When McKinsey announces breakthrough research, companies tend to listen. So when the respected management consultancy last week headlined a report with: 'Web 2.0 finds its pay day', a new item appeared on the agenda at board meetings up and down the country.
For all the hype around Facebook, Twitter and blogging in general, selling it to the boardroom has been difficult for marketers seeking to invest in a social-media strategy, because ROI has been difficult to prove thus far.
The central claim of the McKinsey report is that companies engaging with Web 2.0 technologies are enjoying greater market share and higher margins than those that are not.
The authors, Jacques Bughin and Michael Chui, claim to have identified the rise of a new type of company - 'the networked enterprise'.
This is a business that uses social media such as Twitter and LinkedIn to communicate with customers. It also enables the sharing of information internally.
The report found that 27% of the 3249 respondents' companies reported having both market-share gains against their competitors and higher profit margins. McKinsey calculated that 'highly networked enterprises' are likely to fall into this category.
Crucially, McKinsey found that the 40% of companies that are 'networked' perform better than those that are not.
This raises two key questions. First, why is it still a minority approach, and second, how can companies become 'networked'?
Strategic credibility
John Allert, group head of brand at McLaren, welcomes the fact that the report has, for many, made an ROI case for social media.
The sports-car brand is ahead of the curve when it comes to the platform, but Allert warns that it can be too simplistic to see social media as something brands should just 'do'.
'There are few brands that think they cannot embrace this form of marketing, but it's not about whether you do it or not: it's about how credible your social media activity is,' he adds.
Dell is one company to have proved that social media can make money. The consumer electronics brand claims to have accrued $6.5m (£4m) through Twitter sales alone.
Yet Dell and McLaren, which has led the way in its sector when it comes to connecting with customers, are in the minority. For the majority of companies still figuring out what to do, McKinsey has devised some guidelines for businesses to follow if they want to become 'networked' (see box).
Beyond these basic steps, brands must concentrate on how social media can work for them in the long term, says Andrew Morley, vice-president EMARA marketing at Motorola.
He stresses that social media should not be considered as an ad hoc piece of marketing activity, but 'CRM for the millennia'. 'Social media is not new, or a fad. It's form may change, but it isn't going away.'
McKinsey's report also has an eye on the long-term benefits for companies using social media. It asserts that 'networked organisations' gain from a 'multiplicative effect' - the more they network, the more successful they become. The authors say this is because, as well as being highly networked, the businesses can be deemed 'learning organisations', and the more they learn, the better they perform.
Matthias Metternich, commercial development at digital agency Poke, is one of several experts sceptical about the report. 'We have passed the point of any single research paper having any significant motivating consequence on digital marketers' behaviour,' he argues.
McKinsey's findings could, however, be enough to convince board members to take the path so far chosen only by the few.
Meanwhile, those who continue to ignore social media's potential benefits to brands may find that this time next year, when McKinsey publishes its fifth annual study on the topic, they have fallen even further behind their networked counterparts. RECOMMENDATIONS
McKinsey recommends four steps for business leaders to take to create a 'networked enterprise':
- Integrate the use of Web 2.0 into employees' day-to-day activities.
- Continue to drive adoption and use. Respondents with the lowest levels of connectivity also reported the lowest levels of business success.
- Break down internal barriers. Networked organisations with free-flowing information enable employees lower in the hierarchy to make decisions. This structure is more conducive to market gains.
- Use social media and technology to interact with customers, business partners and employees. This approach is also linked to market gains.