Going digital boosts brands

21 December 2010

NEW YORK: Brand owners embracing the opportunities afforded by digital platforms like social networks are enjoying benefits covering everything from revenue levels to customer retention, McKinsey has argued.

The consultancy surveyed 3,249 executives, and found two-thirds of firms now use at least one form of Web 2.0 service, while 40% are active on social networks and 38% run corporate blogs.

Nearly two-thirds of contributors currently engaged in social media plan to boost their investment going forward, and could experience tangible advantages as a result.

"The Web 2.0 use of these companies is significantly improving their reported performance," McKinsey said.

"Fully networked enterprises are not only more likely to be market leaders or to be gaining market share but also use management practices that lead to margins higher than those of companies using the web in more limited ways."

Some 63% of panellists said emerging technologies had yielded greater marketing effectiveness, providing median growth of 20% for awareness, 15% for consideration and 10% for both conversation and loyalty.

Another 50% cited enhanced customer satisfaction, with the average uptick hitting 18%, figures reaching 45% and 15% in turn for reducing marketing costs, and 35% and 10% when it came to cutting support expenses.

A quarter of participants agreed they were able to bring goods to market more quickly and increase the number of successful launches, recording typical improvements of 20% and 15% respectively.

Elsewhere, 24% of firms using consumer-facing Web 2.0 techniques said revenues had risen.

This is 10% higher than the average.

Businesses primarily connecting with staff and partners in this way also posted double-digit leaps in sales, McKinsey revealed.

The main payback from introducing such strategies in-house or to engage third-parties included faster access to knowledge and expertise, lower communications costs and increased satisfaction.

At present, 61% of the sample tasked information technology departments with coordinating internal efforts, compared with an even split between marketing, IT and business development when dealing with suppliers.

However, 74% of those polled stated marketing teams assumed control if schemes targeted consumers.

Overall, the 79% of companies "developing" their approach had witnessed a 5% expansion across key metrics relating to employees, customers and affiliates.

Among the 13% of "internally networked organisations" mostly using Web 2.0 in-house, the strongest surge, of 19%, was for measures applicable to staff.

The 5% of "externally networked organisations" engaging shoppers through these initiatives had observed a 19% lift concerning vital performance indicators in this area.

An elite cohort of "fully networked enterprises" - just 3% of firms - interact with employees, consumers and business partners in this fashion, with scores rising by 31%, 24% and 27% respectively.

In all, 62% of customers for "fully networked" operators utilise these properties, standing at 59% regarding their "externally networked" peers.

As half of the potential audience for "internally networked" corporations regularly visit such services, as do 31% for the "developing" group, certain firms may be neglecting an essential point of contact.

In total, 27% of companies in the survey boasted bigger margins than the norm and were stealing share from rivals, with "highly networked enterprises" being 50% more likely to fit this profile.

"This finding suggests that the fully networked enterprise could become the benchmark for more vigorous competition in many industries," McKinsey said.

Data sourced from McKinsey; additional content by Warc staff