Facebook was founded in 2004, Twitter in 2006, Instagram 2010, Snapchat 2011, and TikTok in 2016. As these social networks have risen, a graveyard of failed businesses trailed behind them, Friendster, MySpace, Vine, and so many more. The most important question for businesses that incorporate social media — albeit the natural rise and fall of a particular platform’s dominance is: Does social media really improve the bottom line?
Short Answer: Yes. Undoubtedly.
To understand the connection between social following and revenue, ZoomInfo queried our database of over 14 million businesses to identify companies with above-average revenue, relative to their industry, and looked at their Twitter & Facebook followers. We then grouped this data by company size to understand how much of an impact social media following has, depending on business size.
The results of the data are astoundingly clear. On average, 30% of companies with higher revenue than their peers also have larger social media followings on Facebook and Twitter.
It appears that the connection of social media following to revenue varies significantly between small, mid-size, and large companies.
The Debate: Is Social Media Lead Gen or Brand Building or Both?
Many marketers look at social as a lead generative channel in which a business shares a piece of content that leads someone back to their site to purchase whatever they’re hocking.
The problem? Despite modern social media companies being around since 2006, a 2018 study by Sprout Social found that the top three challenges for social media marketers were:
- Measuring ROI
- Understanding Cross-Channel Social Success
- Developing a Strategy to Support Business goals
Basically, the top three concerns hit on, “Does social media improve the bottom line?”
Even with over 5,000 marketing tools available, measuring the ROI of social media in a traditional click-to-purchase remains to be an issue. At a high-level, our research shows a strong correlation between social following and revenue. So, what’s going on here?
As companies scale, the role of social media changes. For small businesses, social media is likely lead generation-focused. The thing is, these companies lack the tools to measure ROI. When it comes to large businesses, however, they have the tools to measure ROI, but the social content is so broad, so varied, that it becomes difficult to capture the total impact.
Small Business: More Followers, More Revenue
Businesses with smaller social followings are more likely to see an impact on revenue when social is used primarily as a lead generating tool. For companies with 11–50 employees, the 40% correlation between social following and revenue is a good indication of social’s early importance in driving revenue.
The issue is as companies scale, the connection between social and revenue drops. When a company is between 200–500, there is only an 18% correlation (still significant but less than half of what it is for small businesses).
So what gives? Why is social less important for mid-sized companies?
More Employees, More “Toss it up on Social”
One issue: content can be all over the place. Anyone working in social will be familiar with this feeling:
Every aspect of the company is emphasized on social media, from lead generation campaigns to posting for new hires to funny Twitter wars with other brands to system outages updates.
“Throw it up on social” becomes part of a marketer’s process, and this is where social begins to be less tied to revenue.
Companies Scale and Social Gets its Groove Back
As companies reach over 5,000 employees, the connection between revenue reaches over 35%. At this size, social takes on a different lens in which it’s less about directly attributable revenue and more about using social media as a way to showcase brand values. Take this tweet from Charles Etoroma, the social media manager for Goop.
In this sense, social media is about articulating the brand’s culture, what it stands for, and how it innovates.
As a company gets larger, being seen as innovative, having a strong culture and articulating what you stand for can help businesses attract the best talent, build strong partnerships with other brands, and of course, reach new audiences.
The following a company amasses on social brings with it the propensity for increased revenue — true statement.
What’s more interesting, however, is that company size plays a role in the importance of social followings and that for mid-sized companies, that importance is somewhat diminished.