Gartner says half of enterprises are wasting money on social media

Just doing social media is not enough, it must be part of broader plan, analysts say

Getting a positive return on investment from a social media campaign is about more than tracking the number of your Facebook fans and Twitter followers. It's about linking the social strategy to measurable business objectives, according to Gartner, which says most businesses aren't doing this.

A new study released this week from the technology consultancy says that half of Fortune 1000 companies will not receive a worthwhile ROI on their social media strategies this year. The rather basic advice to get more bang for your social media buck: Have a plan, measure its success and make changes if it's not working. "One of the keys is to know what you're trying to accomplish," says Scott Nelson, a Gartner analyst who focuses on social media strategies for enterprises. "Doing social media because everyone else is doing it is not a strategy."

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Nelson says most companies adopt a plan for one of four reasons: to increase revenue, decrease costs, increase satisfaction of customers or employees, or to use it as an extension of brand. No matter the reason for using social media, it must be accompanied with a plan of action linked to metrics that will measure its success. "For the 50% of Fortune 1000 organizations not determining, or even measuring, ROI, ignorance will mean failed projects," says Adam Sarner, research director at Gartner. "Among the companies who will not see a worthwhile return, only 20% will even have the data to evaluate where their social strategy is falling short. These organizations will be unable to justify future funding."

Whereas social media has traditionally been embraced by marketing teams as a way to build company name recognition, there are an increasing variety of use cases emerging. For example, social media strategies are used by sales, customer service and customer support departments for lead generation, cross sales and up sales opportunities, Nelson says. This social customer relationship management (social CRM) industry is growing fast -- Gartner estimates that by the end of the year software licenses and subscriptions will total $2.1 billion, up from $850 million last year. Vendors offering such services include Jive Software, Lithium Technologies and, increasingly, Salesforce.com with its Chatter feature.

Still, Nelson says those social CRM practices should be used to supplement, not supplant existing business processes. "You've got to make it fit with your other products and strategies," he says. A business using social media to drive people to a website should be incorporated with an e-commerce strategy that leads them into a sales deal, he says. Whether these products or others are used by an enterprise, Nelson says the advice is simple: "Have a plan."

Network World staff writer Brandon Butler covers cloud computing and social collaboration. He can be reached at BButler@nww.com and found on Twitter at @BButlerNWW.

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