offers. Indeed agencies specialise in helping companies develop campaigns simply to get Likes.
The most sobering of our findings is how few Likes operators have as a function of their subscriber base. For all the time and money they invest in Facebook, no network operator we found had more than 3% of its subscriber base as fans in Facebook. There is one exception of Telenor Norway with 3.59%, which is the dominant player in its market and has the advantage of being in a highly digital country with deep Facebook penetration. Turkcell was higher than the others, but not higher than 4%.
We were especially surprised when we looked at the American operators, Verizon, AT&T and Sprint, operators that spend millions of dollars in marketing and have internal and external teams working on Facebook. For all their work, they can’t budge much above 2%. Such small results hardly seem worth the effort.
This is not to say that operators should not have a Facebook presence. Indeed, we have seen solid evidence from around the world that social media - operators’ own support websites, Facebook, Twitter, and other user-driven tools - can help reduce support costs. For those tasks, we recommend social media. But we have yet to see Facebook as a solid driver for leads and sales.
We suspect that there is a drive for Likes because it’s measureable. More of some number seems like a good thing. But measurable does not equate to meaningful. A mobile operator could slash prices to get more subscribers, but it’s not the number of subscribers that matters, but how much they spend and how well they are retained.
At a deeper level, we sense desperation among mobile operators. Profits are squeezed, and the long term outlook is not positive. So getting more Likes seems like something a marketing director can influence in an environment with larger forces (at) his control.
We suggest that operators need to take a hard look at their marketing investments, and put Facebook into perspective with other marketing channels. The attention Facebook receives is over the level of any other media, but its results under-perform other channels.
Consider the fact that Facebook shows any company’s posts to just 16% of the community that Likes a page. This is part of Facebook’s algorithm to show posts only to a subset of the community. The ability to serve updates to the entire community that Likes a particular operator’s page must be purchased through Facebook’s “Reach Generator”. In practice this means that just 0.32% of subscribers can be reached via Facebook. On top of that, unless operators undertake the task to identify the people who Like their page (which can be a difficult task for technical and legal reasons), they may engaging with people who are not even their customers.
We think that operators should invest their limited marketing budget in proven channels such as e-mail, search and newsletters. In fact, e-mail is the best converting channel of all, and only a handful of operators are taking advantage of it. We suspect this is because marketers think e-mail isn’t sexy.
We see a value to operators developing their own content and improving their websites to show that content, as well as making that content findable and shareable. Next we suggest that operators developing meaningful, authentic messages and deliver them to customers in a personalised way.
In our experience, mobile operators have a lot of traffic on their website that they don’t monetise. Potential customers are searching the Web for information on prices, phones and plans. Operators can take better advantage of this on their website and with e-mail. Furthermore, operators still have a lot of knowledge within their own business intelligence systems that they fail to action for a variety of reasons. We suggest they pick these low-hanging fruits.
We know that selecting a mobile provider is a decision heavily influenced by family and friends, but this more often occurs in a private or offline communication than on social media. We think that Facebook and marketing agencies have made a fetish of the idea of virtual word of mouth. People call and SMS their friends and family every day, the very vital service that mobile operators enable.
Because marketing is a large part of operator’s expenditures, Strand Consult has taken a global survey of operators and collected their case studies and best practices. As a result, we can offer specialised reports and workshops developed from an operators’ perspective. With our new digital strategy marketing workshop you can expect that same quality and no-nonsense approach that we bring to all of our work. Our job is to cut through the hype and help operators make decisions that improve their business. Feel free to contact us about our digital strategy workshop and reports.