Social media is now mainstream, but does it actually drive revenue?
Altimeter Group, a research and advisory firm based in San Mateo, California, set out to answer that question by interviewing and surveying brands including the Coca-Cola Company, Starbucks, SAP, EMC and The American Cancer Society to understand their unique challenges, as well as their strategies for understanding the financial impact of social media. The result is “The Social Media ROI Cookbook” by analyst Susan Etlinger, which lays out the best practices and “recipes” that they are using to understand its impact.
And there are a lot of challenges. As Etlinger says, “Today, we—and our customers—move through the world using a range of devices — such as smartphones and tablets — that didn’t exist a few short years ago. The volatility of social data and the pace of change mean that tried-and-true measurement methods are no longer enough. Social data is different. The old rules don’t apply.”
The top challenge, according to Altimeter’s research, is actually tying social media to business outcomes; 56% of survey respondents noted that as an issue that hinders their ability to draw insight from their social media initiatives. Partly as a result, only 30% consider themselves to be “effective” or “extremely effective” at connecting social media to revenue.
But, Etlinger cautions, while revenue is important, it isn’t everything. Eighty-four percent of survey respondents reported that the primary business impact of social media was not revenue generation, but “insight that helped us meet customer experience goals.”
Based on this research, Etlinger and the Altimeter team identified six top-down and bottom-up approaches that brands are using to measure the revenue impact of social media. The best practice: blend measurement methods to ensure you have both the business context to understand trends, and the granular data to support it.
But, while these six ingredients are consistent, the emphasis each company places on them depends on the nature of their business; every company has a different measurement mix. There is no master recipe. Says Ken Burbary, Chief Digital Officer at Campbell Ewald, “I feel like we’re all data chemists at this point, trying to put a bunch of stuff into our beakers to see if it works.”
Etlinger found that the most important criteria for choosing the right measurement mix are:
- Business: the nature and structure of the business
- Product: the nature and type of products or services offered
- Media: type of media being used
- Customer: the nature and type of customer(s)
Finally, Etlinger says, it’s important to remember that in real terms we are still at the very beginning of social business. In the months and years to come, we will see technologies emerge that will bridge the online and offline worlds, help to connect the customer across multiple screens, enable us to better understand how influence works and, most importantly, integrate social, enterprise, and external data for a holistic view of our products, companies, competitors, and industries.