Social media really means business says study

July 22nd, 2009 by Jon Clements


Is this what the social media world has been waiting for: a detailed study that equates companies’ social media activity with (gasp!) pounds and pence, dollars and cents?

Well, technology and business analyst, Charlene Li and her digital consulting firm, Altimeter Group, have come up with just that. The study took the top 100 brands according the Business Week index and, first, analysed their engagement across 11 social media channels.

The top 10 list of social media performers contains no surprises – Starbucks, Dell, Google, etc – but it’s the next part of the engagement analysis that should put a spring in the step of social media advocates everywhere and give marketeers with metrics on their mind something to think about.

The study claims that revenues of the most social media-engaged companies – or “Social Media Mavens” as the report has it – rose 18% on average in the past 12 months, compared with an average decline of 6% among the least engaged. Finance people (welcome, if you were looking for the FT and have found yourself at PR Media Blog by accident) take note: the same results were identifed in gross margin and net profit figures.

What’s that you hear? It’s the sound of a few thousand social media experts saying “Phew! We knew we were on to something…”

But not content with showing how it benefits the bottom line, Altimeter’s work goes on to deconstruct how the top performers’ social media efforts are paying off. For those who consider themselves social media literate, this will seem obvious; but companies which refresh content regularly and actually respond to comments left on their blogs (i.e., conversing) are already streets ahead. It’s the difference between saying “we must get some of that social media magic” and actually doing it.

Other useful findings show that effective social media engagement is not the realm of the few in an organisation, but the many. This goes against the traditional marketing communications approach of maintaining a vice-like grip around every utterance from within an organisation and is, without doubt, a hard habit to shake off.

Finally, the study focuses on the importance of companies’ attitude to social media, in that it’s no longer something that can be dismissed as irrelevant to a particular business or business sector or something that be treated as a campaign with a finite life span. Sorry folks, but if you want some of those numbers that make the FD smile, it’s in for a penny, in for a pound. 

And in the fine PR tradition of giving catchy names to different modes of behaviour, the study categorises companies from the top flight “Mavens” to the bottom end”Wallflowers”, which are involved in social media, but only just. This tool gives you the chance to rank yourself.

So will you be Maven, Wallflower or something in between? If the study is to be believed – and real, financial fruits can be harvested from social media – then maybe it’s time to stop being (my term) the potted plant, that sits on the shelf waiting to be watered and hoping the sun will shine.

About Jon Clements

Jon Clements is a Chartered PR consultant specialising in B2B PR, corporate and marketing communications and is the founder of Metamorphic PR. Connect at: JonClements ''

7 Responses to “Social media really means business says study”

  1. Mark W Schaefer Says:

    I agree that the report has an interesting methodology but it is seriously flawed in its conclusions and irresponsible in its wild claims of social media programs having a measurable affect on the financial gains of massive marketing machines such as Coca-Cola. I would invite you to read the report more carefully, especially page 6, where they claim that there is no data to support causation. The only thing this report reveals is that important brands are engaging deeply in social media. Is that really news to anybody?

  2. Jordan Stone Says:

    Been thinking about this report quite a bit over the last couple of days. At first I was definitely among those who gave a “Phew! We knew we were on to something…” ; )

    After reading it though, I worry that the report goes a bit far in implying that the financial out-performance of successful brands is down to social media engagement.

    The old addage in stats: “correlation does not imply causation” comes to mind…

    Successful social media marketing strategies can definitely add value to a brand, and it certainly showed that big brands are most likely to be engaged in social media.

    But I think it’s too big leap to imply that this engagement is a big driver of financial success. At this stage at least.

  3. Jon Clements Says:

    Thanks for your comment.
    Since posting earlier today I’ve been pointed in the direction of your own blog post on the subject and concede that there are more questions to be raised by the research than answers.

    For other readers, read Mark’s post here and thanks to for bringing it to my attention:

  4. Jon Clements Says:

    I agree there might be a desire among those embracing social media to latch onto the latest evidence that there is a direct correlation between it and financial performance. Anecdotally there are examples of how social media is benefiting companies and, in the age of user-generated content and the search for peer-to-peer recommendations, social media for business makes sense as an approach.
    I would be surprised if Altimeter approached this research project in anything but good faith – spending time and money to be lambasted doesn’t seem like the smart thing to do. But maybe the figures as presented aren’t robust enough to stake a reputation on.

  5. Jon Clements Says:

    In the interest of balance as started by Mark and Jordan above, here’s ZDnet’s take on the research study:

  6. Ed Stivala Says:

    Interesting report, but I mostly agree with everyone else’s comments that there is probably not much cause for celebration.

    The only conclusion that I would draw is: “Some successful brands have included social media engagement, along with a list of other corporate behaviors and actions, the net result being good bottom line performance”. Not really so exciting is it?

    I think that it is a huge (and ridiculous) leap to imply that social media engagement directly drives bottom line performance. As discussed in the ZDnet article it is a much more complex problem.

  7. Jon Says:

    Thanks for commenting.
    Not sure that the debate is concerned with how exciting the premise of the study is, but whether the asserted link between social media engagement and financial results is true or not.

    Anyway, here’s some tweeted thoughts on the matter from Steve Farnsworth, aka @TheRealPrMan from today, just to keep the debate rumbling.

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