As social networks balloon and Facebook surpasses 900 million users, advertisers are necessarily flocking to them. It simply makes sense to put money where people spend their time.

Coca-Cola, for example, a heavyweight with the third most popular brand fan page on Facebook, has continued to increase its social media budget to the point of 20 percent of its total ad spending. Nike has followed suit, increasing its online presence at the expense of its TV and print advertising. Old Spice is now the leading men’s body wash after its successful Mustafa campaign that combined TV and print spots with Twitter, Facebook, and YouTube to reach its target audience. Subway’s Slimdown Challenge, similarly, received 71 percent of its online registrations from its Facebook page. Cisco saved over $100,000 on a product launch by advertising it entirely online with social media, and even baby vampire doll seller Vamplet achieved a 300 percent return on investment after spending $250 on Facebook ads.

Not every company is sold, however. General Motors cut $10 million of its Facebook advertising, and a recent article on Mashable pointed out that clothing brand Brooks Brothers, which is focusing on its website design rather than online outreach, is not enamored with social media. Even so, it has tens of thousands of likes on its Twitter and Facebook pages, while General Motors is still doling out around $30 million for Facebook marketing.

These composite policies reveal that companies must develop a strategic approach to their online identities, rather than the old barrage of ad spots prevalent in print, TV, and radio. Traditional ads no longer ensure greater outreach, and the interactive nature of social media makes successful marketing a matter of demographics more than ever before.

Know Your Consumers

Beyond operating in completely separate industries, Brooks Brothers and Coca-Cola are very different companies. As the oldest men’s clothing chain in the US, Brooks Brothers understandably attracts an older demographic. Coca-Cola, conversely, is sold to all ages and has a history of marketing to teens. As younger people tend to spend more time online than older people, it should come as no surprise that Coca-Cola has the advantage when it comes to online advertising.

If Brooks Brothers’ key demographic is better reached offline, its budget is better allocated elsewhere. Traditional TV and print ads are more likely to reach an older audience unaccustomed to spending most of the day online. The same holds true for General Motors, which suffers here too because older demographics are more likely to be able to afford new cars. Perhaps that’s why General Motors’ Facebook brand page is ranked a lowly 507th.

Brand Awareness vs. CRO

Another major difference between Brooks Brothers and Coca-Cola is that Brooks Brothers is trying to sell a product, while Coca-Cola isn’t. This seems counterintuitive; Coca-Cola clearly sells Coca-Cola and other beverages. The difference is that very few people buy Coke online. Most people go to the supermarket and pick up a 12-pack, or buy a can from a vending machine on impulse. Coca-Cola, therefore, aims to increase its brand awareness online so that when you’re thirsty, your first thought is Coke.

Brooks Brothers, on the other hand, sells clothes on its website. As people buy more of their clothes online, Brooks Brothers needs to capitalize on this 41 billion-dollar market segment. Its main goal is conversion rate optimization (CRO), a strategy that focuses on maximizing the number of website visitors that are converted into paying customers. Brooks Brothers was able to increase its conversion rate by 9 percent simply by highlighting different items on its men’s shirts page.

That may not seem like a lot, but it amounts to millions of dollars in extra profit, which is why Brooks Brothers is undergoing an entire site redesign. Brand awareness is useful for a retailer like Brooks Brothers because it draws users to their site, but it means less if visitors to the site don’t buy anything. Nike, which has no problem with CRO, can afford to spend more money on brand awareness.

General Motors is in a similar situation to Coca-Cola because no one buys cars online. They may do research, but then they go to a local dealership for the actual purchase. The fact that General Motors is pulling its Facebook ads reflects their lack of CRO. Pulling its ads may have been the right move. To optimize its return on investment, General Motors needs to better consider where it is placing them. Smaller companies with easily sellable products, like Vamplets dolls, can do much better with click-to-buy advertising on Facebook than a behemoth like General Motors that sells cars, which are most definitely not an impulse buy.

The remainder of its budget, though, reaffirms the importance of social media marketing as a long-term strategy. Young people may not be able to afford anything today, but current brand awareness can turn into future brand consumption. As always, advertising comes down to maximizing the return on investment. For companies looking for more brand awareness, each extra Facebook fan or Twitter follower is worth the price. Companies that sell goods online need to have a worthwhile retail model before they can capitalize on the potential consumers that social media brings. But Brooks Brothers can hardly afford to “play it cool” on social media, lest it develop a beautiful online store that no one bothers to visit.

(Images courtesy of BroBible, TorontoSeoGroup)