Introduction and Key Findings | Consumer Companies Begin Tapping Into the Social Media Mania
If you had asked a chief executive at any global company about social media 10 years ago, you would have likely received puzzled looks. “Social what?” While that may be hard to imagine now, consider that in 2003, Facebook (the current king of public social networking sites in the Western world, with more than 1 billion users today) was a year away from being launched out of Mark Zuckerberg’s Harvard dorm room. LinkedIn (with 225 million members today) had just opened up for business. Twitter (now 550+ million users) wouldn’t appear until 2006, and Google+ (500 million users) did not launch until 2011.
Of course, CEOs are no longer in the dark about social media. In fact, about a third of Fortune 500 CEOs today have their own presence on social media platforms – their own Facebook, Twitter, LinkedIn or another account available for the public to view.1 More importantly, social media has become a serious undertaking in many of these firms.
In the last three years, the majority of large consumer companies have incorporated social media in their strategies and operations. Since 2010, 64% of the companies we surveyed in June and July 2013 (average revenue of $15.6 billion; a median of $4.9 billion) had assigned at least one full-time equivalent to use public social sites such as Facebook, Twitter and LinkedIn regularly to monitor what consumers say, communicate with them and understand their needs. The companies we surveyed will spend an average of about $19 million on social media activities this year and, on average, employ 56 people to plot their social strategy, listen and respond to consumer comments on public sites, and handle other tasks to stay in tune with social media discussions about their brands, products and practices.
That nearly two-thirds of big companies around the world are now fully plugged into social media is no surprise; it has become an important channel to reach consumers. According to researcher eMarketer, the average U.S. adult is now online for an average of more than five hours daily; for the first time, that’s more time than they’ll spend watching TV (about 4½ hours).2
If we analyze the way Americans use social media, we find that as of this May, 72% of American adults who use the Internet were members of social networking sites – a huge increase from the 8% in 2005, according to the Pew Research Center.3 (See Exhibit I-1) Given that 85% of US adults use the Internet, the number of social media users is immense: nearly 150 million.
Exhibit I-1: Since 2010, American Adults Have Flocked to Social Networking Sites
Audiences of this size are forcing large consumer product companies to shift their marketing investments and campaigns to social media and other online media. Procter & Gamble Co. (P&G), the world’s biggest advertiser (spending $9.3 billion on it in its fiscal 2012 year), has marketing investments in social media, online ads and other digital media of 25-35% of its total marketing spending.4
Of course, many consumer companies don’t limit their marketing to adults; they pitch their products to teens and children too. In the US, 81% of the 95% of teenagers who use the Internet also use online social networking sites such as Facebook or MySpace.5 And social media is by no means a U.S. phenomenon. In fact, American social media users comprise only 10% of the 1.7 billion total worldwide (which is one-fourth of the world’s population), according to researcher eMarketer. (See Exhibit I-2) Asia-Pacific is predicted to have more than four times as many social media users by the end of this year as North America – some 777 million people. Up 23% from 2012, the number is predicted to reach 1 billion by 2015.
And the trend in Western, Central and Eastern Europe is no different. In Western Europe (a region that we surveyed), eMarketer projects 174 million social media users by the end of 2013. But it also predicts just as many in Central and Eastern Europe.
Exhibit I-2: Social Networking is a Global Phenomenon (eMarketer)
- 2013 CEO.com Social CEO Report. The study was conducted by CEO.com and Domo. [↩]
- According to an article by S. Ng and S. Vranica, ’P&G Shifts Marketing Dollars to Online, Mobile’, The Wall Street Journal, Aug. 1, 2013. [↩]
- Joanna Brenner and Aaron Smith, ’72% of Online Adults are Social Networking Site Users’. Pew Research Center’s Internet & American Life Project, Aug. 5, 2013, p. 2. [↩]
- Serena Ng and Suzanne Vranica, ‘P&G Shifts Marketing Dollars to Online, Mobile’, The Wall Street Journal, Aug. 1, 2013. [↩]
- Pew Research Center’s Internet & American Life Project 2011 Teen/Parent Survey, July 26-Sept. 30, 20112. [↩]