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Why Is Social Media Marketing Failing?

There are two predominant explanations for why social media marketing is failing in financial services: 1) poor execution, and 2) wrong strategic context.

The assertion in the title of this post–that social media marketing is failing–will prompt one (or maybe more) of the following responses in people:

  1. Social media marketing is not failing!
  2. Who says it’s failing?
  3. Why is it failing?
  4. Who cares?

If #1 is your primary response, you have rose-colored blinders on. If it’s #4, I don’t know why you even bothered to click on the link to get here, but thanks!


I’m hardly the only one asserting that social media marketing is failing. I could produce a list of sources backing up (or rather, asserting) the claim, but Ad Contrarian has already done that for us. Atomic Tango links to a YouTube video of a Melbourne Business School professor making his case for why social media marketing is a colossal waste of time (which, I must say, I don’t agree with, although I don’t dispute the conclusion).

My assertion that social media marketing is failing is driven by survey results. According to respondents to the 2015 Financial Brand Marketing Survey, few are finding that social media channels are effective in helping them achieve their marketing objectives for the channel (the actual numbers of social media channel usage and effectiveness will be included in the report to be released shortly that will be available to survey respondents).

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These findings shouldn’t be a surprise. In a study conducted by the MSR Group, just 2% of online banking consumers said they would be likely to follow their bank in a social channel. Granted, that study was conducted in 2013, and attitudes may have changed dramatically since then. So go ahead and quadruple that number. Wow, 8%.

In a Carlisle & Gallagher study, 87% of consumers said banks’ use of social media was “annoying, boring, or unhelpful.” Ouch.

It’s not just a problem in financial services, either. According to Social@Ogilvy, organic reach of content published on Facebook declined by ~50% in just five months from October 2013 to February 2014.

20150126 average_organic_reach_of_updates_posted_on_facebook


These findings don’t faze the social media delusionists, however. A recent article in Huffington Post (that bastion of academic rigor and soundness) titled Is Social Media in Financial Services a Friend or Foe? the author writes:

“Financial-services companies haven’t placed value on social media, viewing it as the reserve of the young: a fad, almost. There is an opportunity here for companies to seize the opportunity and get ahead of the curve; to improve profitability and manage their reputational risks. This can be achieved by developing collaborative relationships through and around social media, and by policy development between firms and the regulator; between IT, marketing, compliance and the C-suite; and between companies and their customers.”

Cumbaya, my lord, cumbaya. Not a single statistic or example to back up the claim.

Meanwhile, there is plenty of evidence that financial services have placed value on social media. Not only has the annual Financial Brand Marketing Survey found a growing percentage of FIs using social media year over year, but a study from Third Degree found that half of credit union CEOs believe social media is worth doing, and three in 10 believe it’s essential to their engagement efforts.

20150126 how_credit_union_ceos_feel_about_social_media

So, sorry ma’am, but FIs do place value on social media–and they do use social media channels–but they don’t see the results you and others promise it will bring about.


The bank ranked #1 in The Financial Brand’s quarterly ranking of banks using social media is Bank of America. It ranks #7 for Facebook likes, and #2 in terms of Twitter and YouTube followers, giving it the overall #1 ranking.

Bank of America, by the way, was the only bank listed in the 10 Most Hated Companies in the US (coming at #5).

Now you might argue that BofA does so many things wrong, that its social media efforts can’t compensate for them.

But that’s exactly the point. If social media presence and involvement can’t compensate for the negative actions, then it simply doesn’t have the impact the social media gurus assert it does.

And if your company does all the other things right (which you might argue that BofA doesn’t), then what incremental benefit does social media involvement provide? Don’t even try to answer that because there’s no way of knowing.

( Read More: Why Social Media Is A Waste of Time For Most Banks & Credit Unions )

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Why is social media marketing failing? Is it because it can’t succeed?

As much as I think that many FIs are wasting their time on social media, I don’t think that the answer to that second question is “yes.” There are two predominant explanations for why social media marketing is failing in financial services: 1) Poor execution, and 2) Wrong strategic context.


Poor execution has two flavors to it. In the 2015 Financial Brand Marketing Survey, we asked respondents not just what social media channels they used, but what their marketing objective for using the channel is. Again, the respondents to the survey will receive the report with the full set of data, but I’ll tell you this: There are FIs whose predominant objective for using YouTube or having a blog is to acquire new customers. They may be as deluded as the author of that Puffington Host article.

The second flavor is the real killer: Many FIs–who use social media channels to “engage” their customers and prospects (the arguably “right” objective)–don’t know the difference between “engagement content” and “sales content.”

In Q4 2012, I analyzed the social media approaches of a number of large banks and credit unions. One large bank’s efforts on Twitter demonstrates their inability to engage: Nearly half of its 100 recent tweets were about TIME magazine’s car dealer of the year award; tweets congratulated each of the award nominees. The bank’s financial results were another frequently tweeted topic. Nearly half of the 100 recent tweets of another large FI–very well liked by consumers–were about distracted driving. Football was another popular topic.

Then there was the large bank whose tweets were all about how convenient their branches are. You can probably guess which bank this was.

The point is this: FIs talk about engaging consumers through social media, but really don’t how. Either their messages are irrelevant or too salesy.


The second contributor to social media failure is the strategic context in which too many FIs put social media.

Does your organization have a social media strategy? If you answered “yes,” that might be your problem.

Social media efforts need to be put into the context of a content marketing strategy. A content marketing strategy–if effective–identifies various types of content, where those types of content are effective in the customer lifecycle, and how to get those types of content in front of customers and prospects at the right time.

Too often, however, firms with a social media strategy start by asking “what can we do with ___? where the blank is some social media channel. This takes the decision out of the context of the customer lifecycle and other content marketing initiatives.

Social media channels are just that–channels for reaching consumers. By not subordinating the social media strategy to a content marketing strategy, many firms never figure out how to effectively use the channel.


Bottom line: Social media is nothing more than just a low-cost way to reach a large number of people.  There are no magical properties that drive trust or any of the other countless number of benefits that these social media gurus promise.

In the old world of marketing, it was expensive to reach a lot of people–so when you did incur that cost, you had to make sure that each message or communication contributed to an ROI.

But in the world of social media, it costs practically nothing to tweet or put something on Facebook. So we don’t have to worry about the ROI of each message. But figuring out if those messages have an impact at all is difficult. As a result, many marketers feel that their social media efforts aren’t very effective at accomplishing their marketing objectives.

It might just be that social media marketing is harder than traditional marketing.

Whatever the case, I really wish the social media delusionists would just. shut. up.


Ron ShevlinRon Shevlin is Director of Research at Cornerstone Advisors. Get a copy of his best-selling book, Smarter Bank: Why Money Management is More Important Than Money Movement. And don't forget to follow him on Twitter at @rshevlin.

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Comments

  1. Ron,

    Great challenges, as always. I completely agree that the vast majority of banks and credit unions have no social media strategy. They are doing Facebook, Twitter, LinkedIn, Pinterest, you name the social media flavor just to do it. There are two “Ss” to social media: strategy and staff. Most financial institutions turn to a 20 year old for their social media staffing and they wonder why it doesn’t match to their strategy.

    If you don’t properly address those two “Ss” your social media efforts are likely to be a third “S” word (one banks and credit unions probably don’t want to use).

    Mark

  2. But, Mark, what’s the RIGHT approach?: Put some 55 year-old in charge of social media? Not that there’s anything wrong with being 55 (trust me, I know), and I’m not saying that a 55 year-old couldn’t be a social media expert. The problem (or challenge) is that after 30 years of learning to be a marketer, can that 55 year-old really understand how communicating on social media is different?

    I don’t dispute that this is about strategy and staff. But, on the staffing side, there’s a new skill set that is required.

  3. Russell Evans says:

    Very good article. I think many companies are afraid to really engage consumers on social media in a truly meaningful manner. Bank of America and Comcast to name a few are not and as a consumer I appreciate when a company recognizes i mentioned them and the respond no matter how negative the post might be. It shows me they are listening. If a company does all talking but no listening that is when they get tuned out.

    Social media to me is becoming more valuable for the eavesdropping to get consumer sentiment. I have learned on twitter how many consumers are mad Chase Bank’s mobile app no longer supports the Windows phone and they want to switch banks or how they want to switch banks cause they don’t support Apple pay. Those are prime opportunities for competitors to engage.

  4. Organic content reach is a challenge. That is why good social media work is not treated as “free” or “low cost” It has to be supported with advertising dollars. The more niche your target, the better.

    Doing it well is the confluence of advertising and social. Many of your Gen Y folks that would run social are clueless about social media beyond their own experiences…thus they have limited minimization ability.

  5. Let me simplify this.

    The social hype that has and is continued to be hyped at industry conferences is BS. Oftentimes it is the blind leading the blind. And as one who has been part of the financial social media scene since the beginning my thoughts and ideas have completely changed.

    Social media is not about “engagement”, “service” or “listening.”

    That’s just BS. And if you are a marketer trying to sell this to your management/CEO/BOD you will always fight an uphill battle because they don’t care. They just want marketing to move the needle. And “social” by itself will not move the needle.

    Here is how you, as a marketer, can get more money for your budget: focus on moving the needle and less on the buzz words.

    Social media is a distribution channel for branded (and more importantly) helpful content.

    I believe there is an enormous amount of opportunity for banks and credit unions to use social media to target key market segments to generate leads through helpful resources, like consumer buying guides, instead of promoting “great rates” and “amazing service” and holiday closings.

    The opportunity for you to grow your bank or credit union, which in turn will get you bigger marketing budgets, lies in using social media for its targeted advertising capabilities.

    And when you combine this targeted social media advertising approach with content marketing, your bank or credit union will generate leads that can be properly nurtured using marketing automation, which leads conversion and thus results in growth.

    But don’t fool yourself. This is not an easy undertaking. It, as Ron noted, requires new skills sets, time and and real dollars to properly plan, develop and distribute content that helps first and sells second.

  6. Thanks for a great blog post, Ron. I’m as social as anyone, but I’ve been beating this drum for years now.

    To me, the question is simple: What do marketers most care about? Do they spend millions to improve reputation, get likes or have conversations? No, the Marketing Department is tasked with something else–inbound traffic, acquisition and conversions. And on those metrics, social is terrible (within many verticals) and always will be (at least for organic content). It’s a channel where the consumer is in control, so how could it be any other way?

    Social is vital and companies must adjust; it just happens to align to marketing objectives rather poorly.

    If you’re interested, here is a blog post I wrote. Like you, I want data and not all the hopes and beliefs of delusionists, so this post has the hard data on how disappointing social is as a marketing channel. I’d welcome your feedback:

    http://www.experiencetheblog.com/2014/10/stop-social-media-marketing.html

  7. Deb Schaffer says:

    Ron,

    Another great read, my friend. (And equally responses from everyone above.)

    Many FIs perceive social media to be “free” as well something that can be handled in a matter of minutes each day. They’re right…it can be. And, those FIs have customers who will fall into the 87% who find their FIs social media approach annoying, boring, or unhelpful.

    The FIs who 1.Hire the right man/woman for the job (not “Sue in Collections” because she’s on FB), 2. Realize that this should be a full-time position, 3. Invest in formal training for their SM manager and go on to train and involve their entire staff, and 4. Understand that SM isn’t free & the days of “pay to play” are here will end up with customers who are engaged members of the online communities they’ve built. These FIs will also end up proving some serious ROI (by way of leads and lead conversions) that their CEO, Board, and leadership team will get very excited about. (We’ve seen it happen with a select few and are hopeful more will learn from their examples.)

    You & James nailed it by saying, it “requires new skills sets, time and and real dollars to properly plan, develop and distribute content that helps first and sells second.” Here’s hoping this article and related comments will light a fire and encourage more FIs to jump into SM with both feet vs. simply dipping a toe.

    Deb

  8. JR Lay: You write “Social media is a distribution channel for branded (and more importantly) helpful content.” You and I are in complete agreement

  9. Deb: Ah, the “social media is free” myth. I didn’t get into this in much detail in the post (I think I may have written about this in the past), but the “cost” of social media isn’t well understood.

    In the old days of marketing, the cost of message development was a small % of the overall cost, and the cost of delivering the message (via TV, radio, print, etc.) was a huge %.

    In the world of digital marketing, the cost of sending an incremental message is practically zero. As a result, marketers bombard us with messages because they’re “free.”

    But the overwhelming majority of those messages aren’t effective, so who cares if they’re free or not?

    To improve the effectiveness of these “free” messages, marketers must develop and test different messages, identify and manage segments who want and will respond to different types of messages, and invest in new measurement capabilities to determine the effectiveness of the messages.

    In other words, the “cost” has shifted from the delivery of messages to the design and management of messaging. Social media is anything BUT free.

  10. Reggie Hammond says:

    Using any social media to reach a new customer base is a waste of time because nobody is paying attention.

    Sure if you have dedicated and I mean REALLY dedicated customer base social media may pay off in getting the word out about current promotions or new products, as for getting new customers, you have to spend money on traditional advertising.

    I read that the “life cycle” of a tweet is less than three minutes.

  11. As a social media manager for financial institutions and others, I can tell you from first-hand experience that social media is largely not working well for them for these reasons: 1) They see it as just another advertising channel for one-way communication. 2) It makes them nervous (especially the compliance folks) that they can’t control the conversation. 3) They don’t acknowledge that financial services is a low-interest category. 4) They think the public is interested in bank products when they are really just interested in their own lives. 5) They (as a lot of companies) lose focus and let their social media channels go untended then conclude that social media doesn’t work. There are other reasons, depending on the institution, but those are the ones I most often see.

  12. And what is the life of a television commercial? Like the one you didn’t see while you took a potty break or because you DVR’d the show and fast-forwarded. Mark Zuckerberg didn’t make a bazillion dollars because nobody is looking at social media. The fact that social media can change behaviors of entire countries shows that most assuredly are paying attention to content that’s relevant.

  13. Steve Moylan says:

    Ron, great article. Gallup published a study (over 18,000 adults) citing only 5% of consumers consider social media to have a strong impact on their purchase decision. Another study by Nielsen points out that consumers trust TV, radio, print, billboard, etc. advertising mediums much greater than social media.

  14. Social media doesn’t exist in a vacuum, and you don’t just sic some intern or recent snot-nosed punk grad on it because he/she is of the right age range. It has to be a thoughtful distribution channel for a larger content marketing strategy. And no, words like engagement are not just buzzwords when there’s substance behind it. Marketers must first create brand awareness, and move on to engagement and thought leadership from there, until they ultimately win conversion. Will a credit union get a new member or loan because they have a Twitter feed? NO. Could a credit union catch the right person(s) at the right time in their life with valuable content that is relevant to their lives, provides a solution and ultimately brings them to the credit union for that purpose. No, Ron, there’s no data cited in my comments, but data can often be empty. For example, the circle chart in your blog post cites CEOs’ feelings about social media, but makes assumptions about the resources invested in it and the understanding of the employer about the necessary skill set. Data is only as good as the assumptions behind it. Love your challenges as always!

  15. Ron,

    Thought provoking post as always… By the way, heard you on NPR last evening on my way home. Nice!

  16. Social Media says:

    Perhaps the question is….How do consumers prefer to establish relationships with banks, credit unions and financial institutions. Find the answer to this as it relates to your organization — and you will find the golden egg.

    From my experience, this relationship is a warm touch – a personal reccomendation. Social is fun, trendy and something to be considered; however, social media is designed to be a social tool. Share stuff we like. Likes are vanity, not business.

    Marketers continue to try to fit social media into the lead-conversion box, but it just isn’t working. Traditonal marketing and advertising are used in attemt to drive people to the social channel. That isn’t social – it negates the entire idea.

    Perhaps it’s ok for supporting the brand and brand building, but measure carefully the cost per lead – to conversion via social against other methods. You may find, social just isn’t cutting it.

    Ask the birdie. Tweet, tweet.

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