This leaves only one question: How does it help my business?
The explosive development of social media platforms over the last few years has been remarkable but, despite growth that has transcended national borders and demographic lines, it has been underscored by the perception that its advantages were not quantifiable from a business standpoint. The elephant in the room has not stopped companies from signing up and maintaining platforms; however, these initiatives have been met with skepticism by C-level executives who’s attention is focused on furthering business. A new report published by McKinsey Quarterly, based on 4 years of data collected regarding enterprise social media usage, goes a long way toward justifying social media as a tool for businesses to compete and win within their industries.
Not surprising was the insight that Web 2.0 technology is being increasingly used among companies surveyed. At the close of 2010, for instance, 75 percent of companies claimed that they were seeing quantifiable benefits with regards to increasing speed of knowledge and a majority were using platforms to reduce communication costs, increase marketing effectiveness and build customer satisfaction. These same companies; however, were having more trouble measuring social media impact on revenue and operations. When broken down further, it became clear that companies who had fully developed internal and external networks were seeing substantially more benefits than those who were in an experimental stage. The discrepancy in benefits reported alludes to a certain intangible benefit from full commitment to social media and a definite synergy between internally and externally networked processes.
Most importantly, this report was able to take the analysis of social media in business a step further by tying gains in market share and operating margins, two fundamental financial metrics, to integration with social media. The most profound finding from this model is that highly networked enterprises are 50 percent more likely to experience simultaneous guides in market share and operating margins while companies that silo social media, internally or externally, or have not used it at all, were less likely to show gains in these core metrics. While this study brings up as many questions as answers with regards to how social media can provide business value to organizations; the implication of the results is that agile, innovative market leaders are seeing a measurable boost to their respective bottom lines from their commitment to social media.
The assertion, that social media is moving beyond “new” and “cool” to essential and quantifiable, is something that the Emerging Media Research Council is helping our clients discover to leverage new ideas and digital innovation in building their business.