Earned (Facebook) media; what quality of reach?

Abstract

For marketers, the idea of ‘free’ access to brand fans is alluring, with organisations continuing to invest money in recruiting their Facebook fan bases. What quality of reach, however, can this sort of “earned media” deliver?

The rise of Facebook and the scale of reach that it might provide is interesting. However, our research shows that a Facebook fan base gives a brand poor access its many lighter buyers. So for marketers with brand growth (or even maintenance) objectives, the quality of earned media’s reach is disappointing.

Key Findings

The Facebook fan base is different to traditional media audiences because it misses out on light and non-buyers.
Media that skews towards heavy buyers is of lower value and should command lower Cost Per Thousand (CPM’s)
Marketers should be careful not to over-invest in small groups of heavy buyers.

SUMMARY

The reason that we ask this question is that the negative binomial distribution (NBD, see Corporate Report #1) shows that brand growth depends on reaching all types of buyers not just the small group of most loyals. For both maintenance and growth advertising needs to reach non and light buyers of the brand. In particular it must to go well beyond those buyers who are easy to reach, who because of their more frequent buying have a greater tendency to notice all the brand’s marketing.

Loyalty programs are an example of marketing that fails in this regard. Loyalty programs attract and then reward only the most already loyal of a brand’s customers, and so therefore incur costs but fail to deliver growth (see loyalty program chapter in Sharp 2010).

“EARNED” MEDIA – HUGE, BUT WHAT QUALITY?

It is estimated that by 2015 one third of the world’s population will be social media users. This will offer advertisers access to consumers who account for 80% of global expenditure (Nuttney 2010). Facebook dominates social media making it the most popular choice for marketers including social media in their media mix.

The number of fans who are attracted and retained are key metrics for evaluating the success of a brand’s Facebook marketing efforts (Millward Brown, 2011; Sterne, 2010). The size of a brand’s fan base affects the reach that can be achieved with brand messages.

TARGETING HEAVY BUYERS – A DEAD-END PATH TO GROWTH?

Targeting strategies that focus on reaching (and rewarding) heavy brand buyers have long been popular in advertising practices. For example, an analysis of advertising effectiveness award entries showed that targeting loyal customers was by far the most popular strategy, although the opposite strategy (targeting light and non-customers) generated far higher sales and profit results (Binet and Field, 2009).

The logic of targeting the heaviest buyers is flawed.

The logic behind skewing advertising to heavy buyers seems to be common sense. However, the logic is flawed, because what matters for advertising effectiveness is not how much customers currently buy, but how they respond to advertising (Wright and Esslemont, 1994; Watts, 2011). By definition, heavy customers are worth more to the brand, on a per customer basis, but it is unlikely that they could be encouraged to buy more than they already do. Customers who are already highly loyal are unable to give the brand much more of their purchases from the category. Besides there aren’t many of these customers.

The NBD distribution tells us that most brands have lots of light buyers, far fewer medium buyers, and very few heavy buyers (Ehrenberg, 1988). As a brand grows in size, most change is seen among the brand’s very many light (and non) buyers (McDonald and Ehrenberg, 2003; Stern and Ehrenberg, 2003). Growth-oriented advertising, therefore, needs to reach light (and non) buyers.

It may be argued that the primary goal of most advertising is defensive; that it works to maintain sales, rather than increase them (see Corporate Report #31). In this case, targeting heavy buyers appears to be a rational strategy: one wouldn’t want to lose them. The sales importance of heavy buyers, however, is often overstated. We have already shown that (Corporate Report #42) a brand’s top (or heaviest) 20 percent of customers contribute less than 60 percent of sales. The remaining 80 percent of customers contribute the other 40 to 50% of sales, making them important for maintenance as well as growth.

REACHING LIGHT BUYERS IS NOT OPTIONAL

It’s also worth noting that many non- buyers are not actually non-buyers at all, but are simply light buyers who did not make a purchase this year, and may return next year (Goodhardt and Ehrenberg, 1967; Anschuetz, 2002; Morrison and Schmittlein, 1988). For marketing communications to be effective the media mix should aim to reach all category buyers, from the very heaviest to the very lightest.

Table 1: Buying Concentration (%) of the 2012 Super Bowl Viewing Audience by Category

	Softdrink		Chocolate
	Facebook (n=520)	Super Bowl (n=397)	Facebook (n=520)	Super Bowl (n=397)
Non-buyers	4	47	1	28
Light	9	29	10	34
Moderate	24	11	33	23
Heavy	63	13	56	15

Table 2: Average Buying Concentration (%) – All Categories

	Length of time subscribed
Purchase Classification	< 6 months	6-12 months	12-24 months	Total
Non-buyers	4	2	0	2
Light	10	7	11	9
Moderate	27	31	26	29
Heavy	61	60	64	61
Total				100

Truly reaching light buyers is challenging as regular buyers of a brand are more likely to notice and remember messages from the brands they buy than non- buyers (see Corporate Report #41). This makes media that can reach light buyers more valuable.

With these facts about buyer behaviour in mind, we now examine Facebook fans to determine how valuable they are to an advertiser: are they light buyers, or easy to reach heavy buyers? To do this we compared the Facebook fan audience with a typically distributed consumer base (i.e. actual consumer panel data).

Two studies were conducted in the chocolate and soft drink categories. Respondents were asked to indicate how many times they had purchased a specific brand in the last 3 months.

Purchase frequency was categorised in this way:

“non-buyers” (“never”);
“light” (“once”);
“moderate” (“two–three times”);
“heavy buyers” (“four or more times in 3 months”).

One set of data was collected from a self- completion link on one of the brand’s Facebook pages, the other was collected via a probability based online panel.

RESULTS

The buying concentration of a brand’s Facebook fan base was vastly different from that of a typical population of shoppers. We found two repeating patterns in describing the average brand’s Facebook fan base:

Purchase frequencies among the panel data were distributed in the usual NBD fashion, with high numbers of light (and zero) buyers, and fewer medium and heavy buyers (see Figure 1).
Purchase frequencies among Facebook fans were distributed in a strikingly different way (see Figure 2): with large numbers of heavy buyers, and virtually no non-buyers.

The results were identical across both categories.

Newer Facebook fans were highly similar to older Facebook fans in that both skewed to heavy brand buyers.

The Facebook fan base clearly reflects a small and biased sample of a brand’s loyal buyers. It does not give the marketer access to sufficient numbers of light buyers.

Figure 1: Buying concentration across the entire customer base

Figure 2: Buying concentration across the Facebook fan base

FACEBOOK FANS VS TV VIEWERS

To ensure our findings were due to the nature of the Facebook fan base, and not a result of self-report methodology, we sought further validation via a third study. We analysed viewers of ads during the 2012 Superbowl.

We asked Superbowl viewers how often they bought the two brands from the previous study, and plotted the distributions. The results? As expected, Superbowl viewers follow the usual distribution of the NBD.

COULD THIS CHANGE?

The act of “liking” brands on Facebook has increased in popularity in recent years (Cashmore, 2010). In part, this is due to the natural growth of the Facebook platform but also as a result of technological changes, making access to the Facebook ‘Like’ button easier. So perhaps Facebook brand fan bases are becoming more representative of their brands’ actual buyer bases.

If so, lighter buyers may have been expected to have been fans of brands for shorter periods (i.e., they signed on as fans more recently). Similarly, heavy buyers of a brand may have been fans for a longer period. There is a slight trend toward this split, with “older” fans (12–24 months) being more likely to be heavier buyers than “newer” fans (See Table 2). However, even the newer fan base was still markedly different from the brands’ actual buyer base, demonstrating that Facebook continues to attract heavy buyers of the brand.

Newer Facebook fans were highly similar to older Facebook fans in that they both tended to be heavy brand buyers.

Figure 3: Buying concentration of the 2012 Super Bowl viewing audience, for the same soft-drink brand

Figure 4: Buying concentration of the Facebook fan base, for the same soft-drink brand

THE ADVERTISING VALUE OF “EARNED” MEDIA

Our research makes it clear that the Facebook fan base is different than traditional media audiences, missing out on the more valuable and harder-to-reach light and non-buyers. Reaching heavy buyers is not in itself a bad thing, but marketers should be aware that most, if not all, marketing efforts already reach these buyers. Successful marketers find ways to reach beyond the small group of already-loyal heavy buyers.

Media that skews towards heavy buyers is of a lower value, and should command low Cost Per Thousand (CPMs). Marketers should consider this when essentially paying twice to reach Facebook fans i.e. the cost to initially acquire fans and now the cost to reach sufficient numbers via promoted posts.

Facebook may offer the potential for fans to become active brand advocates, creating new networks that perhaps include light buyers. The ability of Facebook to leverage such networks (and how efficiently it does this) is currently not known and demands future research.

Readers of this report should be cautioned against large investments in ‘earned media’. More generally, marketers should always be careful not to over- invest in small groups of heavy buyers, especially at the cost of reaching light buyers who are the key to brand growth.

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