Study: There is a Link Between Brand’s Social Media Effort and Revenue Growth
One of the reasons why many SMEs are still skeptical about spending their marketing dollars on social media is because of the payout they could get compared to conventional marketing. In short, they would ask themselves “is it worth it?” The verdict is out and it’s a resounding ‘YES’! A study release in July found that there is a link between brand’s social media effort and revenue growth.
The research from social media platform Wetpaint and digital consulting company Altimeter Group found that companies with social media presence increase their revenue by 18% in the last 12 months, while the least active saw sales dropped 6% from the same period.
Among the top 100 ’socialable’ brands reviewed, Starbucks came out top with a score of 127 point followed by Dell, eBay, Google and Microsoft. Scores were given based on the level of interaction across 10 social platforms including blogs, Facebook, Twitter and Wikis.
The study also found that social media efforts tend to build up on it’s own. According to the report, there is an exponential growth in depth of engagement as the brand extend itself in more and more social channels.
It was also discovered that companies which does well on social media generally have a team dedicated to the initiatives. The most successful of these usually evangelize social media to gain broad based support and cooperation. Instead of using the conventional approach with messages and talking points, they begin to embrace the conversational model.
The report sort the companies into four different categories with “maven” being the most aggressive on the social web to “waliflower” that bascially sit on the sidelines. In between are “butterflies” – companies that spread itself too thin across multiple channels and “selectives” – those that excel by focusing only a few channels.
Not suprising ly, among industries, media and technology seem to be the “maven” while financial, food and beverage, consumer products and apparel brands were on the other end of the spectrum. The report state that this is so because these industries are just beginning to experiment social media.
Only Starbucks is an exception among the food and beverage industry, beating out the media and tech brands. Among it’s most prominent social media efforts is it’s launch of the MyStarbucksIdea, a community site that allows their customers to submit, vote or comment on ideas to improve the company.
However, Starbucks financial performance does not show any link between the brand’s presence on social web and it’s reveneue. In it’s most recent fiscal year report, the coffee chain saw a di in revenue from $2.5 billion to $2.3 billion a year ago. (The report state that revenue growth figure cited in the study is an aggregate of all the “mavens,” and not a reflection of just one company)
Runner- up Dell gained a wide attention after they rammed up their social media efforts to combat their “Dell Hell” label applied by critics for their poor customer service operation. The company now boost a 40 man team to run various blogs, a video channel and listening to what others are saying about the brand.
In conjunction with the study, brands can now find out their social media rating through the new engagementdb.com website. After taking a short survey, companies will get an email report that evaluate their ranking with those covered in the report.
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