Social media is big, and it’s growing faster than any technology ever has. A McKinsey survey shows how pioneers can create consumer value from it.
There is no strength in numbers, or so Uriah Heep would have us believe. But certainly, the power of the many helps to get noticed in this noisy world of ours. In the second half of the 20th century, both Christianity and Islam hit the mark of a billion followers. To date, only two national states have breached this barrier: China and India. In all probability, Facebook will be the next community to achieve that feat, with some 900 million monthly active users as of March 2012. Of course, an online social network is neither a church nor a country. But to many of its members, it might be a little bit of both.
Social media is big, and it’s growing faster than any other technology ever has. Broadcast radio took almost 40 years to reach an audience of 50 million, and TV still took more than a decade. Both Twitter and Facebook made it in less than a year (see Exhibit 1 in the PDF), and Pinterest, currently the fastest-growing social media platform, may be the next to join their ranks. Every day, social network users spend more than 10 billion minutes on Facebook, watch 4 billion videos on YouTube, and send 340 million tweets. Day in, day out.
But why should companies care? Because, much like other societies, social media have long transgressed the realm of interpersonal relationships and become a commercial force to be reckoned with. The commercial potential of social media has been substantiated in several real-life cases. For example, using social media has helped generate sales increases of up to 16 percent, improve the efficiency of communication campaigns by up to 80 percent, and cut the cost of product development by up to 50 percent. These are merely a few of the many examples to come showing what social media pioneers have already achieved.
At the same time, social media drive consumer empowerment through heightened levels of corporate accessibility, accountability, and responsiveness. In a recent survey, respondents said that hearing others talking about a company was among the top three reasons for them to buy from them. According to Nielsen’s Global Online Consumer Survey, more than two-thirds of today’s consumers say they trust opinions stated online—second in trustworthiness only to recommendations from people they know in real life.
Online consumer advocacy can make, but it can also break corporate fortunes. If companies do not see to the buzz worthiness of their brands and their offering, consumers will eventually walk away from their stores and their sites, taking their business to the places and players everybody is talking, and posting, about. In a recent case in the telecommunications industry, we have seen constant negative social media buzz nearly match the effects of a costly TV campaign. Of course, social media are neither a substitute for traditional channels, nor should they be construed primarily as a cost-saving device.
What follows provides overwhelming evidence that those who succeed in creating excitement on social platforms and building rapport with their followers will be rewarded in many ways.