1 in 5 Large Companies Say They’re Losing Money on Social Media (But Twice As Many Are Cashing In)

October 7, 2013

This article is included in these additional categories:

Brand Metrics | Customer Satisfaction | Digital | Return on Investment | Social Media

TCS-Large-Consumer-Companies-Social-Media-ROI-Oct2013Measuring social media’s return on investment (ROI) continues to plague marketers. While most research on the topic tends to focus on the proportion of marketers who can effectively track social ROI or the proportion seeing positive ROI, a new study [download page] from Tata Consulting Services (TCS) goes a step further, examining the share of large consumer companies that have not only measured the value of social media, but have also found it to date to be less than their investment. Good and bad news follow.

The bad news is that 18% of global respondents – from companies with average revenues of $15.6 billion – have measured social’s value and are seeing a negative ROI. That figure actually becomes more pronounced when factoring out the 44% of respondents who aren’t yet measuring social’s value. In effect, of the 56% of respondents who have measured social’s value, roughly one-third said the ROI is negative.

The good news, of course, is that the other two-thirds of respondents who have measured social’s ROI have found it to be positive. Overall, a plurality 38% of respondents overall have measured social’s value and found it to have a positive ROI.

The good-and-bad news? 44% of respondents haven’t measured social’s value, although the vast majority of those (32% overall) do plan to measure it. Also of note: the 56% claiming to have measured social’s value is a big difference from a recent study, in which only 15% of US CMOs said they’d measured social’s business value quantitatively.

Separately in the TCS study, respondents were asked to rate the extent to which social media has improved company performance across 15 named criteria. On a 5-point scale, the largest impacts are seen for the following criteria:

  • “Increased consumer awareness – the number of consumers who receive our messages” (3.67);
  • “Increased brand affinity – the number of consumers who view our brand favorably, and their affinity toward” (3.61);
  • “Measured how consumers view our brand and products (i.e. consumer sentiment)” (3.58);
  • “Improved marketing campaigns” (3.54); and
  • “Understood important consumer trends” (3.5).

The researchers note that across the 15 named criteria, social media has had a moderate – but not high – impact. The lowest ratings were given to the criteria relating to reduced costs (such as reduced new product development costs and reduced customer service costs).

Respondents said that on average they are spending $18.8 million on social media, a tally they expect to increase to $24 million by 2015.

About the Data: The data is derived from a global survey of 655 respondents from mostly $1 billion+ consumer companies in June and July 2013. The average revenue of respondents was $15.6 billion (median of $4.9 billion). Respondents came from 11 global industries.

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