ROI of a Facebook like: The Truth about Social Media Marketing

With 1.44 billion monthly active users in early 2018], Facebook is the leading social networking site in most countries worldwide. For younger generations, Facebook is not only a tool or an application on the Internet but also a ubiquitous level of reality, where the boundaries between online and off-line actions are increasingly blurre. Especially for users of the Facebook mobile client, checking status updates and interacting with Facebook friends have become part of their daily routines. Facebook is an ideal environment for studying human behavior. Every click, like, friend acceptance (or rejection) is tracked for millions of people every day. Facebook's value as a "petri dish for the social sciences."Brands spend billions of dollars a year on elaborate efforts to establish and maintain a social media presence. Facebook is the preferred platform: 80% of Fortune 500 companies have active Facebook pages. Each day enormous amounts of brand-generated content—articles, photos, videos, and so on—appear on those pages and on other social media platforms, all designed to entice people to follow, engage with, and buy from brands. Marketers often justify these investments by arguing that attracting social media followers and increasing their exposure to a brand will ultimately increase sales. According to this logic, recruits who socially endorse a brand by, for example, liking it on Facebook will spend more money than they otherwise would, and their endorsements will cause their friends (and friends of friends) to shop—creating a cascade of new business. At first glance the evidence seems to support this rationale: Many brands have discovered that customers who interact with them on social media do spend more money than other customers. A recent influential study by Facebook found that compared with the general population, people who liked Starbucks’s Facebook page or who had a Facebook friend who liked the page spent 8% more and transacted 11% more frequently over the course of a month.

Merely liking a brand on Facebook doesn’t change behavior or increase purchasing. But that study and others like it contain a fatal logical flaw: They confuse cause and consequence. It’s possible that getting people to follow a brand on social media makes them buy more. But it’s also possible that those who already have positive feelings toward a brand are more likely to follow it in the first place, and that’s why they spend more than non followers.