A concrete method for measuring return on investment for social media remains elusive, but recent research initiatives may be bringing such an answer within range. In one recent study scheduled to appear in a journal titled Information Systems Research, researchers from the University at Buffalo School of Management, Aalto University and Texas A&M University were able to correlate social media engagement with increased purchases for a large specialty firm in the northeast U.S.
According to co-author Ram Bezawada, assistant professor of marketing in the School of Management at the University at Buffalo, “Our results show that when customers engage with a business through social media they contribute about 5.6 percent more to the firm’s bottom line than customers who do not.”
As for techniques, Bezawada echoed some of the basic advice often heard by social media marketers: “When building communities, businesses should craft personalized messages, encourage member contribution, integrate knowledge about customers from both online and offline interactions, and create specialized sub-communities for customers looking for premium and unique products.”
What’s not clear is just how, exactly, social media engagement drives sales (if the relationship is indeed causal): is engagement correlated with increased “brick and mortar” sales? Because based on IBM’s most recent Black Friday report, it would appear that social media’s contribution to e-commerce activity is still pretty small. According to IBM, Facebook was responsible for just 0.68% of traffic referred to leading e-commerce sites this past holiday shopping season. Looking at all e-commerce, the dominant social media players (Facebook, Twitter, LinkedIn, and YouTube) together were responsible for just 0.34% of all online e-commerce referrals.