NEW YORK: Exploiting the potential of social media technologies could ultimately deliver benefits worth more than $1tr a year to brand owners, McKinsey, the consultancy, has predicted.
In a new report, the company estimated that a sum of between $900bn and $1.3tr would be created across the consumer packaged goods, consumer financial services, professional services and advanced manufacturing sectors by leveraging the social tools.
Some $345bn of this total is set to result from changing trends in product development, especially co-creation, and operations, including enhanced forecasting and distribution processes.
A further $500bn was attributed to marketing, sales and after-sales service, due to the tangible gains made in areas from consumer insights to social commerce and customer care.
Business support activities, such as better internal collaboration and "matching talent to tasks" more efficiently, will be worth $230bn. As an example, the use of social platforms rather than email would free up 7% to 8% of the working week in some cases.
McKinsey added that firms with lots of "knowledge workers", relying on strong reputation and recognition scores among consumers, distributing products using digital systems and providing "experiences" or "inspiration" stand to benefit most.
Consumer packaged goods companies meet this description most fully, with individual players having the chance to increase margins by up to 60% through customer engagement and improved productivity.
"Simply shifting advertising and consumer insight budgets to social media will not suffice," McKinsey said. "It has become clear that only well-planned and well-executed programs (often incorporating non-social components such as mass media) will capture the potential value of social technologies."
Around a third of consumer spending could be influenced by "social interactions", equating to $940bn per year in some categories in Europe and the US, according to McKinsey.
A "considerable fraction" of the value provided by social technology adoption is also likely to benefit shoppers as a consequence of lower prices, better products that more closely meet their needs, and new customer service models.
By industry, consumer packaged goods stand to gain at least $212bn per year, hitting $256bn for financial services. Professional services posted $243bn here, with manufacturing on $170bn.
Marketing, sales and customer service are the main "levers" for consumer goods, financial services and manufacturing firms, while improved collaboration was the main driver for professional services firm.
Data sourced from McKinsey Global Institute; additional content by Warc staff