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Facebook, Twitter, & Wikis Really Do Impact the Bottom Line

Most Engaged Brands Reaping Financial Benefits

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Companies have long had problems putting numbers on social media marketing results. Wetpaint and the Altimeter Group have now released a study looking at how engagement with consumers through social media correlates with financial performance. How much emphasis does your company put on social media efforts? Tell us.

The "ENGAGEMENTdb study" shows that companies who measured as having "the greatest breadth and depth of social media engagement" grew revenues by 18% over the last year, while the companies that were the least engaged dropped 6% on average.

Charlene Li "This is the first study of this depth on the top global brands and we think the results provide a good guide for corporations and brand marketers in every industry," says Charlene Li, Founder, Altimeter Group. "The success stories we have uncovered provide a blueprint for companies making decisions about how to best apply their marketing and consumer relations resources."

Channels taken into consideration for the study were:

- Blogs
- Facebook
- Twitter
- Wikis
- Discussion Forums

Brands looked at were the 100 most valuable ones as identified by the 2008 BusinessWeek/Interbrand Best Global Brands ranking. In case you were wondering what the top ten brands are according to the ENGAGEMENTdb study, they are as follows:

1. Starbucks
2. Dell
3. eBay
4. Google
5. Microsoft
6. Thomson Reuters
7. Nike
8. Amazon
9. SAP
10. Yahoo!/Intel (Tie)

Engagementdb graph - Starbucks on top

So what are these brands doing right?

According to Wetpaint and the Altimeter Group, the companies that scored well have dedicated teams (of varying sizes) who are active in the social media channels they utilize. Basically, it shows that it pays (literally) to have a team working full time on engaging with customers via social media. Even if that team consists of one person, it means they will not be distracted by other tasks and can give the social channel the attention required for it to make a significant impact.

As the social web continues to grow (meaning more people joining social networks, more people blogging, and more sites becoming social), there is a growing number of channels that require said attention.

Ben Elowitz "The ENGAGEMENTdb study goes a long way towards validating the importance of social media for business," says Ben Elowitz, CEO of Wetpaint. "The closer any company is to its customers, the better, and it’s hard to argue with the ability for social media to create such proximity. In this day and age, companies should feel much more comfortable investing in social media — the correlation to results is so clear."

It is in fact that clarity that many companies have had a hard time seeing in the past. Social media is still in its early stages though really. In the grand scheme of things, it’s still a relatively new concept. Keep in mind, that many businesses still do not even have websites, let alone a social media presence.

It is going to take studies like this and concrete data showing the financial benefits for more small businesses to truly get on board and engage. Having dedicated teams is a strategy that will likely become more commonplace as companies realize that half-assing it is just a waste of time.

A couple of other highlights from the study:

- The study found that the most successful teams evangelize social media across the entire organization to pull in a broad range of stakeholders.

- These companies view social media as an indispensable tool to help them achieve results, and their approach is conversational.

Along with the study, the ENGAGEMENTdb site was launched as a tool where companies can measure themselves against the top 100 in terms of the strength of their social media efforts. It’s probably not a bad idea to take a look if you’re serious about those efforts.

Would you focus more effort on social media if you knew it would increase your bottom line? Do you think the study holds water? Please share your thoughts.

Facebook, Twitter, & Wikis Really Do Impact the Bottom Line
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  • Guest

    causal = causing an effect
    casual = not formal

  • http://www.astuterecorder.com Judy Asman

    Excellent topic, but the companies listed in the study were already huge, some multinational corporations. They will magnetize success via the Internet regardless.

    What about start-ups? I would think the proof is in the pudding for small businesses using social networking and gaining profitability.

    Why does Li think this sampling is useful for any company in any industry? This type of study is liking doing a PR push for Del Taco vs. a mom-and-pop taco stand. Pimpin’ it.

  • SEB

    Let’s see – some companies actively engaged in social media are growing, while some companies that aren’t are shrinking. Therefore social media is the underlying cause.

    Or just maybe companies that are growing can afford to pay someone to manage the channel, while companies in financial straits cannot.

    Until there is a study showing hard ROI numbers related to social media, “studies” such as this will continue to make responsible marketing managers put social media on the back burner.

    • http://www.jenniferkorol.com Jennifer Korol

      Ok, coming right up! :-)

  • Carl

    The authors seem to assume that the correlation results from a cause-and-effect in one direction: social media engagement causes revenue growth. Without seeing the actual data, it

  • http://Twitter.com/SusanGrisanti Susan Grisanti Guitarist

    As a small business entrepreneur for the last 23 years,
    this recent Recession or Depression (or whatever it is)
    has impacted my bottom line to the point I’ve had
    to cut back on about 1/2 of my Paid Advertising~
    Now that’s where Social Networks have come to the
    rescue for me, Twitter, MySpace, FaceBook & FriendFeed
    have saved the day for keeping my doors open here.
    And also forced me to get a great education on how
    social networks interact etc….
    For small business & big business, social networks are
    just another way of ‘fishing’ in the big ocean…but also connecting
    with people who might never heard of us otherwise…
    And yes, the time investment factor is huge, I spend about
    30 hours a week using various social networks, so the biggest
    challenge is the time factor I think….
    It will be interesting to see how social networks evolve over the
    coming years….

    • http://www.jenniferkorol.com Jennifer Korol

      Susan, I cannot imagine being in business for 23 years and being able to “morph” from raising enough funds to support my business in paid advertising all the way to becoming a virtual problem solver. That must have been a very hard transition. The comment you just left truly is inspiring.

  • http://www.mymegapixelproductions.com Jennifer Korol

    I would always make it a daily routine to go onto Twitter, Facebook, MySpace, YouTube and even the small, “unpopular” venues, because they are new and growing. The remarkable thing I have found with social media is, I end up getting the best results when I build a strong relationship with the people I speak with every day. These people are my followers, my viewers, my clients, and my readers. Most people will say, “If it wasn’t for social media, no one would know my name.”, and this is so true to the action. Nothing is more valuable than having people know who you are, what you’re about, and what you can do for them. Once you approach people this way, they start to see that you do care to hear their side, which in turn, will favor both parties at the end of the day. Hats off to the Author!!! Great post Chris!

  • http://ebook-sie.com Bryan Quinn

    Social Media sites are a common ground for many people with personal and/or business activities. But to employ teams of people with the sole purpose of promoting that business could be cause for concern for smaller business owners. Biggest is not always best.

    • http://ebook-site.com Bryan Quinn

      Did you notice the error in the last post? I wonder. A mistake or a deliberate error?
      The rules of the game are changing :)

  • http://www.michaelghurston.com Michael G. Hurston

    It’s articles like these, that show and highlight studies like this, that really give me a lot of fuel for the fire when I bring the idea of social media and viral marketing to the suits who don’t always “get it”

    It’s been a hard sell for several years now, but the company I work for is finally taking an interest in social sites and I’m hoping we implement some ideas by Q4.

  • http://www.EnglishFinancialAssociates.com English

    Those studies could be on the money for the company brands mentioned however I do not think it necessarily translate the same for small companies or business individuals. As a venture broker I am a member of both Twitter and Facebook, zilch as far as meaningful networking.

    Twitter is a cold constant flow of “noise” which do not seem to be in communication with anyone in particular just news snippets or commentary. I find it hard to go to Twitter and just correspond with myself even though I have followers. I thought such places purpose was to communicate with other like-minded people.

    I am at a loss to say how much impact these services offer, seems to me it offers more hype than substance at least from the standpoint of the little guy.

  • http://blondish.net Nile

    I do the social media for FanHistory.com ( http://fanhistory.com ). FanHistory.com is a wiki for all fandoms. It is totally volunteer based. All of our worth is in our data. We rely on people to be generous enough to visit and possibly contribute links and credible resources in regards to their fandom.

    Since starting my interning there over 2 months ago, we have had a considerable increase in traffic (through quantcast and Google analytics stats) because of implementing more focus on getting our content our there to the social networks. With some of the trending topics on Twitter, we have been able to post relevant articles. Although the fanhistorywiki Twitter account has considerable tweets, I RT their material and add the trend topic hashtags to each. In return my own considerably organically obtain followers are retweeting and visiting.

    We scrambled to put more material to our Michael Jackson article as well as Billy Mays and other recent celebrity deaths. Our traffic toward these pages has definitely been amazing.

    Using the social media concepts to plug your content is great. In fact, Mashable recently mentioned FanHistory.com. I am hoping others see the same value and share as no one cannot say ‘I am not a fan of anything.’

  • http://www.officialsafetyandsecurity.com/ Official Safety and Security

    I use FaceBook, Twitter and other social sites to interact with potential customers and raise their awareness for the safey and security products that my web site offers to keep them safe. Thanks, Chris for this article.

  • http://www.opvest.com OpVest Inc.

    i’m using twitter, facebook, and wordpress now to find out potential client. all things seem to be okie up to now. my site get more traffic from that social site.

  • http://www.oil-painting-online.com Kaia

    The only thing I want to say is that the imfluence of the internet has infiltrated all fields of the society….

  • http://www.xoteria.com John Summer

    Let;s face it. People who used to be couch potatoes and addicted to television heretofore Yahoo IM, MySpace, Facebook, Twitter, etc. ad nauseum are now addicted to the internet. Lonely hearts, social wallflowers, the not so Madison Avenue perfection types, the predators and pervs swarm around these social sites and say they are anyone and talk to someone who is probably other than they type in they are, A viable marketing base? I think not and I twitter not. So why am I typing this?

  • http://twitter.com/EdPrimeau Ed Primeau

    No doubt social media increases business and draws in customers. The tough part is how to manage it if you are an entrepreneur?
    I find our company helping our customers how to do it all with the help of their admin dept.
    Ed

  • http://www.insideview.com Marc Perramond

    Chris, great summary of the research. Very interesting data, at least in aggregate (but hey, aggregate correlation of corporate performance with social media participation is better than individual anecdotes – so this study is a great step.)

    What I can say is that this study supports (in a statistically significant way) the success that our end users – sales & marketing professionals – have had leveraging social media to find, engage, and close new business. The information that sales people rely on to do business in increasingly in the cloud vs. in traditional company/contact databases. The challenge has been to harness this growing sea of information in a way that makes sales people more productive (vs. overwhelming them and actually being a drag on productivity.)

    When we released our free Twitter CRM integration in early May – http://bit.ly/1tRHF – some of our sales end users didn’t immediately understand how they could tap into Twitter & blog search. However, in just the last few months the number of success stories from sales people that are leveraging tweets and blog posts to engage with prospects has been very impressive. Yes, stats people dread anecdotes but guess what, sales people believe in them b/c they represent a real-world success that can be reproduced.

    You could argue that Twitter ups the ante in terms of volume and frequency of information, but the challenge is not a new one. Before our current love affair with Twitter, most organizations had not yet figured out how to filter & analyze the thousands of online news sources, much less the hundreds of thousands of business blogs out there. So we can

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    Anything that increases customers and sales is worth looking into.

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