Stephen Byrne

Enter at your own risk: the real value of social media-based brand engagement.

Everyone is telling us that brand engagement via social media also has quantifiable benefits, but no one knows exactly what the bottom line looks like, yet. So while the latest social media brand study reluctantly admits this to be the case, an understanding of its financial value might be some way off.

EngagedBy any definition brand engagement is an emotional connection or attachment developed during repeated and continuing interactions with a brand. Over time this should accumulate through satisfaction, loyalty, influence and excitement and other factors. Organizations who engage customers to the point where they are moved to a behavioral change do so by creating opportunities for emotional connections through consistent and positive experiences. Social media seems an opportunity for some brands to develop such opportunities, albeit at least turn any negative ones into positive.

However, alongside other media and non-media forms, social media is and should be regarded as just one part of a suite of engagement channels for brands. So, for example, a brand’s appearance or lack of presence on Twitter or Facebook, might harm its perception or level of engagement, it’s just that it won’t hurt if the current levels of engagement are low.  And regardless, for some industry sectors it purely demonstrates a rational and logical extension of their core business activity.

In July the WetPaint/Altimeter Group released its ENGAGEMENTdbReport aimed at measuring how deeply engaged the top 100 2008/9 global brands were in a variety of social media channels and, more importantly, understand if a higher engagement correlated with financial success. Unremarkably, the study understated one of the key defining aspects of these rankings – that the level of financial success generated by the brands had already put them a top 100 brand. A position not defined by some other event or cause like social media.  

WetPaint/Altimeter claimed their study not only measured the level of engagement but also the depth. They evaluated and scored each brand’s engagement in various channels and found the more a brand leverages multiple channels, the higher the level of engagement is (seems to make sense!) Ranking Starbucks as the most engaged brand, with a presence across 11 social media-based channels, they also linked exponential growth in the depth of engagement with continued growth in the channel.

Not surprisingly, it also found engagement differs by industry and with media usage. So the most engaged industries are naturally Media and Technology and the least, Financial, Apparel and Food & Beverage.  In addition, the study found distinct target audiences can influence the level of engagement eg. Toyota’s media channels used to promote Prius are different to those used by either Mercedes or Porsche, again this would simply represent segmented buyer behaviours.

But what interested me the most, despite all claims to the contrary, was that the study admitted NO ONE has the data to determine whether there is a direct cause and effect between financial performance and social media engagement. While it claims companies “deeply and widely engaged in social media surpass their peers in terms of both revenue and profit performance by a significant difference”, it also points out these findings don’t necessarily imply a causal relationship between these two but POWERFUL implications, whatever that might mean.

So while it comes as no surprise that one of the least connected brands at 98 was AIG, the world’s most successful brand Coca Cola is tagged as a wallflower and is down at no 51.  Go figure the financial relationship there between brand and performance.

There’s nothing particularly revelatory in statements like “a customer oriented mindstep stemming from deep social interaction” generates superior profits thus enabling further engagement investment and a virtuous circle of increasing profits.  But social media is, within the primacy of media, a marketing and communications tool for brand engagement in the same way point of sale, packaging, store design, direct mail are.

So how does the Wetpaint/ Altimeter study contribute to the dearth of research on the effectiveness of social media?

  1. Social media engagement effectively enables direct and two way communication for the brand. This is new
  2. Brand engagement can be better managed and measured via social media
  3. The cost and revenues that accrue from this engagement can be directly measured and accounted for
  4. Social media is purely digitally driven. Though the by products from which it is derived are not
  5. Social media brand engagement is governed by levels of participation in the same way any other engagement is. Active, latent, pro-active etc
  6. Social media enables deep and broad brand engagement
  7. Digital brands aren’t necessarily social media brands but it doesn’t hurt they are

What the study also reveals  is that social media enables brands via this form of agency to quantify the value of the brand engagement and subsequently contribute to brand valuation.  The contribution of brand engagement to financial value is already factored in many valuation models but this partition of the contribution is something that can effectively stand alone. We are yet to see how that might happen and who might use this.

So while the Altimeter study contributes to our understanding regarding the level and extent of brand engagement via social media, there’s really not enough evidence here of a direct financial return is not surprising. Indeed page six of the Altimeter report confirms the link between social media engagement and financial performance is not proven.  Unlike one of the often quoted quantitative models, the Harvard Business School’s Sears Model, which proves a direct correlation between internal employee brand engagement and financial return in the vicinity of around 20%.  .

And another study conducted in June last year for Adobe (not ranked by Wetpaint/Altimeter) by Forrester Consulting developed another model and demonstrated a 66% return.  This study examined the total economic impact and potential return on investment companies might realise by increasing investment in engagement initiatives, with an emphasis on using both existing and emerging technology touch points such as social media.

It wasn’t extensive research (200 companies surveyed and six in-depth interviews) but Forrester did use what it calls a Total Economic Impact (TEI) methodology to measure impact. TEI not only measures costs and cost reduction (areas that are typically accounted for within IT) but also weighs the enabling value of a technology in increasing the effectiveness of overall business processes such as customer communication.

Forrester found three main results – firstly, increasing investment in online customer engagement through Internet-based channels improved the efficiency and effectiveness of customer interactions and the customer experience. Secondly, improved efficiency translates to reduced overall cost of sale as well improved internal staff productivity (much like the Sears Model) and thirdly, like the Wetpaint/Altimeter study,  improved effectiveness translates to improved top line revenues resulting from higher purchasing frequency and improved customer value.  Overall, the value of the ROI around 66%.

However, while the study focused on Adobe products and their introduction as part of a wider technology strategy, it still confirmed one of the main conclusions from Wetpaint/Altimeter. Those organisations with higher financial returns were those that were able to develop a deep connection with their customers using online channels such as social media, ultimately raising customer awareness and purchase intent. Just ask Dell about its oft cited Twitter experiment.


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Stephen Byrne DIFFUSION Stephen Byrne
Company: DIFFUSION
Position: Director of Strategy
One of Australia's most consummate international strategists & planners Read Stephen's full bio

Latest Articles by Stephen

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