Perspective

Christopher Vollmer Karen Premo

From Campaigns to Capabilities The Impact of Social Media on Marketing and Beyond

Contact Information New York Christopher Vollmer Partner +1-212-551-6794 christopher.vollmer@booz.com Karen Premo Principal +1-212-551-6683 karen.premo@booz.com

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EXECUTIVE SUMMARY

Booz & Company and Buddy Media, the social enterprise software leader, teamed up in 2011 to identify the capabilities that companies need to excel in social media. This study, Campaigns to Capabilities: Social Media and Marketing 2011, incorporated a quantitative survey of 117 leading companies and a series of in-depth interviews with senior executives from across the marketing and media ecosystem. The study focused on how leading companies are transforming their strategies, skills, and processes to enable social media to play an expanding role in their marketing efforts and in their enterprises as a whole. Unlike much of the research to date, which has focused on the tactics that companies are pursuing in social media, the Booz & Company/Buddy Media study concentrated exclusively on the capability priorities associated with social media, and the focused actions companies need to take as their social and digital media activities increase in scale. As more companies refine their use of social media, it will dramatically transform how they connect their brands with consumers, and how they define and build their marketing capabilities.

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BURBERRY: A SOCIAL MEDIA SUCCESS STORY

creativity that ensures its designs are timeless, yet contemporary. Now there is a new defining element to Burberrys success: the creation and distribution of branded digital and social media experiences. Just look at how dramatically Burberry has reimagined its fashion showsonce elite, exclusive, and effectively off-limits to the brands many fansfor the era of social media. In 2011, Burberry streamed a live video feed of its spring/summer and fall/winter shows, distributing its content directly to fans on Facebook (10.7 million as of February 2012) and to video viewers on Googles YouTube (11.0 million unique video

Burberry Group has a rich heritage that would make many companies envious. Founded 156 years ago, this global purveyor of luxury apparel has long been defined by an overt Britishness, a trio of instantly recognizable icons (the trench coat, the trademark check, and the Prorsum knight logo), and a deft

views and about 30,000 subscribers as of February 2012). Partnering with Twitter, Burberry also created the Tweetwalk, an innovative, real-time social media experience where every fashion show element was tweeted before the models hit the runway. This gave Burberrys Twitter followers (773,000 as of February 2012) unique see it first access ahead of everyone including Vogue editor Anna Wintour. By leveraging the scale and engagement of Facebook, Twitter, and YouTube, Burberry has effectively reinvented its fashion shows as content-rich social experiences that now engage millions of fans and interested consumers, rather than just a few insiders.

A new defining element to Burberrys success is the creation and distribution of branded digital and social media experiences.

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The ability to tell stories directly to consumers via social media is also reshaping how Burberry launches new products. When its fragrance Body debuted in the fall of 2011, Burberrys Facebook fans were invited to a fan-first sampling promotion that generated more than 225,000 requests in the first week alone. The Body video campaign, starring actress Rosie Huntington-Whiteley and shot by famed fashion photographer Mario Testino, premiered not on broadcast TV but on Burberry.com and the brands YouTube channel, further supported by a launch day takeover of YouTubes homepage in 13 countries. Consumers could also buy the scent with a simple click on the Burberry Facebook Body tab; in this way, the brand closed the loop with its community of fans, taking them on the digital path to purchase. What makes Burberry so successful in social media? The deliberate building of specific capabilities around community management, content

development, and real-time analytics has enabled the company to develop powerful, direct, and multiplatform connections with consumers who want to engage with the brand. For Burberry, this strategic focus on marketing innovation has been transformative. Burberry is now as much a media-content company as we are a design company, says creative director Christopher Bailey. In short, Burberry has been successful in social media because it rapidly put in place a new and distinctive set of capabilities to support the digitization of its brand and the consumer experience around it. Looking at Burberrys movesand those of other innovators like Audi, Coca-Cola, Diageo, Nike, Procter & Gamble, and Starwood Hotels & Resorts Worldwideit is clear that social media, in just a few years, has affected not just how decisions about the media mix are being made, but how brand marketing itself is being prosecuted. The traditional stop

and start, command and control model of brand management is morphing into a decidedly more dynamic marketing model. It is always on. It is iterative. It is contentand people-intensive. It is social by design: focused on participation and activation, not just awareness and consideration. And as Burberrys example illustrates, this new model requires very different capabilities from those that most companies possess today. In Campaigns to Capabilities: Social Media and Marketing 2011, three major capabilities come to the fore: community management, content development, and real-time analytics. For companies in all sectors, the evolution of these capabilities, concentrated around the big three social media platforms of Facebook, Twitter, and YouTube, represents a major opportunity to generate business value by building powerful, lasting relationships with consumers through digital communities.

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THE GROWTH OF SOCIAL MEDIA

Recommendations. Referrals. Buzz. Marketers have long known that consumers value the recommendations of a trusted friend or expert more than any form of advertising. Since the emergence of social diffusion theory in the 1950s, marketers have sought to harness the power of social networks and word of mouth to influence consumers decisions about what they like and what they purchase. The importance of social marketing is continually confirmed by researchmost recently by Nielsens Global Online Consumer Survey, which showed that 90 percent of consumers trust recommendations from people they know. Nielsen found that this social recommendation factor in fact tops all other media sources and advertising formats, including TV (62 percent), newspapers (61 percent), and magazines (59 percent). Marketers have, however, historically lacked the key ingredient for social word of mouth to be a bigger part of their playbooks. They cannot generate it at a scale comparable to conventional mass media. Only now

are the tools available to make it happen: social media platforms such as Facebook (850 million users), Twitter (300 million users), and YouTube (where 100 million people interact with one another by liking, sharing, or commenting on videos every week). Through social media, companies can connect with consumers directly at a global, national, or local level, expanding their reach through a few well-designed moves or targeting specific groups of consumers based on more defined communities of interest. The growth of social media among consumers since Facebooks launch in 2004 has been explosive. Consumers now spend most of their digital time there. According to Nielsen, social media and blogs account for 23 percent of all consumer activity online. This is more than twice as much as the next largest category, online games, where consumers spend only about 10 percent of their time. Social media is becoming the hub of all digital activity: as the starting point for engaging with family, friends, and acquaintances, and beyond that, as a way to discover content and connect with brands. Whether its a hot article to read, a must-see video, or a brand they adore, consumers look for it on Facebook, Twitter, or YouTube. Digital technology has become the most important, fastest, and

most influential medium, says Ajaz Ahmed, chairman and founder of AKQA, one of the worlds leading digital advertising agencies. Social networks are now the operating systems for consumers lives. They have rapidly become indispensable. Many companies are naturally attracted by the promise of a largescale media offering that aggregates self-selected consumerseager to share stories, content, and recommendations about brands and productsand enables the targeting of these consumers based on actual preferences and behaviors. Marketers have responded by increasing their participation in social media, most typically via a dedicated presence such as a fan page, a newsfeed, or a branded channel and by incorporating social media elements into their marketing campaigns. According to eMarketer, 80 percent of companies are using some kind of social media platform or tool in their marketing today, nearly double the percentage in 2008. Advertising on social media has grown 40 percent per year from 2008 to 2011, and now represents US$5.5 billion in global advertising spending, according to eMarketer. This amount also represents only a fraction of marketers total social media investment, as it generally does not include the greater expense associated with developing and maintaining a branded social media presence.

Social networks are now the operating systems for consumers lives. They have rapidly become indispensable.

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CAMPAIGNS TO CAPABILITIES

Most companies to date have focused their social media efforts on Facebook, Twitter, and YouTube, rather than on a broad range of social networks, blogs, and location-based services. The dominance of these big three platforms, especially Facebook, is confirmed by the Booz & Company/Buddy Media research. Ninety-four percent of respondents regard Facebook as one of their top three social media platform priorities. Seventy-seven percent include Twitter in this group. And 42 percent say YouTube belongs here too. Even as their investments grow, most companies have yet to allocate a significant amount of their marketing

spending to social media. Today, Fortune 500 companies spend only a fraction of their digital marketing budget, which itself averages 15 to 20 percent of total marketing spend, on social media. For example, 89 percent of respondents to the Booz & Company/Buddy Media study spend less than 10 percent of their digital marketing budgets on social media. The reality is that though there have been some high-profile campaignsCocaColas Expedition 206, Nikes Write the Future, and P&Gs Old Spice Responses, for exampleand there are some early leaders like Burberry, most companies are still at the early stages in terms of their social media efforts. Our Campaigns to Capabilities study revealed that companies recognize the need to expand their social and digital marketing efforts significantly, and many are taking concrete steps to do so. Relevant findings from the Booz & Company/Buddy Media study include the following:

Social media is a CEO agenda item for 40 percent of the responding companies. Social media is a top marketing priority for 2012 for about 60 percent of the respondents. 64 percent of companies have a dedicated team for social media. 78 percent of companies believe social media efforts enhance their marketing effectiveness. 95 percent of companies expect to invest more in social media. 96 percent of companies are developing a specific strategy for social media. The leading companies are shifting their focus from campaignsexperiments, tactics, or one-off efforts that are challenging to replicateto capabilities that enable them to more reliably and consistently deliver a

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distinctive outcome, relevant to their business, through the right combination of processes, tools, knowledge, skills, and organization. Specifically, success in social media requires companies to develop deep capabilities in new areas: in community management to grow and activate audiences, in content development to engage

target consumers, and in real-time insights to analyze consumer behavior and measure impact (see Exhibit 1). Leading companies are not just building these capabilities, but also investing to make them distinctive: so ingrained, proficient, and individually tailored to their strategies and mis-

sions that competitors cannot catch up. To accomplish this, companies must actively transform their key business functions. This transformation typically begins with marketing but will ultimately expand to include customer service, consumer insight, sales, and even product development.

Exhibit 1 A Capabilities System for Social Media Success

Primary Capabilities 1. Community Management: Monitoring, engaging, servicing, and activating a social media presence and fan base 1. Community Management 2. Content Development: Creation and sourcing of brandand audience-relevant content 3. Real-Time Analytics: Ability to analyze and interpret social media activity as it happens

c. Consumer Insights

a. Engagement Optimization

Supporting Capabilities a. Engagement Optimization: Design and execution of the social media experience to drive participation and activation 3. Real-Time Analytics b. Content Management 2. Content Development b. Content Management: Tracking, cataloging, storage, and serving of content assets of all types c. Consumer Insights: Understanding of drivers of community behavior and interest

Source: Booz & Company

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MARKETING: THE FOCAL POINT FOR SOCIAL MEDIA INNOVATION

the periphery to the center of most marketing agendas. Marketers are owning the social media agenda because in most companies they own the brand or product positioning, the market-facing value proposition, and the composition of the marketing mix. They are also the executives most likely to be in the flow of consumer conversations and insights. For many brand-focused marketers, social media sits tantalizingly high on top of the purchase funnelin contrast to other forms of digital advertising, such as the search and display banners that are more often associated with direct response marketing. In discussions with Booz & Company for this study, many senior marketers who have not spent significantly on digital to date stressed that they are looking at social media as more of a branding tool because of its interactive nature and its ability to forge relationships between consumers and brands. Thus, when asked where they see the most benefit from social media, 90 percent of respondents said brand building, 88 percent cited buzz building, and 81 percent replied consumer insights.

Though social media may be used broadly across an enterprise, it is the marketers who effectively own social in 81 percent of the companies that participated in the Booz & Company/ Buddy Media study. Today, advertising is the dominant use case for social media, with 96 percent of companies using social media to support advertising objectives. Significantly, companies are also prioritizing the integration of social media into their overall marketing efforts, rather than developing islands of specialized expertise. For example, 65 percent of companies are actively planning to integrate social media into all of their advertising and marketing activitiesan important sign that social media is moving from

An even more fundamental development is the influence of social media on the marketing function itself at many companies. The adoption of social media by companies is in fact changing the practice of marketing from one of brand management, where campaigns are tightly controlled by brand executives and dominated by paid media, to one of brand curation, where campaigns are designed by marketers and characterized by a seemingly less orchestrated and linked mashup of paid, earned, owned, and shared media (see Exhibit 2). This new model is also more dynamic, real-time, and iterative. Its core tenets are engagement, participation, and advocacy. It connects brands directly to consumers, and also enables brands to connect consumers to one another. Mark Parker, Nikes CEO, described the positive impact of this new model on his business on a recent earnings call: Social networking and digital communication is helping us unify and expand the family of sport. Weve never been closer to consumers as they continue to extend their reach and connect even more with each other, with their sports heroes and their favorite teams.

Exhibit 2 Brand Management Moving to Brand Curation

Traditional Marketing Model Anchored around awareness New Marketing Model Anchored around participation and activating fans

Focused on procuring paid media

Focused on integrating paid, earned, owned and shared media

Emphasis on being in control of media messaging

Emphasis on conversation and relationship value

Digital expertise anchored in specialists and COEs

Brand managers are universal soldiers with digital expertise

Fixed, turn on/turn off, and long lead times

Dynamic, always on, and iterative

Source: Booz & Company

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NEW CAPABILITIES REQUIRE NEW MIND-SETS

Everyone knows that a key ingredient for a great dinner party is a switchedon host who curates a fabulous mix of guests, stimulates lively and interesting conversation, and graciously attends to a variety of needs throughout the evening. Terrific food, drink, and activities enable people to connect, engage, and linger. The host knows how to read the room, analyze the party in real time, and make rapid adjustments to improve ita quick tweak to the seating chart, a personal introduction to ensure the right contact is made, or a subtle change to the playlist to enhance the evenings ambience. All of this makes guests eager to return. The ingredients of a successful dinner partyincluding the central role of the hostis a perfect metaphor for the skills and mind-sets that companies need to build a distinctive social media capability. As one brand manager from a major cosmetics company puts it, You have to realize that social media

is a party and youre the host. There might be someone in the cornerbe generous and gracious and invite him in. There are stars who will flit in and leave. The whole point is to get people together. As anyone who has hosted a successful dinner party knows, it takes planning, effort, and care to create an appealing social environmenta place where guests feel welcome and where they comfortably engage in rich, interesting conversations, sharing thoughts and views with friends, old and new. The best hosts make it appear effortless, but they privately acknowledge how much work it takes. As companies seek to expand and strengthen the impact of their social media efforts, marketers are learning to play the role of the host with increasing levels of sophistication. For the vast majority of them, it requires building new capabilities that have not been part of their traditional tool kit.

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CAPABILITY PRIORITY 1: COMMUNITY MANAGEMENT

At most large companies, the cutting edge of marketing can be found in social media communities today. As companies begin building brands via Facebook pages, Twitter feeds, YouTube channels, and even Google+ circles, they realize quickly that establishing a social media presence is only the beginning. Its the equivalent of sending the invitations to a dinner party. Thus, community managementthe art and science of convening and hosting fans in social mediahas become a vitally important new capability for companies and their marketers. Community management involves engaging, monitoring, servicing, and activating a companys social media fan base across multiple social media platforms. This discipline has become

critical to ensuring that a brands social media community is healthy, active, and growing. Furthermore, once visitors become fans, companies have the responsibility to listen to them and reward their behavior with an always on social media experience that is responsive, interesting, and attentive. If not, companies may face disappointment and disfavor from many of their most valued consumers. Companies also need to ensure that their social communities expand in directions that are coherent with their business goals. For all of these reasons, strong community management has become imperative for social media success. Most marketers know how to manage brands, not real-time communities. The skills required for community management stretch well beyond those associated with traditional brand management. There are five core proficiencies: Listening: understanding what fans in the community are saying; identifying hot topics, what fans are doing and sharing, and why; creating a two-way feedback loop that drives consumer insights

Curating: overseeing the editorial experience; stimulating meaningful discussion; making content and conversation discoverable and interesting; ensuring that the brands voice and presence are coherent and authentic Responding: providing service to the community; helping to resolve issues, questions, and problems; connecting to advocates and opinion leaders; creating emotional connections with fans Measuring: analyzing fans activities and community behaviors; tracking effectiveness of campaigns against business and brand objectives; assessing community vibrancy, sentiment, and growth Innovating: anticipating what is next for a brands fan base in new content, tools, and social or digital media experiences (for example, mobile, apps, and niche communities) Not surprisingly, these new requirements and their vital importance concern many companies. About 50 percent of the survey respondents said the lack of sufficient community

The skills required for community management stretch well beyond those associated with traditional brand management.

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management resources in their organizations represents a major barrier to social media success (see Exhibit 3). Furthermore, their top concern around social media is the labor-intensity of community management: 61 percent of the respondents expressed concern, compared to only 13 percent who are focused on social medias overall cost. Despite the meteoric growth of social media platforms, many companies are still not fully comfortable with the digital megaphone inherent in this medium; 58 percent are concerned with negative word of mouth or PR, and 55 percent worry that they are losing control of their brand messages. You have to be on 24/7, noted a senior executive with a major apparel brand. You have to respond to customers all the time. Issues escalate so fast, you can be held hostage by someone in social media.

Community management is a dynamic, complex, and peopleintensive function, one that cannot be outsourced lightly. Senior executives recognize that community management is central to social media success and that they need dedicated in-house expertise to make it happen sustainably. Already, among the companies surveyed by Booz & Company and Buddy Media that have their own dedicated social media staffs, two-thirds have internal resources dedicated specifically to community management. Part brand champion, part chief listener, part Superfan, and always mission control, the community management professional brings a variety of skills to bear. Executives in community management need to be experts on their brands, audiences, and communities. They know them inside and out. A senior executive with a major entertainment company

described the ideal job spec this way: The guy who runs Facebook for us is an ber-fan. Thats the kind of person you need. Successful community management also requires a fusion of technical and creative expertise. Campaign updates (such as stories, pictures, news, videos, slide shows, and polls) must be drafted, scheduled, and posted with an awareness of engagement and sharing potential. Conversations must be initiated. Fan responses must be addressed. Multiple social media platformsFacebook, Twitter, YouTube, company blogs, etc.must be managed with content sourced and tailored for each. Throughout all of this, campaign analytics and metrics must be reviewed and assessed to determine what is resonating and what is not, and community managers must make decisions on the fly to continually enhance the community

Exhibit 3 Top Five Organizational Challenges for Social Media

PERCENTAGE OF SURVEY RESPONDENTS INDICATING THIS WAS A SIGNIFICANT OR VERY SIGNIFICANT CHALLENGE
57% 52% 51%

48%

43%

Not Enough Cross-Departmental Collaboration

Insufficient Resources Dedicated to Community Management

Lack of Understanding Among Senior Leaders

Difficulty of Proving ROI

Not Core to Overall Strategy

Source: Booz & Company/Buddy Media Campaigns to Capabilities: Social Media and Marketing 2011 survey results

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experience and ensure that it is connected to the brands objectives. In addition to the technical and creative requirements, community management must have a demonstrable human touch that is recognized as genuine and authentic by the fans. There is no substitute for strong person-to-person skills. Community managers will field questions touching on all parts of a business and therefore need to be well networked and empowered to move across departments to respond effectively. Fifty-seven percent of the survey respondents reported that insufficient cross-departmental collaboration is a major obstacle to social media success. In interviews conducted for this study, executives repeatedly stressed the need for great conversationalistsextroverts who enjoy interacting with others and who are comfortable in a fluid, spontaneous, and often unpredictable environment. This new kind of marketing talent, like that great dinner party host, must also be able to process data quickly and make decisions fast. Ninety-four percent of the responding executives stressed that the ability to adapt and react quickly is the single most critical success factor in social media. Many companies are on the hunt to recruit managerial talent that can support high-quality, high-impact community management. About 60 percent of those investing in social media are expanding their community management resources through additional hiring. Recognizing these new and fast-changing requirements, many companies are seeking community management talent outside the boundaries of traditional brand marketing, in areas such as journalism, direct marketing, event planning, and public relations.

Starwood: Where Social Means More Than Marketing Even before the term social media was coined, Starwood Hotels & Resorts had a dedicated professional in the field. He was called the Lurker, says Alyssa Waxenberg, the senior director of emerging platforms for the hotel chain. He was on our customer service team, and he would engage our customers on travel forums like FlyerTalk. He answered questions, resolved issues, and showed us complaints that he came across online. He became something of a mini-celebrity in the hotel industry and a real champion of our guests. Starwoods Lurker was only an introduction to the impact of social media; it did not take long for senior management to catch on to the value of this form of marketing. The owner of such major brands as Westin, St. Regis, Sheraton, and W, Starwood uses social media to get in front of current and potential customers with information, offers, and personalized experiences intended to surprise and delight guestsand to cement their loyalty to the companys brands. We are leveraging social media in all we do, says Waxenberg. We have Facebook tabs, Facebook walls, Twitter channels, and Foursquare tie-ins with our loyalty program. All of these enable us to broaden our reach, follow up in real time, and stay engaged with our guests, she says. But social media is not strictly seen as an advertising vehicle. You cant confine social media to the marketing department, says Waxenberg. Perhaps the greatest change it has made for Starwood is in customer service. Its very easy now for people staying in one of our hotels to post a comment on one of our Facebook pages or tweet something. We can address that guests concern or compliment immediately while they are staying with us. This digital approach to delivering a great service experience has become differentiating for our business. And now we can do it faster and make it more personalized than ever. To make this happen consistently, Starwood has developed a networked approach to social media. A dedicated team within customer service monitors social media channels in real time. This team connects directly to social media champions at individual hotels, along with the loyalty and marketing teams and other central departments. These connections are critical for rapid response. If someone posts, Hooray, were going to the Westin in Maui for our 25th anniversary, the team can reach out to that hotel and let them know to make that couples milestone an experience that is truly memorable, personal, and specialfrom a hotel they will most likely recommend to others.

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CAPABILITY PRIORITY 2: CONTENT DEVELOPMENT

Like a party without the requisite food or drink, a social media community without relevant content can quickly become a stale, empty room. As a major wireless executive explained, We have to constantly think about having the right content. Facebook penalizes you if people arent clickingit forces you to deliver something engaging.

For many companies, developing a robust social media content development capability requires a complete reboot of their approach to developing communications and campaigns. Old-time brand managers only did TV, said a major beverage marketer. Now brand managers have to think about social in everything they do. Do they have sufficient content they can share with their community?

A social media community without relevant content can quickly become a stale, empty room.

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They are trying many new things in order to have content to share events, contests, videoswith their communities. A powerful example of the impact of social media on brand storytelling is Nikes The Chance, a global Facebook- and YouTube-centric competition developed by its agency AKQA. Over an eight-month period, 75,000 young, undiscovered soccer players from 41 countries took the chance to compete for a lifechanging soccer contract with the Nike Academy. Millions of Nike fans followed the competition, which kicked off with a call to action on Facebook from famed Arsenal

manager Arsne Wenger. The aspiring athletes were encouraged to enter the competition by uploading their moment of glory to Facebook, to promote themselves with videos and photos, and to build a fan following. Nike then used invitation-only training events in 32 cities around the world to select 100 global finalists who were chosen to compete for eight professional contracts under the eyes of Premier League scouts at the Chance Final Trials in London. Nike and AKQA zeroed in on the consumer insight that is true in every competitive sport: Young athletes want to prove themselves, they want to be discovered, and they want the

opportunity to compete at the most elite levels. Social media allowed Nike to take that insight global, transforming it into a compelling digital media experience for millions. AKQAs Ahmed describes the strategy behind The Chance: There was no better way to tell the Just Do It story than by empowering people to become better footballers and rewarding the very best with a contract. Without the digital and social revolution, an idea like this would have never been possible. This campaign was seen by millions, influenced tens of thousands, and has changed the lives of many. Indeed, 5.5 million fans actually pledged their support to various participants

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during The Chance, and millions more viewed various Nike- and player-produced videos on Facebook and YouTube over the course of the campaign. The story of The Chance highlights how brand storytelling and advertising need to be designed to take advantage of the unique dynamics of social media. The most compelling stories, says Ahmed, are told by brands that use the inherent properties of social media to do something you cannot do in other media. With

Twitter, that means immediacy. With Facebook, it means making a creative, inspiring, and useful contribution to the community. Unlike traditional advertising content, where the goal is often awareness or brand recall, the focus in social media is on content that stimulates real conversations and gets the consumer motivated to be involved and connected in the storytelling itself and in spreading it around. We do a lot of magazine ads, says a major apparel retailer, explaining

the companys relatively low emphasis on social media. The celebrities in these ads are looking to preserve a certain mystique. They cant do that in social, so it just doesnt work. In contrast, Nikes social media content is participatory, authentic, and relevant, all by design. Thats the decisive difference. Content is the glue in social media. It creates the sticky social value and connection between a brand and its fan community. To be effective, marketers need to become digital

The focus in social media is on content that stimulates real conversations and gets the consumer motivated to be involved and connected.

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publishers, competing aggressively for consumers attention, engagement, and loyalty with high-value content just as media companies do. Leading social media teams are therefore taking steps to build publisherlike capabilities. They are rigorously prioritizing content topics that will resonate with their communities and that align to their overall marketing and promotional programs. They are developing editorial calendars to emphasize specific storylines and story types, and ensure a steady stream month by month, week by week, and hour by hour. They are optimizing content for discovery and sharingeven elevating their brands to act as trusted filters that aggregate the most brand- and audiencerelevant third-party articles and links. Finally, brands are working with an

expanding range of creative resources to accomplish all this. These include external entertainment companies, creative agencies, digital publishers, independent producers, PR firms, and even their own internal creative resources. Media executives have always understood that it matters how many consumers watch, read, or listen to their content. Marketing executives should have the same mind-set as they expand their social media efforts. As platforms like Facebook, Twitter, and YouTube become more crowded, thoughtful distribution including scheduling, packaging, and placementis increasingly important for breaking through the conversation clutter. Buddy Medias own research has shown that there

is effectively a prime time, both in time of day and day of the week, when the engagement rate with consumers is noticeably higher. For example, consumer engagement for auto-related social media content spikes on Sundays, when consumers are researching cars and planning showroom visits. The design of social media content and posts also matters. A random sample of users on Buddy Media platforms in the fall of 2011 showed that social media content with a clear call to actioneither online or offlinedrove 30 percent more activation than more static, less action-oriented posts. Finally, though many consumers may like a brand, few brands are in a position where they can attract a sizable, regular audience to their

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branded social media sites. The most valuable real estate for a marketer is actually the newsfeeds of its brands fans. On Facebook, according to the digital measurement and business analytics provider ComScore, consumers spend 27 percent of their timemore than for any other single categoryon their own homepage or newsfeed. They are also at least 40 times more likely to consume branded content in that newsfeed than to visit the brands page. Given

these realities, companies must excel at developing brand-relevant content that drives posting and sharing. Furthermore, by creating shared content, companies also increase their marketing productivity; they achieve a multiplier effect, whereby messages connect not just with fans, but with a potentially much larger group of friends of fans as well. For all of these reasons, many marketers say they plan to

aggressively upgrade and expand their content development talent. The Booz & Company/Buddy Media survey found that among companies with dedicated social media staffs, 49 percent have dedicated in-house creative talent. Another 35 percent are actively building their content teams. Among those planning to hire social media talent within a year, 72 percent are prioritizing creative resourcesproducers and editors above all other needs.

Among companies planning to hire social media talent within a year, 72 percent are prioritizing creative resources above all other needs.

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CAPABILITY PRIORITY 3: REAL-TIME ANALYTICS

Marketers increasingly need realtime insight into their audiences and the impact of their content to know whether their social media efforts are on target or off the mark. How much content is being shared and by whom? Which social platforms are getting more traffic and engagement than others? How are brand influencers and advocates behaving? What is the community saying about a brand? And what actions are fans taking? Robust, well-structured social media analytics and metrics are fundamental to addressing these important questions, and thus critical for a contemporary digital marketing capability. The Booz & Company/Buddy Media survey and related interviews indicate that there are four levels to a real-time social media analytics capability, with progressively more sophistication: Level 1: Reach. Marketers understand the social scale of their brands. They know how many fans, followers, subscribers, visitors, and views they have, and how many discussions are taking place. They have visibility into where, when, and in what context their brand is being discussed.

Level 2: Engagement. Marketers have moved beyond counting fans. They have insight into the activities in their communities. They analyze the drivers of participation and amplification, studying the patterns in comments, likes, shares, and take rates. Level 3: Advocacy. Marketers can identify and encourage user behaviors that are associated with brand commitment. These include such metrics as intent to recommend, referral and reshare activity, comments and followers per user, and brand favorability, consideration, and preference. Level 4: Return on Investment. The most sophisticated companies set out to achieve strategic business objectives with their social media analytics. Most companies are still not fully at this level. For example, according to the survey, only about 40 percent of companies have metrics in place today to measure ROI-focused key performance indicators (KPIs) such as purchase intent, leads generated, conversion rates, or actual sales.

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The survey also confirmed that marketers are concerned about the quality of their social media metrics and analytics. Sixty percent of the respondents said they are not satisfied in this area. Only 50 percent of companies have social mediafocused KPIs and dashboards in place today; another 47 percent are actively building them. Many companies view expertise in social media measurement, monitoring, and tracking as a core part of the value proposition associated with third-party vendors, such as agencies, software providers, media companies, or consultancies. There is also a tension between the broad goal (expressed by 60 percent of respondents) to link social media metrics more closely to business outcomes, and the more immediate need (expressed by 90 percent) for social media metrics to be tailored to meet the objectives of specific individual campaigns.

A few corporate trailblazers are demonstrating that social media can drive measurable results and business impactin other words, they are gaining a lot more than likes. Wendy Clark, senior vice president for integrated marketing communications and capabilities at Coca-Cola, has shared publicly that the beverage giants analytic capability is advanced enough to know that Coke social media fans are twice as likely to consume and 10 times more likely to purchase than nonfans. In personal computers, Dell has focused relentlessly on analyzing the connection between social media engagement and revenue generated in physical as well as online stores. Dells leaders understand how social media impacts loyalty, product innovation, brand favorability, and even costs (such as the cost of customer support). These insights into business drivers and outcomes have led Dell to concentrate heavily on the health of its

Net Promoter Score (indicating how likely a customer would be to recommend Dell to a friend or colleague) and on the impact of social media experiences, including content around ratings and reviews, on Dell loyalty and recommendation value. In addition to measuring business outcomes, social media represents an enormous opportunity for unfiltered, direct consumer insights into branding, customer service, and product development. Fifty-six percent of companies surveyed are already using social media to support their market research and consumer insight activities. Eighty-one percent believe that they are capturing helpful consumer insights from social media today. Since 56 percent are investing actively to improve the quality and quantity of consumer insights from social media, this analytic capability should become even more robust very soon.

Social media represents an enormous opportunity for insights into branding, customer service, and product development.

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THE MINDSETS OF SOCIAL MEDIA SUCCESS

In addition to these three capabilities, several soft factorsmind-setsare equally important to social media and digital marketing. The senior leaders interviewed for this study repeatedly pointed out that it takes a different personality and a different set of behaviors to be successful now than it did in the traditional command and control brand marketing world. Of course, classic management and brand marketing skills still matter. But when a new product announcement from Google, Twitter, or Facebook can dramatically change the opportunities available to a marketer overnight, companies need more flexible, dynamic, and entrepreneurial executive talent than ever before. Venky Balakrishnan, global vice president for marketing innovation at Diageo, the worlds leading premium spirits company, says next-generation marketers need to be universal soldiers: learning machines who move fast and who can constantly adapt to new situations, almost like Navy SEALs. In an environment where developments occur quickly, consumer behavior is dynamic, and playbooks are rewritten constantly, companies need talent who are ener-

gized by uncertainty, who are techand consumer-savvy, but also know what they dont know, and know how to pursue and test potential solutions. Most important, they analyze every experience, they learn from it, they seek out new sources of input and inspiration, and they keep moving forward. The Booz & Company/Buddy Media study identified several other soft factors that are important to social media success. Ninety-three percent of the respondents said that having a clear set of champions and owners for social media within the enterprise is critical to building strong social media capabilities. A related element is support within senior management. Development of capabilities for social media cannot be perceived as a minor initiative for just the young people in the company. Finally, education is critical. Today, two-thirds of the companies surveyed have dedicated social media staffs in place, and onethird have an executive assigned to lead social media efforts. Nonetheless, about 50 percent of those surveyed said they still need more education in their executive ranks about social media and its value.

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MOVING FORWARD

While many companies are still catching up to their consumers in social media, the Booz & Company/ Buddy Media study shows they are indeed gaining. They are taking important steps to transform their capabilities in community management, content development, and real-time analytics, and they are bringing a more contemporary mix of hard and soft skills to their marketing efforts. As this evolution continues, they will also be in an even better position to shift budgets accordingly. Survey respondents expect their spending on social media activities to accelerate over the next three years, with social media taking an expanding share of corporate expenditures on digital marketing.

Today two-thirds of the surveyed companies dedicate 5 percent or less of their digital marketing spend to social media. Within three years, this proportion will reverse: 87 percent of these companies expect to cross that 5 percent threshold. In fact, 50 percent of the companies surveyed expect social media to be the fastest-growing portion of their overall marketing spend. In three years, 56 percent of companies expect to spend 10 percent or more of their digital marketing budgets on social media, with 28 percent expecting the figure to exceed 20 percent. Not a single respondent reported a plan to spend a smaller percentage of the digital marketing budget on social media moving forward (see Exhibit 4).

ot Core to rall Strategy

Exhibit 4 Social Media Spend as a Percentage of Digital Marketing Spend

Today

3 Years from Today 13% 28%

5%

7%

22% 32% 67% 27%

< 5%

5-10%

10-20%

> 20%

Note: Numbers may not add up due to rounding. Source: Booz & Company/Buddy Media Campaigns to Capabilities: Social Media and Marketing 2011 survey results

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Within social media, where do companies expect to spend their money? Interestingly, despite the growing amount of clutter and crowding in social media advertising, they do not expect to focus on buying advertising inventory on Facebook, YouTube, or Twitter. Instead, they plan to spend more on their own social media teams. Hiring full-time employees is their number one priority for investment in social media; hiring partners and vendors is the number two priority, followed by creating more content. Media buys or paid social media is number four.

The money for this investment is mostly coming out of existing digital budgets. That should be no surprise to the portals and publishers that have been steadily losing share to Facebook and YouTube over the last 12 months. Only 22 percent of the survey respondents have created new dedicated budgets for social media; more than two-thirds are funding social media activities out of their existing digital marketing budgets. While far fewer companies plan to shift spending from television or magazines to support their social media activities, the mere fact that some are doing it highlights the branding potential that executives ascribe to social media and the

longer-term threat it poses to more established elements of the media mix. Finally, companies are awakening to the broader, enterprise-wide value of social media. Though marketing is the dominant focus today, executives recognize that social media can significantly enhance how they connect with suppliers, employees, and customers, as well as consumers. They expect to see executives in customer service, market research, product development, and sales taking a greater social media leadership role in their companies as they pursue digitally driven innovation in these functions too.

Rather than focus on buying advertising inventory on sites like Facebook, companies plan to spend more on their own social media teams.

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THE DIGITAL FUTURE TODAY AT HORSEFERRY ROAD

Think back to the Burberry experience. A venerable company and brand engaged in a radical transformation: a strategically focused and substantive digital metamorphosis that goes far beyond slick marketing concepts dressed up in trendy technology. Burberrys

social media and digital marketing activities now represent 60 percent of its marketing budget. The company has managed this by holding its total marketing spend flat as a percentage of revenue, and strategically reducing its expenditures on traditional print media. It has also revamped Burberry.com, turning it into a content-driven destination where consumers can engage, interact, and purchase. Burberry has deployed retail theater technology in its stores to provide shoppers with a rich audiovisual experience, blurring the line between the physical and the digital. Along the way, the

company has invested in community management, content development, and real-time analytics capabilities, betting big on the benefits of leadership in social media. This journey began shortly after Angela Ahrendts became CEO of Burberry in 2006. She crafted an aggressive plan to turn the company around, with digital marketing innovation as one of the central focus areas. Six years later, look at the results. Burberry has a Facebook fan base that is larger than that of all the major U.S. fashion magazines combined (see Exhibit 5). The fan

Exhibit 5 Facebook Fans: Burberry vs. Major Fashion Magazines, U.S. Versions as of February 2012
10.70

2.17 0.42 Burberry Vogue Elle 0.32 InStyle 0.14 Marie Claire 0.11 Harpers Bazaar

0.10 W

Note: Numbers represent millions of people who like each brands Facebook page, as of February 2012. Source: Facebook; Booz & Company

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base, also active on Twitter, YouTube, and Burberry.com, now constitutes an interconnected, linked, and owned media ecosystem. This gives Burberry unprecedented opportunities to build its brand, market its products, and engage with consumers directly across channels, platforms, and mediums. Not coincidentally, Burberry has continued to increase revenue and strengthen its brand. Most recently, the company announced a 21 percent rise in third-quarter 2011 total revenue over that of the same period in 2010, with same-store sales growth of 13 percent over the period. These most recent achievements have all occurred during the most turbulent global economy since the Great Depression. Ahrendts has repeatedly attributed the companys solid financial performance to its investments in digital marketing as well as its innovative design and retail strategies. In a video

statement (appropriately available on YouTube), Ahrendts elaborated on this point. You have to create a social enterprise today, she said. You have to be totally connected with everyone who touches your brand. The Booz & Company/ Buddy Media study confirms that this digital-social transformation is occurring not just at Burberrys headquarters on Horseferry Road in London, but also in Atlanta, Austin, Beaverton, and many other places where forward-thinking executives lead. For most companies, however, their social media journey is just beginning. By focusing on developing distinctive capabilities in community management, content development, and real-time analytics, they too can not only create rich new social media experiences for their customers but, like Burberry, transform their organizations and unlock marketleading performance.

Resources: Burberrys Social Media Ecosystem The Facebook Burberry Page (content, community, commerce): www.facebook. com/#!/burberry Burberrys YouTube Channel (live streaming, campaigns, how-tos): www.youtube.com/ user/burberry?ob=4 Twitters Burberry Feed (live events, real-time news and updates): twitter.com/#!/ burberry Burberrys own home page (content, product information, commerce): www.burberry.com Art of the Trench website (user generated and professional photographs) artofthetrench.com

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L Oral: Developing Social Media Mind-Sets and Skill Sets Im an evangelist, says Rachel Weiss, assistant vice president for digital strategy and interactive marketing at LOral. Social media is not just a new marketing tool; its so much more. Its a fundamentally different operating mind-set. As Weiss points out, getting social media channels up and running is only the starting point for marketers who want to develop this capability. From there, identifying the right talent to run these channels and cultivating a social mediafriendly mind-set inside the company are key to success. You have to embark on a campaign of constant education internally, not just with your digital teams, but across the organizationexecutives and marketers and HR professionals and consumer insights. She explicitly sets out to demonstrate for these colleagues the power and reach of social media and how it can be used to transform consumer relationships. Weiss has pursued multiple strategies for building traction for social media across LOral. Ive found that reverse mentoring works very well, she says. If you have a social media evangelist sit down with an executive to show her how Twitter works, what she can do on Facebookif you can get her engaging in a real hands-on experience with consumers on these digital platforms, thats a great start. She also recommends drawing attention to the size of social media audiences: The other way to reach busy executives is through the numbers. Weve done studies on digital listening, and sharing the sheer volume of conversations happening every day around our products and brandswith or without our direct involvementis very eye-opening for senior executives. Social media requires not only a new mind-set but also new skills. This means that companies need to develop different recruiting criteria. When I interview candidates, Im looking for people from diverse backgrounds who are willing to experiment. They have demonstrated the ability to marry the left and right sides of their brainthe creative and analytical, says Weiss. I also ask candidates to describe their digital lifestyleif they are not caught up in social media at home, they are not going to bring that passionate engagement, hands-on attitude, and curiosity that we know is essential. For Weiss, the ultimate end goal of social media marketing is to drive consumer engagement that leads to measurable gains in revenue. I think most companies are still primarily focused on building fans and followers, but we have our eyes on a greater prize. We want to cultivate advocates and convert their insight and interest in our brands into product purchases.

Survey Methodology In 2011, Booz & Company and Buddy Media surveyed 117 companies across a broad range of industries. The online survey addressed social media platform priorities, use cases, benefits and key success factors, challenges and concerns, resource requirements, organization needs, spending trends, and metrics. Booz & Company and Buddy Media supplemented this quantitative survey with a series of in-depth executive interviews focused on the capability priorities, key areas for investment, evolving role of partners, and major issues related to organization, talent, and metrics that companies are confronting vis--vis social media.

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About the Authors Christopher Vollmer is a partner with Booz & Company based in New York. He leads the firms global media and entertainment practice, and has extensive experience advising clients in digital media, consumer marketing and digital technology. He is the author of the best-selling book Always On: Advertising, Marketing and Media in an Era of Consumer Control (McGraw-Hill, 2008). Karen Premo is a principal in Booz & Companys global media and entertainment practice. Based in New York, she works with media and consumer-facing businesses on digital and social media strategy, sales force and marketing effectiveness, capability building, growth strategy, and organizational design.

About Buddy Media Buddy Media is the social enterprise software of choice for eight of the worlds top 10 global advertisers, empowering them to build and maintain relationships with their consumers in a connectionsbased world. The Buddy Media social marketing suite helps brands build powerful connections globally with its scalable, secure architecture and data-driven customer insights from initial point of contact through point of purchase. Buddy Media is the most award winning social enterprise software company, winning the prestigious TechCrunch Crunchie Award for Best Enterprise application, named to the Advertising Age 2011 Digital A-list, and CEO and founder Michael Lazerow was selected as 2011 New York Entrepreneur of the Year by Ernst and Young. For more information, visit http://www. buddymedia.com.

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