An article in the latest McKinsey Quarterly by Jacques Bughin, “Getting a sharper picture of social media’s influence,” describes new research involving European consumers and the growing impact of social media on their buying decisions. While these findings are based on consumer behavior “across the pond,” they provide insight into ways marketers and public relations practitioners here in the U.S. can harness the power of likes, tweets and posts.
Bughin’s team, based in Brussels, examined the purchasing decisions of 20,000 European consumers, across 30 product areas and more than 100 brands, in 2013 and 2014. Respondents were asked how social media influenced their decision journeys and about instances when they themselves recommended products.
According to Bughin, “We found that the impact of social media on buying decisions is greater than previously estimated and growing fast, but that its influence varies significantly across product categories. Moreover, only a small slice of social influencers are creating the buzz.”
Social recommendations, Bughin writes, led to 26 percent of purchases across all product categories, substantially higher, he notes, than the 10 to 15 percent others have estimated. He also found that roughly two-thirds of social media’s impact was direct (it played a critical role in decision-making) and the remaining third was indirect (it created an awareness of the product or helped the buyer evaluate product attributes).
What’s interesting, and it makes sense to me, is that the influence of social media varies across categories. As you might expect, at the low end, only 15 percent of consumers reported using social media in choosing utility services. But for categories such as travel, investment services and over-the-counter drugs, 40 to 50 percent of consumers looked to social media for recommendations.
Here are some other interesting findings gleaned from the article:
- Product categories tend to have their own set of influencers on social media, and they don’t cross over very much to other categories.
- Analog media remain important. The research showed that about half of recommendations were made offline (in person or by phone).
- Influencers account for a disproportionate share of total product recommendations. For example, in fashion categories, 5 percent of recommenders accounted for 45 percent of the social influence generated. Overall, 10 percent of active influencers accounted for 24 percent of total recommendations (tweets, likes, etc.) across all product categories.
- Online articles written by journalists are prompting consumers to seek social media to further inform their decision-making. Bughin says that “public-relations spending to generate such stories may be a worthwhile investment.” He also writes, “Companies that spend effectively on search-engine optimization (to move their product mentions to the top of search results) can expect to benefit from a greater social-media impact, as well.”
- Television advertising acts as a substitute for social media rather than complementing it. Relatively few customers, he says, were prompted to seek out social influences after viewing a TV spot.
Bughin says that marketers should consider ways to encourage would-be customers to engage more in social media and inspire more influencers to express enthusiasm for a company’s products.
He also notes the growth in data analytics to amplify positive recommendations and gain greater understanding of product preferences and purchasing behavior. Sophisticated recommendation engines, he notes, can identify potential customers and send them messages at key points along their decision journey.
“The pathways of social influence are shifting constantly,” he concludes. “Looking ahead, better mobile devices and more robust social applications will make it even easier to share experiences about products and services. Companies can’t afford to fall behind this powerful curve.”