Articles

24.1.2011 Proving social media's ROI

When McKinsey announces breakthrough research, companies tend to listen. So when the respected management consultancy last week headlined a report with: 'Web 2.0 finds its pay day', a new item appeared on the agenda at board meetings up and down the country.

For all the hype around Facebook, Twitter and blogging in general, selling it to the boardroom has been difficult for marketers seeking to invest in a social-media strategy, because ROI has been difficult to prove thus far. The central claim of the McKinsey report is that companies engaging with Web 2.0 technologies are enjoying greater market share and higher margins than those that are not.

The authors, Jacques Bughin and Michael Chui, claim to have identified the rise of a new type of company - 'the networked enterprise'. This is a business that uses social media such as Twitter and LinkedIn to communicate with customers. It also enables the sharing of information internally. The report found that 27% of the 3249 respondents' companies reported having both market-share gains against their competitors and higher profit margins. McKinsey calculated that 'highly networked enterprises' are likely to fall into this category. Crucially, McKinsey found that the 40% of companies that are 'networked' perform better than those that are not.

B.L. 24.1.2011