• by Erik Sass , Staff Writer, January 13, 2011

There's no question that social media is the hottest part of the Internet from an advertising and marketing perspective, with companies big and small pinning their hopes on its huge potential for engaging consumers and propagating messages through word-of-mouth. But that doesn't mean they're actually doing it right, as reflected by endemic self-doubt among marketing execs at 2,100 companies surveyed by the Harvard Business Review Analytics Services on behalf of SAS.

The most remarkable finding: just 12% of the companies surveyed believed they were currently effective users of social media, meaning almost nine out of ten respondents relegated themselves to the "ineffective" pile. But this is hardly surprising in light of some other figures from the same study: for example, 75% of the companies surveyed said they didn't know where their customers were talking about them online, while 31% said they don't measure the effectiveness of social media, and just 23% said they are using social media analytics tools.

The implications of the Harvard-SAS study are quite clear: social media, for all the buzz and excitement, is for from having "arrived" in most important sense. Indeed, any discipline in which 69% of practitioners fail to measure the impact of their efforts can only be described as experimental. The real question is: when is it going to leave the experimental phase?

The answer might include more precise, broadly-applied metrics -- at least enough to set a common baseline in terms of measurement, which could then be adopted as an industry-wide best practice. This would follow the example of the digital out-of-home industry, which came together to create a common metric under the auspices of the Out-of-home Video Advertising Bureau (now the Digital Place-based Advertising Association).

This sounds like a tall order, but the alternative is letting this nascent medium stall in its experimental phase.

On that note, the results of the Harvard-SAS report bear a worrying similarity to figures from an earlier survey by KingFishMedia of 457 marketing executives in the second quarter of 2010. While 72% of respondents in the KingFishMedia survey said their company had a social media strategy of some kind, only 30% of respondents said they had executed a social media ad campaign -- and only half of these (15%) had attempted to measure the ROI of their campaigns.

Now, maybe it's too much to expect these figures to rise noticeably in just six months; I realize it's hard enough to actually execute a social media campaign in the first place, and equally challenging to define benchmarks of success in what is (as noted above) a new, emerging discipline. But the measurement outlook needs to improve rapidly over the next year or two if social media advertising spending is going to scale up to a level commensurate with the size of the audience. Otherwise, without a firm handle on ROI marketing execs -- under pressure to account for every penny -- may simply take a "wait and see" approach, drastically slowing social media's revenue growth.