So where do you stand on social media? How often do you Twitter? What’s your Facebook profile like? Are you LinkedIn, on YouTube, or do you blog like crazy? Or are you a cynic, and fail to see how social media can help the bottom line? New research from McKinsey suggests that social media is at last beginning to help companies make money.
Of course, McKinsey doesn’t use the phrase ‘social media’. Instead, as is the wont of consultancies, they call it Web 2.0.
McKinsey says it has observed a new breed of company, which it calls the networked enterprise, and says that by adopting Web 2.0 technologies, these networked enterprises have learnt how to better connect a firm’s employees to customers, partners and suppliers.
McKinsey says: “Results from our analysis of proprietary survey data show that the Web 2.0 use of these companies is significantly improving their reported performance. In fact, our data show that fully networked enterprises are not only more likely to be market leaders or to be gaining market share but also use management practices that lead to margins higher than those of companies using the Web in more limited ways.”
Okay, let’s cut through the corporate talk.
McKinsey says that 63 per cent of companies surveyed said that Web 2.0 usage has led to more effective marketing; 50 per cent say that customer satisfaction has increased; and 45 per cent say marketing costs have reduced.
But the report suggests benefits have occurred throughout organisations: through increasing speed of access to information among staff, partners and suppliers; through reducing communication costs; through reducing travel costs; and through increasing speed of access to external experts.
In fact, the list goes on and on.
But McKinsey is not unique in making such bold claims. Recently, Chris Anderson, author of The Long Tail, and Free, and editor in chief of Wired, said video on the Internet is doing for face to face communication what the invention of the printing press did for communication via the written word.
It is all rather bewildering, of course. Facebook and Twitter are such new technologies, who can really say for sure that they will still be dominant in a few years’ time. But then again, the cost of learning these technologies is not so great that fears they won’t last should not be prohibitive.
But companies wishing to communicate their message are now being forced to stretch further. Podcasts are so very yesterday; now, video is becoming more popular. Presumably 3D video conferencing, and then just plain 3D video, will follow on. There has even been a spate of articles recently on holographic video conferencing. Did you ever see that scene in one of the Star Wars films, in which a number of what George Lucas called Jedi Knights sat around a table having a meeting. In this particular case, however, a couple were not actually present, and instead a holographic image of that individual appeared in the meeting. Well, some of the technology in development will be able to create scenes just like the one Lucas came up with.
What has that got to do with social media? One assumes that future versions of Facebook will incorporate video, even 3D video or holographic images. And don’t write this off as the stuff of science fiction. These types of technologies could be upon us within a few years.
The problem for smaller companies is that there must be this feeling of hopelessness. No sooner have you mastered one new technology, than a new one comes along.
McKinsey found a strong correlation between the use of Web 2.0 by companies, and their market share. But of course, it is equally possible that only companies with large market share can fully afford to embrace the endless possibilities that Web 2.0 seems to provide.
But it would be churlish to deny McKinsey has a point. Of course social media and related technologies are changing business, and of course businesses that are slow to adjust will lose out.
One has to feel sorry for IFAs, in all this. By the time the FSA has finally reacted to social media and issued reasonable guidelines that actually enable IFAs to talk to more than one client at a time, without fearing the FSA will come along and close them down, the technology will have long moved on.
For the McKinsey report, see: The rise of the networked enterprise: Web 2.0 finds its payday
For Chris Anderson and the importance of online video, see Chris Anderson: How web video powers global innovationAnd for holographic technology, see: Holographic videoconferencing moves nearer to market
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