Rethinking the recommendation economy

Much debate about the value of social media recommendations
Much debate about the value of social media recommendations

Despite Facebook's efforts to make its ad platform more attractive, there is still much debate about the value of social-media recommendations, writes David Benady.

Facebook is making renewed attempts to boost its advertising platform this year with an increased focus on sponsored stories. While some brands have jumped at the opportunity, others are keeping a watching brief on the service, and wondering whether other methods are just as effective.

The sponsored story platform kicks in when a Facebook user visits a brand site and clicks on the 'like' button. A message about this will appear in their friends' news feeds, but the friends may miss it if they are not online. Brands can pay for a sponsored story, thus ensuring the message appears in friends' ad columns on the right of their Facebook page at different times of the day.

The social network claims that this is a valuable recommendation for a brand, as it comes from a friend. It certainly seems more powerful than ads running on the site for loosely targeted products, which may be of little interest.

Full-scale endorsement

After 10 years of web 2.0 and user-generated content, however, questions about the value of online recommendation for brands still play on marketers' minds.

The public has placed a surprising amount of faith in what strangers say about brands on the web, but few marketers doubt that a word-of-mouth recommendation from a friend in the real world remains the most powerful form of marketing.

The value of a Facebook 'like' is also a moot point. Often, it can simply mean a consumer has entered a brand's competition on the site. Moreover, a Facebook 'friend' can be anything from a distant acquaintance to a bosom buddy.

As Facebook looks to increase its share of brands' marketing budgets, it must therefore demonstrate the power of social-media recommendations to engage consumers and build sales. Facebook product marketing manager Jim Squires, who helped create the sponsored stories feature, claims it is a 'game-changing' development for brands. 'The inspiration behind it is that recommendations from friends are the most important way to learn about a brand,' he says. 'We noticed that the centre-piece of the user experience is the news feed and news about friends and brands. Those stories are very valuable for marketers.'

He adds: 'With sponsored stories, the brand can control the frequency and length of time the recommendation shows.'

Squires quotes Nielsen research that shows those Facebook ads that come via a friend's recommendation perform 68% better on ad recall than those without.

They have twice the impact and create four times more purchase intent, he claims. Another recent launch Squires argues is highly significant is the 'people talking about this' entry on brand pages, which shows the numbers of people involved in conversations about that brand.

Facebook points to a sponsored stories campaign by VisitBritain to increase the number of fans of the Love UK page in the week of the royal wedding in April.

The tourism body says the campaign sent fan numbers 'through the roof', and that it will use sponsored stories again this year.

Starbucks, meanwhile, is often held up as an example of a brand that has excelled on Facebook. It has attracted 25m followers in total and 470,000 in the UK. Brian Waring, the coffee-shop chain's vice-president for marketing in the UK and Ireland, says the site is a 'wonderful' way of engaging with customers.

However, he adds: 'We don't think of Facebook as a form of advertising.

You have to see it as a conversation, sharing bits of news, asking for input and points of view.'

Waring explains that Starbucks uses sponsored stories 'quite selectively', and is non-committal on the results of some recent activity around the chain's Frappuccino product.

'We are assessing all those different opportunities,' he says. 'The bigger opportunity is the general dialogue and conversations that happen every day.'

Still experimenting

Some brands have struggled to crack social-media marketing. Volvo has been active on Facebook for the past three years, but Duncan Forrester, the brand's head of social media, says it is still experimenting with the site. It has tried various ways to build its reputation among younger, affluent consumers.

One Facebook campaign linked Volvo to the Twilight series of teen vampire movies, which featured Volvo cars. Another made reference to the Snowbombing music festival in Austria.

'We realised that the fan base were not Volvo fans, but Twilight and Snowbombing fans that we had managed to attract,' says Forrester. The company is now concentrating on appealing to people interested in cars, and is aiming to draw 50,000 fans to its page by tying activity into TV ad campaigns and using competitions.

'We don't plan to use sponsored stories, though that's not to say that we won't. I question whether you can deliver a similar result to sponsored stories with a competition mechanism. For instance, (the lure of) a bigger prize if you get your friend to come into a competition with you,' he adds.

Elsewhere, hotel-booking brand Mr & Mrs Smith has recently launched a sponsored stories campaign on Facebook to push a competition to win a holiday. As part of the mechanism, people choose Facebook friends they would take with them if they were to win.

Amber Spencer-Holmes, Mr & Mrs Smith's head of global marketing strategy, says the aim of the campaign is to boost the number of 'likes' for the brand's Facebook page. People have to click the 'like' button to enter. Their choice of companions if they were to win are also invited to take part, thus increasing the number of clicks on the 'like' button.

'Bookings are what it's all about, though that is something where it is going to take a longer time to see the results,' says Spencer-Holmes. 'I'm not sure Facebook lends itself to being a last click-to-book channel. We hope there will be some direct bookings, but we are not looking for that to justify the adspend by itself.'

A key measure of the campaign's success will be how it drives search marketing and how people use search terms.

In the first week of the campaign, 'likes' had almost doubled, to 32,000. Measured on a cost-per-click basis, each 'like' cost the brand 80p. Spencer-Holmes says the activity generated 33m Facebook impressions in five days.

She argues that sponsored stories have specific uses. 'I'm not sure we would run sponsored stories as a standalone activity. There has to be more of a narrative around it, with a viral element, and an enticement to tell people about it,' she explains.

Brands are experimenting with ways to get their message across through social media. One route has been to create their own social-media sites, though usually these are driven by offers and sales promotions.

Typically, people do not go on the web to interact with brands. The strong point of Facebook's offer is that brands can become part of social conversations in a subtle way and replicate live word-of-mouth marketing. Marketers under the cosh of the economic downturn, however, will be wary of investing a significant budget in the site unless they can prove that it leads to a rise in sales.

RECOMMENDATIONS - FACEBOOK VS FACE TIME

Is an online recommendation as valuable as a face-to-face recommendation?

Jim Squires - Product marketing manager, Facebook

'Word of mouth has always been important to marketers and we have strived to achieve it. The problem in the past has been that it doesn't have scale or volume; you can't bake it into the marketing campaign and plan for it. Sponsored stories are word of mouth at scale, they are predictable and baked in.'

Brian Waring - Vice-president marketing and category, UK and Ireland, Starbucks

'I suspect it is as meaningful and as valuable. It is all about who it is that is recommending. If it is somebody you know, it carries more value, whether on Facebook or face to face.'

Amber Spencer-Holmes - Associate director, Mr & Mrs Smith

'Yes, absolutely, an online recommendation can be as valuable as a face-to-face one. That's not to say I think a "like" on Facebook equates to a recommendation, though it can act as a nudge to someone with a pre-existing propensity to engage with the brand.'

Duncan Forrester - Head of public affairs, events and sponsorship, Volvo Cars UK

'Social media gives you another channel to have conversations about brands. Recommendation is the way the brand world has always been. It can serve to drive you toward a brand if you are in the market, or reinforce the reasons you have made the purchase.'

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