In the past, we have used the Facebook Like button as a baked-in promotional mechanism to drive referral marketing of deals, and that formed the core functionality of our product (see screenshot below for an idea of how we did it with our SaaS group buying solution for online retailers). After nearly 6 months of collecting data and experimenting with the Facebook Open Graph API and plug-ins, we have decided once again to use Facebook like how every other business uses it – as an independent, bolt-on, add-on sharing mechanism, and nothing more. We will no longer be giving Facebook VIP status in our product.

Here are some problems with Facebook:

1. The Facebook API changes too often. The plug-ins are buggy, the API changes without notice rather often, and there are too many rules constraining how developers can use the API in building applications. As a platform, it is unstable, period. It may be a good idea to use Facebook as a platform for consumer applications, but it might have been a mistake for us to use Facebook as a platform for an ecommerce application.

2. Facebook is overhyped. Personally, even though Facebook actually has 600 million active users, developers still tend to overestimate how many people actually 1) have a Facebook account, 2) use it regularly, and 3) are comfortable using it as a third-party authentication method. Many consumers across different niche markets are simply not familiar with how Facebook works; developing Facebook-only applications marginalizes this segment of users, who may be substantial in number.

3. Facebook is still mainly social for most, and exclusively social for some. We are still not completely convinced that Facebook can be an effective platform for ecommerce or any commercial activity, i.e. does anyone even care about commercial offerings on Facebook? Low sales on so-called f-commerce platforms seem to support our view. Some businesses may be too quick to assume that, just because Facebook works for games, it will work for ecommerce. Of all the new variants of ecommerce, the one that might actually take off is, in our view, mobile commerce.

So which direction are we now taking with our product, Zuupy CrowdDeals? We are now focused on point-of-sale transactions, working more like a sales tool that facilitates group buying transactions and processes, leaving the marketing of deals largely to our customers (online retailers themselves). We hope that this small product pivot would serve as a better fit to what the market wants. After all, Likes are ultimately useless. Sales are what matters, and that is what we aim to bring to our customers from here on.

In the past, we have chastised the idea of selling on Facebook (f-commerce): here and here. Recently, there have been several reports that social commerce may just be a bunch of hype, and, more relevantly, there are now compelling sales data pointing towards the infeasibility of Facebook as a platform for commerce. Forrester Research, Inc. released its latest report on the so-called f-commerce phenomenon, which has been neatly summarized in this SocialCommerceToday.com article.

Simply put, the results are pathetic; nobody has made any major money on Facebook to make it a worthwhile customer acquisition channel to consider. Worst of all, online retailers infected with the herd mentality still often charge ahead with plastering their website with Facebook Like buttons, buying fans (seriously?), installing f-commerce software on their Facebook Pages, etc. without a clear idea on how to turn a profit on those efforts. We have always wondered if Facebook’s explosive growth and hype have actually clouded the judgment of brands and retailers into believing that Facebook is the elixir to all marketing and branding woes.

No, Facebook is not the panacea for all ills. Use it for customer service, user feedback, or even for short-term deals and promotions if you want, but do the actual commercial transaction elsewhere – somewhere more stable and less vulnerable to API/policy changes. Any Facebook developer can testify that developing Facebook applications can be a nightmare sometimes; we never know what will change tomorrow. Platform issues aside, we really should also consider what or who we are competing against when we decide to peddle our goods on Facebook. No, your competitors are not other brands within your niche; think again.

Consider this quote by Paul Marsden:

“Facebook is a people-centric forum, and whilst huge – a forum it is. And the forum has been around since the 1970’s – do you know any businesses that made money from connecting forums with retail?”

Try competing with a consumer’s closest friends and family members. We would be very surprised if a large number of consumers would prefer to pull out their credit cards and make a purchase on a cramped “Facebook store” than to comment on their friends’ new haircut or post witty status updates to garner Likes and congratulatory comments. The blue bar on top of Facebook.com is an f-commerce retailer’s biggest enemy, just as the back button in a browser is a website owner’s biggest enemy. Once a red notification number appears, it is game over (or cart abandonment, whatever you prefer to call it).

Online marketing is an increasingly tough nut to crack. It is gradually becoming a business operation that cannot simply be solved by cash alone. In the online space, competition is becoming stiffer, while barriers-to-entry are getting lower, with cheaper bandwidth and server space as well as the emergence of numerous scalable turn-key solutions causing saturation. This phenomenon is especially pronounced in the online retail market; while ten years ago online retailers would be able to solely rely on banner/display advertising and wait for sales to roll in, today’s online retailers would find such a strategy unworkable. Search engine optimization, social media marketing, and even A/B testing are increasingly necessary for successful online marketing.

There exists a misconception that these newer marketing strategies are cheap or free, a claim that could not be further from the truth. Although one could probably 1) learn the skills necessary to pursue these strategies and 2) actively spend time applying said skills, all without spending a single cent, one should not neglect the economic cost of employing such a tactic, not to mention its impracticability. On the other hand, employing marketing executives for this purpose or outsourcing to service providers would incur real expenses (and get the job done). Still, the outsourcing or delegation approach is much less obvious when it comes to social media marketing – after all, how hard can it be to peddle offers and engage the community? Contrast this to search engine optimization where considerable technical skill is required.

The fact is that social media marketing is neither cheap nor easy, and it should be treated as such. Social media marketing has always been tricky, because it mixes social and economic norms. Any business that sees real value in social media marketing should thus give it the attention and tact that it requires, since having a poor social media presence is infinitely more expensive than no social media presence.

Social media marketers are generally loathed within the technology industry. They often go by a myriad of self-conferred titles, such as “social media guru” and “social media expert,” leading to the emergence of embarrassing parodies, such as this (by the way, “guru” is something that other people call you). The problem is obvious: social media marketers tend to talk a lot but achieve very little.

The objective of any social media marketer, and indeed any online marketer, is to build leads and increase sales. ROI is non-negotiable, and ROI has to be measured in dollars and cents. To be fair, social media is fairly young (even by internet standards) and constantly changing, but to substitute traditional ROI for newer metrics like followers, fans, tweets, mentions, conversations, etc. does not build a business case that justifies investment.

In other words, all social media marketing activities have to be sales-centric and geared towards pushing the target audience through the sales funnel. The most obvious yet dubious way to achieve this is to employ sales-laden speak in all communications with the community, which would very quickly alienate the community whose intention is to use social media as a channel of communication to reach the brands and companies that its members care about. Introducing market norms within a context governed by social norms is bound to upset community expectations and violate trust.

The better way, as I have always suggested, is to focus on making the target audience’s life better. Contextual relevance is crucial in determining whether a sales-motivated communication is perceived as helpful or annoying. For instance, a community member asking for advice or suggestions will welcome a product recommendation if it genuinely solves her problem. Make a market norm seem like a social norm.

How do you conduct social media marketing?

The simple answer to the perennial question of social media ROI is, like traditional marketing, to tie social media activities to sales. The amount of sales resulting directly from social media activities, which can be tracked via referral indicators like traffic sources and redemption codes, can give an idea of how well your social media marketing efforts are faring. This method of calculating social media ROI, however, merely represents the minimum ROI obtained from your social media activities, because there are other numerous indirect benefits that result from cultivating a thriving community and engaging customers on a regular basis (e.g. sales resulting from non-attributable word-of-mouth marketing, customer service cost reduction, customer feedback acquisition cost reduction, etc.).

Fixation on the ROI of social media (as with any other business endeavor) is important; nobody likes wasting time and/or money. The important thing to determine from the outset is the core objective of any social media activity, which would then help determine the relevant metric to track to produce the minimum ROI. If management wants to explore the potential of using social media to automate or scale customer service, the relevant metric to track is cost reduction in customer service expenses, not sales. Tracking sales may produce a positive ROI, but that number would not confirm or debunk the effectiveness of using social media in aiding customer service.

The whole purpose of tracking ROI is to determine the amount of value a specific activity creates in order to give a picture of the likely future returns, should the business decide to invest further in said activity. Unfortunately, the uses of social media are so broad and encompass a wide range of applications (e.g. broadcast-style marketing, customer service, product development, etc.) that are essentially different activities altogether. Lumping all social media activities together as one activity to obtain one average, mashed-up ROI is unlikely to be useful in guiding future decisions, because it involves too many variables. Track your social media activities separately, and it will quickly become clear which application of social media is most fruitful for your business.