Some 18 percent of companies have reported negative returns from their social media investments, while 38 percent say they see benefits from such efforts. However, 44 percent do not even have mechanisms in place to measure the impact of social media activities.
According to a survey released Wednesday by Tata Consultancy Services (TCS), respondents in the Asia-Pacific and Latin American regions were more likely to see positive returns on investment (ROI) in this space compared to their peers in North America and Europe. Conducted in June this year, the study looked at how 11 global consumer industry sectors across the four regions were using social media, and polled 655 respondents from companies with average revenue of US$15.6 billion. Social media platforms included Facebook, Twitter, Pinterest, YouTube, LinkedIn, and corporate blogs, and respondents were asked to assess ROI in 16 business functions such as marketing, sales, service, and product innovation.
TCS said businesses will each spend an average of almost US$19 million on social media this year, before increasing this figure to US$24 million by 2015. Respondents involved in marketing and customer service functions actively monitored customers' comments on social media, while those from research and development, manufacturing, and finance did likewise least frequently.
Industries with greater benefits from social media were more likely to sell products and services that consumers were passionate about, namely, media, retail, high-tech, travel-related, and telecommunications.
Some 42 percent of respondents said their company's organizational structure for social media activities were effective, while 51 percent said they would likely reorganize these by end-2014.
Asked what factors contributed to a company's effective use of social media, respondents cited protecting consumer data, adhering to a corporate culture that values consumer opinions, and responding swiftly to customers who voiced issues about the company or its products.
Only 10 percent had organized their social media efforts to significantly improve their business, for instance, in the way they market, sell, provide after-sale customer service, develop new products and services, as well as identify ways to improve their current offerings.
TCS said in the report: "These companies have created one large internal 'social circle' for their social media activities. By this, we mean a central group that collects and analyzes social data, and gets managers from marketing, sales, service, product development, production, finance, and other functions to jointly make sense of the unprecedented and ever-growing amount of daily consumer input that social media now makes available to consumer companies."
Companies that were able to improve viewed social media as a game-changer and that allowed them to transform "from a world of cursory and episodic consumer feedback, to one of broad, deep, and continuous consumer interaction", the Indian IT services vendor explained.
These companies noted that key challenges they faced in leveraging social media were not just about perfecting the use of such tools. They also battled organizational issues and how such activities were structured, as well as cultural issues in which there had to be transparency in the practices, externally and internally, TCS said.
According to the study, 62 percent of companies that invested more, about US$24 million, in social media reported positive ROI, while only 17 percent of respondents that spent less, US$14 million, said likewise. In addition, 81 percent of those that reported positive returns actually measured the impact of their social media investments, compared to just 34 percent of those that reported the least benefits.
Respondents that saw more positive returns were more likely to have corporate blogs, at 81 percent, compared to 51 percent of companies that reported the least benefits. Some 61 percent of those with more positive returns operated a video channel, while just 34 percent among those that experienced the least benefits did likewise.
"Leaders at social media go far beyond creating company pages on public social networks; a majority of them have blogs, online communities for consumers, mobile apps, and company video channels," TCS said, adding that 77 perecnt had mobile apps for consumers who use social media.