Does using social media really lead to higher margins?

10 January 2011

According to the latest survey research from the McKinsey Global Institute, it does. Of course, this is fantastic news for all those – including myself – who have spent the last few years evangelising the application of web 2.0 technologies in the workplace. Cue tweets and blog posts regurgitating same.

But before you join their throng, take a closer look at the data and methodology – not to mention the comments, which reveal a number of caveats – and you’ll see that the reality doesn’t quite live up to the hype.

  1. All the data is self-reported rather than empirical and therefore subject to over- or under-estimation by respondents, some of whom are no doubt evangelists for these technologies in their own organisations.
  2. The correlation coefficients are very low and don’t isolate the impact of web 2.0 technologies to show that they are the cause of any business performance indicator improvements.
  3. Only ‘market share gains’ have a moderate correlation and high statistical significance, and this metric is often estimated and may not even be relevant to many organisations.
  4. The correlations of variables associated with operating margin are actually very low.

So ultimately, this is a pretty inconclusive study and to claim that ‘Web 2.0 finds its payday’ seems a little misleading. It may further the debate, but it by no means resolves it as many social media proponents are suggesting.

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One Response to “Does using social media really lead to higher margins?”

  1. Tweets that mention Collective Conversation » Marketing Technology » Blog Archive » Does using social media really lead to higher margins? -- Topsy.com

    [...] This post was mentioned on Twitter by Niall Cook. Niall Cook said: Does using social media really lead to higher margins as #mckinsey research suggests? [blog post] http://t.co/PIUSO5E [...]

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