2/27/2020 American Express: Advertising on Social Networks - Is There a There There?

- Knowledge@Wharton

American Express: Advertising on Social

Networks — Is There a There There?
Dec 23, 2010  Partner Collaborations

On the surface, Facebook is an advertiser’s dream platform: You can target your audience
by interest, geography, age or educational level. You can decide how you’ll pay for your ad
— by impression or click-through. And that’s not all. While your ad runs, Facebook provides
daily reporting so you can track your ad’s reach and e ectiveness in real time.

Yet, despite the incredible scope and

robust infrastructure, there’s not
much data to suggest that, outside of
a few notable exceptions, advertising
on Facebook – or any social network
– has led to signi cant sales.

“These networks are paradoxes,”

says Wharton marketing lecturer and
new media expert Steve Ennen.
“Facebook reaches 500 million
people, but that doesn’t mean it will
reach people who are interested in
buying what you are selling.”

A social network’s strength, he believes, is in its ability to create clubs and groups around
areas of interests, not to deliver revenues from traditional broadcast-like advertising.
“Groups generate interest,” says Ennen. “But that’s not the same as targeting someone who
likes your product.”

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The community aspect is part of the paradox, says Ennen. “It’s not just the ability to
identify those who seem likely to buy, but to play a part in a dynamic community.” It’s
about participation, not simply penetration. “The idea is that businesses need to engage in a
community as more than just advertisers. They need to bring something of value.”

For example, Old Spice created a humorous ad campaign featuring actor and former pro
athlete Isaiah Mustafa. “They started making short videos that became popular online,”
says Ennen. “It was a viral success. It had a YouTube presence; it could be passed along and
shared. It was user-generated content that propelled the message across di erent
environments. It’s active. And it’s directly tied to an increase in sales. Old Spice was
strategic. They allowed users to participate. The overall costs were minimized because the
users did a lot of the work.”

On the other hand, Ennen says he sees a lot of static ads that whimper out. “Samsung was
advertising a phone. They developed a Facebook fan page, the purpose of which was to
stream online videos of commercials – nothing of value to the users whatsoever. It was just
ads running. There were 150,000 people who liked it, but nothing happened there. So
Samsung stopped participating. Now they have this Facebook page on which nothing is
happening. The company didn’t care. The agency didn’t care, so why would consumers
care?”

The key, says Ennen, is for advertisers to ask themselves what they can bring to the
conversation. They will be e ective by being perceived as an expert. A successful advertiser
on the social networks “o ers something of value to the conversation,” he says. That’s a
shift in dynamics from traditional advertising. “Companies don’t see the results they expect
because they are taking a broadcasting mindset. It’s a shift to a community mindset that
will make advertising on social networks e ective going forward.”

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