For those marketing and promoting their businesses on social media, it came as a surprise when Eric Schmidt, senior manager of marketing strategy and insights at Coca-Cola, told AdAge magazine in March 2013 that there was no “statistically significant relationship between our [social media] buzz and short-term sales.” But is that accurate for every business — or even Coca-Cola?
Coca-Cola has been on the vanguard of using social media to drive sales; it created a Facebook Page in December of 2008 (almost a full month before rival brand Pepsi) and to date has 62 million fans and growing. It joined Twitter in March 2009, and has cultivated an active presence on Tumblr, Pintrest, MySpace, YouTube, and Instagram. But according to Mr. Schmidt, all that social media engagement has directly affected sales by only 0.01 percent.
Has the entire commercial mechanism been hoodwinked into believing in social media’s sales effectiveness? In our interviews with the following industry professionals, we discover that social media actually is an effective tool in the sales process, but there is a lot more to it than initially meets the eye.
Social Media and the Indirect, Soft Sell
In a response piece to Mr. Schmidt’s AdAge interview, Wendy Clark, senior vice-president of integrated marketing communications and capabilities at Coca-Cola, acknowledged that Mr. Schmidt’s data about social media directly leading to sales was, “when taken in isolation…true.”
But she also shared that social media is an important part of Coca-Cola’s sales strategy, albeit indirectly. It’s effective within the context of creating engagement and impact, not direct, hard sales. According to Ms. Clark, social media, when combined with other sales strategies — like blogging, TV, and digital ads — plays a “crucial role at the heart of our activations that create marketplace impact, consumer engagement, brand love and brand value.”
The experience of other sales professionals, even those who don’t have Coca-Cola’s breadth and depth of resources, validates the research and the impact of the indirect sale. For example, a recent research study conducted by Aalto University, Texas A&M University, and the University at Buffalo, found that customers who are engaged on a company’s social media platform contribute 5.6 percent more revenue than customers who aren’t socially engaged with the company.