Does social media drive brand value?

Spanning all age ranges, economic sectors, and walks of life, social media has easily been one the most talked about subjects of 2010. And few people really get it. How does one measure the “social-ness” of a brand when a new social network arises everyday? Is there even a measurable ROI? We know that social media drives sales growth; sales increase by 18% at companies with the highest levels of social media activity and decrease by 6% at companies with the least social media activity (Source: Erik Qualman, Social Media ROI Socialnomics). But we wanted to see if there was a direct correlation between social media and brand value. We conducted some research using Interbrand’s list of Best Global Brands of 2010. We originally hypothesized that in order to make the top of this annual list, the companies must have a solid grasp on how to best utilize/popularize their social media platforms.

We were so wrong. We ran a regression analysis and it turns out that brand valuation and social media activity are not directly related.  For example, the number 1 best global brand of 2010, Coca Cola, is worth $70,452 million this year and has over 12 million Facebook fans, over 122,000 Twitter followers and over 13,000 YouTube channel subscribers. These numbers are strongly correlated, however the number 2 brand, IBM, looks completely disproportionate. Worth $64,727 million, one would expect a more active social media presence than 13,000 Facebook fans, 11,500 Twitter followers and 1,000 YouTube subscribers. 

Since there is no evident correlation between the level of activity of social media on a brand and the overall success on the brand, is it even worth it? Through our research, we have come to three conclusions. 

• Social media may not be appropriate for all brands. For example, the impact of social media on a B2C company (like Coca Cola) will be vastly different from the impact that it has on a B2B company (like IBM). 
• Social media is not everything and brand need to take a holistic approach to this phenomenon by focusing as well on advertising and communications. 
• Social media is not a push strategy. Brands need to engage in a relevant conversation with their customers because they are the influencers. Ultimately, these will be the people shaping the brand presence.

(Jean-Yves Minet) @acebrandage
Photo courtesy of LA Hall