Monday, August 04, 2008

Is Social Media overrated?

If the last week has taught me anything, it's that while social media has plenty of evangelists (hi!), there's also no shortage of people that think these tools are completely overrated and over-hyped. Naturally, we evangelists would beg to differ.

But the problem is, even those of us that use these tools are often hard-pressed to find good examples of companies that are really using social media effectively to reach their customers. I've blogged before about how I am 'tired' of talking about Dell's wonderful work in this space. Simply because I want to see other Fortune 500 companies follow Dell's lead and get active with social media as a way to reach their customers.

So to those that subscribe to the 'social media is just a fad/overrated/overhyped' idea, the fact that companies are struggling to show solid bottom-line results from their social media efforts is music to their ears. To the naysayers, this tells them that there's no 'real' benefits to be found. Which is why these tools are 'overrated' and 'overhyped' and that we blogging/social media evangelists need to 'calm down' and 'get over ourselves'.

But if Company A launches a social media strategy that does nothing to grow their business, does this mean that social media doesn't work, or that this company's social media strategy didn't work?

It's an important question to ask. Is it that social media doesn't have the potential to improve business that we evangelists think, or is it that many businesses aren't sure how to tap into that potential?

And it seems that more and more companies are betting that the potential is there. Dell's efforts speak for themselves, Lionel recently announced that the company was opening up many social sites such as Twitter, Plurk, Facebook, etc, to all its employees. Ford recently hired Scott Monty to be the company's first Director of Social Media, and he'll head up a 5-person team for the automaker. Disney is hiring a Social Media Manager. Pepsico was recently advertising an opening for a Director of Social Media.

So if Social Media is overrated and overhyped, as some claim, why are all these big companies putting money into this space? On the flipside, if social media IS working for companies, why can't they more effectively show the bottom-line results?

I think an important reason why is because social media, when utilized effectively, makes a company's existing business processes more effective. Much has been made of Dell's turnaround over the last couple of years. But even Dell's biggest social media advocates, such as Richard Binhammer, are the first to admit that while they 'think' that social media is helping their company grow, they don't really have hard numbers to point to that prove this. Is it coincidence that LinkedIn's surge in traffic seemed to coincide with the company hiring popular blogger Mario Sundar as its Community Evangelist, launching a company blog and adding more social elements to its interface? Maybe. Masi has enjoyed impressive sales growth in the past few years, despite a relatively modest advertising and marketing budget. But they do have a brand manager named Tim Jackson that's incredibly active in social media. Like Richard, Tim would likely say that he thinks that social media is greatly contributing to his company's growth, but he can't directly quantify the bottom-line impact.

But in each case, social media DID help these companies perform their existing business functions more effectively. Social media has helped Dell better communicate with its customers, and this improved communicate no doubt greatly contributed to the percentage of negative blog posts the company tracked falling from 49% to around 20% currently. LinkedIn launching a company blog helped the site better connect with its users and better educate them on how to use the site as a networking and connection tool. By connecting with current and potential customers via his blog and other social sites, Tim Jackson has greatly helped raise the online awareness for Masi.

Is it that social media's potential for businesses is overrated, or is it that many companies aren't realizing the potential that social media holds for growing their business? What do you think?


Anonymous said...

In my experience, Mack this is nothing new. Every time some new means emerges for connecting with customers/prospects, there are those who say it doesn't/won't/can't work. AND those who are the evangelists have trouble documenting and providing a solid return on their investment.

Because there is always so much going on, it will always be difficult to isolate the effect of one part of any marketing mix - academics have the time for that, but business doesn't.

But I'm sure of this: companies such as Dell and Starbucks, which make the effort to develop and sustain a two-way communication with their customers - and which listen to and implement the results of that communication, are always going to have a leg up on the companies that argue against this sort of interaction.

Great, thought-provoking post, as always Mack!

Mack Collier said...

Frank it's funny because one of the most frequent lines of thought I hear from the naysayers on why social media is 'overrated' is that 'well if it worked as you claimed, more companies would be throwing more money at it'.

But that's EXACTLY what's happening! Ford, Disney, Pepsi are just a few examples of HUGE companies that are setting aside budgets for social media efforts. And companies such as Dell that have been using social media for a while, continue to expand their efforts.

I don't think social media is overrated as a business-growth tool, I think it's that many businesses simply don't yet understand how to EFFECTIVELY use social media to grow.

BTW great comment, as always!

Anonymous said...

I find it rather amusing that so much of the focus has been placed on the online channel - especially when so many firms are doing such a poor job talking with their customers face-to-face. (My recent experiences with telephone support and in-store support at some major corporations serve as examples.)

So now the focus is on social media and strictly the online channel. Take what most can't do offline, and stick it online!

Don't get me wrong - I am a big fan of social media but the hype is silly. Talk to the customer regardless of channel...and respond quickly and appropriately.

And there doesn't seem to be all that many firms that have a specific objective in mind when they go off on a social media bent which is why it's so difficult to identify too many firms that are doing it well.

Anonymous said...

Social Media is neither over rated nor under rated. It is just very new.

Before TV reached critical mass, and advertisers put their full effort into understanding it, Radio was considered the #1 medium for advertising. Newspapers held the position before radio. Do you recall the stories about how e-commerce was going to replace bricks & mortar retail.

One of the risks the social media evangelists run is killing the medium by over hyping it. Marketers will try it based on the hype and, through ignorance, it won't work so the whole channel gets rejected.

Marketers should put their toe into social media if only to discover how it will or will not work for them. This will take time.

Don't expect the world to change. Social media will not replace other channels and for some it might never be appropriate. If a marketer goes about it systematically they should be able to find out how it can work for them.

Anonymous said...

Mack, I think we should make an important distinction: social media as used by businesses, and social media as used by professionals. You're talking about the first; and that is the common default setting when we discuss utility, ROI, etc. But much of what is happening in social media is going on between individual professionals, some of whom happen to work for companies, others for themselves, etc. Much of the value at that level will come from job leads, finding resources, new business growth, learning, professional collaborative efforts, etc. That's a whole other world of "ROI" that, perhaps, is hard to measure, but seems to be a great source of value for those of us involved.

Amber said...

Mack, insightful stuff as always. I think there's a lot of fuss about "social media": the term and the tools (hey sounds like a movie title or something). Twitter. Plurk. FriendFeed. Blogs, do you or don't you? YouTube videos. And most businesses are missing something much more fundamental. You nailed it.

The entire undercurrent of social media is about facilitating conversations, connections with people (whether they be customers or colleagues). Businesses create value for themselves through social media by building better relationships with their customers, and (the hardest part) finding ways to quantify how better relationships = better business. Social media is a means, not the end.

So overrated? Heck no. But careful thinking about how and WHY social media can help you or your business, and always keeping in mind the end game - building better, more symbiotic relationships - is what matters the most. No matter what you call it.

Way to keep the gears turning, friend. Exciting stuff we're wading through, huh?

Anonymous said...

I don't think we can qualify social media as overrated yet only because, as a lot of the others have said, it's very new. Yes, maybe to those who only judge social media by the bottom line, the cash flow, the ROI, it may be a lot of hype for little "return", but that's a bad way to look at it.

Ask anyone who works for a big company what their ROI is on their accounting department. I bet that's a hard question to answer because the accounting department doesn't sell anything. And social media doesn't necessarily have to either. It should be more about being an honest presence that people can connect with instead of how much product it can move out the door.

Great stuff as usual Mack

Anonymous said...

Mack -- do you have any hard numbers as to how much money companies are throwing at social media? Just curious. Also, I think some of the new tools hold promise, especially when merged with existing marketing and communications practices. What I bristle at is the so-called media gurus who make bold pronouncements about SM with nothing to back it up.

Anonymous said...

Touching on points from our plurk thread:

Its definitely deals with the understanding of new SM mediums that are developing before our eyes. These companies are taking advantage of new technology of a common theme, communicating and connecting with consumers.

Case Studies and the like are to the benefit of companies that are toeing the line of whether SM would be beneficial for their company or not. So, over hyped, maybe but hyping something up comes the latter of understanding the hype.

Management may have a hard time accepting it without concrete measurements to fall back on, but the benefit is there.

Anonymous said...

I think the biggest problem is that social media is where the tide is turning. But it's longer term than the quick sales promotion. There are so few good case studies because we're talking about a major shift in corporate policy and mindset here. We're talking about something that might not be fully realised for a good 2 - 3 years.

Mack Collier said...

Pat I think that many people get too hung up on social media itself, and not on how these tools help facilitate connections. BTW one thing that I love about Dell and LinkedIn's social media strategy is that as an outgrowth of that, they are spending more time OFFLINE connecting with their customers. LinkedIn hosts lunches with their users, and several of Dell's employees are constantly attending and speaking at Web 2.0 events, which lets them cultivate offline connections that build upon the ones they started online.

James you are exactly right. The hype over SM drives some companies to try it, when they have no idea if it will work for them or not. I keep hearing from companies that want to start using social media, and the first thing they say is 'well we know we need to be blogging...' and I ask them HOW they know that? They have no answer cause they just assume that blogging is the first step, and have no idea if it will work in their unique busines case, or not.

Steve that could potentially open up a whole new discussion though. One could argue that people like Richard Binhammer and Jeremiah Owyang have such strong personal brands that their company benefits as a result. In fact, I'm sure that's the case.

Amber I agree. I think the beauty of SM is the connections that it helps facilitate. I think cos should try to create more connections, and at the same time, strengthen the existing ones.

Matt it gets said all the time, but putting a human face on an organization really DOES matter. I noticed today that Frank at Comcastcares had changed his Twitter avatar from the Comcast logo, to his headshot. That might seem trivial, but suddenly we go from interacting with some Comcast rep on Twitter, to interacting with Frank, who works for Comcast.

Mel you would be surprised, but many of these companies aren't too keen on sharing their information with me ;) And I have asked them if they can accurately measure the impact that SM is having. The answer I usually get is 'we KNOW it's making a positive impact, but aren't sure how to quantify it'.

Now in terms of how much is being spent by business as a whole on social media, I would think you'll start to see some firmer numbers and predictions on this in the next year or so.

One thing I can say is that in the last 6 months or so, I have seen a marked uptick in companies wanting more information on social media case studies, and how to measure results. Last year it was still 'so what the hell is this blogging stuff anyway?!?' This tells me that companies are curious about SM and considering moving money into this space.

As for 'the so-called media gurus who make bold pronouncements about SM with nothing to back it up', I get what you are saying. But at the same time, I think many of these 'gurus' are seeing how THEY are using social media to build their personal and professional networks, and saying 'If I can this, why can't Company A?'

And now that some companies ARE using these same tactics to build better connections with their customers, it seems to be coming full circle.

Social media isn't a silver bullet that can magically cures what ails any business. But if social media makes sense for a business, and if they correctly execute a social media strategy, the results can be big.

Anonymous said...

I don't think it's overrated. I just think many of us can't contain our enthusiasm. We're inspired by the possibilities we see for social media to empower a completely new, more honest and more human exchange between people and brands, or better said, the people in the companies behind those brands. So we get a little carried away, and don't yet have the metrics to back up our intuition and instinct. I think we'll need to do that -- it won't be enough to say it's not "how many" but "who" with whom we connect. Because the keepers of the budget will still want some way to determine if that "who" we're engaging with is helping us get to the desired business result.

Anonymous said...

As a consumer and not a marketer or corporate entity, all I can say is that it behooves companies to earn my trust and loyalty through building positive customer relationships, not advertising - and certainly not through big-old-boy arrogance that trickles down to the customer helplines and customer service operators. I'm tired of being treated like an unwelcome guest by companies (cable TV, phone especially) that I pay enormous fees to employ. If social networking helps me get a message to corporate headquarters without listening to music on hold and being passed from menu to menu, I say, bring on Plurk and Twitter! Let's hear what the customers have to say for a change.

Gavin Heaton said...

Great discussion going on here, Mack. I think one of the biggest challenges is that most social media efforts are performed in isolation -- that they are not seen as part of an overarching business strategy. Instead they are hived off from the rest of the business and measured according to "traditional" metrics of reach, awareness etc.

However, if you take an integrated approach to social media and look at the drivers of economic value, then there are a number of business impacts that reflect well on your enire business. But until we start looking at social media as a fundamental link in your business ecosystem, it will seen to be marginal at best.

Jonathan Trenn said...

Overhyped? Yes. Overrated? Not at all. Evangelists often have a way of speaking in absolutes - "engage or die" and do it with such a zeal that it turns people off. Especially when there aren't a huge amount of success stories.

But media usage is changing. Individuals and groups of people have more power now in relationships. Digital social media directly address this and it is a major, major wave of the future.

Just some of us have to tone down the rhetoric.

gianandrea said...

Ah, measurement!! That could solve all of our problems, no matter the company size, the activity you run. But, are we so sure about the measurement of mainstream media and their contribution to the bottom line? Be honest: do you really believe in TV GRPs? Or in Print GRPs? Do you have a tool showing the true contribution of each single dollar spent in advertising to sales?
If you answer yes to all the above questions, you are entitled to ask for a measurement of social media activity.
If you answer no, so why the hell you ask for measurement?
My question is: do you ask to measure to see the real impact on sales or to cover your ass?

Kelly said...

We are a small company (8 employees) utilizing social media instead of 'traditional' (read: expensive) advertising. I'm not sure I have anything new to say here, but I can say it from the perspective of a social media marketer working for a small business. Of course, the constant battle is measurement. Is it working? How do we know if it's working? Why are we, the 2 marketers, investing so much of our time - and what are doing with all that time? And how can we use our time, as a resource, more effectively? And so on, and so on. Though the battle and the questions are sure to continue, I thank stars that at least I work for a company that realizes the benefits of social media!!

Anonymous said...

Hi Mack,
Great discussion thread. The social media hype is actually hurting its adoption. A lot of CMO types tell me that they're having a backlash reaction to the hype, which they say all sounds like a bunch of cool widgets and tech tools -- not much to do w/ business.

For a couple of presentations this week I'm trying to talk about the possibilities and value within four constructs that I hope do make sense:

1. Awareness/attention
2. Perceived brand value
3. Customer preference, relationships
4. Internal efficiencies

Fingers crossed.

Anonymous said...

Steve Woodruff and Mack's follow-up comments nail it.

For larger companies, they still fear a loss of control by embarking on a social media campaign, and even when they have the best intentions, it's hard to get it right. A company's community cares what the people inside have to say- not what the hired gun PR flacks churn out on their behalf.

That's why it's individuals that are always the best examples of social media successes- in companies who aren't afraid to include everyone: their founders, engineers, and front-liners in the discussion.

We can't get enough of Tim Jackson, Gary Vaynerchuk, Jeremiah and Mario, because of who they are. And yes, their brands all benefit tremendously because of their efforts.

But social media isn't a coupon campaign that's easily measured. It's good will, which is difficult to quantify. It's like trying to ascertain an ROI from excellent in-person customer service strategies. Hard to do- you just know that it works, and feedback is about the only metric you can measure effectively.

Jonathan Trenn said...

Actually Jordan, while I agree with the gist of what you just wrote, I disagree with one aspect...and it's why I think that there can be hype.

You mentioned "A company's community cares what the people inside have to say..."

Where I disagree is that I think that most companies don't have communities. They have customer bases. Communities have a feeling of actually being a community. A connection. Sure, technology companies have users who get together in forums, but I'm talking most consumer packaged goods here. The companies that create them don't view their customers as communities.

So they resist to some of the rhetoric that's used. They call it hype. Yes,they're often afraid of giving up control, but its more than that.

Mike Chapman said...

I've used the Presidential campaign to point out that social networking, when used to enhance traditional efforts, can be extremely effective. It's natural for large businesses to be cautious. A Presidential campaign is on a strict deadline. They're more likely to throw something new against the wall to see if it sticks. Dell had to do something, they were in a tough position and they had to act. The new tools will be used. Those who use them sooner and more effectively will gain a competitive advantage and the measurements will eventually follow.

Mack Collier said...

"I think one of the biggest challenges is that most social media efforts are performed in isolation -- that they are not seen as part of an overarching business strategy. Instead they are hived off from the rest of the business and measured according to "traditional" metrics of reach, awareness etc."

Gavin I think this is pretty accurate. SM has to fit with the existing business strategy.

Anonymous said...

I think that there's still several challenges being faced by social media, not the least if which is just what the hell social media is in the first place! From the client side the questions starts with where does it fall within the company? Should it be part of the customer service group or is it part of marketing? How does it get funded and how, if at all, do you measure it?

On the agency side, the challenge is that way too many agencies just jump from tactic to tactic without really trying to figure out how these tools can help our clients create true connections with their audiences. Just look at the tactics that have defined our industry in the past couple of years. A new tactic comes along and, boom, it's the savior of our biz! So we've moved from branded entertainment to WOM to Second Life to now social media and most times we don't really look at how these tactics need to play into the total strategy of the brand experience.

what's also interesting is that these new tools are allowing us to go back to a time long ago, when brands were really all about relationships. Back when the butcher knew who you were and what you liked. And had a relationship with you both in & out of the butcher shop. As they say, everything old is new again.

The answer is that it's probably both over-hyped and under-used today. But, like all new tools, we'll find the balance in the future.

Hope I didn't go on too long!

Mack Collier said...

"The answer is that it's probably both over-hyped and under-used today. But, like all new tools, we'll find the balance in the future."

This might be the most accurate statement in the entire conversation! It is WAY too early in the game to be making knee-jerk proclamations about what SM can or cannot do.

The tools, and our understanding of their potential, will continue to evolve.

Michael said...

Social media has been around long enough now that if it were really effective at creating an ROI there would be case studies available, and I have not found any. Also you can't say well you can't track it, because you CAN track it. Part of social media is linking back to your website, no? So you have GA stats on your conversions. All the social media I have ever seen produces minimal traffic and little or no conversions.

What drives me crazy especially are smaller companies who are getting drawn into social media as the cure all when they haven't even tackled SEO or SEM at all first.

It just seems like a fad. I think people will find in the next couple of years a few companies that have success stories, and the rest of the market saying this isn't working.