So, here’s the big one, does spending on social media really pay back? A fresh MBA graduate from MIT, Niki Gomez, passing through London and We Are Social on her way to Mumbai, gives her views.

At last, a study quantifies what many of us felt must be true, that social media does translate into increased sales. As Violette mentioned last week, a study by Wetpaint and Charlene Li’s Altimeter Group shows an extremely strong correlation between engaging in different social media and earning higher revenues. The study looks at the engagement of top 100 brands from the 2008 BusinessWeek/Interbrand Best Global Brands report and ranks them from 1 to 127, based on how they use social media channels. It finds that the top brands with their rankings in brackets are:

1. Starbucks (127)
2. Dell (123)
3. eBay (115)
4. Google (105)
5. Microsoft (103)
6. Thomson Reuters (101)
7. Nike (100)
8. Amazon (88)
9. SAP (86)
10. Tie – Yahoo!/Intel (85)

The most engaged brands experienced revenue growth in 2008 of 18% whilst the least engaged brands experienced losses of negative 6% over the same period.

Also interesting is that only arguably half of these are internet companies. The study categorizes the brands, a la Malcolm Gladwell, into mavens, those heavily engaging in 7 or more channels, such as Starbucks and Dell; butterflies, such as American Express and Hyundai who engage with seven channels but with less engagement; selectives who engage in six or less but do some on a deep level such as H&M and Philips; wallflowers like BP and McDonalds who engage with six or less but with a light touch. My question was whether social media pays off because of lower marketing spend, as there is a shift from spending on more traditional channels. However it seems, revenues, actual sales are up on previous years, even boom times!

Their findings conclude that it is not how many social media channels you use, but how deep that engagement is: so being social pays, but it’s the quality rather than quantity of these conversations that seems to triumph yet again. So, please think before you tweet… a good piece of advice for brands and individuals alike.

Twitter is on every lips at the moment: tales of towering growth battle with news of celebs twittering the night away while the rest of the world learns about worldwide events on their Tweetdeck.

So it’s not a very big surprise that the latest marketing campaigns all use Twitter: yesterday Andrew McCormick of Revolution Magazine mentioned the creative WB Harry Potter Twitter campaign, while US TV show Dollhouse has decided to promote the release of the series on DVD with “Twitter-enriched banners”.

It’s no wonder that entertainment brands are particularly active (and successful) on this front. Entertainment is by essence a very social activity, a powerful way to identify and connect with your peers. So when your key-target happens to be Gen Y or early-adopters who are more than likely to be thirsty for any kind of additional experience then the path is wide open to experiment with all sorts of social media tools and engage with followers. Interestingly enough they’re called fans and not customers.

TV shows and bands have been very active on that front, leading the community activation with Twitter character profiles, blogs, forums, online and offline games including ARGs (only last week fans of Muse managed to get the band’s ARG to the sixth most popular trends on Twitter). And when expectations are not met, the backlash can be pretty strong, with rumours claiming that Brüno is facing a box-office drowning due to calamitous Twitter reviews (Update: also see what effect Twitter had on Inglourious Basterds).

Social media activation by the entertainment industry acts as a magnifying glass of what’s happening elsewhere: there are lots of other brands out there, they don’t necessarily connect with their customers by creating a convoluted ARG but they engage daily with their customers, just as we do for Skype.

Charlene Li has just released her ENGAGEMENTdb report which analyses the engagement of company in social media and correlates it to financial performance. Some of the findings are very interesting, especially when analysing the scores by industry. Of course there are some justified reservations (Patricio Robles has voiced most of them). However what I would like to keep from this report is that no matter what solution is chosen, companies have to find the mix of social media that works for them.

Best pratices and reports can give an idea of what’s happening out there, set benchmarks and reassure shareholders, but in the end customers are out there, waiting to be talked to in a human way which will both improve their customer experience and with which they can identify (and not simply for financial reasons). So go out there and try it, you’ll see social media is not that scary

If my post on the purchase funnel and the consumer decision journey was a little too academic for you, then meet Dave, and follow his idealised journey from initial consideration to becoming an advocate:

With all the talk of teenagers’ online habits in the news, we got our most knowledgeable man in to blog on the matter. 17 year old Adam Bernstein is an A-level student currently on work experience with We Are Social, and here are his thoughts.

It’s been the buzz of the social media sphere this week: how Matthew Robson, a 15 year-old intern at Morgan Stanley, had written a report which had shocked and dazzled city bosses in equal measure.

The trouble is, as another teenager – admittedly a slightly older one – Robson’s arguments do not hold true. There is much value in Robson’s report – it does provide an interesting insight into how one particular teenager consumes media. But there is a danger in taking isolated examples and extrapolating them to be indicative of society.

Robson’s report is supposed to be focussed on the teen market, yet too often he ignores important economic & social factors. For example, the argument that teenagers don’t buy newspapers because they’re too expensive is an interesting one. But this argument is based on one assumption which underscores Robson’s entire report: teenagers are independent of their parents. But this simply isn’t the case – most people I know who do read a newspaper read it because it’s in the house. Teenagers probably wouldn’t pay 80p a day for a newspaper but it’s not an issue because in many cases they don’t have to.

If Robson wanted to know the real reason teenagers don’t read newspapers, it is more about content. Teenagers will consistently have their lifestyle treated with derision in the papers; but how often will a viable alternative be offered? With the continual damning of teens in the papers, it’s no wonder teenagers don’t read them.

But it was Robson’s claims about Twitter which were the most ignorant: “Twitter is pointless to teens” screamed the headlines. It’s true to say that teens (on the whole) don’t use Twitter but his fixation on the costs of texting missed a crucial point: only 5% of Tweets are made via SMS – the success of applications such as Tweetdeck and Twitterfox show how it is really used.

The reality is that teens don’t use Twitter because of demographics: to make a broad – and somewhat unfair – generalisation, teenagers use Facebook, whereas Twitter is used by older people. Essentially, teens follow other teens so it’s inevitable that most of the age-group stays away from Twitter. Twitter’s relevance to the younger market is diminished because many perceive a ‘tweet’ as being the same as a Facebook Status Update – they don’t see the need for both.

Robson’s report is useful for the many truths it does contain: Teenagers doing all they can to avoid advertising is an important point which the ad companies will be trying hard to counteract. But Robson’s suggestion that teenagers are motivated above all by cost is a spurious one: teenage consumption of media probably does have something to do with money; but most teens don’t have a full-time job, many are in full-time education and are supported by their parents – it is they who pay for everything so his argument that costs are the most important thing to teens is wrong.

But, as Suw Charman-Anderson notes, the main problem with Robson’s report is that he thinks his experiences are emblematic of teenagers as a whole. The reality is that there is much greater diversity in the teen market than Robson suggests. Teenagers are an eclectic bunch – and Robson would do well to remember this.

Update: I’ve just come across an interesting report by Forrester about this exact topic (for those interested in US rather than UK data, there’s also a good presentation from the Pew Internet & American Life Project and Nielsen’s recent How Teens Use Media report). Robson’s argument that all teenagers are always listening to music, particularly free online music, is kicked into touch:

With its findings suggesting socio-economic factors are unimportant in how teenagers consume media, Robson’s arguments that costs are the primary factor in deciding what teens do is shown to be false.

But what is most interesting for companies is that teenagers are using social media for the same reasons as the population as a whole. Possibly this means they don’t need tailored advertising; more probably, it means that in time teenagers will drift over to Twitter – Facebook was originally intended for Harvard University students yet is now used worldwide.

Having said all of this, the accuracy of the report does have to be considered – speaking to 261 13-19 year olds and making assumptions that this data covers society as a whole is questionable. But at least it’s more accurate than Robson’s report which was simply the findings of one person.

Update 2: Dubit have also added some stats into the mix with their How UK Youth Really Consume Media Report: Newspapers & Magazines and Twitter

Nielsen’s latest Global Online Consumer Survey confirms that people trust other people more than they trust advertising. As Jonathan Carson explains on the Nielsen blog:

The explosion in Consumer Generated Media over the last couple of years means consumers’ reliance on word of mouth in the decision-making process, either from people they know or online consumers they don’t, has increased significantly.

It’s not surprising that people trust the opinions of people they already know – it’s why word of mouth marketing is so powerful. But as the graph below shows, the trust in online word of mouth is significant. Globally, 70% of people trust consumer opinions posted online, and the same proportion trust a brand’s own website.

Good news for those who are investing in websites? Well, when you consider the ways that sites often try to drive traffic, you’ll notice these types of activity appear very low down the list.

It’s quite striking that online word of mouth acheives much higher trust than all other online-specifc activity. Opt-in emails (also known as ‘bacn’) are only trusted by just over half of us, and only one third of people trusting online banner advertising – though average click-through rates (0.1% in the US according to Doubleclick) indicate how successful they are at delivering people to their intended destination.

We’ve been building websites that allow consumer opinions to be posted (also known as blogs!) for some of our clients, as well as helping to increase online conversations about them, so we’re pleased to see even more evidence from Nielsen that this is a valuable thing to do.

Following on from our Best Buy social media case study back in May, I thought it worth looking at what the FMCG giant Coca-Cola are up to in social media.

Last month in Cannes, Jonathan Mildenhall, Coca-Cola’s VP of global advertising strategy, admitted the multi-national corporation had been slow to embrace social media and historically, they did make some mistakes. However, if you scratch the surface a little, they’re doing some interesting things.

In April they created a new office of digital communications and social media within its public affairs and communications department, giving Adam Brown, digital communications director, and Anne Carelli, digital communications manager, oversight of corporate digital and social media communications efforts.

It’s worth watching Adam speak about Coca-Cola’s social media strategy at the recent BlogWell New York conference (start 50 secs in):

You can also see Adam’s slides here.

Coca-Cola Conversations is the blog Adam mentions, check out the Coca-Cola Facebook page, and for a UK perspective it’s worth looking at this article about ‘Let’s get together’ and the Coke Zone blog.

Of course, there’s also the famous story of the Coca-Cola Facebook page:

Update: Adam has kindly tweeted me to point out that Coke are on Twitter too. I especially like the fact that they’re being very conversational, even with their arch-rivals Pepsi:

Update 2: Coke’s new social media policy

Update 3: Coca-Cola and social media: Fans first

Update 4: Coca-Cola builds new social media model

Update 5: Coca-Cola’s marketing shifts from impressions to expressions

Clay Shirky at the recent TED@State conference:

In a world where media is global, social, ubiquitous and cheap. In a world of media where the former audience are now increasingly full participants. In that world, media is less and less often about crafting a single message to be consumed by individuals and is more and more often a way of creating an environment for convening and supporting groups. And the choice we face, and I mean anybody who has a message they want to have heard anywhere in the world, isn’t whether that’s the media environment we want to operate in – that’s the media environment we’ve got. The question we all face now is how do we make the best use of this medium, even though it means changing the way we’ve always done it.

Last Wednesday we hosted our second MeasurementCamp. It was very much a last-minute affair – we stepped in to host it after an appeal on Twitter the day before. Given the late arrangement it was a smaller crowd than usual, but at the same time it was intimate and very much like the first few MeasurementCamps – with fewer people we were able to hold it as a single discussion session.

I presented a case study on our recent Dunlop campaign, with a measurement-focused angle. The key learning was what we ended up measuring was different from the KPIs we had agreed at the start, owing to a change in circumstances – and that raw numbers don’t tell the whole story. For example, the audience for our Twitter activity in setting the record straight was in the tens of thousands, far less than the total audience for the blogs, but it was important to target them as they were in a chatty, lively community where misinformation has the potential to spread quickly.

We then had a breakout session where we talked about specific metrics, and how best to classify them. There was a consensus that different campaigns and clients need different metrics, but the question was raised of how to select them.

So we thought publishing this framework might be useful. The first classification – ‘traditional’ v. ‘social’ is relatively easy to make, but even then a ‘social’ metric varies from viewing a YouTube video to blogging about it. We then rate the metrics in terms of both engagement (how much effort a user puts in to an activity) and longevity (how long the effect of that activity it lasts):

Out of this you can start seeing how one might go about selecting the right metrics to best reflect the difference your work can make. If you are working on instant incidental awareness or viral spread, you can focus towards the bottom left, and if you’d push for a longer relationship-focused then you’d go for the top right where the numbers are smaller but the time and dedication greater. Of course, there is a lot of extra context that fits around this – sentiment, enthusiasm, trust, and existing relationships, which numbers alone cannot account for – but still we hope it helps frame better the different metrics out there and their relevance to your work.

Advertising Age, the 79 year-old journal of record for the US advertising industry, is perhaps not the institution you’d expect to be running the undisputed chart of the world’s top advertising and marketing blogs.

Called the Ad Age Power 150, it actually consists of over 1000 blogs, with a robust methodology and rather strict entry criteria. One of the criteria is that your blog has been running for over six months, so although its seems longer since we first posted here, we only became eligible last month – but we’re pleased to say that when we did, we went straight into the top 150.

The observant among you will have spotted the orange crest that appeared a few weeks ago underneath our Flickr stream over there on the right, where you can see our position in the charts updated daily.

We’re also very proud that we’ve also entered the list of the UK’s top marketing blogs, which is based on Ad Age’s data, at no. 11.

In both instances, we’re delighted to be in such great company…

Update: We’ve also entered the Ad Age Power 150 European top 100 blog ranking in 19th place, and the Plannersphere Top 20 in 5th place.