How do the most successful companies use social media? By Nora Ganim Barnes

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1 How do the most successful companies use social media? By Nora Ganim Barnes 8 Spring 2010

2 Tweeting blogging and to the top The Center for Marketing Research at the University of Massachusetts Dartmouth, under the direction of researchers Barnes and Mattson, recently conducted a new in-depth and statistically significant study on the usage of social media in fast-growing corporations. This new study revisits the Center s study of Inc. 500 social media usage for the third consecutive year, making it a valuable and rare longitudinal study of corporate use of these new technologies. (For a complete list and executive summaries see The new study compares adoption of social media over the last three years (2007, 2008 and 2009) by the Inc. 500, a list of the fastestgrowing private U.S. companies compiled annually by Inc. magazine. The 2009 Inc. 500 list was released in the September issue of Inc. magazine. In this third iteration, 30 percent (148) of the Inc. 500 participated. The companies include five of the top 10, 12 of the top 25 and 38 of the top 100 companies from the Inc. 500 list. All interviews were conducted with the chief marketing officer or other marketing professional at each company. Questions probed respondents about their familiarity with six prominent social media tools (blogging, podcasting, online video, social networking, message boards and wikis). This included the popular micro blogging service Twitter and other popular social networking sites like Linkedin, Facebook and MySpace. Respondents were also asked about their usage, level of success and their intention to adopt the social media technologies they were not currently using. The latest version of the study also includes new questions on the use of social media tools for recruiting and evaluating employees. marketing research 9

3 Executive Summary Successful companies are adopting social media tools to meet an array of goals including communicating more effectively, monitoring their brands and researching perspective employees. More of them are blogging, tweeting and networking than ever before, and the trend looks like it will continue. Longitudinal data on the Inc. 500 and the Fortune 500 shows social media is fast becoming an integral part of a company s marketing strategy and that the social media tools of choice are shifting. In 2007, the Center s first study of this group and its use of social media was released. It revealed that the Inc. 500 was outpacing the more traditional and larger Fortune 500 companies in its use of social media. (The Center conducts research on many sectors besides the Inc. 500, including the Fortune 500, U.S. colleges and universities and not-for-profit organizations. Where applicable, the data available on the Fortune 500 will be included for comparison purposes.) For example, in 2007 research showed that 8 percent of the Fortune 500 companies were blogging compared to 19 percent of the Inc This difference continued in 2008, with 16 percent of the Fortune 500 blogging vs. 39 percent of the Inc It appears the Inc. 500 s lead in blogging will continue in 2009 with the Inc. 500 now blogging at a rate of 45 percent, vs. 22 percent for the Fortune 500. This research proves once again that social media outlets have penetrated parts of the business world at a tremendous speed. It also indicates that corporate familiarity with and usage of social media within the Inc. 500 has continued to grow in the past 12 months and that social media adoption by the Fortune 500 has been slower. The respondents in this study, as in the first two studies of the Inc. 500, are diverse in industry, size and location. They include five of the top 10, 12 of the top 25 and 38 of the top 100 companies from the Inc. 500 list. The 148 companies that responded were asked the same detailed questions concerning their usage and measurement of social media that were asked of the Inc. 500 approximately one year and two years earlier. Questions probed the familiarity of respondents with six prominent social media (blogging, podcasting, online video, social networking, message boards and wikis). In order to maintain the integrity of all comparisons, all those tools studied in the first two studies were included in this followup research. In 2009, several new tools were added including Twitter, Linkedin, Facebook and MySpace. In addition to questions about current usage, the responding executives were asked about their intention to adopt the social media technologies they were not currently using and about their perceived level of success with tools they were using now. The research question concerning the importance of social media to each responding company s marketing strategy was repeated in this third year of research. The latest version of the study also includes new questions on the use of social media tools for recruiting and evaluating employees as well as for communicating with stakeholders other than customers. More detailed questions about the responding companies corporate blogs and social media policies were also included for the first time. Findings As in the past, respondents were asked to rank their familiarity with each technology from very familiar to very unfamiliar. The social media that was most familiar to the Inc. 500 in all three studies is social networking. As of 2009, 75 percent of respondents claim to be very familiar with social networking tools. In 2007, 42 percent were very familiar with social networking, and 57 percent were very familiar in However, across the board a significant percentage of the companies are very familiar with each of the technologies studied. In the 2007 study, wikis were the least familiar to the Inc. 500, but in 2008 wikis jumped ahead of podcasting in familiarity. In 2009, there is no significant difference between familiarity with message boards, podcasting and wikis. From familiarity, the survey moved into the companies actual usage of social media. The companies were asked in 2007, 2008 and 2009 if they were using the six social media discussed above and, if yes, for how long. While familiarity is related to adoption, even the least familiar tool (podcasting) has 37 percent adoption among the Inc Twenty-one percent of the Fortune 500 companies are using podcasts. Social networking and blogging have enjoyed growth, while the use of message boards, online video, wikis and podcasting has leveled off or declined. There is a similar pattern among the Fortune 500. The addition of Twitter (considered by respondents as both a microblogging site and a social networking site) in the latest study shows that 52 percent of the Inc. 500 are using this tool for their business vs. 35 percent of the Fortune 500 are now tweeting. The social media tools studied are diverse and serve many purposes. Companies reported using these tools for several reasons. They reported that the tools provide the following: Another way to communicate Added value to customers Product/brand awareness Ability to keep up with trends and competitors Demonstration of product A more cost effective and productive form of marketing Those not using any social media tools cited resources or legal restrictions as the most common barriers. A closer look at blogging between both the Inc. 500 and 10 Spring 2010

4 the Fortune 500 shows interesting differences in adoption and use. Forty-five percent of the Inc. 500 have public-facing (available outside the company firewalls, intended for view by the public) blogs in In the previous year, the group reported 39 percent using this tool. It is interesting to note that the No. 1 company on the Inc. 500 list in 2009, Northern Capital Insurance, does not have a public-facing blog. One hundred-eight (22 percent) of the primary corporations listed on the 2009 Fortune 500 have a public-facing corporate blog with a post in the past 12 months. These include three of the top five corporations (Wal-Mart, Chevron and General Electric. Exxon/Mobil and Conoco Philips, do not close). Among the 2008 Fortune 500, 81 companies (16 percent) met the criteria. The top five included General Motors, which was replaced in 2009 by General Electric. (Both have blogs.) In both years, Exxon Mobil and ConocoPhillips did not have a public-facing blog. The end result is a 6 percent increase in public-facing blogs. Three of the top five ranking companies in both years have blogs. The Fortune 500 is blogging at a lower rate than other business groups, specifically the Inc The Inc. 500 list is composed of the fastest-growing private companies in the U.S., while the Fortune 500 is based on total revenue, not growth, and may include public and private companies. Although blogging increased by 6 percent from 2008 in both Inc. 500 and Fortune 500, the latter is still blogging at a much lower rate. It is possible that the difference is related to size of the company, internal structure or corporate philosophy regarding open communication with its stakeholders. Regardless of the motivation, the Fortune 500 companies have been less likely to adopt social media tools. One interesting note, however, is that the Fortune 500 companies that do blog use the tool effectively. A common measure of how engaged a company is with its constituents is whether or not it accepts comments. Some argue that a blog that does not accept comments is not an engagement tool. Eight-five percent of the Inc. 500 with blogs accept comments, and 90 percent of the Fortune 500 with blogs do the same. Both groups demonstrate use of their blogs with frequent and current posts, guest bloggers, CEO blogs etc. In both the Fortune 500 and the Inc. 500, there is a relationship between rank and adoption of blogging. In the Inc. 500, 30 percent of the top 100 blog while 16 percent of the bottom 100 use the tool. Of the top 100 companies on the 2009 Fortune 500 list, 39 percent have a corporate blog. In a pattern that mimics the Inc. 500, 18 percent of the bottom 100 companies are blogging. When asked if they plan to adopt any of the social media technologies that they are not currently using, the Inc. 500 companies clearly intend to continue immersing themselves in these tools. Forty-four percent of those without corporate blogs intend to have one. Twenty-seven percent of respondents that do not currently have a business presence on Twitter plan to move into that space. Even though the use of Social Media Definitions The following definitions (from were used to maintain consistency in interviews: A blog is a type of Web site, usually maintained by an individual with regular entries of commentary, descriptions of events or other material such as graphics or video. Entries are commonly displayed in reverse chronological order. Video blogging is a form of blogging for which the medium is video and is a form of Internet television. Entries often combine embedded video or a video link with supporting text, images and other metadata. A social network service focuses on building and reflecting the social networks or social relations among people (e.g., who share interests and/or activities). Most social network services are Web based and provide means for users to interact over the Internet. A wiki is a Web site that allows the easy creation and editing of information. They are often used to create collaborative Web sites, to power community Web sites, for personal note taking, in corporate intranets and in knowledge management systems. A podcast is a series of digital media files (either audio or video) that are released episodically and downloaded through Web syndication. Twitter is a free social networking and microblogging service that enables its users to send and read messages known as tweets. Tweets are text-based posts of up to 140 characters displayed on the author s profile page and delivered to the author s subscribers who are known as followers. online video appears to have dropped slightly, the intent to adopt it appears strong. When asked if the use of social media has been successful for their business, the overwhelming response is yes. Twitter users report an 82 percent success rate while every other tool studied enjoys at least an 87 percent success level. Measuring success was investigated, and most respondents report using hits, comments, leads or sales as primary indicators. Not only is this widespread adoption being driven by strong familiarity but also by the recognized critical role of social media in a company s future success in today s online world. When queried on the importance of social media, 26 percent of respondents in the Inc. 500 in 2007 felt that social media was very important to their business and marketing strategy. That figure rose to 44 percent in approximately marketing research 11

5 Adoption of blogging % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 39% 45% % 8% 16% 22% Inc. 500 Fortune 500 one year. It remains virtually the same in With the Inc. 500 recognizing the importance of, expanding their familiarity with and increasing their usage of social media, it should come as no surprise that they re also seeking to protect themselves from some of the potential legal pitfalls. In the third iteration of this benchmarking survey, we asked a new question to explore if the respondents had a policy around blogging by employees. Thirty-six percent answered affirmatively in the Inc. 500 group while 22 percent of the Fortune 500 reported having such policies. All respondents were asked if their company monitors its brands or company name in the social media space. Sixtyeight percent reported that they do monitor their products and brands. That number is up from 60 percent in 2008 and 50 percent just two years ago. Clearly, the Inc. 500 companies are becoming more sophisticated in the use of social media both for joining conversations and for listening to them. For the first time in this series of studies on the Inc. 500, executives were asked if their company uses social media tools to communicate with other companies like vendors, suppliers or partners. Again, social networking is the most widely used with 34 percent reporting they employed these tools. Twitter is being used by 26 percent of the Inc. 500 for this purpose. It is interesting to note that one in four Inc. 500 companies considers Twitter an appropriate vehicle for B-to-B communications. This could signal an important change in the popular conception of Twitter and how it is being used. (See chart, page 13.) Another question added to the 2009 study focused on the company s use of search engine and/or social networking tools to recruit and evaluate potential employees. More than half of the Inc. 500 companies are using search engines to assist in the recruitment and evaluation process. Google was the most popular search engine cited by executives. Forty-eight percent indicated using social networking sites such as Facebook, Linkedin and Twitter. Future studies will probably take a closer look at ROI for social media initiatives. It is unclear if businesses are hiring additional people to manage these tools or if the social media efforts have fallen to existing employees in marketing, PR or communications. This has important implications for social media adoption as we move forward. Is Social Media for Every Business? There are times when businesses should think twice about using social media. These include the following circumstances: 1. When you re in a high-ticket business. If only a few clients bring in most of your revenue, the in-person approach is still best. When personal contact is a feasible option it is a preferred method of communications especially among highticket clients. 2. If you are in conflict with your employees. Opening up the lines of communication may work in industries with a motivated and highly technical workforce. It s a potential disaster if employees use that channel to trash management. In a high conflict situation between management and employees, either wait to engage in social media or create a social media policy establishing acceptable boundaries for employee participation. 3. If there is management skepticism. If management doesn t encourage and reward participation, the initiative will fail. Social media can make an organization more transparent, accessible and accountable. Management must be predisposed to moving in that direction. Social media will require some resources as well as some access to management. Without some buy-in from those in charge, the tools cannot be utilized effectively. 4. If there is a strategic vacuum. Social media tools are no good unless you know what to do with them. If you do not have an objective, then you don t know what to measure, which means you have no way to determine success. Social media has to be integrated into the strategic plan of the organization. It must be part of all marketing initiatives (packaging labeling, brochures, newsletters etc.) as well as part of the corporate mentality. All business cards should list URLs for 12 Spring 2010

6 Social media skills % Yes 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 34% Does your company use any of the following social media tools to communicate with other companies like vendors, suppliers, partners, etc? 26% 18% 18% Social networks Twitter Online video/ Blogs Message/ Wikis Other videoblogs bulletin boards (Instant messenger) 14% 9% 1% 500 companies are becoming more sophisticated in the use of social media any company blog, Twitter or Facebook site as well as the corporate Web site. These are tools that need to be used as part of or in support of corporate strategic initiatives. 5. Privacy and regulatory concerns. If you re in an industry where there are legal penalties for what you say in public, you should be careful. In some industries, communications can be limited by ethical or legal considerations. In those cases, companies may opt to use social media in more creative ways. A bank, for instance, may post tips for home buying on its blog or tweet a link to its rates page for loan information. Again, having a social media policy for anyone involved in posting or tweeting is crucial. The Future Social networking continues to lead the way. The technology that continues to be the most familiar to the Inc. 500 is social networking, with 75 percent of respondents in 2009 claiming to be very familiar with it (compared to 57 percent in 2008). Another noteworthy statistic around familiarity is Twitter s amazing share of mind, with 62 percent of executives reported being familiar with it. The adoption curves for different social media technologies are not all the same. Interestingly, while social networking and blogging have enjoyed growth in actual adoption, the use of message boards, online video, wikis and podcasting has leveled off or declined. The addition of Twitter (considered by respondents to be both a microblogging site and a social networking site) in the latest study shows that an amazing 52 percent of the Inc. 500 companies and 35 percent of the Fortune 500 are already using this tool for their businesses. Social media matters and is here to stay. Forty-three percent of the 2009 Inc. 500 reported social media was very important to their business/marketing strategy. And an incredible 91 percent of Inc. 500 companies are using at least one social media tool in 2009 (up from 77 percent in 2008). In addition, as they ramp up their usage, companies are also seeking to protect themselves legally, with 36 percent of the Inc. 500 and 22 percent of the Fortune 500 having implemented a formal policy concerning blogging by their employees. Fortune 500 companies are moving into social media. The continued steady adoption of blogs and the growth of Twitter among Fortune 500 companies demonstrate the growing importance of social media in the business world. These large and leading companies drive the American economy and to a large extent the world economy. Surely a willingness to interact more transparently via these new technologies with stakeholders is a good thing. From familiarity to usage to importance, social media has expanded the most successful U.S. companies. And, for the first time, three-year trends among the Inc. 500 in familiarity, adoption and importance to mission have been documented in a statistically significant longitudinal study. The latest data sheds light on exciting new social media tools like Twitter, new uses of social media like recruitment and hiring and the emergence of social media policies. With almost every responding company using at least one form of these exciting new technologies, social media is clearly here to stay in the business world. The future will be fascinating. The only question is: What will 2010 bring? l Nora Ganim Barnes is a chancellor professor of marketing and director of the Center for Marketing Research at the University of Massachusetts Dartmouth. She may be reached at marketing research 13

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