Does social media really correlate with the bottom line?

A recent study has found that revenue, gross margins and profits correlate nicely with companies that are the most engaged with social media. Should you build a portfolio around these highly engaged social media friendly brands? Probably not.

A report by Charlene Li of the Altimeter Group and Wetpaint rank the top 100 brands by social media engagement. The big takeaway from  the report

Companies that are both deeply and widely engaged in social media surpass their peers in terms of both revenue and profit performance by a significant difference

Sounds plausible right? The report divides the top brands into four categories: Mavens, which use seven or more social media channels; butterflies, which use many channels with less engagement; selectives, which use six or fewer channels with higher than average engagement; and wallflowers, which use fewer channels and don’t engage much.

It’s easy to buy this case. There is some ROI to social media, but it’s harder to quantify. The run to the bottom line isn’t a straight line. Nevertheless, the report’s findings make sense—more engaged companies have more touch points right?

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