ROI from owned social media for FMCG brands in small and medium countries (case based on Belgium)


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This is the executive summary of the thesis I wrote to be graduated from Solvay Brussels School of Economics and Management.

If you want to get the full pdf, contact me by email (

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ROI from owned social media for FMCG brands in small and medium countries (case based on Belgium)

  1. 1. To  contact  me  :­‐goudsmit/37/760/ba3   Executive  summary         Social  media  is  a  trendy  and  global  subject,  which  gives  390  million  results  on   Google  search  engine.  In  Belgium,  82  %  of  the  online  population  is  connected  to   social  networks.  For  this  reason,  more  and  more  brands  decide  to  invest  in  this   new   channel   but   majority   of   those   brands   do   not   measure   the   return   of   investment  (ROI)  of  social  media.  Impression  emerged  that  many  companies  are   investing  in  social  media  to  mimic  other  companies,  to  be  modern  and  because  it   looks  like  a  “free  lunch”  but  do  not  have  a  real  strategy.  This  feeling  has  given  a   definite   question   for   this   thesis:   “is   social   media   a   profitable   channel   for   FMCG  brands?”           This   thesis   tries   also   to   countered   common   erroneous   beliefs   such   as   the   concept  that  social  media  is  free,  that  “built  and  they  will  come  strategy”  is  always   successful,   that   social   media   can   only   be   measured   by   qualitative   metrics   because  much  is  intangible.     Based   on   researches,   main   reasons   for   unsuccessful   social   medias   can   be   emphasized:  lack  of  knowledgeable  staff  and  of  budget,  management  resistance   and   technical   complexity,   not   relevant   to   the   market,   issue   of   immediacy,   complexity   of   integration   in   the   marketing   mix   and   consistence   in   the   different   channels  used.       Increase   sales,   create   shareable   content,   mimetism,   skip   expensive   traditional   media   and   create   more   competition   in   the   advertising   space   in   order   to   improve  
  2. 2. purchasing   conditions   of   traditional   media,   improve   after-­‐sales   department,  enhance  brand  awareness,  modify  brand  perception,  personalize  the  brand  are  the  main  reasons  to  invest  in  social  medias.    It  seemed  essential  to  separate   the   social   media   landscape   in  three   different  components.  The  first  is  the  paid   media,  that  requires  paying  advertising  space.  Then   there   is   the   owned   media,   which   represents   all   the   assets   the   brands  possess   such   as   their   Facebook/Twitter/YouTube   page   and   finally   the   earned  media,   which  refers  to  “brand-­‐related   consumer   actions   and   conversations”.  This  thesis  focus  on  owned  media  because  earned  media  is  not  led  by  companies  as  it   is   initiated   by   consumers.   Nevertheless,   consumers-­‐generated   has   been  considered   for   the   listening   part,   as   it   is   the   starting   point   to   build   an   owned  media  campaign.    To   determine  the  listening  value  for  FMCG  brands   in   social   medias,   a   sample  of   twenty   different   brands   have   been   selected   at   a   representative   cluster   of   local  and   regional   brands,   which   are   active   in   Belgium   and   in   maximum   two   other  neighboring  countries.  No  global  brands  have  been  chosen  to  avoid  creating  too  much   noise   and   because   patterns   and   preferences   are   different   among   various  cultures.   Then,   a   sampling   method   has   been   selected,   using  (to   analyze   social   media)   and   (to   analyze   blogs).   Many  limitations  were  however  faced,  such  as  the  low  quality  of  the  chosen  platforms,  software   issues   to   recognize   sarcasm,   slang,   comparisons’   issues   and   the  equivocal  use  of  names.      This  analysis  has  demonstrated  that  only   10%   of   the   total   sample   expressed  opinion   related   to   the   brand   while   only   7   comments   out   of   640   could   help  brands.  For  the  majority  of  those  brands,  not   enough   information  was  available  to   get   a   directional   or   a   representative   idea   that   brands   could   use   to   better  understand  feelings  toward  the  brand.  This  seems  to  be  linked  to  FMCG  market  (low   involvement)   for   which   consumers   do   not   spend   time   to   write   reviews.  Moreover,   it   seems   more   relevant   to   look   at   the   category   of   products   than  analyzing  brand  names.    
  3. 3. It  has  been  concluded  that  online   listening   cannot   be   currently   considered   as  an   alternative   technique   and   brand   should   continue   to   listen   offline.   Online  listening   could   however   be   interesting,   as   it   has   permitted   to   highlight   two  potential  crises.      The  core  of  the  thesis  has  been  focused  on  the  ROI  of  owned  social  media  advertising  in  2011.  The  aim  was  to  provide  an  easy  and  clear  framework  that  can  be  applied  to  different  social  media  platforms.  It  is  obvious  that  it  is  not  the  only  measure  to  evaluate  impact  of  social  media  but  it  has  permitted  to  highlight  results   that   the   analyzed   brands   were   not   aware   of.   Engagement   and   brands’  personalization   concept   are   too   difficult   to   measure   and   have   been   excluded  from  the  analysis.  For  this  chapter,  a  sample  of  115  local  and  regional  brands  has  been  identified  but  only  84  of  them  have  been  studied,  as  the  others  have  been  considered  as  equivocal  (having  several  meaning  such  as  “Le  Chat”  &  “Sun”  soap,  “Zero”  chocolate).      The   analysis   of   this   ROI   is   based   on   the   respective   cost   per   contact   in   traditional  media  vs.  social  media.  Each  social  media  cost  per  mille  (CPM)  will  be  linked  to  a  traditional  media  that  mirrors  well  the  value  of  a  contact.  This   approach   gives  the   maximum   value   that   a   brand   could   spend   on   social   media   before  reaching   the   break-­‐even   point   vs.   traditional   media   expenditures.   This  notion   has   been   called   “maximum   equivalized   investment”.     YouTube   has   been  compared   to   television,   Twitter   and   Facebook   to   magazines.   It   seems   obvious  that  comparing  magazines  with  social  media  is  not  a  perfect  fit  as  there  are  a.o.  problems   related   to   the   quality   of   Twitter   posts   which   should   not   exceed   140  characters  while  magazines  ads  appear  on  one  page,  problems  linked  to  people  who  choose  to  follow  brand  social  media  news  while  magazine  ads  are  imposed  by   the   magazine’s   editors,   etc.   Nevertheless,   it   gives   the   most   reasonable  benchmark  to  start  the  analysis.  Furthermore,  for  Facebook  and  Twitter,  analysis  has   only   looked   at   web   pages   managed   by   brands   while   for   YouTube,   owned  videos   but   also   earned   videos   that   were   generated   by   consumers   have   been  considered,   to   determine   their   owned   social   media   share   of   voice.   Finally,   by  interviewing   the   brand   owners   and   comparing   value   (as   calculated)   with  
  4. 4. costs  of  the  social  media  campaign  (as  communicated  by  the  interviewee),  it  has  been  possible  to  judge  the  ROI  of  their  owned  social  media  efforts.    Many  findings  can  be  extracted  from  the  analysis.  First,  not  every  FMCG  brand  is   active   on   a   social   media   platform:   25   %   are   active   on   Facebook,   5%   on  Twitter  and  20%  on  YouTube  and  the  bulk  of  those  brands  are  active  only  on  one  of   the   three   different   networks.   Then,   beer   brands   attract   more   people   on  Facebook   than   other   brands.   This   can   be   explained   by   the   notion   of   social  magnetism,  where  some  trademarks  appeal  more  to  people  as  they  want  to  be  associated   to   them   and   because   those   brands   reflect   an   image   of   coolness.  YouTube   videos   uploaded   seem   to   be   interesting   due   to   the   best   practice  campaigns   but   60   %   of   the   analyzed   videos   have   been   watched   less   than   100  times.  It  has  also  be  concluded  that  85  %  of  the  studied  brands  should  spend  less  than   1000   €   on   YouTube   before   reaching   the   break-­‐even   point   vs.   traditional  media.   For   Facebook,   80%   of   the   brands   should   spend   less   than   5000   €   to   reach  this   break-­‐even.   Moreover,   interviewed   brands   claimed   having   spent   between  40.000   €   and   60.000   €   in   2011.   It   can   thus   be   concluded   that   Facebook  investments   could   have   been   more   significant   than   YouTube   investments   and  above   all,   that   owned  social  medias  were  not  profitable  for  FMCG  brands  in  Belgium.    Another  finding  is  linked  to  the  share  of  voice  of  the  three  different  social  medias  in  comparison  with  TV  traditional  media:  for  75  %  of  the  brand,  social  medias  represent   1   %  of   the   total   traditional   and   social   media   views  while  for  the  remaining  25  %,  the  share  of  voice  is  lower  than  5  %.    Earned   media   seems   to   be   the   consequence   of   a   good   paid   and   owned   media  strategy.  Indeed,  focusing  on  owned  media  increase  brand  awareness,  motivate  people   to   speak   up   and   can   be   the   stimulus   that   lead   to   the   next   social   media  campaign.      
  5. 5. To  conclude,  owned  social  media  has  a  lot  of  potential  but  still  a  long  way  to  go  before   it   becomes   a   profitable   tool   for   the   local   and   regional   FMCG   brands   in  Belgium.