SXSW Panel Recap: Marketing Budgets Have Gone Social – Is It Working?

SXSW Interactive, which is also known as Spring Break for Geeks, is absolutely packed this year. Unlike last year, conferences are spread among 10 “campuses” instead of being located solely at the Austin Convention Center. Thus I find myself at the Hyatt, across the river, for “Marketing Budgets Have Gone Social – Is it Working?” Fortunately I got here early, as the line was out the door. Seems like 50+ people didn’t get in to see this panel.

The panelists include:

  • David Witt, Global Head of Social Engagement and Brand Public Relations at Hershey’s;
  • Kathy Baughman, Owner of ComBlu (moderator)
  • Julie Hamp, Senior Vice President Communications for PepsiCo; and
  • Kris Narayanan, Vice President, Digital Marketing for Samsung Electronics’ North America.

The premise of the panel is obvious from the title, and the brands represented are impressive. The panel is going to look at how budgets have increased, what’s working and how the lessons learned (positive and negative) permeate through the corporation, if at all.

Budgets Overall

Baughman noted that 5 to 15% of budgets are going to social media, while eMarketer is expecting about 60% growth. Altimeter Group says “the mature social enterprise” is spending low seven figures in social media.

(On a personal note, in my experience, these statistics seem about right, but we’ll see in the conversation below that in some cases they are too low.)

General Mills and Social Media

Witt, who just left his job as head of Social Engagement for General Mills, spoke broadly about his experience there. (He’s only been at Hersey for 5 days.)  He agreed that about 5% of the General Mills marketing spend goes to social media marketing. He noted that the marketing budget is generally not additive, it’s being shifted from other places, like TV advertising. It’s particularly hard for “TV brands” to move away from what they’ve done. Social media however are now “table stakes for the modern brand,” Witt said.

General Mills has 30 major brands, so they tried to build cross brand platforms that could scale, like a blog network, an advocacy network and an in-home party network. All of the brands use those platforms, which are designed to build relationships more than transactions. Secondarily, they wanted to build strong social capabilities for each of the brands so they were agile enough to engage with the public.

Samsung and Social Media

Narayanan, of Samsung (disclosure: Samsung is an Ignite Social Media client), noted that Samsung started “dabbling” in social media nearly 5 years ago and had a lot of success in pockets with small efforts that resulted in unboxing videos and more. Planning began in 2009 and in 2010 the company seemed to realize that it wasn’t a playground but a real business opportunity. That realization led to increased spending in four categories:

  1. listening (which is often ignored);
  2. people growth (training of people);
  3. product launch level investment (the greatest visible activity);
  4. consistent brand investment.

In the last year, budgets that have gone into social have grown, although he doesn’t think it’s yet at the “mature level” in part because the metrics currently favor other marketing types. That’s shifting. Narayanan noted that the Mr. Samsung persona did very well for Samsung a few years ago, even though it’s not on Facebook at all.

Pepsi and Social Media

Hamp noted that Pepsi is partnering this year with Fast Company to live stream SXSW, which is just one small effort for this particular event.

She then noted that every company has finite resources, but there’s “no doubt” that you need a social model to engage with consumers in the way they want to be engaged. Pepsi’s spend across their 500 brands (whoa… that includes 20 different billion dollar brands), ranges from about 10% to in some cases 100% spend (on brands with limited budgets). The spend on Pepsi Refresh was 60% social. Pepsi brands are, on average, spending 30% more on social media than they had been, which is a significant increase.

As budgets increase, Hamp notes, the pressure to show that increased spend is driving business results increases proportionally. In one example, they got extra funding for Brisk and Hess stores. Hess agreed to do a Foursquare program with Brisk where  you’d check in at point of sale and get two free Brisk teas. This drove sales up 140% during the test period and Foursquare interactions were up 200%. So they could show awareness and then driving directly to point of sale.

Measurement and ROI

Baughman shared that Altimeter studies note that 66% of brands are measuring engagement, but only 22% of them have been able to tie those metrics to conversion. At the same time, 48% of the companies said they are heavily focused on ROI this year.

Narayanan noted that they are reporting brand awareness, brand engagement and brand preference to the executive suite. The challenge is unlikely to be solved just by some established KPIs, but a mix of anecdotes and hard numbers.

Since Samsung doesn’t sell directly, they have to correlate sales increases with things like reviews read, Facebook likes, reviews written and more. They are seeing some correlation and they have good case studies, but it’s hard to track a sale from the interaction through a retail partner in a definitive way over and over.

Pepsi’s Hamp thinks we shouldn’t move away from purchase funnels. Those are all still very valid. If your goal is to improve the consideration score, the strategies that follow should be heavily focused on improving that score. This still makes sense. Connecting the marketing side to the sales side is critically important and for many of us it has been lost. She noted as an aside that Brisk worked with Instagram so that 50 photos could be included to be on the Brisk can (being introduced here at SXSW).

Witt talked about the Fiber One bar and worked with Hungry Girl who has a list of 1.3m email lists. Hungry Girl liked it and wrote, “Sorry Snickers, but this is better than you.” A great endorsement for a new product. He noted a continuum:

  • Don’t meet expectations –> negative word of mouth
  • Meet expectations –> no word of mouth
  • Exceed expectations –> positive word of mouth.

Witt noted that he has repeatedly charted online conversations and actual sales and the lines move in virtually perfect symmetry. The only stronger correlation was being on shelf (which makes sense… hard to sell what you can’t get in store…). In essence, Witt said, we’re now showing strong correlations more than definitive ROI, but the numbers are very impressive. Eventually we’ll have to show hard numbers, he said, but today it’s a bit difficult to do so definitively.

Witt noted research that found, “It matters who you tell first.” While people will eventually learn about your product, you can speed it up when influencers choose to share your product with others.

Ignite Social Media