Turns Out, Social Media Marketing Doesn’t Work

Foursquare Wholefoods chalk board

A test of how much location-based services like Foursquare and Facebook Places can help local businesses has shown an impact close to 2%, according to data seen by Fast Company.

The test was made by Applied Predictive Technologies, a company that uses artificial intelligence and randomised tests to help big companies like Starbucks assess the impact of various decisions. 

In most of APT’s tests of social media campaigns, the “bump” in revenue is on the order of 2%.

Don’t panic yet, Foursquare investors!

A couple things warrant optimism:

  • We don’t know how long the test was. If anything, social media marketing probably yields benefits over a long period of time. In our experience, being or wanting to become the Foursquare Mayor of the place will tend to make us go slightly more often. Is that going to be a huge bump in revenue right away? Nope. Can increasingly recurring revenue make a big difference to the bottomline, especially in a high fixed costs business like a restaurant? You betcha. It may yet turn out that the net present value of a Foursquare Mayor is pretty high.
  • It’s still early days. Right now, social media marketing and advertising is in the experimental phase. We don’t really know what works and what doesn’t. We’re fumbling in the dark. That’s fine. That’s how it was in the early days of the internet, and how it is in the early days of every medium.

One social media advertising platform that is great at getting warm bodies through the door, but hasn’t yet reached its full potential, is Groupon.

Don’t Miss: What Groupon Needs To Do Now →