Loopstatic

The Engagement db Report

The following post was written in response to Dawid Konotey-Ahulu's Social Media and Finance - The new Frontier post

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Hi Dawid

A useful and interesting post.

Like you I believe that social media have the potential to shake up a number of the financial industries if we have the right approach to them. As with all tools it's how you use them that is often more important than the functionality they offer. A hammer can either build or destroy depending on use and context.

I thought I'd share an interesting study that was published a couple of months ago. The 'Engagement db Report' looked at how large companies were using social media and how this might correlate to business growth.

Chart 1: http://bit.ly/UcosL
Shows the degree to which companies are using multiple social tools (x-axis) against the amount of effort and investment they are placing in using those tools (y-axis). So for example Microsoft is using many tools and devoting quite a bit of effort to their use. While Mercedes uses only a few tools and isn't really committed to them.

Chart 2: http://bit.ly/UwfTm
The researched companies can be divided into 4 groups.

• SELECTIVES: Use few social media but devote a reasonable amount of effort to them, 
• WALLFLOWERS: Trying just a few of social media and not really devoting much effort to any,
• BUTTERFLIES: Try an above average number of social media but not devoting much effort to them, and
• MAVENS: Companies currently using a lot of social media and devoting considerable effort to them.

Chart 3: http://bit.ly/FArZM
Shows revenue, gross margin and net margin growth for these companies in the last 12 months. While the whole social media analysis area is still fairly immature and it is often very difficult to establish a causal effect between investment in social media and growth, what this graphic does show is a clear correlation. Companies who invest effort in more social media than their competitors are also seeing greater growth than their competitors.

Now here's the important part for those in the financial industries.

Chart 4: http://bit.ly/NCsFU
13 companies from the financial industries were researched for this report and these are the businesses that have invested least in social media. This could mean that social media is inappropriate for the financial industries. Then again there's a chance that this could just be an underinvested area that offers potential to those willing to stand up and shake up an industry that has been caricatured (wrongly in my opinion) as being conservative and complacent.

If you're interested in the full report it can be downloaded from http://www.engagementdb.com/

Best wishes

Richard
http://twitter.com/richardsedley