Share on LinkedIn0Share on Facebook0Google+0Pin on Pinterest12Tweet about this on Twitter

The ROI of Embracing Social Media for Business

by

Social Media today, has become an integral part of any organisation. However, there is an on-going debate about how to measure the ROI of social media for businesses. McKinsey Quarterly, recently released a report aptly titled – “The Social Economy – Unlocking Value and Productivity through Social Technologies”. . . .

Social Media today, has become an integral part of any organisation. However, there is an on-going debate about how to measure the ROI of social media for businesses. McKinsey Quarterly, recently released a report aptly titled – “The Social Economy – Unlocking Value and Productivity through Social Technologies”.
According to the study, almost 1.5 billion people have at least one account with a social networking site. It has become obvious that social media is influencing and changing behavioural patterns of consumers. Social Media is also extremely useful in business intelligence gathering.
But the study revealed an extremely important piece of information – social technologies can unlock upto $1.3 trillion into economy if used effectively by businesses. Let’s see how.
Firstly, you might be wondering what the scope and meaning of social technologies is. The figure below will give you a better understanding.

Source: McKinsey, The Social Economy Report, July 2012

With an understanding of what social technologies is, we can now look at how they enable value creation within an organisation. The Social Economy Report, has identified some key characteristics: –

  1. Social is not tied to a product but it is a feature that can be replicated in any IT interaction or interaction. For example, the Facebook like button is not just tied to Facebook. It’s an instance of the social feature being used.
  2. Social technologies has no boundaries geographical or otherwise. If you online you are connected and more importantly from a company point of view – reachable!
  3. It acts as a medium for talent aggregation. If you are a writer – you can start a blog, a singer – post a video on YouTube. It has eliminated the need for third parties. This is true for companies too. Businesses can now reach their customers directly and in real-time.
  4. You can plot a social graph to interpret consumer behaviour based on past spending, browsing habits and other personal interactions.
  5. Social Media has given way to true democracy where the voice of the people is extremely powerful and influential, both on governments and on companies.
  6. The use of social technologies allows marketers to customise product sales to a whole new level.

How can these distinctive characteristics, add value to industries across the world? The figure given below, will give you an insight into this.

Source: McKinsey, The Social Economy Report, July 2012

This figure is just a high level overview of how social technologies can add value to organisations. How is social media contributing to the economy? One example is the use of broadband services in households. According to McKinsey and IAB Europe, the monthly consumer surplus for broadband services is about $50 per year. The consumer value of this growing at a projected rate of $253 billion – of this social technologies amounts to about $40 billion in 2010 with a projected rate of $76 billion by 2015.

This is just one example, of the value proposition social media adds to the economy. The figure below shows how social technology providers can generate revenue.

Source: McKinsey, The Social Economy Report, July 2012

The points discussed above at just the tip of the iceberg. Social Media and its technologies have changed cultural and behavioural patterns to an extent that they are beginning to have a significant impact on global economies. While experts are discussing the pros and cons of becoming a social business, consumers are moving towards a social economy.

About Logan Nathan

Social Media Business Consultant | Social.Local.Mobile Marketing-Strategist| Speaker | Trainer

Based in Sydney, Australia, Logan has been an avid & passionate social media user since the advent of Facebook.  As the Social Media Business Consultant with over 30 years’ experience in corporate, SME business, together with running his own organisation for the past seven years. Logan is focused on guiding organisations through the four stages of social media for business – Education, Strategy, Implementation and On-going Management. If your business needs expert assistance on creating a custom Social Media and Search Engine Optimisation Strategy, contact us via logan@logannathan.com. Logan is also an expert on LinkedIn and is running a series of workshops over the next few months. To Register: – http://www.ictsocialbusiness.com.au/social_media_education/social-media-training-workshop/Getting-leads-from-LinkedIn

Stay tuned for more developments from Logan’s company.