Getting a sharper picture of social media’s influence
New research shows that buzz plays a greater role
than previously thought in getting consumers to buy and that the pool of the
most effective influencers is largely untapped.
Over the past decade, marketers have increasingly turned to
social-media networks like Facebook and Twitter to create buzz around their
products. But what impact do tweets and other recommendations have on sales,
and how can companies get a bigger return on their investments in these
important channels?
To get a clearer view,
we examined the purchase decisions of 20,000 European consumers, across 30
product areas and more than 100 brands, in 2013 and 2014. Respondents were
asked how significantly social media influenced their decision journeys and
about instances when they themselves recommended products.
We found that the impact of social media on buying
decisions is greater than previously estimated and growing fast, but that its
influence varies significantly across product categories. Moreover, only a
small slice of social influencers are creating the buzz.
A growing importance
Social recommendations
induced an average of 26 percent of purchases across all product categories,
according to our data. That’s substantially higher than the 10 to 15 percent
others have estimated. For the 30 product categories we studied, roughly
two-thirds of the impact was direct; that is, recommendations
played a critical role at the point of purchase. The remaining third was indirect:
social media had an effect at earlier decision-journey touch points—for
example, when a recommendation created initial awareness of a product or
interactions with friends or other influencers helped consumers to compare
product attributes or to evaluate higher-value features. We found that in 2014,
consumers made 10 percent more purchases on the back of social-media
recommendations than they had in 2013.
Nuances are essential
Consumers, we found, access social media to
very different degrees in different product categories. At the low end, only
about 15 percent of our respondents reported using social media in choosing
utility services. For other categories, such as travel, investment services,
and over-the-counter drugs, 40 to 50 percent of consumers looked to social
recommendations.
Product categories tend to have their own
discrete groups of influencers. Our data showed that the overlap of
recommenders between any two consumer categories was very small—a maximum of 15
percent for any two pairs of products we analyzed. Timing matters as well: a
first-time purchaser, for example, is roughly 50 percent more likely to turn to
social media than a repeat buyer.
While the role of digital influence is expanding,
the analog world remains important. Among the more than 100 brands we studied,
about half of the recommendations were made offline—in person or by phone.
Offline conversations were up to 40 percent more likely than digital
interactions to influence purchase decisions of products such as insurance or
utilities.
Power influencers and
the long tail
Our research shows that 10 percent of the
active influencers accounted for 24 percent of the total recommendations,
tweets, “likes,” and so forth (exhibit). These power users are even more
significant for product categories such as shoes and clothing: 5 percent of the
recommenders accounted for 45 percent of the social influence generated. The
upshot is that in most product categories, there’s a substantial long tail of
less active recommenders who could be spurred on to greater engagement.
Navigating in a changing
environment
As companies look to maximize returns from
their social strategies, they can both encourage would-be customers to engage
in more social interactions and inspire more influencers to express enthusiasm
for their products.
On the demand side, our research suggests that
online articles written by journalists prompt consumers to seek out social
media to further inform purchases (and that public-relations spending to
generate such articles may be a worthwhile investment). Consumers who use
search engines to gain some initial knowledge of a product are also more likely
to tune in to social media before a purchase. Companies that spend effectively
on search-engine optimization (to move their product mentions to the top of
search results) can expect to benefit from a greater social-media impact, as
well.
Television
advertising, by contrast, tends to act as a substitute for social media rather
than complementing it. Relatively few customers were prompted to seek out
social influences after viewing a TV spot.
On the supply side, prompting the long tail of
less active influencers may require creativity and a greater use of data
analytics. Our research found, paradoxically, that if companies allowed
endorsements only, they generated a less strong response than companies that
invited any sort of comment. Positive remarks were three times more numerous
than negative ones, and some companies demonstrated that they could turn
negative vibes to their advantage by responding quickly.
Other companies are amplifying positive noise by making the
recommenders’ data “speak.” Through machine learning and the application of
advanced analytics to recommenders’ profiles, they obtain a granular
understanding of product preferences and purchasing behavior. That analysis
becomes a key input into sophisticated recommendation engines that
identify potential customers and send them messages such as
“purchasers like you bought this appliance” at key points along the decision
journey. These engines are highly effective at converting customers, though with an important caveat:
the influence the engines generate can be as much as 75 percent lower if
messages aren’t highly personalized and targeted.
byJacques Bughin
http://www.mckinsey.com/Insights/Marketing_Sales/Getting_a_sharper_picture_of_social_medias_influence?cid=other-eml-alt-mkq-mck-oth-1507
