by Ernest Kim and Mira DY

The ROI, or lack thereof, of paid advertising on Facebook has been a hot topic of late. Starting with GM’s highly public and much publicized exit from the social network as a paid platform to comScore’s riposte (published in collaboration with Facebook) suggesting that the doubters are simply doing it wrong, important questions about the value of social media are finally being broached in polite company.

These questions got us here at XM Asia Pacific thinking … many of us in the industry—both in the client and agency worlds—have accepted as received wisdom the notion that Facebook Likes are worth pursuing, and the more the better! Case in point: the aforementioned comScore report, which just so happens to be titled The Power of Like 2, casually states that “Most of the brands with an active Facebook presence have focused early efforts on accumulating Facebook Fans, recognizing that there is a long term value associated with being able to continuously communicate with and market to these brand followers.”

The idea that Facebook Fans = value is so uncontroversial that comScore saw no need to substantiate this claim. After all, if you want to fish where the fish are, casting your line out to an audience of 901 million users sounds like a pretty good idea. While we don’t disagree with the theory, our field research suggests that Fan acquisition is a dead end, with questionable long-term value to either the brand or the bottom line. Instead, it’s conversations that matter, and offline engagement can deliver greater return—in both meatspace and the digital world—than even the best community management.

“I can’t remember if I Liked Starbucks on Facebook. If I did, it must have been a long time ago.”

This was a response from Lyon, one of 15 Singaporean students we interviewed to help qualify the value of a Like. Unbeknownst to Lyon, this question was something of a canard in that we knew he had indeed Liked Starbucks. Surprisingly, as the transcripts from our interviews piled up, we learned that Lyon was not the exception, but very much the rule. Of the students we talked to—all of whom had Liked the Starbucks Singapore page on Facebook at the time of our interviews—most had no recollection of having Liked the page, and only one in five could recall seeing any status updates from the brand in their News Feeds.

Our research suggests that, among young people, Starbucks’ welcoming retail environment is a more effective online conversation driver than their highly lauded—but seemingly ineffectual—approach to social media.

This is not some digital lightweight we’re talking about here: With over 173,000 fans for their local page, Starbucks is among the most Liked brands in Singapore. The brand is also widely recognized as a global leader in social media. Indeed, Starbucks was highlighted in comScore’s The Power of Like 2 report as a prime example of the potential of social media to deliver statistically significant lifts in in-store purchase incidence.”

Perhaps something was lost in translation across the Pacific, but we have a hard time ascribing much value to an action that consumers don’t recall doing or to messaging that they don’t recall seeing. But, and this is a J. Lo-sized but, Starbucks has successfully established preference here in Singapore—all of the students we talked to were regulars, choosing the mermaid over other nearby multinational and local coffee houses. So, if it wasn’t the brand’s own social messaging driving this preference, what was?

“[Starbucks] is more welcoming to students, in my opinion. I get to study at Starbucks, so I frequent it for that reason,” replied Yanqi, 18. Fellow Singapore Polytechnic student Arvin echoed this sentiment: “I prefer Starbucks, I find it welcoming … they have friendly staff, so it’s a better place to chill.” The availability of free Wi-Fi, ample power outlets and better music were also often cited as important factors driving preference for Starbucks.

The value of these amenities is perhaps unsurprising, but we were surprised to find that their impact extended beyond the physical. Cross-referencing mentions of Starbucks on Twitter, we realized that the qualities that make Starbucks an ideal venue for friends like Arvin and Yanqi to study and “chill” together in the real world also make the brand a frequent topic of conversation in digital media. This tweet from @krystletheseira is representative of the large volume of similar messages we uncovered over the course of our research:

“At Starbucks studying with @punkylemon because we’re not allowed to go into the art rooms in sch.”

In short, by making its physical spaces conducive to social engagement among Singaporean students, Starbucks has become an organic part of their online conversations. Facebook’s own global head of brand experience, Paul Adams, has emphasized the “incidental nature of brand conversations,” and our preliminary research suggests that nurturing these conversations offline is a more effective and efficient strategy for generating impactful earned impressions than traditional, Like-driven approaches to online community management.

Action Items

• Don’t be afraid to question the value of traditional, Fan acquisition-driven approaches to social media. Our research indicates that you can very effectively earn a place in your customers’ conversations by crafting an offline environment that fosters real world engagement.
• If you’re not able to leverage physical venues, consider social engagements that promote conversations between your customers. A prime example here is Nike’s Nike+ platform, which amplifies awareness by encouraging peer-to-peer messaging over the traditional brand-to-consumer model.

What do you think? Is this a breath of fresh air or a load of bunk? Don’t be afraid to let us know what you think by joining the conversation below. And, if any of the above piques your interest, let’s talk.