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The Correlation Between Social Media & Revenue

imageAs marketers, driving revenue is our ultimate goal and being able to track marketing efforts to actual sales is nirvana. Money talks, after all. But what about social media? In the past, debates have raged about the value of putting resources, time and effort into social media, when its impact was unclear. Even today, when most companies acknowledge that social media should be part of their marketing strategy, there is still the question about the value. What impact can social media have on your business? Does it help to drive revenue? Is the investment worth it? According to new research from Wetpaint, a social media platform, and Altimeter Group, a digital strategies consulting group, there is significant correlation between a company’s social media engagement and their revenue and profit. In fact, their research shows that, on average, organizations with the deepest social media engagement increased revenue 18% last year, while the least active saw sales drop 6%. Bear in mind, that this study was based on an analysis of the world’s 100 most valuable brands as measured by BusinessWeek/Interbrand “Best Global Brands 2008” rankings. These are both B2C and B2B focused companies. The study measured how deeply engaged these companies are in a variety of social media channels and correlated engagement level within these channels to financial performance.It’s important to note that this study did not just measure the number of social media channels e.g. blogs, Twitter, Facebook, LinkedIn, YouTube etc, that these companies leverage. It measured the level of engagement within each channel. Engagement is the key. It’s not only about having a presence in a number of social media channels. It’s the level of engagement within each of these channels that seems to correlate to financial performance. Keep that in mind as you develop your social media strategies.The ENGAGEMENTdb report classified companies into four different categories or profiles depending upon the number of social media channels used and how deeply they engaged within them. Mavens -- Have a robust strategy and dedicated resources focused on social media. Social media is a core part of their go-to-market strategy. These companies engage deeply and consistently across seven or more social media channels.Butterflies -- Have presence in seven or more social media channels, but tend to actively invest in a few channels. These companies have potential to be mavens but struggle with getting full buy-on from their organizations to fully engage in multi-way conversations that deep engagement entails.Selectives -- Engaged in six or fewer channels, but have a strong presence in the channels where they choose to engage. Light staffing dedicated to social media requires them to focus their efforts.Wallflowers -- These companies are just getting started or sitting on the sidelines, trying to figure out social media by testing a few channels.Check out the image below to see how companies in these four engagement categories performed in revenue, gross margin and net margin growth.imageKey Takeaways:Emphasize quality, not just quantity -- The ENGAGEMENTdb report shows that engagement goes beyond setting up a blog and letting viewers post comments. It’s keeping your content fresh, replying to comments, building your friends network and updating your profile status.Make social media part of everyone’s job -- Companies with the highest social media efforts to revenue ratio understand that social media is a shared responsibility. Everyone in an organization should be engaging with customers in the social media channels that make the most sense.Doing it all may not be for you, but you must do something -- Not every social media channel makes sense for every industry. What’s most important for organizations is to start doing something. Companies that have not already begun engaging in social media will fall behind other brands, both within their industry and across their customers’ online experience.Find your sweet spot -- True engagement means full engagement in the channels where you choose to invest. It’s important for organizations to choose their social media channels carefully and advocate strongly to acquire the resources and support needed to succeed. For resource-constrained organizations, it is better to be consistent and participate in fewer channels.If you’re interested in understanding how your level of engagement ranks against the world’s most valuable brands, you can find out by taking a five question survey on the ENGAGEMENTdb site. (In case you’re curious, the ENGAGEMENTDB report ranks Cisco 15th on their engagement index.)If you’re ready to define your social media strategy, consider these 10 Things a B2B Company Can Do to be Social Now from Amanda O’Brien.

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5 Comments.


  1. As a big believer and user of social media marketing, I applaud the research (and thanks for the great overview). The effort to link social media marketing to revenue continues.At the same time, correlation is not causation. It could be that successful organizations embrace social media because the organizations have larger marketing budgets or are early adopters and not that the use of social media has made that organization successful.As you correctly noted the results ‘seem’ to correlate to financial performance.@RobertLesser

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  2. Ruth White-Cabbell

    Robert,Thanks for the comment and I couldn’t agree more. This study notes correlation, not necessarily causation – an important distinction. As the first study to look at social media and financial performance, to the best of my knowledge, it is an important step in understanding the potential impact of social media. One thing companies can do now is begin integrating scoail media methods with traditional marketing where we have good tracking and measurement. This can also help quantify the impact of social media.Ruth

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  3. Yes, Robert makes a strong point. Social Media does seem to be an integrated part of the mix, but not necessarily the cause of profits. As permission-based email marketers, we have seen that email is highly profitable and is easy to quantify. It does seem that email is sometimes overlooked in the social media sphere – what could be more engaging and social than an email ? Thanks for the article.

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  4. Thanks for the compliment Contactology!Check out today’s case study re: a management consulting firm’s ROI on social media and SEO from MarketingSherpahttp://www.marketingsherpa.com/article.php?ident=31340

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  5. Ruth,I think you have cleared the way for a new method of quantifying the importance of social media. This will also provide for more qualitative data as well, as we can better understand what social media networks work better than others. Robert makes a great point, regarding coorelation versus causation, but the importance of connecting to business and consumer cannot be overstated. Social media empowers both business and consumer, and allows for traditional walls to be removed. The more business and consumer can interact, the more we will understand one another.Looking forward to more enlightenment Ruth!Great job,BrianLooking forward

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