In the wake of Starbucks (NASDAQ: SBUX) stronger-than-expected earnings, I found an interesting article about a study published by wiki provider Wetpaint and the Altimeter Group. The study suggests that when a company/brand is more active with its consumers through social media (the likes of Facebook and Twitter), it is more likely that the company will have financial success. The study looked at a group of 100 companies from BusinessWeek's listing of the top 100 brands of 2008 and their activity on Facebook, Twitter, and the likes.
According to the study, the brands scoring the highest on the engagement scale saw 18% revenue growth in the past year. Those brands with the least engagement saw revenue decline 6%. Companies that were the most active were classified as "mavens," while the least active were called "wallflowers."
The top 10 mavens have seen recent financial success, despite the current economic crisis. Here are your top 10 mavens in order: Starbucks, Dell (NASDAQ: DELL), eBay (NASDAQ: EBAY), Google (NASDAQ: GOOG), Microsoft (NASDAQ: MSFT), Thomson Reuters (NYSE: TRI), Nike (NYSE: NKE), Amazon (NASDAQ: AMZN), SAP (NYSE: SAP), and a tie between Yahoo! (NASDAQ: YHOO) and Intel (NASDAQ: INTC) for the 10th place.
I find the study interesting, as it shows that companies that value communication with their customers seem to have the most success. My problem with assuming that use of Twitter or Facebook will lead to profits is the inclusion of Nike on the top 10 list (following its disappointing earnings), along with McDonald's (NYSE: MCD) being qualified as a "wallflower." MCD is a very successful company that has yet to harness the power of social networking, and I am sure there are plenty of other companies in this situation. However, it stands to note that there is tremendous power in social networking, and it can lead to profits.
Will the use of Twitter or Facebook guarantee success? Not necessarily, but any little bit can help in the current economic environment.
Closing Bell: Economic Catapult for Thanksgiving & Black Friday (WMT, TGT, GRMN, GOOG, MSFT)
Deere up on Q4 earnings performance
Reid Hoffman: LinkedIn will go public (at some point)
Reader Comments (Page 1 of 1)
7-23-2009 @ 1:02PM
SK said...
i believe the study also said that the result points the other way around and not the way this blog seems: strong brands tend to leverage all availalable avenue to build relationship with their customers. using FB, Twitter etc is only an extension of their continued effort to engage with customers.
9-19-2009 @ 2:23PM
simon said...
If people like brands they will shout about them, its that simple, even without social networks, people talk (in the real world) about how great a product is.
Social networks by themselves will not make people love your product or brand.