Online Buzz Has No Measurable Impact on Short-Term Sales

According to a new study from Coca-Cola, online buzz has no measurable impact on short-term product sales. However, online display ads are about effective as TV ads, noted company exec Eric Schmidt during this week’s Advertising Research Foundation Re:think conference in New York. As a point of clarification, a top marketing exec for the company, Wendy Clark, was quick to note that social media still plays a crucial role.

“It’s a stunning admission for a company whose flagship brand has 61.5 million fans, more than any other brand on Facebook,” writes Ad Age. “But Eric Schmidt, senior manager-marketing strategy and insights at Coca-Cola, isn’t giving up on buzz just yet. And he cautioned against reading too much into the research, noting that it covers only buzz, not sharing, video views or other aspects of social media.”

However, when Coca-Cola placed buzz sentiment into the same analytical framework that it uses to evaluate other digital media, Schmidt said: “We didn’t see any statistically significant relationship between our buzz and our short-term sales.” He showed that buzz only effected short-term sales by 0.01 percent.

“Is that the end of the story?” Schmidt asked. “I would say no. This is one study on a set of brands in a particular company within a certain segment of the consumer-packaged-goods industry. It is by no means a generalized result that applies to all industries.”

According to Schmidt, Coke will look to refine how it measures that buzz. It would like to determine how many people the buzz reaches, “rather than just counting the raw publicly available comments from such sources as Facebook, Twitter, blogs and YouTube,” explains the article.

Regarding digital display advertising, the research was far more favorable. Those were found, on average, to be 90 percent as effective as TV at generating sales on a per-impression basis, according to Schmidt. “Search was 50 percent as effective as TV — about the same as out-of-home — with radio coming in between TV and search and print scoring slightly more effective than TV,” writes Ad Age.

UPDATE: Marketing Exec Defends the Crucial Role of Social Media