Engagement Index Busts Social Media Myths, Finds Financial Performance Correlation

A new engagement index is showing correlation is busting up some long held beliefs about social media. One of the myths is that social media can’t be measured. The release of this report alone proves that it can. They measured the top 100 brands, as seen in the BusinessWeek / Interbrand “Best Global Brands 2008″rankings. The index was calculated by Wetpaint and Altimeter Group.

They looked at a variety of channels (Facebook, Twitter, YouTube, blogs, etc.), the interaction that took place via those channels and the participation levels within company staff.

It should come as no surprise that brands who engaged with the most depth in the most channels scored best in engagement. Generally, media and technology brands did better than other niches, likely due to their early adaptability.

The report also challenged the idea that social media doesn’t work for B2B niches. SAP has been busting that myth for 6 years with their SAP Community Network (SCN). It consists of 1.7 million members. Of those, 5,000 are bloggers. Mark Yolton, Senior VP of SCN, says that opening up the site to bloggers was a great way to scale the community. As a result, the site helps facilitate sales and get valuable feedback on new products.

Take a look at another successful brand using social media: Starbucks. They’re on Facebook and Twitter (you know about free pastry day, right?), and also have their own suggestion site, MyStarbucksIdea.com.

Starbucks Chris Bruzzo, VP of Brand, Content and Online explained the value of social media. Bruzzo says that for every 4 people who interacted with a news item, 3 people are added virally as a result.

Another interesting finding was a correlation between social media and financial performance. It’s quite interesting to note this during a rough economy. While companies look for efficiency, those who’ve dug in deep to social media seem to be staying afloat better. However, the report (found here, PDF) is careful to point out that a correlation does not indicate cause and effect. Don’t just put up a Facebook page or start a Twitter account and expect a magic potion to cause great third quarter results. That’s not how it works. Remember, this is an engagement index.

If you’re a smaller brand or if you haven’t yet launched a social media effort, the idea of launching such a campaign may sound daunting. But Wetpaint and Altimeter urge that you start now. Do what you can. It’s more important to have depth in one or two channels than to spread yourself thin across many. Last but not least, the most successful brands all talked about developing relationships instead of just making social media another marketing outlet. It takes some time. Plan it out. Once you’ve started, you can’t really turn back.

That might sound scary, but the numbers show that it’s far worse to stay away than it does to get your feet wet.

What do you think about this report? Let us know by leaving a comment.

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